Financing for auto loan

[FMCoug]

This thread has been a lot of fun. It is clearly Exhibit A for Lebowski's point that we debate stuff on here as if the fate of the free world depends on it.

[hostile]

This thread has been a lot of fun. It is clearly Exhibit A for Lebowski's point that we debate stuff on here as if the fate of the free world depends on it.

NO WE DON'T

[Mormon Red Death]

So, in order to be bored with something, you have to use it all the time? What percentage of the time is enough before you can be bored using it?

If you have a 30 minute commute (and I'll be DDD has at least that), that's an hour a day spent using a car. You may end up using your car more than that on weekends. Keeping it steady at an hour a day, that's 730 hours in two years. 730 hours over two years isn't enough use to become bored with something?

It seems to me he would get more bored with his commute than with his car. But hey if you and ddd need a new car every two years so your not bored so be it. Financially speaking its not a smart move but like most things in life its not all about the financial equation.

Sent from my SGH-T839 using Tapatalk 2

[old_gregg]

new or used? Obviously due to depreciation, the cost of financing for a new car needs to be adjusted for depreciation vs. the financing for a used car.

i'm talking strictly in cost of money terms.

an external consideration is if one's new car or lease includes a substantial warranty. it only takes one bad timing belt, catalytic converter, head, transmission, etc., or some such to quickly negate not incurring depreciation.

[FMCoug]

I just drove my car to the plumbing supply store (yes DDD these do exist) and to dinner. I tried to feel bored or like I was in a beater but was unsucccessful on both counts.

[falafel]

I just drove my car to the plumbing supply store (yes DDD these do exist) and to dinner. I tried to feel bored or like I was in a beater but was unsucccessful on both counts.

Don't worry. The rest of us could see that you were driving a beater.

[Viking]

i'm talking strictly in cost of money terms.

an external consideration is if one's new car or lease includes a substantial warranty. it only takes one bad timing belt, catalytic converter, head, transmission, etc., or some such to quickly negate not incurring depreciation.

I don't think you can compare that way. You have to incorporate the fairly significant yr 1 depreciation of a new vehicle in your analysis. It's de facto interest cost you bear by virtue of owning a new car vs a depreciated vehicle. As in 15-20% minimum depending on the car. It rarely, if ever, makes sense to buy new.

[Uncle Ted]

I you can avoid it, pay cash. Paying interest for a rapidly depreciating asset is never intelligent.

Maybe not if the spread is in your favor. Say you can get a 4.5% yield investing in bonds the interest rate on the car loan is 1.9%. You would get 2.6% on the spread if you use your cash to buy some bonds instead.

I do agree that new cars depreciate too rapidly.

[old_gregg]

I don't think you can compare that way. You have to incorporate the fairly significant yr 1 depreciation of a new vehicle in your analysis. It's de facto interest cost you bear by virtue of owning a new car vs a depreciated vehicle. As in 15-20% minimum depending on the car. It rarely, if ever, makes sense to buy new.

i think we agree that purchasing a new vehicle is basically unjustifiable when there's a ready market for the same car with few miles. front loaded depreciation is important and silly to pay. my point is that to finance a 1yr old vehicle compared to sacrificing liquidity by paying cash for a 6yr old vehicle leads to a difference that isn't as large when all factors are considered.