What makes more sense...driving a long paid for old truck, or making huge payments??

[ovrszd]

I financed simply because I had the cash but it was invested in stocks. With the stock market going up (I made about 10% last year with conservative investments) it was a no brainer. My loan is at less than 1% so I make about 9% by taking out a loan vs buying cash. The price I negotiated was the same as the dealership doesn't care who pays them, me or a bank. I could have used one of their preferred banks (they may get a kickback) but mine was lower. On the loan I will pay less than $800 over the entire length. If you take the same amount, say $25k over 6 years, and use an average return of 7% that $25k will become $37k. That's $11k you are giving up. Now that assumes that stocks will continue to go up. But with auto loan rates so low you don't need much of an increase to break even.

I understand that and respect it.

For those that use that method they are acutely attuned to what's going on in the financial world. For those that pay cash, they could care less. Right or wrong is in the eyes of the beholder.

 

[two_bit_score]

I have not had a payment on anything other than our home for about 15 years.

They try to tempt me with 0% interest but I don't fall for it. Boats, Cars, Trucks, Tractors, Furniture, ect is all bought with CASH when we can afford it!

At first I really didn't like that I couldn't get a discount for cash when I bought the TLB but it worked out fine because with the sect 179 deduction I only had about 30% of the cost in it but deducted the entire amount. Then paid it of in about a year.

 

[ovrszd]

At first I really didn't like that I couldn't get a discount for cash when I bought the TLB but it worked out fine because with the sect 179 deduction I only had about 30% of the cost in it but deducted the entire amount. Then paid it of in about a year.

Wouldn't the 179 deduction have been available even if you paid cash?

 

[two_bit_score]

Wouldn't the 179 deduction have been available even if you paid cash?

Yes it would have. But I got to keep a good chunk of money invested and deduct full price as allowed under 179.

TBS

 

[Industrial Toys]

I have never made payments on anything in my life. I understand it may make financial sense and many just don't have any other option. I just don't like the idea of having to keep paying for something long, long after the NEW (and initial excitement) is gone.

 

[MossRoad]

Well.... if you pay say $10,000 for a vehicle cash, and keep it for 7 years, your cash is gone for 7 years and your vehicle is worth about $5000. So, at the end of 7 years you lost $5000.

So lets look at taking a loan for $10,000 at 1.5% financing and make payments over 7 years, you'll end up paying back about $550 in interest.

You invest that $10,000 in the stock market aggressively and hoping for average returns, you'll end up with about $19,500 AND the vehicle that you can sell for $5000. So that's $24,500 minus the $550 in interest and you're looking at about $23,500 VS $5000, a gain of about $18,500.

Well, that leaves out the payments, taxes on the investment, and hoping there's no stock market crash, etc... and I'm sure I've missed a bunch of details, etc.... but you'll end up with about $10k more than paying cash.

but you can definitely make your money work better for you than giving it all away in cash in lump sums.

 

[MossRoad]

Auto loan calculator - Bankrate.com

 

[MossRoad]

Investment Calculator-Cost of Waiting to Invest | Scottrade, Inc

 

[Industrial Toys]

I'm told my 08 Duramax with 160 KMS that I paid 56K CDN for is worth 25-30. That's not too bad.

Anything my family or I ever did in stocks has been a disaster. Well, for us, not someone else!

 

[Diamondpilot]

I'm told my 08 Duramax with 160 KMS that I paid 56K CDN for is worth 25-30. That's not too bad.

Anything my family or I ever did in stocks has been a disaster. Well, for us, not someone else!

Just think what that 56K would be worth today have you invested it in GM Stock!