What do you drive?

[WhiteElephants]

Originally posted by Asher

How do you pay more for a car than it's worth when you buy it at the fleet price?

Because it immediately loses value.

You seem to think we're paying more overall to buy it upfront, when it's actually vice versa. At least in my case.

It's not true in your case, or anyone elses.

If you lease a car or a house, you're paying money for something you will never own and won't be able to sell at all when you're done with it...

That's potentialy not a bad thing either, especially if you've paid more money than the car you own is worth at the end of the day.

[Asher]

Because it immediately loses value.

What are your options? When working it out with a simple calculator, if you lease a car or finance it I end up paying more. In the case of leasing, I don't have ANYTHING left over at the end.

We just sold our 1992 Previa for $6000, and we bought it at $29000 (regularly $40000). That means we paid roughly $23000 for the use of the van over 10 years.

Or $191.66/mo in total.

There certainly was no lease or financing offer to match that...

[JohnT]

Re: Re: What do you drive?

Originally posted by WhiteElephants




While you may take whatever amount of pride in having bought your vehicles with cash, from a financial standpoint you're both rather foolish. The fact is as you drive your new car off that lot it depreciates in value to the tune of thousands of dollars. In otherwords, you'd purchased something that is worth far less than what you'd paid for it. Hardly a good buy, by any standards.

The house, on the other hand may appreciate in value, though the appreciation in real estate the last 10 (?) years has been unprecidented. I believe you're all familiar with the tech bubble, no? Well all bubbles eventually have to burst and a real estate bubble isn't unheard of. The mere liquidity of capital that you both squandered in your purchases is nothing to joke about, but I digress.

So, in summary, next time you choose to brag about buying such-and-such in cash realize that the only people you're impressing are people much like youreselves with little inkling of the actually value of money.

W.E., uhhh... well, if you like to pay interest and truly enjoy perpetual, never-ending car payments, well that is fine and dandy with me. Here's how I figure it:

I paid $20k for the car. Had I financed it at 8% interest, I would've paid about (guesstimating here) $25k for the car. Please, oh please tell me which investment vehicle (no pun intended ) that I should've invested the 20k in that would earn me (guaranteed) more than 8% over the next 5 years (assuming I was dumb enough to put a 5 year note on a car)? Stocks? Bonds? CD's?

[JohnT]

Also, WE, your argument assumes that we are the sort of owners who trade in every couple of years... if that were true, your point would be correct and I would've never had paid for the car in cash.

But we don't. We intend on keeping the Rodeo far longer than 5 years, which renders your argument moot. Could we have found a better investment for the $20k? Maybe, possibly... but we played it safe and decided against the -8% r.o.r.

[WhiteElephants]

Originally posted by dv8ed
My car...you know, what was being discussed before the threadjacking.

That's relative to whether or not you believe this thread was created out of genuine curiosity in what kind of car you drive, or a chance to foolishly brag you've bought your car with cash.

What are your options? When working it out with a simple calculator, if you lease a car or finance it I end up paying more. In the case of leasing, I don't have ANYTHING left over at the end.

I'll say it one more time you sacrafice your liquidity, capital, and opportunity when you pay cash. The potential financial value of that capital far, far, far exceed the potential financial value of that car that's depreciating daily in your driveway.

The fact that you have nothing left over at the end of a lease isn't neccessarly the bad thing you make it out to be. If you end up paying to drive the car for the value of the car why is it such a bad thing? Whether you have the car to sell at the end of the lease is trivial as you haven't paid as much as you would have to own the car and then sell it. Besides, you can turn around and get another new car and do it all over again.

Asher, your circumstances are slightly different because you're buying cars at below sticker price, but your still losing capital, liquidity, and opportunity to do it regardless.

I paid $20k for the car. Had I financed it at 8% interest, I would've paid about (guesstimating here) $25k for the car. Please, oh please tell me which investment vehicle (no pun intended ) that I should've invested the 20k in that would earn me (guaranteed) more than 8% over the next 5 years (assuming I was dumb enough to put a 5 year note on a car)? Stocks? Bonds? CD's?

Today, or yesterday, you should have bought USLB which closed at $9.80 the day before and closed today and $14.39, a 46.84% increase in value. And you two a pissing and moaning about 8% interest?

Furthermore a growth potential of 8% over five years is aiming quite low, most aim for 15%.

The fact of the matter is there is, the only "gaurantee" you have with your investment in a car is that you are gauranteed to lose money. That's a gaurantee I'm not in favor of and would always choose potential gain over gauranteed loss.

As for your 's, I'm the one laughing all the way to the bank on the profits I've made in just this week -- how about you two, how profitable was your vehicular investments this week?

Both of you are approach the situation from a stand point of, "What am I gaining?" All the while failing to consider what is being lost.

[Asher]

Originally posted by WhiteElephants
but your still losing capital, liquidity, and opportunity to do it regardless.

This tends to happen when we buy things, yes...
I lose capital, liquidity and opportunity whenever I buy food too, but I need to do it regardless.

Not everyone looks at cars in terms of an investment and what kind of return we get on it. Some of us just like to buy cars that are comfortable to be in, reliable, and get you where you want to go.

[WhiteElephants]

Originally posted by JohnT
Also, WE, your argument assumes that we are the sort of owners who trade in every couple of years... if that were true, your point would be correct and I would've never had paid for the car in cash.

But we don't. We intend on keeping the Rodeo far longer than 5 years, which renders your argument moot. Could we have found a better investment for the $20k? Maybe, possibly... but we played it safe and decided against the -8% r.o.r.

No, it doesn't. What my arguement assumes is that there are far more profitable ventures out there to invest in rather than tie up capital in an automobile and because those conditions exist you two are both foolish braggards for patting yourselves on the back for having paid cash for a car.

[Asher]

What my arguement assumes is that there are far more profitable ventures out there to invest in rather than tie up capital in an automobile

So what you're saying is never buy a car?

I've heard the term penny pincher...but wow...

[WhiteElephants]

Originally posted by Asher

This tends to happen when we buy things, yes...
I lose capital, liquidity and opportunity whenever I buy food too, but I need to do it regardless.

Not everyone looks at cars in terms of an investment and what kind of return we get on it. Some of us just like to buy cars that are comfortable to be in, reliable, and get you where you want to go.

Hey, I pay cash for food too, you don't see me plastering it all over the internet do ya? And if I could take out low interest loans on food I'd be doing that too.

It's fine that you don't look at cars in terms of investment, but don't go around proudly touting you've paid cash for it unless you're prepared to look rather foolish.

[Asher]

Originally posted by WhiteElephants
Hey, I pay cash for food too, you don't see me plastering it all over the internet do ya? And if I could take out low interest loans on food I'd be doing that too.

Very very strange man, WE...

Why you'd want to pay interest on anything is beyond me. Perhaps you'd invest the money otherwise, but I'm staying out of the stock market for a while myself, and I'm not interested in playing with low-return bonds or the money market...

[WhiteElephants]

Originally posted by Asher

So what you're saying is never buy a car?

I've heard the term penny pincher...but wow...

Real funny... of course that's not what I mean.

Is this all you have left? It's painfully obvious to me you've reached the end of your rope.

[Asher]

Originally posted by WhiteElephants
Real funny... of course that's not what I mean.

Is this all you have left? It's painfully obvious to me you've reached the end of your rope.

WE, the problem here is you assume everyone is stupid enough to play the stock market right now, or make some other worthwhile investments.

I don't see any investments that will guarantee me anything near the money I'd save by paying cash for a car, or avoiding a mortage, and I'd prefer the peace of mind of not having hundreds of payments ahead of me for the forseeable future.

Different strokes for different folks...
The strong minority use the money they save by doing a lease to invest, though. Most people would just buy a bigscreen or something instead.

[WhiteElephants]

Originally posted by Asher

Very very strange man, WE...

Why you'd want to pay interest on anything is beyond me. Perhaps you'd invest the money otherwise, but I'm staying out of the stock market for a while myself, and I'm not interested in playing with low-return bonds or the money market...

Yes, strange indeed. I assume you believe the Fortune 50 companies stay away from loans becuase they don't want to pay interest?

I'll tell you what, there hasn't been a better time in 15 years to get into the stock market, but if you want to use your money like a poor man don't be suprised when you become one.

[Asher]

Originally posted by WhiteElephants
Yes, strange indeed. I assume you believe the Fortune 50 companies stay away from loans becuase they don't want to pay interest?

You're comparing buying a car with cash to loaning millions of dollars as a successful company?

I'll tell you what, there hasn't been a better time in 15 years to get into the stock market, but if you want to use your money like a poor man don't be suprised when you become one.

Don't be stupid, you're not going to become poor by paying with cash for cars.

You could be less rich, providing you invested wisely, but then again you could be much poorer since you were an idiot and invested thousands of dollars into Enron the day before the scandal began.

[JohnT]

Well, given that my net worth is well into the 6 figures, I really don't have any complaints on that score. But to say that I shouldn't have paid for a car in cash in the year 2001 because US Labs went up 46% on 8-9-2002 doesn't really make sense. Sure, the opportunity cost is/was high, but given that I am not prescient (nor do I have an ear on the Bureau Veritas BOD) this isn't a true assessment of how personal finance works for us non-day traders/stock professionals.