Paying Cash for Car

The advantage of paying cash for a car

Feb 20, 2020
Empower Insights

The more you can pay up front, the less you’ll spend on interest

Borrowing to buy a car or truck is more popular than ever. In the past eight years, the total auto debt in the United States rose from $710 billion to $1.27 trillion, and the most common term for an auto loans is now 72 months.1

Consider bucking those trends by saving cash for a down payment. Putting down more may help you take on less debt and pay it off faster — potentially saving you big money in interest. What’s more, making a bigger down payment may even qualify you for a lower-interest rate.

The charts below show how much interest you’ll pay over time if you buy a $20,000 car and put down either 50% ($10,000) or 15% ($3,000), based on various interest rates.

Charts - 60 and 72 month loan terms

FOR ILLUSTRATIVE PURPOSES ONLY

Save for your next car purchase with an Empower Investment Account

1 wallethub.com/edu/auto-financing-report/10131/, August 2019
2 bankrate.com/calculators/auto/auto-loan-calculator.aspx, as of February 2020

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Securities offered and/or distributed by GWFS Equities, Inc., Member FINRA/SIPC. GWFS is an affiliate of Empower Retirement, LLC; Great-West Funds, Inc.; and registered investment adviser, Advised Assets Group, LLC. Investing involves risk, including possible loss of principal. This material is for informational purposes only and is not intended to provide investment, legal or tax recommendations or advice.

IMPORTANT: The projections, or other information generated on the website by the investment analysis tool regarding the likelihood of various investment outcomes, are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. The results may vary with each use and over time.

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