Ask Terry Questions Auto loan vs investments

Auto loan vs investments

By Terry Savage on September 26, 2023 | Wild Card

I’m planning on replacing my 15-year-old car with a new SUV. I have plenty of money with my investment broker to cover a cash payment. However, my investment counselor suggests that I should finance the car. My investments return for the current year has been 8.47%. I have a excellent credit score, so I should qualify for a good rate. He says if the rate is less than 8.47%, I would save more money by financing the car. Does this make sense or are they protecting themselves.
Thanks so much for your investment advice. I love watching you on WGN, you always cover timely topics!

Terry Says

I think your advisor is getting paid a fee based on assets under management (AUM). And if you take money out to buy the car, he/she gets lower fees!

I know for sure that you get a better deal if you’re paying cash for the car –and you negotiate well. So I’d pay cash.

But, hey, don’t leave it to chance. Ask the “investment counselor” if he can/will guarantee you 8% a year for the next 5 years — the life of the loan?!! Of course, they can’t do that — it’s illegal! And so you have your answer to your question.



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