M&Abanker4life

This thread keeps getting better and better.

The math, logic and justifications people use to defend their choices/bias is incredible and also wildly incorrect from both the fully levered and all cash crowd. It’s ******* hilarious! Keep it up!

M&Abanker4life

I financed my 3RS with an 80 month loan through Porsche with minimum equity down (I think it was like 50 or 75k down don’t remember).

I took the cash I would have used to pay for the car in full and invested in a blue chip dividend portfolio of banks and a preferred share ETF. Up 10% on book value plus the investment covers the interest and 50% of the principal payment on the loan.

I can pay for the car in cash anytime without selling the ETFs, triggering a capital gain. The dividends get taxed at lower rates in my jurisdiction. If the value of my stocks goes down 10%, I’m still even. If the dividends get cut, I can still make the payments with recurring income/other investment income.

Tell me how I am full of $hit?

M&Abanker4life

Money is one and the same. Your feelings shouldn’t impact the pure logic and math about using leverage or not using leverage to purchase something. It’s not stressful unless the borrower has issues making ends meet already or has a questionable source or irregular income; clearly, they shouldn’t be buying a sports car to begin with.

So said another way, being lazy with your money is your preference.

M&Abanker4life

If you are a sole propriator, its your decision to make. Agreed, it would be better to re-invest into your business to drive growth vs. paying a personal dividend, particularly if you are adding leverage.

At the same time, there are many folks who have built their private businesses over time and grown them to material value; taking a dividend out to buy a GT3 (in the order of a couple hundred thousand) is relative. For a million dollar enterprise, thats might be a bad decision, vs. a 10 million dollar enterprise that is owned by an individual or family who has worked hard to build it up and now wants to enjoy the fruits of their labor.

Christian Plyler

Meh. I paid for my car with a check out of my savings account. Yeah, there are good odds that I could beat the interest rate on a loan with an investment. But those odds are not 100%, and I just really, really enjoy not owing people anything. That comfort level is worth some dollars to me.

aparedes

Agreeing on this topic will be quite difficult. However I believe there are financial instruments that could assist off setting the lending cost with little or no risk if you have the ability to buy the car under the business and take the write off there are few companies that offer structures similar to a balloon loan, but written in the form of a lease with the flexibility of selecting terms, and allowing the buyer to have a residual value as little as 20% of purchase price. You can proceed to lease the vehicle over a period of 12 months and pay as much as 80% of the vehicle in the form of lease payments and take a complete write off, assuming obviously you can justify its use for business under the tax code, at the end of the lease you purchase the vehicle for the remainder 20%. If financing is needed because of the inability to pay the value of the vehicle in cash, terms can be structure where the lease go as far as 3-5 years with much higher residuals decreasing the monthly payment and still having the benefit of the write off. I believe this specially works quite well on vehicles which values appreciate.





In my opinion paying a 4-6% interest rate over 12 months to offset 37%+ in income tax on the lease amount makes more financial sense than paying a vehicle in cash. I understand this might not apply for those who are not able to take the write off, of those who are buying a 200K+ is like going out to buy lunch.

HelpMeHelpU

It's interesting to see how different people are just wired differently. For myself, I would feel stupid writing a check out of my savings account to buy an expensive car. I would be like, why I am using MY money to do this when someone is willing to give me money for next to nothing (less than 2% rate) over 60+ months. One is not better than the other; each just suits different people better. Thank goodness for Baskin Robins and their 31 flavors.

Maverick787

This topic will always have a never ending story. You guys know many have direct deposit of their salary into a savings account or checking and they write checks off the account. My point some buy a car with their monthly paycheck, and still have left over.

hectorlopez

SERIOUSLY???

JRBucks

Lol at these threads. There is so much dick slapping it's funny. Life is short, why wait until you're old, gray, & limp to realize your dreams. If you can afford the payments buy it. We all have a certain amount of income we **** away on dinners, guns, guitars, cars, watches, etc. If your comfortable making the payment do it.

It can all come to an end in an instant. Sure if you don't have enough saved for your retirement or have to borrow against your house, wait until you're in better shape. But if Porsche had to depend on people paying cash they would've went out of business 50 years ago.
I think paying ADM is a lot less prudent than financing a portion of your toy.

Quadcammer

And thats why the majority of americans are financially screwed...because hey, why wait until you can actually afford something to do it. If the payments work...do it....but wait, what if you lose your job, what if you have health problems, what if you get divorced, what if etc. Maybe some people on this site have plenty of cash invested and could pay off the loan even if **** hits the fan, but thats not reality for the vast majority of people.

It could all end in an instant...but based on the percentages, you're likely to live a long life. Delaying gratification until you don't have to be slave to a lender is an admirable quality.

JRBucks

First off it's American's. 2nd, Do you have a credit card? Do you have a mortgage? Student loans? And what if you lose your job, get divorced, have major health problems. It's easy, sell the car. Waiting until you are old, miserable, and independently wealthy to enjoy yourself, to me is waiting too long.

Like I said, all of us have discretionary funds to blow on fun things. Life is not about just accumulating and counting your money. I like looking at stacks of cash and statements too but it far and away pales in comparison to blipping the perfect downshift as you head into a corner on your favorite road on a nice day. You can't do that on a pile of cash.

Maybe for some owning a toy is merely a reflection of their wealth, but to some, it is therapy. And if you can swing it do it.
It is better to have owned a Porsche and lost it than to never owned a Porsche at all.

Quadcammer

First off...no it isn't "The majority of Americans" is grammatically correct sooo...what?

Sure I have a credit card...which I pay for in full every month as I use it solely for daily expenses.
Do I have a mortgage...yes, a small one...on one of the few things in life that are generally considered an asset.
Student loans? No

I have plenty of toys that were bought with cash. Instead of a 991 GT3, I figured it would be more fun to track and build up a boxster race car. I'm having just as much fun as the guys in GT3s but I'm doing it at roughly 20% of the cost. If **** were to hit the fan, I would not be materially affected.

I can do some real heel and toe downshifts in a miata and not go into debt for it.

Thats the point...you can have plenty of fun in any number of less expensive cars, including a number of kick *** older porsches, without financing. in fact, you can have more fun because you aren't so worried about losing your license or having to exceed 100mph to get any sort of thrill.

I guess whatever helps you get through the day.

JRBucks

Lol, I'm a live and let live kind of guy, so enjoy your Miata.

M&Abanker4life

Admirable to who exactly?