Buy a car outright or finance?
Buying a new car?
I wish I had $1 for every time I have been asked how to structure the finance. This is what I think:
1. If you have cash, pay cash. This is a great way to keep yourself honest. It is very hard to get yourself to spend your hard earned savings on a car. Not so hard to take out a loan to buy a car. It just feels different. Paying cash will almost always cause you to make a better purchasing decision - like buying a cheaper car or making do with the one you have!!!
2. If you must borrow money, set the finance over a number of years that you will commit to keeping the car and NO LUMP SUM PAYMENT AT THE END. Again, this is about the psychology of the spending decision. If you have a lump sum at the end, the monthly payments will be lower and you will trick yourself into thinking you can afford a more expensive car. Once you get your finance quote with no lump sum at the end, if you cannot afford the monthly payments, you cannot afford the car.