No good reason not to pay cash

Dear Terry,
I am able to pay $33,000 cash for a new-car purchase or finance the car for 48 months at 6.35 percent. My home is paid for and I have $380,000 in savings earning 5.4 percent. Are there any compelling reasons not to pay cash?
-- Debbie

Dear Debbie,
Paying cash for a car is almost always the way to go -- you can negotiate the initial price from a position of strength and you will save thousands of dollars in interest costs. With your large savings balance -- and assuming you won't have to pay any penalties if you withdraw some money -- you should definitely pay cash.

Here are this week's reader questions:

• Car's onboard data system could haunt you • Do the same dealer fees apply when buying or leasing? • Should I use my savings to pay off my car loan? • Is it better to pay cash or finance a new car?

If you have a question for Terry, e-mail him at Driving for Dollars.