View Poll Results: did you pay Cash Finance or Lease
Paid cash
62
53.91%
Financed
28
24.35%
Leased
25
21.74%
Voters: 115. You may not vote on this poll
did you pay Cash Finance or Lease
03-09-2019, 12:20 PM
#91
LOL, You want the float, but you want a low payment? Which is it? If you making money on the float, why do you care about a payment? Everyone loves to lie to themselves. The car is always worth more then it is, they always make more money in the market then the cost of a loan. People also do bad math, they say I make 5%, the loan cost 3%, I make 2% on my $100K every year.... Wrong, first the amount you are making a float on every month decreases. Second you pay taxes on your investment return. While the last 10 years has been great, 08 sucked, 99 sucked, 83 sucked. Most people pay someone to manage their money (which is another topic). And they pay way to much for the person to manage their money. Take all of the cost into consideration and see if you are really making money from the float. Let me point out the obvious - Banks make money lending money. If you can get the money at 3%, the bank is paying someone 2.5% for the money to lend to you.
If you make money on the float you should take every penny you can in a loan. But you don't, you say you don't want a big payment? But you make money on this money, the payment is already covered and then some (the float).
As I stated earlier, it all comes down to net worth, if ask, what can I cash flow or what's my net worth. People love to see a high bank account. So If I pull $100K out of my account, it might not look as good, but it looks great if I have a $100K and a Porsche. They like to just ignore the loan. It's being cashed flowed with my pay check, keep the payments low.
I'll say it, those who pay cash are on the road to financial freedom (or already there).
If you make money on the float you should take every penny you can in a loan. But you don't, you say you don't want a big payment? But you make money on this money, the payment is already covered and then some (the float).
As I stated earlier, it all comes down to net worth, if ask, what can I cash flow or what's my net worth. People love to see a high bank account. So If I pull $100K out of my account, it might not look as good, but it looks great if I have a $100K and a Porsche. They like to just ignore the loan. It's being cashed flowed with my pay check, keep the payments low.
I'll say it, those who pay cash are on the road to financial freedom (or already there).
03-09-2019, 12:35 PM
#93
Rennlist Member
Best answer, who cares what others do, it’s their business and everyone’s financial situation is different. Pay cash, finance, lease, who cares, A Honda or Toyota are a smarter $$ move but what fun is that. Life is short do what makes you happy.
03-09-2019, 01:05 PM
#94
Rennlist Member
LOL, You want the float, but you want a low payment? Which is it? If you making money on the float, why do you care about a payment? Everyone loves to lie to themselves. The car is always worth more then it is, they always make more money in the market then the cost of a loan. People also do bad math, they say I make 5%, the loan cost 3%, I make 2% on my $100K every year.... Wrong, first the amount you are making a float on every month decreases. Second you pay taxes on your investment return. While the last 10 years has been great, 08 sucked, 99 sucked, 83 sucked. Most people pay someone to manage their money (which is another topic). And they pay way to much for the person to manage their money. Take all of the cost into consideration and see if you are really making money from the float. Let me point out the obvious - Banks make money lending money. If you can get the money at 3%, the bank is paying someone 2.5% for the money to lend to you.
If you make money on the float you should take every penny you can in a loan. But you don't, you say you don't want a big payment? But you make money on this money, the payment is already covered and then some (the float).
As I stated earlier, it all comes down to net worth, if ask, what can I cash flow or what's my net worth. People love to see a high bank account. So If I pull $100K out of my account, it might not look as good, but it looks great if I have a $100K and a Porsche. They like to just ignore the loan. It's being cashed flowed with my pay check, keep the payments low.
I'll say it, those who pay cash are on the road to financial freedom (or already there).
If you make money on the float you should take every penny you can in a loan. But you don't, you say you don't want a big payment? But you make money on this money, the payment is already covered and then some (the float).
As I stated earlier, it all comes down to net worth, if ask, what can I cash flow or what's my net worth. People love to see a high bank account. So If I pull $100K out of my account, it might not look as good, but it looks great if I have a $100K and a Porsche. They like to just ignore the loan. It's being cashed flowed with my pay check, keep the payments low.
I'll say it, those who pay cash are on the road to financial freedom (or already there).
I manage my own money (I'm too small a fish to get the really good stuff anyway) - my mixed-risk, diversified discretionary portfolio (not 401K) has averaged about 9.7% over the last 20 years (I just calculated this last week while working on taxes). Let's take my last car (CPO), I paid $42K total - split 17K cash, $25K loan 5yrs @ 0.99%. I owned it for 5 years and sold it for $26K last week. Over the lifetime of the loan I paid $634 in interest and lost $17562 in depreciation & taxes ($16,000 + $1,562 in sales tax). Now, the depreciation and taxes are lost no matter which way we pay, so I usually just factor that as a cost of ownership, but lets consider it...
My $25K that I didn't pay in cash returned ~$46K (my returns over the last 5 years are better than 9.8%) but when I did the calculation I was expecting ~$37K. So I actually earned $20,366 on the float. I too didn't want a $1000/mo car payment (that's just me) - but of course, one would have earned more if I'd borrowed the full $43.5K.
All in, I'm net ahead ~$2800 on this last car deal for the last 5 years, which is basically a wash. I expected to be down about $6K. Which isn't bad for a 5 year car deal.
That's just my simple logic. If you can show me how to meet my requirements with better returns, I'm always willing to learn, no pride here :-)
03-09-2019, 01:15 PM
#95
That's another excuse people use to buy something they can't afford.
It's an expensive toy.
Awesome if you get the opportunity to buy one.
03-09-2019, 01:53 PM
#96
Just for illustration -
I manage my own money (I'm too small a fish to get the really good stuff anyway) - my mixed-risk, diversified discretionary portfolio (not 401K) has averaged about 9.7% over the last 20 years (I just calculated this last week while working on taxes). Let's take my last car (CPO), I paid $42K total - split 17K cash, $25K loan 5yrs @ 0.99%. I owned it for 5 years and sold it for $26K last week. Over the lifetime of the loan I paid $634 in interest and lost $17562 in depreciation & taxes ($16,000 + $1,562 in sales tax). Now, the depreciation and taxes are lost no matter which way we pay, so I usually just factor that as a cost of ownership, but lets consider it...
My $25K that I didn't pay in cash returned ~$46K (my returns over the last 5 years are better than 9.8%) but when I did the calculation I was expecting ~$37K. So I actually earned $20,366 on the float. I too didn't want a $1000/mo car payment (that's just me) - but of course, one would have earned more if I'd borrowed the full $43.5K.
All in, I'm net ahead ~$2800 on this last car deal for the last 5 years, which is basically a wash. I expected to be down about $6K. Which isn't bad for a 5 year car deal.
That's just my simple logic. If you can show me how to meet my requirements with better returns, I'm always willing to learn, no pride here :-)
I manage my own money (I'm too small a fish to get the really good stuff anyway) - my mixed-risk, diversified discretionary portfolio (not 401K) has averaged about 9.7% over the last 20 years (I just calculated this last week while working on taxes). Let's take my last car (CPO), I paid $42K total - split 17K cash, $25K loan 5yrs @ 0.99%. I owned it for 5 years and sold it for $26K last week. Over the lifetime of the loan I paid $634 in interest and lost $17562 in depreciation & taxes ($16,000 + $1,562 in sales tax). Now, the depreciation and taxes are lost no matter which way we pay, so I usually just factor that as a cost of ownership, but lets consider it...
My $25K that I didn't pay in cash returned ~$46K (my returns over the last 5 years are better than 9.8%) but when I did the calculation I was expecting ~$37K. So I actually earned $20,366 on the float. I too didn't want a $1000/mo car payment (that's just me) - but of course, one would have earned more if I'd borrowed the full $43.5K.
All in, I'm net ahead ~$2800 on this last car deal for the last 5 years, which is basically a wash. I expected to be down about $6K. Which isn't bad for a 5 year car deal.
That's just my simple logic. If you can show me how to meet my requirements with better returns, I'm always willing to learn, no pride here :-)
From what you are saying I must assume you have your brokerage account 100% on margin. The interest rate on margin account is far less than 9%.
03-09-2019, 03:16 PM
#97
Rennlist Member
It's not about better returns. A car and a loan is not an investment. You have depreciation, maintenance, and interest. That's the cost of the car.
From what you are saying I must assume you have your brokerage account 100% on margin. The interest rate on margin account is far less than 9%.
From what you are saying I must assume you have your brokerage account 100% on margin. The interest rate on margin account is far less than 9%.
Care to explain your logic?
03-09-2019, 03:26 PM
#98
Not sure what you are saying here - I don't carry any margin loans in my investment accounts. I do have a portion of my portfolio in options, which can be a type of lever depending on the strategy (In my case, where required - all of my option positions are fully covered) - and vol was very good to me in 4Q18. I do reinvest dividends and I haven't accounted for capital gains taxes here as I have't realized the gains from sale.
Care to explain your logic?
Care to explain your logic?
margin is just another place to borrow money.
you calculated the money made from the loan into your cost but you didn’t calculate the cost of the money paid for the car. In the cost.
The posts are saying a loan loan is great, because you make money on the float. Then you comment you don’t want a large payment. That makes no sense. Supposedly every dollar you hang on to makes you money. The money is sitting there waiting to make the payments. No logical.
People like to see there portfolio grow. And they ignore there debts as long as monthly income covers payment.
the cost of your car was not $6k over 5 years. But if that’s how you want to see it awesome.
03-09-2019, 03:33 PM
#99
I think there is some gray to this subject.
Imho, if it’s a daily, I don’t mind the idea of financing. It’s a needed tool to survive unless you live in a city. But at the same time, if you love cars, I feel it’s okay to stretch if need be. Responsibly though, as long as the stretch isn’t too far.
If it’s a weekender, I think financing or leasing is not the right move. Just my two cents.
Imho, if it’s a daily, I don’t mind the idea of financing. It’s a needed tool to survive unless you live in a city. But at the same time, if you love cars, I feel it’s okay to stretch if need be. Responsibly though, as long as the stretch isn’t too far.
If it’s a weekender, I think financing or leasing is not the right move. Just my two cents.
Last edited by superdog; 03-09-2019 at 04:40 PM.
03-09-2019, 04:09 PM
#100
Rennlist Member
I think, given my constraints: (1) I want to drive a reliable, late model vehicle, (2) I want to loose as little as possible on the transaction, (3) I want no more than $500 / mo payment impact to monthly cash flow - this is the best approach financially. If you can show me a more efficient way to meet those objectives - I really am interested - as I don't care to leave money on the table :-)
cheers!
03-09-2019, 04:29 PM
#101
I agree, if you are talking about the opportunity cost of the $17K I paid in cash - that money would have made more in my investment account - so that's a cost. However, the drawdown earns less than the $17K held for 5 years at 9+ %, as the balance is decreasing every month. If I pay cash, and then drop that ~$450/mo into my investment account, it too doesn't quite earn as much as the full amount compounded. I've run those numbers as well.
I think, given my constraints: (1) I want to drive a reliable, late model vehicle, (2) I want to loose as little as possible on the transaction, (3) I want no more than $500 / mo payment impact to monthly cash flow - this is the best approach financially. If you can show me a more efficient way to meet those objectives - I really am interested - as I don't care to leave money on the table :-)
cheers!
I think, given my constraints: (1) I want to drive a reliable, late model vehicle, (2) I want to loose as little as possible on the transaction, (3) I want no more than $500 / mo payment impact to monthly cash flow - this is the best approach financially. If you can show me a more efficient way to meet those objectives - I really am interested - as I don't care to leave money on the table :-)
cheers!
You sound like a financial savvy person. You have it under control. I'm speaking in general for people that borrow money and say its an investment. They borrow the same money multiple times. Example: I can afford this car for $100k, I currently have $500k in savings. I will take a loan because I can make more on my money then the loan rate. 3 months later, I'm going to by this boat for $90K, I can afford it because I have $500k in savings. I will take a loan because I make more money in the market then loan cost. Buy a new cabin, $200K, can afford because I have $500k in savings... They keep borrowing against the same money. As someone else just noted these people run into trouble when something turns down. They are too leverage and the market is not going well and they lost their job, now they can't make the payments. This money that was sitting there making money is half what it was and I can't pay for the car.
Do you have earned income? If yes, ask yourself would you finance the car if you were retired and had no more earned income? How would that change financial decisions?
You are not leaving money on the table. You might be putting on some rose-colored glass when looking at your true cost of ownership of your cars. :-)
Enjoy driving that beautiful car.
03-09-2019, 04:35 PM
#102
Drifting
Leasing made a lot of sense to me for my GTS - my "corporate car" - from a tax write-off standpoint. For my incoming GT3T, buying outright made more sense for my circumstances. Yes, I could lease it but I don't like the idea of a $3,000/month lease for a weekend fun car. I could also buy it and take out a loan for a portion of the car (say, $100,000) but then I am paying interest on a depreciating asset. Sure, I could hold onto my money and/or invest it but like others on this thread, I am not a fan of debt or monthly payments for years to come. Hence, I am going to cut a check, drive it like I stole it, and not have to worry about paying the car off over the next several years.
03-09-2019, 05:10 PM
#103
As Jonny Cash said cash is King , I paid cash for my 2014 50 th anniversary which I purschased from the original owner with 8000 miles for much less then the going rate . I will sell it later this year to upgrade to a GT3 T ( used) and make after all carrying costs 10% + . I m happy and I wish everyone else the same . Thanks god Spring is around the corner
03-09-2019, 05:13 PM
#104
As Jonny Cash said cash is King , I paid cash for my 2014 50 th anniversary which I purschased from the original owner with 8000 miles for much less then the going rate . I will sell it later this year to upgrade to a GT3 T ( used) and make after all carrying costs 10% + . I m happy and I wish everyone else the same . Thanks god Spring is around the corner
