I am getting close to pulling the trigger on a Golf R. I am trying to decide the best way to pay for the car though. Normally there is some incentive to finance through the dealership whether by cashback or getting a better deal on the car, but with the Golf R it doesn't seem to be the case.
1. I could pay cash. This would wipe out a good portion of my cash savings though. Instead of paying a car payment I would just pay this back to my savings monthly to build my cash back up.
2. I finance for a fairly low rate of 1.99% which seems doable with USAA and the various credit unions. Whatever I get for my R32 would be the down payment if I don't do trade it in.
With most interest accounts only paying 1%, my liquid savings isn't earning that much, but the interest rate isn't that much more either.
As a I result it almost seems like the better financial decision is to take the low rate auto loan. Sure I will pay something in interest and more than my money would earn, but the difference seems to only boil down to a couple hundred dollars before you take into consideration the taxes on the interest earned. I have no other debt so there is nothing I would be better off paying down instead. It just seems like it would be smarter not to take a large chunk of my savings when I could pay a couple hundred in interest not to.
Does anyone see any flaw in my logic?