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Originally Posted by Ima saver
Believe it or not, my husband believes that his cars are an investment!! Since he works so hard, 7 days a week, I indulge his one vice, cars!! That said, we have a 1933 ford victoria that we paid $40,000 for, it is now worth $60,000. Our 1978 corvette is appraised at more than what we paid for it in 1978. (There were only 16 cars that came into the dealership in primer color and were painted non corvette colors and we have one) Now if we can just hang onto this vette for about 30 years, we may get our money back on that one too.
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That is a rare exception. Those are vintage cars or sports cars and they are only worth that much to COLLECTORS. If the economy fails, those cars will be worth nothing (just like everything else). 99.99999% people drive normal, non-collectable cars that depreciate. Always.
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Originally Posted by jmjj215
If I could borrow money at 1% and stick it in ING (now at 4.25%) I'd do it in a heartbeat. That 200k that ima has in savings is probably making her much more money than the 1% she's paying to borrow for the car.
That being said, I personally pay cash for cars.
To each his own. Both methods are perfectly fine in my opinion.
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My point was, if you have that much money in CASH, WHY take out a loan to pay for something? If I went to Wal-Mart looking for a box of cereal and I had $50.00 in my pocket and a CC with 1% interest, why finance the cereal when I have cash? That makes no sense. And please people, no "but I get rewards, blah blah
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Originally Posted by poundwise
Was one of the previous posters actually saying that he would be willing to LOSE money to avoid having a loan?
If you can get a car loan at, let's say, 2.5% you would pull money out of a 4.5% interest money market account just to be able to buy the car with cash? That doesn't make mathematical sense. You are 2% to the positive to take the loan and keep your cash earning the higher interest.
I appreciate the desire to avoid loans/debt, etc. but math is math.
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I see what you are saying. Maybe I wasn't that clear. The person that had $200k and $100k probably has some decent cash in their checking account. That's where I would pull it. Besides, yes, math is math but reality is also reality.
A car financed at 2% will depreciate quickly. If they did a 2 year loan, not only will that car be over-paid (with interest) it will also be worth a LOT less because it is 2 years old because of depreciation.
If I were able to build $300k, I am going to have cash on the side. Cash always wins. Besides, sure, they may get a "great" rate of 2%, but cash has more buying power. They could get the care cheaper with cash because there are no banks involved (for the dealer)
cbmeeks