Buy car with cash if you can

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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?


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.

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
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