Is it better to take out a car loan or pay up front if you have the money?

well I can tell you how to start to build credit, and the rest you will have to ask questions from the loan officer or who ever you end up dealing with at a later date. One thing banks love to see, are stable people, The ones who deposit their pay checks regularly, put 25 percent or more into checking and hardly ever touch it. Stay with a good employer for years, things like that. Open one or two credit cards, and keep a 0 balance by paying it in full every month things like that. any loan you get for a car, is going to cost you money. There are loan fees, and there will be interest too, depending on what loan rate you qualify for. and there will be some restrictions about the year, make and model and mileage and price. Things like the vehicle can be no more than 10 years old by the time the loan is paid off. And if a dealer is involved, the bank will look closely at the final price, if it seems high for the mileage, or the model and options, the bank can hold up the loan, and force the dealer to renegotiate a better price, or a better car (with a better options list)

The best way to buy a car is to pay it off cash, there is no interest, and no principal.. Its paid in full , you own it. Now adays, there are so many car companies with crap cars, that it is in your best interest to do your research ahead of time. Due to the many cars that once get near 100,000 miles that are no good, its easier to list the few good manufacturers. honda, nissan and toyota for the most part, are very good quality cars, yes, used cars are just that, but at least these three manufacturers strive to make great cars every year. for the most part, front engine rear wheel drive, is a stronger, better more time tested and proven to hold up in the long run drive train. front engine front wheel drive, is cheap to produce, smaller lighter and with the entire drive line crammed in the front end, you pay 2 to 8 times as much to fix something if it breaks than a front engine rear wheel drive car. Subaru is an all wheel drive car that holds up well, and mazda has good years, and some bad ones. Sadly the american small cars don't even make my list. for their throw away cars that they used the consumer as quality control.

Edmund's.com has some links to both new and used cars, and you can do a fair amount of research this way, it just takes some Patience and following the links, It pays to send any used car you want to buy, to a mechanic, and get at least a one hour diagnostic (about 70 bucks) I test drive my vehicles cold, after sitting overnight if possible. many old wore out high mileage cars, will not even move for the first 10 to 15 minutes when cold, but once warmed up, may run ok the rest of the day. (but not for long) and I take at least a 30 to 40 minute test drive, I check all the windshield wipers, and heater and lights and turn signals my self during that time, so the mechanic can focus on the mechanical parts. It is good to know a rough idea of a price for any used car www.nada.com you can price new, or old classics for free in the consumer gide. and if you are not sure how to check used cars www.samarins.com has lots of free tips on what to look for, and has some used car reviews that may be helpful. The best deals I ever found were via private party sales, this is also the slowest way to look, and you spend lots of time looking at broken crap, people will lie and say anything, a dealer or private party, to sell a car, so the mechanic, is the line of defense you must have BEFORE YOU BUY.

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Pay of the car loan, definitely. Unless you can find a secure investment that offers a higher rate of return than you are currently paying in interest, you'll just lose money by not paying off the debt. Few investments can offer a reliable return that is higher than your interest payment. For example, let's say you owe $1000 on the car, with an 8% interest rate. After the first month you owe $1080; after the second month you owe $1166, and so on... the amount just keeps growing, because you have to pay interest on the previous interest. If you were sure you could earn, say 20% interest on an investment, then yeah, that would be a great choice, because 20% minus 8% still gives you 12% profit. But you just won't find any reliable, short-term investment like that. You're far more likely to lose money over the short term. The stock market is best for long-term investing, because it historically goes up over the long-term (decades). In the short-term, it goes up and down dramatically, but not even the most educated stock brokers can reliably predict what and when.

there are several factors to consider first. paying cash is great and if you pay yourself back at 0% interest and doing it every month it is fine, but if you don't put the money back where you took it from than not good idea.

if the car dealer is giving you a loan for 0 - 1 - or 2 % not bad idea taking and using their money the interest rate is cheap enough it will be like using their money for hardly nothing and keeping yours.

before making up your mind on what to do get the car price and when going to talk with finance man ask what interest rate they have and than you can do either one. it is important to repay yourself back sorta like making payments but to yourself and if you miss one no big deal but pay it all back in full.

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Pay upfront. In the long run you'll pay more for the car by taking out a loan. It is just one more thing off your mind.

They both have Benefits.

Pay now= no debt

Get loan=builds credit.

Have fun! Have whatever you buy inspected by a mechanic before you buy! An inspection now can save you 1000's later

pay upfront that way there will be no debt later

the loan people and the car people only say loan so they can get extra money off intrest

Pay up front,you'll save tons in interest!! :)

Interesting discussion!