Kevin from Minneapolis called into “The Ramsey Show” with a question: Should he pay cash for a car or finance it? With a $200,000 income, $700,000 net worth, and $75,000 in savings, he wondered if it made more sense to finance at a low rate and keep cash in a high-yield money market account.

Co-host George Kamel challenged Kevin’s assumption of earning 5% in a savings account and warned that a used car loan could cost more over time. Co-host John Delony emphasized the ROI of peace of mind, willing to sacrifice some return for financial security.

Kamel cautioned that financing a car could put buyers in a tough spot if they ever need to sell. He highlighted the risk of being underwater on a financed car compared to one bought outright. The hosts stressed the importance of avoiding debt to maintain financial flexibility.

While Kevin saw financing as offering flexibility, Delony reminded him that taking out a loan means the money is no longer his to keep. Kamel emphasized the benefits of living without debt to have more room for future financial decisions. The hosts praised Kevin’s financial management but advised against sacrificing security for slightly higher returns.

Read more at Yahoo Finance: A Dave Ramsey Caller Debates Buying A $40,000 Car Or Investing The Cash. ‘You Can’t Be Underwater On A Car You Paid Cash For’