[VBprogrammer]

While a long term average for mutual funds at 8% is pretty reasonable, I'd argue that 3-7 years is short enough that you have a reasonable chance of ending up with less money than you put in, never mind out performing the 2% interest.

Besides, as I've mentioned elsewhere, anyone offering a loan at 1.9% is aware that they are subsidising your purchase. You should be able to negotiate most of the difference into a decent cash deal.

Not to mention the non-trivial risk of being involved in an accident in a car which is worth less than is outstanding on it (which for a 7 year loan is probably 6+ years).

[hurricanetc]

The last 3-7 years the average is over 20%.

Your financing argument is actually flipped. You will get a better cash price if you finance because that is where dealers make money. Your best strategy if you want to pay cash is to finance the car and then pay off the loan immediately.

As far as being underwater is concerned... most dealers throw in GAP insurance these days. Removing GAP to lower the cost is counterproductive because the banks buying your loan want you to have GAP.

There really are just very few scenarios where paying cash at the dealer makes the most financial sense.

[scarface74]

I’ve never had a loan where the bank required Gap insurance. I usually get it anyway through my insurance company.