Overhaulin' - Should I buy a car with cash or take out a loan?(which is best)?

Should I buy a car with cash or take out a loan?(which is best)?

The car I'm looking at is a 2006 Acura TL with 48,000/Miles & the dealer is selling it for $14,000(before tax & fee's). I've looked the car over myself, Test-Drove it, Car Faxed & had my mothers mechanic check it inside & out & he says buy it before I miss out. Only thing missing that I really wanted it to have is a navigation system buy I can just have that installed later on. I have about $7000 at the moment, & want to know should I just keep saving & get all the money & pay for the car in cash & only have insurance to pay or should i use the $7000 as a down-payment??? I have bad credit (505) so I don't think I'd get a loan anyways, but my mother said if she co-sign I might have a shot at a loan cause her score is in the 720+ area.

Public Comments

it is almost always better that you buy a car cash. the point is that when a car is listed for say $14,000 if you walk in with cash you would probably pay $12,000 cash out the door i mean with tax title n license. verse if you took out a loan and got the car for $14,000 then plus TTL its $16,000 then you took out the loan for like 4 5 years and that builds interest so by the time you finish paying off the car you paid $20,000-$25,000. but thats the thing most people dont want to wait they want it now. so if you can wait just save up your money it would be alot cheaper in the long run
You would definitely need your Mom as a co-signer if you decide to go with a loan. Using a loan will cost you more in the long run (finance charges) and will burden you with monthly payments but will get you a car sooner and let you save some of your $7000 for other purposes. It will also give you a way to build your credit back up so that you won't need a co-signer next time -- assuming you make all your payments on time. Paying cash does not improve your credit.
In todays economic conditions, you're much better off sitting on your cash if at all possible.
Paying cash for a car is a finanical mistake, in my opinion. People will point out the interest that you are saving in 3-5 years time, but they overlook a couple of things: One, the real cost of money. It's not how much you can make with that money in the bank, but it's the leverage it gives you to use that money on other things for the next 3-5 years. Why spend all your cash on a depreciating asset? You can always pay the loan off early if you want, but by keeping some or most of your cash in the bank, you've got more options to you, financially. Loans on cars are relatively cheap. Let the banks take the risks for you