Finance vs. Cash?

[Taco_Sexual]

I know this is always a "fun" topic on this message board but I came upon this video from Doug DeMuro that he posted two days ago and thought it holds a lot of water. In case you don't follow Doug, his focus is on car reviews where he evaluates new cars as well as older, unique cars. I've always found his reviews pragmatic and interesting. Anyways, here's some solid advice for why you should finance your car vs. pay in cash (for most scenarios). *I have zero affiliation with Doug and am not trying to drive traffic to his channel.

*You can fast-forward to 4:50 in the video which is when he goes into specifics.

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[mtap]

Cash is always king…

 

[NotApplicable]

*grabs popcorn*

Not sure I would consider this a general bronco topic. Strikes me more as a troll post given OP knows 2 groups never agree on this topic!

 

[Tricky Dick]

Credit is dirt cheap, I'm taking advantage of it. It's also my only option, because my current Bronco fund would only buy half a base.

I was watching his video on why he bought the new Defender. He mentioned not being able to afford a certain car and I thought that was odd, he has to be filthy rich off that channel.

 

[Shotsy]

*grabs popcorn*

Not sure I would consider this a general bronco topic. Strikes me more as a troll post given OP knows 2 groups never agree on this topic!

THIS.

You can share mine...

However, the big equation is the time value of money. If financing rates are lower than investment rates, then I'll finance. If not, cash will get you further.

 

[VictoryLights]

What he says makes sense as long as the market is doing well.

 

[RustySeatbelt]

I was watching his video on why he bought the new Defender. He mentioned not being able to afford a certain car and I thought that was odd, he has to be filthy rich off that channel.

He goes into this in some videos. Yes, he has made quite a bit of money off his channel, but he doesn't spend that money freely. He is pretty wise with his finances and frugal when it comes to vehicles he uses as a daily driver. I believe he typically targets less than $50k. He does have some high dollar purchases, but again, those are not vehicles he goes into with an expectation of high depreciation.

 

[Gamecock]

What he says makes sense as long as the market is doing well.

It makes sense if the market acts as it historically has acted, particularly in the last 50 years. You just need an average or a little below average return for this to make sense, and if your horizon is longer, it has always made sense. Take the nearly free money....and keep your cash invested 100% in equities.

 

[Headsong]

He nails it. I'm an accountant, and it's easy: credit unions offering 2% for up to 60 months, while even basically invested you'll earn 3x that.

 

[Brongo]

I know this is always a "fun" topic on this message board but I came upon this video from Doug DeMuro that he posted two days ago and thought it holds a lot of water. In case you don't follow Doug, his focus is on car reviews where he evaluates new cars as well as older, unique cars. I've always found his reviews pragmatic and interesting. Anyways, here's some solid advice for why you should finance your car vs. pay in cash (for most scenarios). *I have zero affiliation with Doug and am not trying to drive traffic to his channel.

*You can fast-forward to 4:50 in the video which is when he goes into specifics.

Great video!
Anyone else think of George McFly when they watch Doug’s videos?

 

[khatch]

Everyone likes to think their decisions are the right ones so they tend to argue a "side". But when it comes to financial decisions, everyone has a different money situation and risk tolerance.

I understand the math but every time someone tries to explain why people should borrow to invest, I have to admit that I don't think many people have the right circumstances to follow through with that plan. And usually these people don't mention the things that could go wrong.

Admittedly I would probably have more money if I were more of a risk taker.

 

[PSUTE]

Why would I withdraw money that is making ~10%/year so I didn't have to pay ~3% interest on a loan?

 

[Taco_Sexual]

Everyone likes to think their decisions are the right ones so they tend to argue a "side". But when it comes to financial decisions, everyone has a different money situation and risk tolerance.

I understand the math but every time someone tries to explain why people should borrow to invest, I have to admit that I don't think many people have the right circumstances to follow through with that plan. And usually these people don't mention the things that could go wrong.

Admittedly I would probably have more money if I were more of a risk taker.

I agree. Financial competency has to play into the decision. Not everyone knows how to throw their money into an index fund or invest it through other means. Nonetheless, I like talking money/finance which is why I shared the video. When I was in my 20's I wish I had been smarter with my money.

 

[UncleBuck]

I know this is always a "fun" topic on this message board but I came upon this video from Doug DeMuro that he posted two days ago and thought it holds a lot of water. In case you don't follow Doug, his focus is on car reviews where he evaluates new cars as well as older, unique cars. I've always found his reviews pragmatic and interesting. Anyways, here's some solid advice for why you should finance your car vs. pay in cash (for most scenarios). *I have zero affiliation with Doug and am not trying to drive traffic to his channel.

*You can fast-forward to 4:50 in the video which is when he goes into specifics.

I'm not even watching the video, but I'm telling you to finance. An average person with average credit should be able to get a 5 year loan for a good interest rate. The average market return over the last 50 years is like 10%. If you can get 5% interest rate on a vehicle loan, you're better suited to finance you entire 60k vehicle and dump the extra cash in the market. I'm talking zero down, 100% finance. Let a bank's money float your car note so YOUR money can make returns in the market. If you can't get a better interest rate than 8-9% then maybe explore paying cash.

 

[Headsong]

hell... you might earn that by sticking the cash in your mattress in the next few years.

Far better if you have a used truck! Paid 21k for mine (used) 10 years ago. Just sold it for 13. Edmonds says 15! But it's a friend.... Wish I had 2!

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