Personal Finance ChoicesAs I described a few weeks back in my opportunity knocks part 1 and part 2 posts, I was given the opportunity to purchase a Jeep Wrangler from my brother.  I took the opportunity and financed the vehicle with a used auto loan instead of paying with cash.  Yes, I did have enough cash to pay for the Jeep, but I went with the loan instead.  I detailed my reasoning for getting an auto loan in part 2 and I thought that would have been good enough.

Well, I was wrong!

Apparently, my decision was a very poor financial one.  The option to get an auto loan pissed off quite a few readers.  While they chose not to comment on the post (not sure why), they did decide to email me personally.  I do enjoy getting emails from my readers, no matter the tone.  Good thing for me is that I can take what they say and turn it in to a post.  I don’t plan on citing exactly what they told me, but I will play it out for you here.

Only One Option

A few emails went into depth about why cash is the only option to purchase a car.  While I do agree that cash should be used if at all possible, you have got to be kidding me that it is the only option.  Why does it have to be that way? Is that because someone told you that and that means it’s right?  It must be on Wikipedia or something. 😉

When I hear that there is only one option, I automatically go searching for alternatives.  Why do I do this?  Easy, I don’t like just accepting what is always told to me.  This pissed off my parents when I was younger, but they understand it now.

Let me explain why paying cash for a car is not the only way.  It is simple.  BECAUSE IT IS NOT!

Options Available

I am sure you are aware of why there are options available for purchasing a car.  You can either pay cash, finance, or do a combo in order to make a vehicle yours.  I am not including leasing, because that only applies to new cars.

Dealers make these options available because if only one was available, they probably wouldn’t make it very far in the business world.  When was the last time you went to a business that didn’t accept credit cards or another form besides cash?  I know it has been a very long time for me.  Businesses accept other forms of payment in order to provide as many potential customers a way to pay.  It makes business sense.

Not only are their options to pay, but there are also many options to get a payment.  There are so many places to get an auto loan that it can make your head spin.  This is because people like to have options.  That’s right, we all like options.  If you wanted to get an auto loan, you could reach out to a credit union, traditional bank, or service like Lending Tree and Applewood Finance in the UK.

Choose What Is Right For You!

The point of this post was to show my detractors that there are options for people looking to buy a car, no matter new or used.  The other point was to show that personal finance is in fact personal.  Why do some people forget that?  Your decision might not be a good one for me and vice-versa.  While I got a used loan for my car, that might not work for others.

I chose an auto loan because it gives me the greatest flexibility with my money.  I got an extremely low rate that will cost me almost nothing over the course of the loan. It allows me to keep my money liquid.  I get to continue to invest into my Roth IRA and my other investment accounts.  The little that I will pay over the course of the loan in interest fails in comparison to what I will earn from my investments.

The reason I chose to finance my used car was because it was right for me.  It doesn’t have to be right for you, but if you want to tell me that I am not helping people by letting them into my world, then get lost. I don’t want you here.  I work hard to provide both sides of the argument when it comes to finance.  Each person has their own opinion with regards to money.  There are some basic fundamentals when it comes to finance, but that doesn’t mean that everything is so cut and dry.  That is why I love the personal finance space.  There are so many opinions and none of them are wrong. The differing opinions come from people that found what works for them.  They share it and hopefully it will work for others.

So, to those that emailed me after reading about my auto loan purchase, here is your reality check.  While I understand your opinion, it doesn’t mean that I am hurting others by sharing my story.  I am sure that my story has helped others through their debt issues.  I make my decisions based on myself and my family.  If my ideas can help one person, then I have accomplished my goal.  Your negativity doesn’t stop me from sharing my story, it only pushes me harder to help more people, so thank you for that.

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  1. I am completely baffled by people who feel the need to blast you for your financial decisions. As you said, personal finance is personal. There is no rule on how one should use their money or not. If getting an auto loan works for you? Go for it. If you prefer paying with cash, go for it. The important thing is making the best decision for you.

    I have a strong dislike for those who view personal finance as black or white.

    Keep up the great work you’re doing, Grayson!

    1. I am as well J. I don’t understand why they do it, but I assume because I put my life and opinions online. I don’t mind criticism, but when you only think that your way is the one that works, that is when I have a problem.

  2. I definitely think there are times when an auto loan makes sense. When there is a low interest rate, you don’t have a huge emergency fund, you have debt to pay down, etc. there is incentive and good reason to get an auto loan. Even if I have enough money to pay for my next vehicle in full I will probably still end up getting a loan.

    1. I agree. I wouldn’t go with it in every situation, but when I can use the loan to my advantage and pay almost nothing for it, why would you not use it?

  3. Love this post! Too many times in PF blogs people forget that there is more than one way to do things. Not everyone wants to (or has the means to) pay 100% cash all the time. And that doesn’t always mean you should go without. We just replaced my old car (ironically enough, with a Jeep Wrangler) and we financed it because purchasing in cash just wasn’t an option for us right this moment. I know a lot of people would say to just hang in to the old car for longer, but that wasn’t a good option for us either! Thanks for reminding everyone that these decisions are personal and based in what is right for each individual’s situation! 🙂

    1. I agree. If everyone could pay cash for everything, then we wouldn’t have such a debt problem. Unfortunately, there are many scenarios where people won’t have the funds, but they need whatever item they need. That is when they have to make the best decision that they can for themselves.

    1. I really did what was right for me. While I did think of my family in this situation, this money was all mine and did not come from my joint account with my wife.

  4. There is never only one option. It only makes sense to understand all of the options available to you and pick the one that makes the most sense for you personally. Relying on maxims without doing your own due diligence can quickly get you into trouble, or at the least will not allow you to optimize your own situation.

  5. Love the honesty and reality check Grayson! I know an auto loan may not be right for everyone, but what the hell? Personal finance is personal for a reason! I think you made the right move and have done it myself in the past. I may not always handle it that way, but just depends on the situation at the time and what makes most sense for the use of my money at the time. I think some only see things in black and white and get pissed when someone introduces a little gray. 😉

    1. You always know that you will get honesty on Debt Roundup, John! That is how I roll. I don’t think people fully read the article, because I stated that a loan is not for everyone or a good option for everyone. The problem was that they didn’t really understand my situation and that gives them less than desired information to make such a claim.

  6. We took out a small auto loan when we got a new car last year. I could’ve paid in full, but I wanted to save some money for liquidity. There is NOTHING wrong with taking loans responsibly, in fact, debt can be a very positive tool. Glad you are sharing your story, and congrats on the car purchase.

    1. I think many like the liquidity factor. People want to make sure to have enough cash. Yes, having a loan is not the most fun option, but knowing you can afford it is better.

  7. I am surprised you got a low rate on a used vehicle. I am from Canada and there are good deals to be had on new car financing but rates are much higher for used cars.

    I read personal finance blogs to hear other people’s opinions and reasons for making financial choices. I don’t always agree but the discussions help me to find the right decision for me.

    The right decision for me would be to pay cash for my next car but I don’t have any money so I will be financing in the spring.

    1. I got a low rate because I have a great credit score and they knew how much I had in my bank account. The risk for them was extremely low and that is why I was rewarding with such.

  8. “I don’t want you here” I literally LOL at this sentence. I get a lot of “don’t you know better GMD – you need an Emergency Fund” type emails but I politely ignored them because they clearly did not read my many posts explaining why it is the right decision for me right now in my life because I am aggressively paying down debt. You are certainly not hurting anyone by sharing your story Grayson. In fact, I thank you. 🙂

  9. I don’t think theres anything wrong with taking out a loan as long as you can pay it back and still have money to save and invest. And every situation is different. Sounds like some of your readers who want to riticize you for your financial decisions, really need to get a

    1. Haha, thanks Romona. There are always people out there that just want to criticize others. I usually don’t mind it, but some people just piss me off because they don’t go back and read the full story. They just assume.

  10. People only ever want to see things one way-their way. But you are right, not only are their alternatives but people have various reasons for choosing each. It could make sense if you have some other out of pocket expense coming up. Or, more practically, if the amount of money that you pay in car loan payments fits into you cash flow life. You might not like the hit that your personal balance sheet would take by paying cash up front, but having a manageable debt obligation may fit nicely into your fiscal life.

  11. That’s beyond funny. Anyone who thinks there is a single way to do anything should try becoming a financial advisor. You’ll learn quickly that what’s right for you right here/right now isn’t right for everyone else.

    Personally, I think it’s a graduation process. If you’re someone who can’t keep your hand out of the cookie jar, stay away from debt. Once you can be around the cookies without having to eat every single one….then maybe you can begin to use leverage to your advantage.

    1. Haha, good point Joe! I don’t think they would succeed very well.

      Another great point. I can stand by the cookie jar all day long without getting one. It is a graduation process and I already turned my tassel a year ago.

  12. Oh wow. Last time I checked you weren’t holding a gun to anybody’s head and forcing them to take out an auto loan. You did what worked for you after a careful analysis of your personal situation and what worked for your family (which is exactly what you should have done).

    1. You are correct KK. My site and myself do not hold people hostage if they don’t do exactly what I do or say. People take things too seriously.

  13. I think it’s good to point for others too that you decided to go with the auto loan and not pay cash for the Jeep – that doesn’t mean it was a poor financial decision. You might have a plan on how to use the cash you had to make more money with. For example, a stock option, a business venture, etc that you knew you were going to make a lot of money with. Sometimes it’s best to use the money you have to make more money with instead of just handing it over in the purchase of the Jeep.

    1. Hello,

      You are correct. I do have a plan for my cash and that is why I kept it liquid. I have a few chances to make a lot more money than I would ever pay in interest. This is just using credit wisely and to my advantage. That is how you succeed.

  14. “I don’t like just accepting what is always told to me.” Grayson, this is exactly what we are teaching our children. Just like you do for your own family, we want our kids to be able to determine what’s best for them and their situation, and WHY, instead of just following the leader. Rick and I did WAY too much of that in our younger years, which is part of the reason we’re in the mess we are today. Like you mentioned, there’s no one way that’s right to handle your finances. People often disagree with how we handle ours as well, but tough bounce. You guys totally made the best decision for your family, and that’s what truly matters.

    1. I think it is a good lesson. You need to teach your children this lesson because it enables them to become more informed about what is going on around them. My parents taught me this lesson and it has taken me far. I don’t mind ruffling a few feathers along the way to an answer that works best for me either.

  15. Hopefully I didn’t add to your angst by replying on the twitter thread! I wasn’t aware of the loan details, but wanted to point out that you and the commenters had valid points (though the details of the interest rate obviously would make me more likely to swing one way or the other).
    The reality is that finances are about personal choices, but also about math! If someone is willing to lend you large amounts of money to hold onto their money, and you feel you can safely invest and outperform the interest rate then go ahead and do it! It’s the wiser money move so long as you’re comfortable with the risks. After all, that’s exactly what banks do with your money.

    1. No, you weren’t adding to my angst. I enjoyed the twitter discussion and like when people can voice their opinions. You are correct that this is about personal choices and math. Luckily for me, the math was very much on my side, so I took advantage of it. You are right with regards to banks and I got a chance to take advantage of the bank.

  16. Haha…love your attitude…but doubt it knocked them off their pedestals. Sometimes auto finance is a choice and sometimes a matter of necessity. Either way its all a personal choice.