I need to lose my car payment.

[ckkone]

I love the Internet, so many experts.

[Dadhawk]

Originally Posted by ckkone

I love the Internet, so many experts.

I don't think any of us are claiming to be experts, the OP asked for opinions, and that is what he is getting. I'd call it a good discussion over beer amongst friends.

[Dadhawk]

Originally Posted by extrashaky

No, it counts backwards:
....

To me, you are leaving out the part where in a net worth calculation you have to subtract the debt on the car in month 2. So, to me, in the end, the day you and I drive off the lot, we are in the same position except I now spend the next 5 years (or whatever the term of the loan is) adding money to my account, and you subtract it from the debt.

For example, $25,000 car. We both have $25,000. I pay cash for the car and have a net worth of zero day one. You take out a loan, and therefore have a net worth of zero day one.

In both cases we have a $25,000 asset that is decreasing in value. In my case that carries no risk to me. In yours, it does. Whether your scenario plays out positively for you requires a set of assumptions and what-ifs.

There is no real downside for me as I can sell the car at any point and recover the same net value you can.

[ckkone]

Originally Posted by Dadhawk

the OP asked for opinions, and that is what he is getting. I'd call it a good discussion over beer amongst friends.

He asked how to get rid of his loan.

1. Sell the car
2. Pay off the loan

Had he bought a car he could afford he never would have asked this question, back to my point if you can't afford to pay cash for a car its out of your price range.

[BlackMonarch]

What have I started, my goodness.

[Tcoat]

Originally Posted by BlackMonarch

What have I started, my goodness.

Don't sweat it! This is a pretty standard debate that shows up every time somebody says anything about their financing.
There are some far worse threads when a handful of guys start to debate some small matter (i.e. a 20 page thread on what the tire pressure should be) so this is nothing.

[Tcoat]

Originally Posted by ckkone

He asked how to get rid of his loan.

1. Sell the car
2. Pay off the loan

Had he bought a car he could afford he never would have asked this question, back to my point if you can't afford to pay cash for a car its out of your price range.

Only 12 to 15% of new car purchases are made with cash. It just is not a realistic option for everybody and if every person stopped financing and waited to save enough the whole industry would crumble, millions would be out of work and the economy would be devastated.

[stugray]

Originally Posted by ckkone

He asked how to get rid of his loan.

1. Sell the car
2. Pay off the loan

Had he bought a car he could afford he never would have asked this question, back to my point if you can't afford to pay cash for a car its out of your price range.

This is NOT a fact, it is an opinion (and a flawed opinion)

Option #1 save $500 a month for 5 years and go buy a new car then
OR
Option #2 spend $500 a month for 5.1 years starting now for a new car

No difference just slightly longer duration (and therefore total cost) in total for option #2.
The "monthly expense" is the same for both cases, so how can one "afford" ONE, but not "afford" TWO

I make a lot of $ and I choose to finance my car @ 3% instead of paying up front, because the $ I have in hand is making >25% ROI where it is sitting right now.

I would be an idiot to take cash out of an account making 30% to pay for a car instead of paying 3% financing for the car.

[Dadhawk]

Originally Posted by stugray

I would be an idiot to take cash out of an account making 30% to pay for a car instead of paying 3% financing for the car.

I think idiot is a strong word, its just a choice as to how you decide to spend your money.

In theory, if this makes you an idiot, why pay cash for anything? You spend a lot more money every month on other items/expenses than your car payment. All that money is losing 30% in your example. So, why not pay for everything you consume with credit?

Does it make you an idiot to pay cash for TV rather than finance it? It's a depreciating asset like a car.

Or taken to the extreme for that matter the breakfast you had at Waffle House this morning. That money is gone forever, with no chance of recovering a portion of it or making any money on it. Wouldn't it be better to use a credit card at 18% interest if you really are making 30% on all your money?

[reni]

Originally Posted by srt4evah

What's so funny? AAPL made me $50k in the last 12 months.



AAPL
TSLA
FB

All 3 stocks rose 30-40% in the last 12 months... not that hard to pick hot stocks, the trick is just knowing when to sell.

Listing stocks that went up in hindsight is meaningless.

Why don't you share your thoughts on what to buy *now* that will be up 40% in 12 months.

[Tcoat]

Originally Posted by reni

Listing stocks that went up in hindsight is meaningless.

Why don't you share your thoughts on what to buy *now* that will be up 40% in 12 months.

[Bergen23]

Originally Posted by ckkone

He asked how to get rid of his loan.

1. Sell the car
2. Pay off the loan

Had he bought a car he could afford he never would have asked this question, back to my point if you can't afford to pay cash for a car its out of your price range.

That's a negatory, big tuna. I couldn't afford to pay cash because I don't keep large sums of cash hanging around because my money isn't a liquid asset. It's tied up in RRSP's. There's no way that I'd pull money out of that and get taxed on it. That's just silly. Instead I'll finance a car that I'll have paid off in just over a year from the purchase date, or 2 years at the most.

Plus, that money in the RRSP will be far better spent on a house.

[srt4evah]

Originally Posted by reni

Listing stocks that went up in hindsight is meaningless.

Why don't you share your thoughts on what to buy *now* that will be up 40% in 12 months.

Why?

[Dadhawk]

Originally Posted by srt4evah

Why?

It's hindsight, so it looks good but doesn't prove anything. Using this same logic I could argue against it by pointing out its not a good idea because if you had NOT taken your money out before the .com crash or the real estate crash and paid for a car, it had the opposite effect.

You actually lost money by leaving your money invested rather than buying a car and losing your money more slowly that year.