Car loan or use savings?

A

ALB

Guest
I'm buying a car and don't know wether i would be better off using savings to pay for it or get a car loan and reinvest savings approx 20k. car costs 15700 and was going to use 10k of savings and get loan for the rest. Is this a no brainer or is there some obvious reason that I should get a car loan. Help.
 
In the case of a car loan, the loan rates are usually pretty high. Unless you can get a deposit rate better than the loan rate, I would always advise to pay the car with your savings if possible. But even using 10K of your savings towards it is far far better than just getting a loan for the entire amount. If your entire savings is 20K this might be a better approach so that you still have 10K to tap into immediately should the need arise.
 
Unless you have a good reason to have €10k set aside, it seems to me to be "no contest": use your savings rather than incur interest charges (which, as japester points out, might be at a high rate).
 
The interest rate for a car loan is much higher in the return you will receive by putting your money in a deposit account. If an emergency presents itself, then you can borrow.
 
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