So, after 16 years, I have come to the realization that my current car may not make it through the next winter, and that I should buy a car sooner rather than later.Anyhow, I have budgeted the amount that I am willing to spend on a used car. However, although the thought of having to pay an auto loan abhors me, I was curious ...With the following assumptions:1. I find a loan with a fixed rate below the traditional rate of inflation (i.e., 3% or less); and2. I can reasonably be sure of investing the money that would be used to buy the vehicle at a return greater than at least the traditional rate of inflation (and hopefully greater than the inflation rate plus the interest rate).I would think it would be worth it to take a loan, as opposed to buying the vehicle outright.Am I missing something here?
If you have the cash to buy the car now, why don't you do so and then apply what would have been monthly loan payments to your savings for future maintenance, retirement, whatever?If you do want a loan, consider checking out your local credit union for better rates and service than a big monster megabank or the dealership. You should also look at joining consumerreports.org for a year to get access to their car buying guide which can help you pick out the most reliable and least expensive to operate vehicle in your interest category.FuskieWho thinks you are focusing too much on the trees and missing the forest...
I'm assuming a car loan would be 3-5 years, but no longer than 5. I personally wouldn't put money I wanted to use for something specific into the stock market for only 5 years. Right now the markets on a high - but a lot of people in the financial industry think a big part of that is due to the Fed greasing the economy - odds are they'll stop in 3-5 years and who knows if there will be a correction then.And with a car, there's always a risk it could get damaged someway - and insurance might not pay you back as much as you still have a loan for - if the market's down at that time, than it's like losing twice.Might be wrong - but I also thought that car insurance is higher when one has a loan on a vehicle compared to once it's paid off (but I might be wrong there).Overall - if you have the cash I think it's better to pay cash than take out the loan and invest in the hopes your investment increases faster than your loan rate.
In what world is a lease ever a good idea?
In what world is a lease ever a good idea? When the numbers support it. There are times manufacturers heavily discount residual values and payments on leases to get cars on the road.
In what world is a lease ever a good idea? For businesses, tax deductibility is cleaner. When checking the numbers, it is possible for a lease to be cheaper. I considered a lease for a Leaf because the tax credits are applied to the lease, and I might not be able to claim the tax credits myself.
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