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That's not a bad idea either, though most need a car to get around unless you live in a major metropolitan area. Most Americans don't realize that they are buying something that rapidly depreciates when they buy a new car, which is why buying used is a wiser choice in most instances.
The same can be said about food. It depreciates as soon as you eat it.
Last edited by Ultrarunner; 09-21-2011 at 12:32 PM..
Even though I love my TSX and bought it used, looking back I would have probably bought a cheaper car that I didn't need to finance almost seven years ago. It is paid off now, and I will drive it for years. I will never finance a car again, there are much better investments I can make with that money. I think financing cars is one of the biggest drains on the average person's wealth.
Quote:
Originally Posted by NJBest
I would suspect that people would take the loan with the smallest down payment possible. And invest the money.
For example, I bought my dad a car in October. I put down $5,000 and took the remaining $45,000 on loan at 1.99% from my credit union (estimating here, don't recall exact numbers).
I then took the $45,000 I was originally going to use to pay for the car in my brokerage account. I have earned 17% on it so far (due to the wacky economy).
If you were to buy a car today, it would be silly to buy it outright at these low rates.
The problem with this is that most people only hear the first part and they never invest the difference. Most people are saving their cash to invest they are already stretching to afford the monthly payment. Even with the cash it's still risky to have yourself so highly leveraged. A lot of people borrowed cheap but didn't have the money to cover themselves when housing dropped along with the stock market.
The problem with this is that most people only hear the first part and they never invest the difference. Most people are saving their cash to invest they are already stretching to afford the monthly payment. Even with the cash it's still risky to have yourself so highly leveraged. A lot of people borrowed cheap but didn't have the money to cover themselves when housing dropped along with the stock market.
Anytime you buy something you cannot afford is a problem. Whether it be a house or a car.
I haven't heard anyone call an installment loan a "note" since I worked as a bank teller with a bunch of little old lady bank tellers 30 years ago. You know ... when we were paying 6.5 percent on passbook savings accounts.
I haven't heard anyone call an installment loan a "note" since I worked as a bank teller with a bunch of little old lady bank tellers 30 years ago. You know ... when we were paying 6.5 percent on passbook savings accounts.
Now they're paying 15% on reits dividends... I'm not complaining.
We called it a note all the time in my mba accounting classes.
Even though I love my TSX and bought it used, looking back I would have probably bought a cheaper car that I didn't need to finance almost seven years ago. It is paid off now, and I will drive it for years. I will never finance a car again, there are much better investments I can make with that money. I think financing cars is one of the biggest drains on the average person's wealth.
I use to run into it all the time... so many of the new hires I work with would go out and buy a "Nice" new car... then they would think about buying a home and couldn't because they were car poor.
I use to run into it all the time... so many of the new hires I work with would go out and buy a "Nice" new car... then they would think about buying a home and couldn't because they were car poor.
I think that's one of the good things about hating shopping with an absolute passion.... I never run out and buy ANYTHING. Every purchase (except groceries) is a considered decision undertaken after much deliberation and research.
And I do my utmost to buy quality so I won't have to go through that agony again for a long long time.
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