Overhaulin' - Using my savings to buy a brand new car in cash, good idea?

Using my savings to buy a brand new car in cash, good idea?

I am a 25 year old male, I don't have a car and I use public transport to get to work. I don't have a house, I rent a 2 bedroom flat with someone. I am thinking of using 80% of my total life savings to purchase a car in cash. It's a new car and if I take very good care of it it can last me for at least 7 years or more. The reason I am considering buying a car in cash is to avoid paying interest if I have it financed by a bank so in the end I will save money. You are probably asking yourself why not a cheaper second hand car, well it's because I want something that will last me years and years, and not having to fix it once in a while. There risks of using 80% of my savings in order to buying a depreciating asset are great, that I know because I can be retrenched or something else might happen, but in life you sometimes have to take risks right :) ? What do you guys think?

Public Comments

I would buy a slightly used car for 1/2 the cost (or less)....why buy an asset that instantly depreciates the second you take it off the lot?
Use cash for a car that is only 1 or 2 years old. You shouldn't have many problems with it and it has already taken the biggest depreciation hit.
new cars are not worth the price. buy a low-mileage but old beater, get the minimum insurance, bank your savings.
Zach Yea, unless you do not feel comfortable with your savings reserve. If not take a small loan for the least period of time. BUT once paid off, continue to have the payment amount transferred to your savings to rebuild it as fast as possible. That way you can pay cash for your next car too! I have not had a car loan for my wife or I since 1980! Soccerref
I believe in new cars (I keep mine 10 - 15 yrs - so it does pay off). Bide your time until the company you want to buy from offers super low or zero interest rate so you can leave your money in the bank. Cash is king, and you never know when you might need it. Better yet, keep using public transportation, and for the amount you would pay for gas, registration, and insurance to pay a friend, or even take a cab; and keep building your savings. {Yeah, my kids don't think much of that idea, either.}
it's good to have a cushion of cash in case you have some sort of life emergency...like if you lose your job or are injured or have a health problem. do you really have to spend almost all of your savings?