Question – Would You Take $25,000 Or A New Car?


And no, you cannot take the $25,000 and buy a car. It’s hypothetical and an either/or. $25,000 cash to do what you want with (except buy a car) or a brand new $25,000 car that you cannot sell? Which would you choose?

The reason I ask is because I had this exact conversation the other day with a friend and both of us said to take the $25,000. Why? Because how often do you get handed $25,000 in cash, tax free, to do what you want with? It is a down payment on that house you want, it’s a huge deposit into a retirement account to help you play catch up, it’s some money to start that business with…it’s yours to do anything you want with OTHER than to buy a car with. Also, almost anyone can finance a clunker of a car, so getting wheels is not that difficult. But getting your hands on $25,000 cash can be a rather tough thing to do.

So what would you do?
I am curious about what the readers think about this question, as I want to understand how they would react if asked an either/or question about money.

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Comments (20)

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  1. Slinky says:

    I would take the cash and pay off my student loans (~8k). I’d save some to use for my last year’s tuition. The rest I’d either save for a downpayment on a house or give it to my fiancee to pay off his credit card (if he’d take it). Then I’d save up the money that I would have used to pay off my loans and save for a downpayment, and buy a car. 🙂

  2. david says:

    Very nice Slinky!

  3. Zachary says:

    Definitely the cash. That is a no-brainer. I would never plunk down that much money for a car in a million years!

  4. Debbie says:

    I’d pick the $25,000 and use it to renovate my house.

    I’d take quite a bit less cash, even if I had a choice between it and a new $25,000 car. And if that $25,000 car was not a reliable model, the amount of cash I’d select instead could be even smaller. The last thing I need is a car with problems.

  5. Brainy Smurf says:

    Cash for sure… Last week I debated what “my” number would be to reach a content state of mind in regards to my finances and $25k tax free exceeds what I’d concluded.

    Now to start trying to get on a game show…

  6. Without a doubt the 25k! No questions, no ifs ands or buts about it, the mula over the car.

  7. Adrienne says:

    Take the money and run…..proper investing of the money could result in enough returns to purchase a vehicle and then some. 🙂

  8. Cash in a heartbeat.

    The question might be more interesting if it was a $40,000/$35,000 car or $25,000 in cash. I still think I take the cash in that cash.

  9. Kira says:

    This is an interesting question I’ve actually recently had to deal with, except it was more than 25K.
    Problem is – if the IRA doesn’t know you have it, how do you explain to the bank where you got it from? A downpayment on a house would be out of the question at this point.
    Payoff loans? Again, must deposit it. Anything over 10K you have to fill out a form to claim to the IRS.
    Now look at what you can really do with that money – the answers are much less obvious.

  10. Tim says:

    depends on how you got the $25k or car. if you win the choice of $25k or a car, the answer is easy, take the cash. if you win something like a car, you are still liable for taxes on the prize. at least with the $25k prize you can use it towards taxes unlike the car where you have to come up with the money yourself to pay the tax.

  11. Ellen says:

    …What kind of car?

    Nah, I’ll take the cash. Becky, my Corolla, is only about 5 years old–a baby in Toyota terms.

    Besides, the only cars I would consider worthwhile taking cost a LOT more than 25K, anyway. 😀

  12. I would take the cash, unless it happened that I was about to buy a new car that cost more than $25K (never done that yet, but I think our next car will be a minivan that’s a little bit over $25K). I would use the money to either pay off debt or put it in my kids’ education fund, maybe both.

  13. paidtwice says:

    do I get to keep my current car?

    this isn’t a “you have no car” question right? lol

    I’d take the cash. Sadly, it is not enough to pay off all my (our) debts in one fell swoop.

    But it is enough to get rid of the credit card and either my or my spouse’s student loan and have some left over even lol

  14. CiCi says:

    Without a doubt! The Cash! I never have spent more than $11,000 on a car!

  15. I’d take the cash and pay off my debts (which it’s fortunately more than enough). Then, I’d save the rest for an emergency fund and some investments.

  16. John Bennett says:

    Definitely the cash. A new car would be nice, but the one I have is fine. I could make good use of that much cash.

  17. ryan says:

    i would take the 25K. i would use it as a down payment on a 4 unit apartment building, and then write off a car to go check on it.

  18. Ryan says:

    I’d take the cash and put it in investments. I’d cash out the money I currently have in investments to buy the car. Pretty much the same thing as using the $25K for a used car and keeping the change.

  19. Golfing Girl says:

    I’d take the cash. I’d use 3K to pay off our 2nd mortgage. I’d then put 10K in our emergency fund to get us to our 6 month mark. With the remaining 12K, I’d put 5K in my daughter’s 529 plan, 3K for a nice vacation, and the remaining 4K to pay my entry fees on a mini tour.

  20. Bridgette says:

    Take the money and run!