Dear Terry, When I buy my next car, is it a good idea to pay for that car outright so I have no payments? Or is it better for me to pay for it with a monthly bill so I'll have tax deductions? -- MaryDear Mary, It's always best to pay cash for a depreciating asset like a new car. And unless you use a home equity loan -- and meet certain IRS guidelines -- interest on a car loan is not deductible against your federal taxes. Here are this week's questions:•Will hybrid lease payments rise soon?•Should I pay cash for a new car?•How can my daughter lower car payment balance?•Can I renegotiate after signing a contract?If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter advertisementRelated Links:7 best off-to-college carsNational auto loan averagesWhat changes auto loan rates?Related Articles:All new cars for 20105 steps to 'clunker' dealTake the 'cash back?'Read more Driving for Dollars columnsAsk a question
Dear Terry, When I buy my next car, is it a good idea to pay for that car outright so I have no payments? Or is it better for me to pay for it with a monthly bill so I'll have tax deductions? -- Mary
Dear Mary, It's always best to pay cash for a depreciating asset like a new car. And unless you use a home equity loan -- and meet certain IRS guidelines -- interest on a car loan is not deductible against your federal taxes.
If you have a question for Terry, e-mail him at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter