"HW "Skip" Weldon" <skip5700[at]yahoo.com> wrote in message
news:q133mvojli8tmpi953i7k2lo2g68jqjrgh[at]4ax.com...
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Hey, Skip. What's wrong with a good used Ford or Chevy? Last year we bought
a 2000 Taurus with only 10,000 miles on it.

Elizabeth Richardson

In article <pan.2003.09.08.23.47.22.46588[at]body.com> , somebody <some[at]body.comwrites:

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This is probably one of those rules of thumb that is really more along the
lines of "It depends!" than a useful generalization.

At work we usually pay cash for computers (including servers and our unix
boxes). Of course, being a community college, we don't have certain concerns
that a corporation would have, such as tax deduction for business expenses like
interest payments, or making the balance sheet look particularly attractive for
shareholders by playing financial games.

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As John indicated, you are not a corporation. One of the ramifications of this
is that you cannot get a tax deduction for the interest charges on the vehicle
unless, of course, the vehicle is used strictly for business.

There are considerations that would apply to you, the corporation, and to my
employer...

If paying cash would present a liquidity problem, taking out a loan may be
better. For example, if you end up with too small of an emergency fund or,
worse, would jeapordize the ability to pay upcoming bills, a loan may be
better.

If the loan is a zero interest or very low interest, and you expect to be able
to have your cash work better someplace else, a loan may be better. (However,
watch out for the "$3,000 discount OR 0% financing"--the forfeited discount
would essentially be the finance charges.)

If you have the cash, but not access to a dirt-cheap loan, it may be better to
just pay cash.

Also, if you would normally not carry comprehensive, paying cash has the
benefit of being able to save on car insurance premiums almost instantly
because most lendors require that one carries comprehensive, and that usually
includes bank and credit union car loans as well as loans by car dealers.

If you are going to get a car loan, be sure to do a little shopping around--car
dealers aren't always the best source of car loans, but sometimes they are.

Actually, I have never heard "It's not financially wise to payoff anything that
depreciates, like a car." It sounds more like someone allowing the tax tail to
wag the dog instead of looking to see what would be best after expenses and
taxes, at least when dealing at the personal level instead of at a corporate
level.

Personally, if I was inclined to buy new cars, I would probably save up so I
could pay cash for the car without seriously depleting my emergency fund.


Mark A. Young