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Question for the Money Doctors

Question submitted on Nov 23, 2012.

Question

My mother wants a new suv and she wants to pay cash for it. I can get her a new jeep cherokee @36 mionths ,0% financing,and I think she should leave her $28,000 drawing interest,but she doesn''t want a monthly payment. I think she will lose a lot of interest if she forks over the cash. What is the best approach?

Answer

I think you are assuming that the cash price of the SUV and the purchase price of the Jeep Cherokee are the same. Perhaps you should negotiate the cash purchase price of the vehicle that your mother wants and then once that price has been determined, discuss financing. I suspect that the purchase price that includes the 0% financing is actually a higher price. If on the other hand the cash price is negotiated and you can still get the 0% financing, you might want to take the financing.

I might even consider getting a jeep or suv that is a year or two old already. I am not in favor of financing depreciating assets and now with interest rates at an all time low, your mother may not be losing a lot of interest.


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