AlexCeres

dude. Try to have a bit more perspective. I don’t love credit. But I love taxes even less.

Yippiekiaye

Just because you pay cash for a car doesn’t mean you are hit with an extra tax on those funds.

AlexCeres

nope. That’s not even remotely what the poster said:

He explicitly says he needs to sell equity. Even in states with no income tax, a 20% capital gains costs twice as much absolute dollars as a 6 year 3% loan. $40K instead of $19K. In a high tax state like CT, that’s even worse. To say nothing of the cost of locking in those 20% losses instead of riding it out.

Even worse, taxes are paid with today’s dollars. If you believe we have high inflation, it’s full retard to pay anything with 2022 cash when you can pay with 2028 cash instead. Inflation is running at 7%. You’ll pay the bank back 93c for each dollar you borrow. Interest rates are under 3%.

He should be looking at a portfolio loan since he has a professional advisor. Now these are complex and have additional risks, so I wouldn’t fault anyone for avoiding them when they could just go to PenFed Credit Union (or like almost any major bank) and get nearly as good terms with no margin calls.

folks need to do actual math for their situations. Most folks here aren’t and it’s pretty astounding to watch people complain about the economy in the same breath they take actions that are the opposite of what their complaints suggest would be most profitable.

You’re welcome to say that you feel the peace of sleeping without a loan is worth paying solidly over $30,000 extra dollars. But it objectively worse in dollars.

Yippiekiaye

I wasn’t referring to the op. I was referring in general.

But yes for me- I’d prefer to not have debt on a depreciating asset. And yes- these things will eventually depreciate.

I don’t disagree with any of your points- from a pure math perspective it makes sense. All I was saying is that just because you pay cash- doesn’t Mean you are liquidating stocks to get that cash. One can potentially have access to cash with no tax implications.

At the end of the day yes math says take out a bit fat loan and use low interest to finance your car. Some of us would rather not have to deal with debt or monthly payments.

Neither method is right or wrong. This is simply personal preference.

AlexCeres

I can’t disagree with any of that. Loan payments are a drag. It’s basically adm you get to pay out over a few years. I muster the enthusiasm to avoid much larger tax bills.

Yippiekiaye

again- just because Someone is paying cash - does not mean they have a tax bill to get access to the cash.

Lets say an individual gets a quarterly bonus of 100k and tax is taken out and they put 65k aside. They do that for a few quarters and now have the after tax funds to pay foe their car.

Lets say someone gets a 500k year end bonus and taxes are taken out and they now have the funds to pay cash for their car.

Lets assume someone owns their own business and has a tax bill coming up and needs to add some expenses to minimize the tax bill.

let’s say someone has 20 million in their investment account with 5-% sitting in cash and they decide to use it for their car.

let’s say someone sold their business for 30 million and has paid all the taxes and just wants to pay cash for their car.

Your math and assumptions about inflation are 100% correct and it makes a ton of sense and what you wrote about the op is spot on.

All that being said, it’s not necessarily true that one will incur a tax bill if they want to use cash to pay for their car.

mooty

a see a lot of economist on RL

1 America live on credit, let's lever up guys.
2 yes Fed fund rate will go up
3 there was a drop in stock market?

Ascend

ok so should I buy a car now or wait? I am sitting on some cash and thinking of buying rs 4.0. I dont wanna market time but trying to see if the inflated prices of collector cars will go up even more or drop.

carcommander

It will do both. It’s just when.

Deven

I think many people here (Rennlist) have differing opinions on the 'value' of cars. Some of us (myself included) look at cars in general as a sunk cost. By that I mean, you buy the car, and 'assume' it has zero value until you sell it (most likely for a substantial loss). It serves a purpose (transport, enjoyment, etc) but at the end no different than a steak dinner. What many people forget though is that there are more annual expenses (carrying expenses) after the sunk cost (registration, maintenance, insurance, repairs, etc) that will likely increase yearly as the car gets older.

The only difference perhaps is leveraging that sunk cost and amortizing the expense vs a 1 time loss because there is always an opportunity loss cost as well. I agree though, at some point it does not matter as everyone's personal financial situation is different. The 'headache/annoyance' of managing debt might be worse for some people.

To the person leveraging the stock market and then deciding if they can buy the car, consider doing both. Keep your capital in the market, and take out a 5 year loan, and pay your monthly payments from the portfolio. Who knows what will happen in 5 years, but there is a decent chance a good portion of your capital might still be there, and you will end up having a car as well. Worst case scenario is that the market tanks 50% and you are upside down on the loan. That is the risk of leveraging.

chance6

rodneyr

Yes, but I don't really want to burn any bridges with my dealer in basically flipping the car. I still have my 996 GT3
I feel very lucky I got an allocation. I am sure there many people that have purchased more P-cars than I have, and not yet received an allocation.

Ascend

So whats the verdict? Buy now or wait for market to drop? Im talking about cars like 997RS or 911R that is already discontinued not 992 gt3 which is currently in production.

CAlexio

If you're held onto your CGT's, then you're doing much better than stocks

shrimp money

Given how backwards everything has been , like how we all thought everyone would lose their homes, and commercial property collapse, I’d say the market of exotics keeps going up.

Fed raising rates? Ok, now I better get a home now before my payments are higher later! Better buy that new car now or else it’ll cost you more later!