Who's Paid Cash?
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Originally Posted by kevink
I guess this depends on the interest rate of the loan, etc. And, many times, don't you have a choice between a low interest rate, or a rebate? Forgoing the rebate for the lower interest rate sure bumps up the effective payment.
You have to also factor in taxes. A 5% loan, non tax deductible, vs having to earn over 7.5% to even break even. No guarantees on over 7.5%. May go up 20% on stocks, or go down.
In my case, nearly 4 years ago, I put $10K down and financed the rest at 3.4%. Wanted to leave some money in savings for emergencies, so I wouldn't have to go straight to credit cards.
You have to also factor in taxes. A 5% loan, non tax deductible, vs having to earn over 7.5% to even break even. No guarantees on over 7.5%. May go up 20% on stocks, or go down.
In my case, nearly 4 years ago, I put $10K down and financed the rest at 3.4%. Wanted to leave some money in savings for emergencies, so I wouldn't have to go straight to credit cards.
Actually, so long as your loan rate is below about 10%, it's a much smarter choice (financially) to finance rather than pay cash. A 2.5% rate of return on an investment will earn the same amount over 5 years as a 5% loan would have cost in interest over the same period. Better than that, you still have the principle plus interest after the 5 year period, still earning interest.
Last edited by Syclone43; Jun 11, 2007 at 11:10 AM.
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Originally Posted by new2G
vicg35: for me it's all about balance. The only money I owe is on real property, where I can write off all interest & most expenses. I have not had a car payment since I was 26. It's what works for me.
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From: Brooklyn
I paid all cash for my new G35 S 6MT. Was going to finance part of it. But my wife discovered some stock options that mature in three weeks, so we paid cash.
I leased then purchased and financed my previous car, '97 Passat. Monthly payments were not burdensome at either stage. But if you have the money, why not forgo the monthly hassle?
Besides, the idea that that you will invest the money and then earn a decent return is all theoretical. Plus, there are no deductions for car loans and few under 5%. Infiniti's best current rate is 5.89% if you have a credit score in the 700s. And there are taxes to be paid on unearned income, albeit indecently low under our current regime.
In the end, everyone's financial situation is unique. So there is no unilateral right move here.
I leased then purchased and financed my previous car, '97 Passat. Monthly payments were not burdensome at either stage. But if you have the money, why not forgo the monthly hassle?
Besides, the idea that that you will invest the money and then earn a decent return is all theoretical. Plus, there are no deductions for car loans and few under 5%. Infiniti's best current rate is 5.89% if you have a credit score in the 700s. And there are taxes to be paid on unearned income, albeit indecently low under our current regime.
In the end, everyone's financial situation is unique. So there is no unilateral right move here.
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