We're in the market for a new car, and appreciate the input of forum members on our situation.
We have had a single car (corolla, paid off, 125k miles) between us for a few years now because my spouse has not been working and hence we did not feel the need to have another car. Now that we are having our first baby in a few months, the extra car has become a necessity. We are looking at a larger car that we plan to keep for 15+ years and have narrowed it down to a Prius V (lowest trim) after test driving a few options.
We have saved up for the car in I-bonds (along with our EF) which we can redeem for a few months interest penalty so that we can buy the car with cash. However, PenFed offers a 1.49% new auto loan for 3 yrs which we are considering for two reasons: (1) assuming current ibond rates, we come out slightly ahead at the end of 3 years compared to cash purchase (2) we think there is an advantage in having some liquid cash lying around for the upcoming baby and me being the sole earner at least for the time being. We anticipate having an EF covering 4 months of expenses if we buy the car with cash and 10 months if we take the loan.
- Does taking a car loan make sense for us? I’ve read around here that cash purchases are the way to go. Am I missing something?
- We are considering taking the car loan on my spouses name since the current car was bought on a loan in my name (credit history purposes for potential future home purchase). We checked credit scores on Quizzle and we are both between 770-780. But I am afraid that the loan process might be difficult since she is not currently working. Since our scores are so similar, is it worth the hassle? Or should I just apply for a loan under my own name? Sorry if this is vague.
- On the topic of the Prius V itself, we would like leather (or leather-like) seats for easy cleaning purposes. The lowest trim has cloth interiors which we do not fancy, neither do we want to pay more for higher trims that have the bells and whistles which we find unnecessary. Are there good after-market options for leather seats out there?
- We plan to use the method described here to buy a car. Any advice on this is appreciated. We’ve never tried this before.