Did you finance or pay cash?

[Southern Boi NOLA]

Man....I ain't as rich as y'all. I don't have 46k in savings that I could pull out to pay cash. I am financing it and putting 20% down.

Sponsored

 

[UtahLars]

The truly wealthy finance just about everything that they can

What is your basis for that statement?

The wealthy who are smart - which is most of them - use whatever method advantages them the most in the particular case in front of them. They do homework.

In some cases, leverage is a smart alternative because either (1) your use of leverage is being highly subsidized by others (like a 30 year mortgage for a home, which your fellow taxpayers are helping to pay for) or (2) there are identifiable tax or accounting benefits to the use of leverage -- eg they create valuable tax assets that you are likely to be able to use.

Neither of those applies to the personal acquisition of a vehicle. Leverage there is an additional product you buy along with the car - the ability to drive the car when you don't have the funds to buy it outright. And, like any other product you buy, you have to pay for it. It costs extra.

You're combining apples and oranges and the result is not great advice.

 

[GotWake]

What is your basis for that statement?

The wealthy who are smart - which is most of them - use whatever method advantages them the most in the particular case in front of them. They do homework.

In some cases, leverage is a smart alternative because either (1) your use of leverage is being highly subsidized by others (like a 30 year mortgage for a home, which your fellow taxpayers are helping to pay for) or (2) there are identifiable tax or accounting benefits to the use of leverage -- eg they create valuable tax assets that you are likely to be able to use.

Neither of those applies to the personal acquisition of a vehicle. Leverage there is an additional product you buy along with the car - the ability to drive the car when you don't have the funds to buy it outright. And, like any other product you buy, you have to pay for it. It costs extra.

You're combining apples and oranges and the result is not great advice.

I would say the basis is the fact they can take $50k and make 10% on it or buy 3 rentals and cash flow $1500 per month. When you have low interest rates, you are usually better off not paying cash.

 

[Richtor]

Lmao this isn’t even remotely accurate. The truly wealthy finance just about everything that they can, hell some of the wealthiest in this country even finance their own salaries.

You have no clue what you speak of. The wealthy make their money on income. Or the other word for revenue. The banks make their money form everyone else financing.

Do you know the 2nd wealthiest athlete in the world? For the longest time he was the wealthiest athlete in the world. Yet no one knows his name. Thats because he gained his wealth through banking.
Start a bank rule the world as you make your money skimming funds on everyone who finances through you!

Discover the card that pays you…1% made almost $600 million per month net in the 2nd quarter 21.
While you make $300 per month on your $3k worth of purchases they made $600 million. Wait the math does not add up. I wonder why?

 

[Cheshire]

What if I told you there is a US government bond that is offering 7.12% for the first 6 months, then uses the fixed rate + inflation rate to determine future interest? Did you know that interest is state tax free, and federal if used for education? Would you concede that you were unaware of such a bond, and may rethink your strategy in this new age of high inflation? The most successful people in this world are those that are always willing to reevaluate their thinking

https://www.treasurydirect.gov/indiv/products/prod_ibonds_glance.htm

I'm earning 8%, compounded monthly, at BlockFi sign up w/link get $10 free Bitcoin.

https://blockfi.com/?ref=cc180d45

I've earned about $13,000 interest since opening 2 accounts there last Feb or March. They actually pay 9% on the first $40,000 and 8% on any money over $40k.

You can trade Crypto there, but I only use them for the high interest. They also have a credit card where you can earn crypto through purchases.

Great place to park cash! I invest mainly in commercial property, but need a place to put cash from dividend payments or property sales until re-investing in the next property.

I bought my Bronco with cash. I could have financed, invested Bronco cash and made a few bucks, but too much hassle for too little reward. Working to pay for a deprecating asset you bought in the past is not a great strategy for getting ahead imo.

 

[Richtor]

I am well aware of how banks make money thank you. Your statement that wealthy people only pay cash for toys is false, hence my sarcastic response. Again anyone who is looking for financial advice on a truck forum is already likely in over their head

Yes banks make money by stealing money from those that finance!

First I never said wealthy only pay cash. Though I will say most pay cash. Why in the world would someone worth $100 million or more, that make over $10 million a year just in investments take a loan on a $100k/$200k vehicle.
Second they don’t make their wealth from the interest earned on financing.

An example: Best case scenario is borrowing money at 2% and then making 10% on that money after fees. You just earned your 8%.
$10 million would cost you $200k.
$10 million would make $1m or net you $800k
Nice chunk of change. And yet $800k in one year is penny’s to the wealthy.

Bottom line financing to maybe make $200-$300 in interest on a $50k purchase is crazy.

If you have the cash above retirement Emergancy funds pay with cash.
And yes I know more people who have killed themselves trying to make money with interest 4, than I know people who are wealthy based making money based on their interest payment 0.

 

[nikkgmm]

I ended up putting 25k down and financed the rest with BOA @ 2.08% as they had the most competitive rate I could find.

 

[Paul Gagnon]

Y'all who paid cash.... need a sugar baby?

Totally joking. (Please don't ban me lol)

I financed at 2.99 percent and am in LOVE with my ride.

I could use a sugar baby but I'll have to take out financing.

 

[GardenGirl]

Wanted to pay cash.
Was told by dealer for the price we reached that dealer financing and a trade would be required. Was able to bring that down to a small chunk on loan with rest in cash with stipulation that loan could not be paid off before 4 months.

 

[Richtor]

I could use a sugar baby but I'll have to take out financing.

Pay cash if you find a sugar baby.

 

[Paul Gagnon]

Pay cash if you find a sugar baby.

To be honest, I’d rather have a sugar mama.

 

[jmmckenz]

penfed giving 0.99% APR loans

I saw this and was like SWEET!!!!! Logged into penfed, checked rates....1.99% for 60 months...
Only way for .99% is to go through THEIR buying service and only good for 36 month term.
https://www.penfed.org/auto/rates

 

[tater_70]

Lot's of good information, but I'm going with cash. Sold my Mustang for 6X what I paid for it 10 years ago, retired, modest pension, no debt, no house payments, no current car payments and I like it that way. It's just your preference, and I'm still invested.

 

[skhubbard93]

I was not excited about paying 10-30% CG taxes on invested assets, so it made more sense to pay ~1.9% APR for 60 months than cap gains tax. Using the Bronco as collateral instead of margining brokerage assets yields a better rate and protects those assets. Even with the recent market dip, that approach still comes out ahead for me.

If I can achieve 10-12% IRR then borrowing $50k instead of liquidating enough assets to free up that amount after-tax (which could be as much as $70k depending on hold duration and IRR) means that I grow those still-invested assets as much as $8.4k per year. Meanwhile, I need to spend ~$875 per month for the $50k loan. After 5 years, if I keep remaining assets invested at ~12% and use dividend and/or sale proceeds to pay the loan payments, I've paid off the Bronco and spent under $2500 in interest, but what remains from the original assets could still be worth as much as $42k pre-tax assuming I can keep the CG tax bracket at 20% or less, leverage something like a low-interest margin account to carry loan payments across the buy low / sell high cycles, and maintain my IRR. That ultimately means that rather than the entire $70k pre-tax going to the Bronco, I come out the other side still having $42k (pre-tax) invested.

Sometimes you get less than 12%. Sometimes you get more. But only risk can earn a reward.

Each person's asset level, liquidity requirements, risk appetite and near-term cash flow expectations are different. So do what is right for you.

 

[Fulber]

Evidence we’ve been spoiled with equity returns for the last decade+ haven’t we.

Shocking when talking time value of money and risk doesn’t get a seat at the table. Bear markets 2000-2002 and 2008-2009 May have something to say about that.

Personal finance is personal. Not sure why there’s so much animosity towards each individual’s decision. This isn’t Bronco vs Jeep Relax.

Well said!

Sponsored