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Nope. There are very few good reasons to pay cash for a car.
Completely agree. Interest rates on car loans are under 2% right now but the market is growing by 10% or more. Why flush money down the toilet by buying a car using cash?
Cash rules . . . Purchase what you can afford with cash. If not, welcome to the club of long term debt.
More of these terrible posts. I already in a battle of words with another poster in the Personal Finance section where he claims he only pays all cash for homes...cash is the only way to go rhetoric
More of these terrible posts. I already in a battle of words with another poster in the Personal Finance section where he claims he only pays all cash for homes...cash is the only way to go rhetoric
Terrible posts??? It is terrible to encourage someone to not go into debt?
As to homes, almost 1/3 are bought with cash. It can be done.
The borrower is slave to the lender. Go ahead and be a slave if you wish.
Completely agree. Interest rates on car loans are under 2% right now but the market is growing by 10% or more. Why flush money down the toilet by buying a car using cash?
Because debt adds risk and returns are not guaranteed. What happens if we see another event like 2008/2009. Notice how many people lost their homes and cars.
Terrible posts??? It is terrible to encourage someone to not go into debt?
As to homes, almost 1/3 are bought with cash. It can be done.
The borrower is slave to the lender. Go ahead and be a slave if you wish.
it's not that we believe it can't be done. There just isn't always a reason to. I had the cash on hand to pay off my previous house I owned for 7 years (just sold in May). But 6 of those 7 years my investments crushed the interest rate on my house. So why would I funnel money into paying off the house?
Sure it's risk. I understand. I guess you're arguing no risk. I'm willing to take some risks for reward. So far in my 9 years since graduating my risks have paid off extremely well financially.
it's not that we believe it can't be done. There just isn't always a reason to. I had the cash on hand to pay off my previous house I owned for 7 years (just sold in May). But 6 of those 7 years my investments crushed the interest rate on my house. So why would I funnel money into paying off the house?
Sure it's risk. I understand. I guess you're arguing no risk. I'm willing to take some risks for reward. So far in my 9 years since graduating my risks have paid off extremely well financially.
But in your case, it's not risk because you had the funds to pay it off if something unexpected happened to your income stream.
There's a difference between borrowing money to buy something that you can afford to pay cash for because your funds are making you more money than you're paying in interest and borrowing money to buy something because you can't afford it otherwise. The crux of most of these arguments is that the participants don't take the time to consider the difference.
Quote:
Originally Posted by k374
Was having this discussion with someone...I was of the opinion that you shouldn't buy a car more than 25% of your annual gross income IF you have no debts besides a mortgage. If you have debts that number goes lower.
So, if you make $100,000/yr with no debts then buy a car for $25,000 out the door, i.e. a Toyota Corolla LE or similar. If you make $150,000/yr perhaps a Acura ILX or similar.
Someone else thought that was ludicrous! He thought a person with average debts ($500-600/mo.) and income of around $40,000 can easily afford to buy a car for $30k otd.
All above assuming single/married household with typical living expenses (rent, utilities, discretionary etc.)
So what if a guy is retired with no income but $15,000 a year in social security but has millions of dollars in savings? I'd say he can buy any car he wants regardless of the fact that it might cost many times his annual income. That's why this argument makes no sense whatsoever.
Nope. There are very few good reasons to pay cash for a car.
Quote:
Originally Posted by NYCresident2014
Completely agree. Interest rates on car loans are under 2% right now but the market is growing by 10% or more. Why flush money down the toilet by buying a car using cash?
Perhaps, your equation and outcomes have been more productive than mine.
I will not speak for my own productiveness. However, using the same family principles, with regard to wealth building . . . My two adult children(32/30) are debt free with the exception of rental properties liabilities, which provide additional positive income streams.
Old Asian family rule . . . 1) Do not create needs 2) Constantly looks ways to save 3) Always look for ways to limit your liability.
I expect my kids to retire before the age at which I had retired or at least have created the option. Life is too short to work everyday to pay off debt.
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