New car: pay cash or finance?

Hey Jeremy,

Sorry for the length post in advance. My current car lease is coming up soon and I’m looking into purchasing a new car. I know, buying a new car is never a good investment - as I’ve learned from you! However, I make a decent salary and have my 401k and backdoor roth set-up and maxed out. I also have my brokerage that I’m contributing to twice a month, so I’m letting myself splurge a little here. I have roughly $100k currently in my savings account that I have set aside for any large purchases that I may want to make - was initially saving up for down payment on a house, but realistically, I don’t think I’m at that stage of my life yet, but perhaps maybe in a couple of years. My question is if you think I should pay for all of the car in cash (with money from my savings account) or if I should finance?

The current Tesla apr is 2.99%, doesn’t matter the length of the lease. I’ve tried shopping around at different banks and credit unions to see if I can find a lower rate, but haven’t found anything drastically lower - around the low 2’s, but I also just started that search. I know that the total amount of interest I’ll end up paying will vary based on the length of my loan, the interest rate, and the down payment that I put down. With all of those variables considered, do you think I should move forward with some version of financing, or should I just pay for the car in full with cash? I think the main concern here is that if I pay for the car in cash, would that money have been better off being distributed in my brokerage account (mostly here)/high-yield savings account.

Thanks in advance for any feedback!


I 100% would pay for the car in cash. If you don’t want to do that, then you’re buying too much car. I’ve met a lot of rich people, but I have yet to meet one who got there by borrowing money to buy expensive things that plummet in value.

Here’s a post where I go into more detail.

1 Like