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Old 12-23-2009, 01:14 PM   #8
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kbz2002
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Join Date: Jul 2008
Location: CNY
Posts: 14,383
Re: Vehicle purchase...WWYD?

Is the $500 car payment with you financing half of it? That's an awefully expensive SUV?? Are your jobs pretty secure? The only other thing that I see is that you have car insurance for 3 cars, do you really need the SUV? Is the 32K in savings only half of the price of the SUV or would you actually be able to pay cash for it?

Now back to your question... yes I think you can afford if you have the money to pay cash for it. It sounds like you are really good at making sure you are saving your money and you have an enormous emergency fund. I personally wouldn't buy a third vehicle (we are a 1 vehicle family) but I would probably finance it if I needed the vehicle and was in your financial situation just because you would be still earning an additional 1% on your initial savings. So even though the car would depreciate quicker you still have enough in savings to pay it completely off and you would be earning money still on that. So even though you are paying interest on the vehicle you are making up the value in your savings. I actually do finance a lot of things with the 0% interest even though I can pay cash for them, I just put the money in a seperate account that I make sure I absolutely do not touch and I earn interest and pay it off at the same time. Usually I even come out ahead because I try to still figure out a way to make the payment and I don't take the payments out of my account, but the account is there just incase. But I know I'm in the minority here but that's just my 2 cents on it. It's not very DR to actually do the finance option but I would (then again I don't really follow DR).
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