Your logic works out fine if you don't mind a dash of risk (e.g. from a job loss). But when I ran the numbers from my perspective it didn't seem worth it. (I might be doing my math wrong).

Let's say I get a car that costs $30k, I put $10k down, and I take a loan out using the numbers above rounded up just for napkin math (1% APR, 4% savings account).

After one year:

```

$30,000 x 0.04 = $1,200 from savings account interest

$1,200 x 0.33 = $396 in TAXES from the interest (assuming you earn over $145k/year in California)

$30,000 x 0.01 = $300 in loan interest

Total earned = $1,200 - $396 - $300 = $696

```

Don't get me wrong, $696 isn't _nothing_ but I personally would rather have the feeling of not owing people money then an extra $696 at the end of the year. Add in depreciation from getting a new car and it's almost a wash.

>> I could pay off my car tomorrow. But I'll have more money in the end keeping that cash in the bank. Why would I pay it off early?

> Your logic works out fine if you don't mind a dash of risk (e.g. from a job loss).

I notice that no part of your comment actually describes this risk. What is it? Assuming you have the cash in hand, and it's earning more interest than the interest on your car financing, how would losing your job affect the situation?

The only effect I see is that it will dramatically increase the amount of that extra interest you actually collect, by lowering your tax rate.

I don't live in California, taxes are less. There is no risk from a job loss, I could pay it off tomorrow. You're also only looking at one year of a several year loan.

Sure, more expensive buying a new car. But I was going to get a new car anyways, the question is loan or no loan.

I don't care too much about depreciation. It'll probably be in my garage for a decade or more so that's just paper losses today, and once again I was going to buy new anyways.

I thought this was the main reason to take the loan given an opportunity. The longer the money is with me, I could use it as an investment(mostly S&P 500)

Is the negotiation of these loans separate from the negotiation of the car price? If not I suspect the margin is just being shifted to the asset price

It depends. There are a whole bunch of weird complex financial interactions between the mfg, the dealer, and the loan provider (who is often also an arm of the manufacturer). There can definitely be situations where the dealer makes off better by getting you into a loan even though the loan provider is almost sure to lose money on it.

They were willing to go cheaper with the loan than without it, about the same as what the total interest is on the loan.