re: Would you shiite your pants if you had a $700+ car note?

I’m no financial guru, so I could be wrong.

But I’ve always been taught that if you can, pay cash. Not just for cars. That includes houses. And if you can’t afford to buy it outright, you probably shouldn’t get it.

I realize that’s in an ideal scenario, but i guess the point is if you can’t buy that BMW in cash, maybe you should look at an Infiniti instead, rather than pay an insane monthly note.

On the Ram trucks, they offer an extra $1500 off if you have a LESS than 620 credit score. A lot of money is made from the finance dept. They can sell a vehicle for break even and still make out good.

Why would you pay cash for ANYTHING when the interest rates are anywhere from 3-5% when you can make 10% or better in investing it? It’s free money and then some. Being able to “afford” something is a very subjective word. If you’ve got enough money to pay cash for a house or vehicle, the money you “saved” compared to the money you could’ve made over the long run are substantially different

For that small portion of people who can afford to pay cash but finance, sure, I see that argument.

But I would argue that the vast majority of people paying high lease for a vehicle don’t have that cash sitting in the bank to do something else with it. They just make enough per month to cover it. I’m mostly referring to those people financing, I suppose.

Because I’m not smart.

In my mind I’ve been arguing lease vs. paying cash for a vehicle.

Leasing is like renting housing, a total loss

I haven’t had to pay a car payment in 10 years. Any car loan sounds horrible to me, especially a $700 one.

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Because reality is different. Nearly everyone who says these things don't have the cash to invest, or purchase the vehicle in the first place. Maybe you're a unicorn.

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I would have the cash to pay for a vehicle outright if I wasn't contributing to my 401k like I am now, but why would I do that when my 401k will yield better returns than the interest rate on an auto loan?

It's not like I have $50k in my rainy day fund

I've never been a fan of leasing unless it's for a business

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But I’ve always been taught that if you can, pay cash. Not just for cars. That includes houses

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I don't necessarily agree with you there where the housing part is concerned as cheap as interest rates are now, and with the continued availability of tax deduction for interest paid on the mortgage. A sound mortgage with a decent amount of equity can be a reasonable component of most people's overall financial portfolio, or at least I consider it so for mine.

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Why would you pay cash for ANYTHING when the interest rates are anywhere from 3-5% when you can make 10% or better in investing it?

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Premise is great, but 10% NET gain is very difficult for persons not of relatively high net worth to obtain, especially if you want it to be reasonably liquid. But even if you are 1 or 2 percent ahead, it still makes sense, but bear in mind this is applicable only if you actually have the cash invested and have the discipline to keep it so.

I just think you have to look at cars as an expense as opposed to an investment, figure out what an reasonable amount to spend is and be happy with it, whether it's a payment or cash - I personally hate to tie up a large lump of cash in an automobile when money is either very cheap or free, but I'm not going to have a payment that I cringe at every month, and I don't care to go more than 36 mos, even with free money.