Is it dumb to pay cash for a car when rates are this high?

Your advisor isnt wrong mathematically, but I disagree with the advice for most people. **His math:** - Keep k invested at ~10% average return - Pay 7% on car loan - Net gain: ~3% on your money **The reality:** - Market returns arent guaranteed (could drop 20% year 1) - That + monthly payment is guaranteed - Psychological weight of debt is real - You MUST have full coverage insurance while financing **What I would do:** Pay cash. Heres why: - Guaranteed 7% "return" by avoiding interest - No monthly payment = flexibility if income changes - Lower insurance requirements - Peace of mind is worth something - You can rebuild that k in savings while having no payment The only way Id finance is if they offered 0-2% promotional rate. At 7-8%? Pay cash, enjoy your paid-off car, rebuild savings with the money you would have spent on payments. Sleep well at night.

Paid cash for my last car and zero regrets. The "invest the difference" argument assumes you actually will invest it and not touch it. Most people dont have that discipline. Guaranteed 7-8% return by avoiding interest is real.

The one exception - if you can get 0% or really low promotional financing, take it and invest the cash. My Toyota dealer offered 1.9% and high yield savings was paying 4.5%. Free money basically.