Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Why does it matter how much is "exposed" to a depreciating asset if you are paying for that depreciation one way or the other? What you should really be concerned with is the net present value of the decision, not the "exposure".
The benefit of leasing is that you only pay for the depreciation that you use, and often less than you would if you simply paid cash for the car then sold it three years later, due to the typically overinflated residual values from automakers. Your exposure is minimal - either the car is worth less than the residual and you give it back to the lender for it to be their problem, or its worth more in which case you can buy it outright at a value that is less than what you can sell it for the next day.
You keep pointing out that people pay for the depreciation on a lease as part of the lease as if someone has taken a position contrary to that.
Until they invent a car that holds it's value as well as real estate or even a Rolex wristwatch I'm still declaring them the #1 worst big ticket item you can sink your money into or god forbid put yourself into debt over*
*with the possible exception of it being a necessary business expense used to make money.
Until they invent a car that holds it's value as well as real estate or even a Rolex wristwatch I'm still declaring them the #1 worst big ticket item you can sink your money into or god forbid put yourself into debt over*
*with the possible exception of it being a necessary business expense used to make money.
Oh. You're saying don't buy a car at all.
Or buy the cheapest one you can get away with.
I assume you do that with every single food item, toiletry, electronic device, etc, that you buy.
Originally Posted by UrbanAdventurer View Post
I understand the concept perfectly fine thanks. What we have is a difference of philosophy on this. Both of you think it's financially savvy to borrow money at a low(er) interest rate so your own capital can be invested for a higher rate of return (maybe). This perhaps would be a worthwhile tactic if you're running an entire country like, for example, the United States of America and dealing with trillions of dollars of debt. Down at the individual level it's just a simple matter of penny wise and pound foolish B. when one attempts to justify financing a depreciating asset in order to preserve a very limited pool of capital. I've stated previously that the only possible justification I could logically think of for doing that is if the vehicle itself is somehow used to make money. Otherwise it is just a luxury item and should be treated as such. A. People who are truly wealthy don't finance cars...they just buy a car that to them represents an insignificant amount of money. C. That would be a better mentality to try and emulate IMO.
If indeed you are talking about people who have millions at their disposal every day then no they probably don't finance anything.... If you are talking about people who have 1 million or hundreds of thousands of dollars then yes they finance... Ever been to a Rolls/Bentley dealership?? They have a financing dept... Why??? You figure if someone can afford to buy one of these cars they would not need to finance it.. BUT you would be wrong... People finance them just like other vehicles....
Oh. You're saying don't buy a car at all.
Or buy the cheapest one you can get away with.
I assume you do that with every single food item, toiletry, electronic device, etc, that you buy.
Not at all. Those are relatively insignificant day to day expenses. Smartphones in particular offer a very hard value and many people use them for business/making money. That's the last thing I would ever recommend a budget-conscious person get rid of, contrary to what some of the fuddy-duddys might say.
Automobiles are a much more troubling financial issue. Despite liking cars, I haven't owned one in almost 2 years now and frankly don't care if I ever own another one...been there done that, and like to think I've turned over a new leaf of enlightenment. Owning a nice car used to be a genuine status symbol and indicator of wealth, but now it's all a big **** fest anyway, with endless TV commercials trying to sucker everybody into the dealership to sign their life away on the latest $40,000 boondoggle they don't need. Every douche with a job can drive luxury car if they are just stupid enough to sign on the bottom line The credit is too easy. The cars are too complex and expensive, and we depend way too heavily on the American automotive industrial complex to keep the economy rolling, if you'll pardon the pun.
Not at all. Those are relatively insignificant day to day expenses. Smartphones in particular offer a very hard value and many people use them for business/making money. That's the last thing I would ever recommend a budget-conscious person get rid of, contrary to what some of the fuddy-duddys might say.
Automobiles are a much more troubling financial issue. Despite liking cars, I haven't owned one in almost 2 years now and frankly don't care if I ever own another one...been there done that, and like to think I've turned over a new leaf of enlightenment. Owning a nice car used to be a genuine status symbol and indicator of wealth, but now it's all a big **** fest anyway, with endless TV commercials trying to sucker everybody into the dealership to sign their life away on the latest $40,000 boondoggle they don't need. Every douche with a job can drive luxury car if they are just stupid enough to sign on the bottom line The credit is too easy. The cars are too complex and expensive, and we depend way too heavily on the American automotive industrial complex to keep the economy rolling, if you'll pardon the pun.
I quite enjoyed the pun, actually.
Insignificant day-to-day expenses actually add up. My car payment is a fraction of the sum of the total we spend on groceries (usually whole foods), soap, cleaning supplies, and various sundries that you discount and 'day-to-day' but actually is the meat of any family's budget.
Deceptive bc it's not a one time large expense representing only one item. But it's a death by a thousand cuts vs one fell swoop.
Owning a nice car used to be a genuine status symbol...but now it's all ruined...that's NOT why I have a nice car. I don't give two whits what someone else thinks of my choice of ride. That's none of their business and their opinion is none of mine. So I don't know why you bring it up. What do status symbols have to do with use credit as leverage?
Originally Posted by UrbanAdventurer View Post
I understand the concept perfectly fine thanks. What we have is a difference of philosophy on this. Both of you think it's financially savvy to borrow money at a low(er) interest rate so your own capital can be invested for a higher rate of return (maybe). This perhaps would be a worthwhile tactic if you're running an entire country like, for example, the United States of America and dealing with trillions of dollars of debt. Down at the individual level it's just a simple matter of penny wise and pound foolish B. when one attempts to justify financing a depreciating asset in order to preserve a very limited pool of capital. I've stated previously that the only possible justification I could logically think of for doing that is if the vehicle itself is somehow used to make money. Otherwise it is just a luxury item and should be treated as such. A. People who are truly wealthy don't finance cars...they just buy a car that to them represents an insignificant amount of money. C. That would be a better mentality to try and emulate IMO.
If indeed you are talking about people who have millions at their disposal every day then no they probably don't finance anything.... If you are talking about people who have 1 million or hundreds of thousands of dollars then yes they finance... Ever been to a Rolls/Bentley dealership?? They have a financing dept... Why??? You figure if someone can afford to buy one of these cars they would not need to finance it.. BUT you would be wrong... People finance them just like other vehicles....
The Rolls Royce dealership has a financing department because fundamentally they are no different than the vultures at the Lexus or Ford dealership. They're there to make money off of any sucker willing to give it to them, not to arbitrarily decide who is worthy of driving off in one. It's not a Park Avenue co-op where they don't let you in if you're black or jewish or just don't have enough money in your bank account, lol. It's just a car.
You don't need to have millions of dollars to buy a car like a wealthy person either. If I had $100,000 in the bank free and clear, $20-25k would not be an unreasonable amount of money to spend on a car if I needed one. It would be a luxury purchase I could afford
Insignificant day-to-day expenses actually add up. My car payment is a fraction of the sum of the total we spend on groceries (usually whole foods), soap, cleaning supplies, and various sundries that you discount and 'day-to-day' but actually is the meat of any family's budget.
Deceptive bc it's not a one time large expense representing only one item. But it's a death by a thousand cuts vs one fell swoop.
Owning a nice car used to be a genuine status symbol...but now it's all ruined...that's NOT why I have a nice car. I don't give two whits what someone else thinks of my choice of ride. That's none of their business and their opinion is none of mine. So I don't know why you bring it up. What do status symbols have to do with use credit as leverage?
Right, he just showed his cards, He's a carist, It's not about the loan.
Rich people ask "How much?". Broke people ask "How much per month?".
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
