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re: People who think they are smart because they pay cash for their cars
Posted on 11/27/17 at 8:46 am to ItNeverRains
Posted on 11/27/17 at 8:46 am to ItNeverRains
If you finance and invest $200 a month, and keep a nest egg earning interest vs. pay cash and invest same$200 plus the payment, how much can we be talking about over 60 months? It can't be more than hamburger money.
And by paying cash and investing the "payment" I will have more of an egg every time I buy a car, so over time it seems the value of paying cash would result in more money in my account.
I don't think it really matters in the long haul at all. It is a matter of personal preference. I prefer not to have a payment so always buy cash.
And by paying cash and investing the "payment" I will have more of an egg every time I buy a car, so over time it seems the value of paying cash would result in more money in my account.
I don't think it really matters in the long haul at all. It is a matter of personal preference. I prefer not to have a payment so always buy cash.
This post was edited on 11/27/17 at 8:48 am
1
Posted on 11/27/17 at 8:49 am to LNCHBOX
quote:
And a lot of them are full of shite.
It’s a faceless, nameless site, where it makes no difference who you are because you can be whoever you want to be when you wish upon a star,
Posted on 11/27/17 at 8:50 am to kc8876
quote:
According to the latest 2014 release of Dalbar’s Quantitative Analysis of Investor Behavior (QAIB), the average investor in a blend of equities and fixed-income mutual funds has garnered only a 2.6% net annualized rate of return for the 10-year time period ending Dec. 31, 2013. The same average investor hasn’t fared any better over longer time frames. The 20-year annualized return comes in at 2.5%, while the 30-year annualized rate is just 1.9%. Wow!
Forbes
Posted on 11/27/17 at 8:52 am to Mike da Tigah
Article is a little old, but further proves the hilarity of the OT.
Somewhere in the neighborhood of 10% of new car buyers pay cash, everyone else finances, but 50% of OT posters pay cash. Yeah right
LINK
Somewhere in the neighborhood of 10% of new car buyers pay cash, everyone else finances, but 50% of OT posters pay cash. Yeah right
LINK
Posted on 11/27/17 at 8:54 am to HeyHeyHogsAllTheWay
quote:
omewhere in the neighborhood of 10% of new car buyers pay cash, everyone else finances, but 50% of OT posters pay cash. Yeah right
Considering the US household median income is right around 55k, either this place is a house of 1% ers or folks are lying to themselves
.
Posted on 11/27/17 at 8:55 am to 50_Tiger
Or they're just driving hoopties. Good for them
Posted on 11/27/17 at 8:56 am to LNCHBOX
quote:
Or they're just driving hoopties.
This is more likely.
Posted on 11/27/17 at 8:56 am to 50_Tiger
quote:
Considering the US household median income is right around 55k, either this place is a house of 1% ers or folks are lying to themselves .
And only further exacerbated by the fact that most of the posters live in one of the poorest states in the country.
Posted on 11/27/17 at 8:56 am to HeyHeyHogsAllTheWay
quote:
Article is a little old
Unlike your shtick, which is well past a little old.
Posted on 11/27/17 at 8:58 am to Mike da Tigah
quote:
And only further exacerbated by the fact that most of the posters live in one of the poorest states in the country.
Yes, and no offense Chicken, but I have a hard time believing TD is the La 1% ers clubhouse website.
This post was edited on 11/27/17 at 8:59 am
Posted on 11/27/17 at 8:58 am to Mike da Tigah
quote:
The truly rich use other people’s money.
Always
Posted on 11/27/17 at 9:01 am to kc8876
i don't think a car is going to move the needle much if any, rather just pay cash and not have to mess with it.
Posted on 11/27/17 at 9:03 am to Street Hawk
Yep, because the market will never go down.
Posted on 11/27/17 at 9:06 am to Janky
quote:
According to the latest 2014 release of Dalbar’s Quantitative Analysis of Investor Behavior (QAIB), the average investor in a blend of equities and fixed-income mutual funds has garnered only a 2.6% net annualized rate of return for the 10-year time period ending Dec. 31, 2013. The same average investor hasn’t fared any better over longer time frames. The 20-year annualized return comes in at 2.5%, while the 30-year annualized rate is just 1.9%. Wow!
I’m not gonna go back and forth posting articles saying different things, but it’s definitely higher than that. And like I said to him, if that’s all you’re averaging, you’re doing it wrong
Posted on 11/27/17 at 9:12 am to 50_Tiger
quote:
Most cars finance at 0% nowadays if you are not a bum.
It's literally free money.
Let's just make it simple a three year ROI on 30k @ 3% is $32,354.
Source: ROI Calc
So in three years, you have actually made money on your car and it's free and clear after paying the 30k.
Maybe there's a micro element I am missing here?
Call me a bum, but I have never paid more than $10k for a car. The reason is in your answer. Lets take your example. 5 year loan, future value of payments at $33k for a car that is now worth maybe $8k at resale.
That might sound stupid but I would rather pay $30k and get $8k back than pay $33k, and thats ignoring the total waste of capital due to depreciation (worth $22k).
Why do people throw so much money into a depreciating asset, and then finance it?
This post was edited on 11/27/17 at 9:20 am
Posted on 11/27/17 at 9:17 am to kc8876
quote:
I’m not gonna go back and forth posting articles saying different things, but it’s definitely higher than that. And like I said to him, if that’s all you’re averaging, you’re doing it wrong
Gotcha.
Random dude on the internet>>>>>>>well respected financial institution.
Posted on 11/27/17 at 9:18 am to Street Hawk
quote:
If you can finance the car at a rate that's lower than what you typically make out of your investments, you should choose to finance instead of paying cash, even if you can afford to pay for the car fully using cash.
This is a completely elementary way of looking at things. With all investment decisions, it is dependent upon the individual of how much cash they want to hold and how much risk they are willing to bear at any point in time.
With car buying, interest is just part of the price. You put more down, that rate will go down. They know more about the time value of money than you do, it's their business.
Posted on 11/27/17 at 9:22 am to NYNolaguy1
quote:
Call me a bum, but I have never paid more than $10k for a car. The reason is in your answer. Lets take your example. 5 year loan, futur value of payments at $33k for a car that is now worth maybe $10k.
That might sound stupid but I would rather pay $30k and get $8k back than pay $33k, and thats ignoring the total waste of capital due to depreciation (worth $22k).
Why do people throw so much money into a depreciating asset, and then finance it?
Interesting, diving deeper into the same situation above.
30k @ 0% for 60 months = 500 dollar note
Investment Way: 30k @ 3% return = 32,354
Cost of 36 payments = 18000
Average depreciation of a car 3 years old = 46%
Value of vehicle after 3 years: 30k x 46% = 13,800
Cost of Loan to pay off @ 3 years = 12000
ROI - Payment to yourself - Payment to the bank = 32,354 - 30k = 2,354
Your gain + value of car = 2.354k + 13.8k = 16.154k
/-----------------------------------------------------/
Paying car straight cash homie.
No ROI, Same 46% depreciation.
30k x 46% = 13.8k
Summary: Looks like I came out ahead.
Posted on 11/27/17 at 9:24 am to NYNolaguy1
quote:
Why do people throw so much money into a depreciating asset, and then finance it?
I suppose this is a good point. You have know-it-alls telling you that financing at a low rate is such a great decision, but completely ignore the vehicle. Technically, buying a brand new car, oftentimes, is a poor financial decision over buying a well used (at least one lease term) vehicle. It's a luxury purchase, of sorts.
Posted on 11/27/17 at 9:26 am to Janky
quote:
Gotcha.
Random dude on the internet>>>>>>>well respected financial institution.
So the numerous articles from other respected sources all over the internet are excluded because of that article?
Bottom line, if you’re averaging 2.5% you’re losing
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