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Buying a Car (Financial Question)


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School starts in January. I have a 99 Honda, but would like to "upgrade" to something 2004 or newer to help decrease the risk of having to be at the mercy of a mechanic in a foreign city (Not to mention don't want added unnecessary stress).

 

My Question

 

I was going to sell my 99 and pay cash for the newer one. But got to thinking, I could just take out a $6,000ish loan @ 1.79% interest right now and use my cash towards school expenses instead of loan money that is @ 6.8% interest. I know very little in regards to student loans and how they work, approval, etc and am wondering if there would be any cons to this?

 

Thanks in advance

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your smart for upgrading your car. my 99 Honda broke down 7 months before graduation. Was a hassle trying to get around with no car for a week, Luckily i'm from the city I went to school in so I had friends to give me a ride to my rotation site but it was still a total inconvenience to them. Also sucked trying to car shop while on rotations. Luckily my preceptor was understanding and gave me a day off. If you get a loan I wouldnt spend the money on school up front. I would keep it saved as a "rainy day" fund through out PA school (unless you already have one), you'll never know when you may need additional money and may not have time to get extra loan money. anywho thats just my 2 cents

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School starts in January. I have a 99 Honda, but would like to "upgrade" to something 2004 or newer to help decrease the risk of having to be at the mercy of a mechanic in a foreign city (Not to mention don't want added unnecessary stress).

 

My Question

 

I was going to sell my 99 and pay cash for the newer one. But got to thinking, I could just take out a $6,000ish loan @ 1.79% interest right now and use my cash towards school expenses instead of loan money that is @ 6.8% interest. I know very little in regards to student loans and how they work, approval, etc and am wondering if there would be any cons to this?

 

Thanks in advance

 

It won't really matter unless you will have some income to pay the auto loan back. If you're paying a 1.79% loan with a 6.8% loan then you're losing more money than if you had just paid outright with the student loan money. You're probably better off paying in cash cost-wise.

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When in doubt, cash is king. Never use your reserves unless you have to. $6k at 1.79% is a nothing car payment (especially if going with a standard 48-60 month loan). Depending on the sales tax on your state, you're looking at less than $150/month. Gas is a wash and the insurance will certainly be less than $50/month. So...$200/month (which is less than most grocery bill's for half a month), you're good to go.

 

Buy the newer car as if nothing else, it's cheap peace of mind.

 

Rich

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All my private and federal loans were at the mercy of the school's financial aid office. The office has a set price that they are willing to verify for the program. Any monies needed above this amount has to be requested via a statement from me WHY I need the extra money. This way people are not using subsidized student money to purchase non school things. So even though Wells Fargo approved me for a loan far and above the needs of my program, the money was still filtered through the financial aid office and I only got what was "allowed". Which was plenty..but still made me feel like I live in a Mother May I society

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