-
Want to remove ads? Register an account and login to see fewer ads, and become a Supporting Member to remove almost all ads.
Anyone buying Tesla Model Y in cash?
- Thread starter JetFalcon
- Start date
ElectricIAC
Good-Natured Rascal
Why?
It’s been proven thus far that Dave Ramsey is somehow still relevant despite his ignorant and deliberate misinformation on responsible credit use. Paying cash (especially in small bills) and receiving car, keys and title is a good feeling but an emotional fallacy. You’re only guaranteed to lose value in that fluid capital you just handed over vs investing in any number of options: it doesn’t have to be the stock market.
If you have a mortgage, send that money toward the principle instead. If you own your own business and are in a position to expand or diversify, get on it. Precious metals, Rental properties. The possibilities and opportunities to make your money work for you at a return exceeding (excellent credit) auto loan interest are endless.
It’s been proven thus far that Dave Ramsey is somehow still relevant despite his ignorant and deliberate misinformation on responsible credit use. Paying cash (especially in small bills) and receiving car, keys and title is a good feeling but an emotional fallacy. You’re only guaranteed to lose value in that fluid capital you just handed over vs investing in any number of options: it doesn’t have to be the stock market.
If you have a mortgage, send that money toward the principle instead. If you own your own business and are in a position to expand or diversify, get on it. Precious metals, Rental properties. The possibilities and opportunities to make your money work for you at a return exceeding (excellent credit) auto loan interest are endless.
For those arguing against paying cash if you can, I've got a question for you:
Let's say I gave you my brand new Model Y valued at ~60K. Free and clear. You're welcome. Now... will you go out and secure a loan against it so that you can invest the loan and start making monthly payments?
Let's say I gave you my brand new Model Y valued at ~60K. Free and clear. You're welcome. Now... will you go out and secure a loan against it so that you can invest the loan and start making monthly payments?
FredMertz
Member
FredMertz
Member
If you are a 100% economically rational person and you can get a low-interest loan secured by the vehicle (something that I do not believe actually exists), yes you should.
Why are you having so much trouble synthesizing that most of the decisions we make on a daily basis are not 100% economically rational and that's OK?
There is an irrational fear of debt in this country that I believe stems from us all being only 2-3 generations away from people who went through the Depression and don't have any understanding of economics.
Leverage is good!
Electric Steve
Member
Electric Steve
Member
Leverage is a mixed good.
A bird in hand is worth two in the bush. The possibility of making a few points of profit has to be weighed against the actuality of retaining the principal and avoiding the interest.
In theory, a hypothetically rational person will perform the game-theoretic calculations by multiplying out the Bayesian-derived probabilities to get expected yield. Practically, this ignores factors that aren't irrational, just outside the scope of the simplistic model of what it means to be rational. (Recommended book: Thinking, Fast and Slow.)
A while back, a co-worker asked me for advice on what to do with their PSU's -- stock in the company, issued as a bonus -- and was leaning towards retaining them because they hoped it would grow in value over time. This makes sense on the surface, but is mostly wrong.
I asked the same sort of probing question that @roleary did: if you had received that as a cash bonus, would you have immediately invested it in the company's shares or would you have perhaps diversified? Granted, there are tax complications to immediately selling units as they vest instead of waiting a year, but the point was made and received. They did not let it ride and thereby put all of their eggs in the same basket.
What's missing in the equation is the notion of goals. Yes, buying anything at all entails an opportunity cost, but that doesn't mean that maximizing leverage optimizes for our desired ends. If your goal really was to make the most money (or perhaps lose a lot in the attempt), you shouldn't buy a Tesla, even through a loan. You should invest it all in the riskiest, highest-gain financial vehicle you can find. I mean, nobody's ever lost money on mortgage-backed securities because tranching is magic, right?
I'm starting to wonder if maybe we do disagree, not so much on the raw facts but on how much weight we put on them. Kind of like, "Yes, I know these cigarettes are killing me, but I value the pleasure they bring me above the costs." It's hard to argue with that, even though it's wrong.
Last edited:
linux-works
Active Member
I agree and bought my 3 in cash last year. Already made a killing on the 35K I didn't invest last year
I like buying depreciating assets in cash so I'm not upside down (despite what Elon said
Jokes aside I do have debt, student loans at 2.5% that also get me a tax break and are eventually forgiven. Car loans not so much
FredMertz
Member
I agree and bought my 3 in cash last year. Already made a killing on the 35K I didn't invest last year
I like buying depreciating assets in cash so I'm not upside down (despite what Elon said
Jokes aside I do have debt, student loans at 2.5% that also get me a tax break and are eventually forgiven. Car loans not so much
What's wrong with briefly being underwater on a long-term financial commitment? If being forced to sell it and take the loss is a reasonable possibility, you can't afford a car.
I'm no Dave Ramsey but most people are over extended/ have no savings. (Might not be true for Tesla crowd that can do math).
I think leverage IS good for investments/business, a car (and arguably a house) is not that.
This is also the reason why so many people/companies are in trouble with the current covid situation. - lots of debt that is so dependent on today's cash flow. Then the fed comes in to save the day with 0% rates to make matters worse for the long term. Might be good for business, but personal debt at such rates is a bad idea IMO like financial crack
My problem is what do I buy now that's a good deal and low interest rate for my savings. So even a 3% loan feels like a waste.
Last edited:
Bikeman
Member
My answer to the OP's question on page one of this thread was mostly tongue-in-cheek, of course. Seems like this thread has grown some serious legs, so I'll answer in more detail what I have and continue to do.
Cars and sometimes commercial real estate can and have, for me at least, been depreciating assets. I can't imagine taking out a 60 or 72 month loan on a vehicle, paying all that interest over the term of the loan on a depreciating asset, unless the vehicle is used for business. Then you can apply that depreciation towards the business taxes. I've done that a couple times too. But cars for personal use, you're going to lose money both ways. Forget what Elon says about a Tesla being an appreciating asset in a couple years; he's not talking sense.
So, what can one do? Take one of those expenses, the vehicle, or the loan, out of the equation. I know many people under the age of 30 that don't own a car and don't have plans for one, so maybe they've figured out something? That won't work for me, so I delete the loan.
Starting about 8 cars and 43 years ago, during my Chevy Chevette 36 payments of $116/mo., including as I recall an insane interest rate at the time (it really was), I started something that would be a life long practice. As I finished the 36 payments, I opened a separate savings account earmarked "next car." I still owned the Chevette, but with every subsequent paycheck I began depositing seed money at an ever increasing rate as both income and age increased. By the time I sold the Chevette to an employee, I had saved enough to pay about 50% of the replacement car as cash, plus a small loan covering the rest. I never closed out the "next car" account, besides moving it from bank to bank over the decades.
Beginning day one with that new vehicle I continued the practice depositing parts of every paycheck. By the time I needed another, this time a van, I had enough to pay cash. There was still something left in the car account. Fast forward a couple more vehicles and paying cash for new cars with ever more % of the account reserve remaining afterwards. I got ahead of that loan circus altogether, no interest to pay, and the best part is, with creative banking, opening a "next car" certificate of deposit side account and getting much higher interest in the mean time. It takes some planning, in my case a decade or more, but there is a way to pay cash without it being at all painful.
Cars and sometimes commercial real estate can and have, for me at least, been depreciating assets. I can't imagine taking out a 60 or 72 month loan on a vehicle, paying all that interest over the term of the loan on a depreciating asset, unless the vehicle is used for business. Then you can apply that depreciation towards the business taxes. I've done that a couple times too. But cars for personal use, you're going to lose money both ways. Forget what Elon says about a Tesla being an appreciating asset in a couple years; he's not talking sense.
So, what can one do? Take one of those expenses, the vehicle, or the loan, out of the equation. I know many people under the age of 30 that don't own a car and don't have plans for one, so maybe they've figured out something? That won't work for me, so I delete the loan.
Starting about 8 cars and 43 years ago, during my Chevy Chevette 36 payments of $116/mo., including as I recall an insane interest rate at the time (it really was), I started something that would be a life long practice. As I finished the 36 payments, I opened a separate savings account earmarked "next car." I still owned the Chevette, but with every subsequent paycheck I began depositing seed money at an ever increasing rate as both income and age increased. By the time I sold the Chevette to an employee, I had saved enough to pay about 50% of the replacement car as cash, plus a small loan covering the rest. I never closed out the "next car" account, besides moving it from bank to bank over the decades.
Beginning day one with that new vehicle I continued the practice depositing parts of every paycheck. By the time I needed another, this time a van, I had enough to pay cash. There was still something left in the car account. Fast forward a couple more vehicles and paying cash for new cars with ever more % of the account reserve remaining afterwards. I got ahead of that loan circus altogether, no interest to pay, and the best part is, with creative banking, opening a "next car" certificate of deposit side account and getting much higher interest in the mean time. It takes some planning, in my case a decade or more, but there is a way to pay cash without it being at all painful.
Last edited:
ElectricIAC
Good-Natured Rascal
When’s the last time a CD paid enough interest to be worth mentioning?
Sady, I just contributed by reading the whole thing and posting this comment
@JetFalcon - if you were indeed serious, I'm with the others who say buy used and take the depreciation. TBH, while your initial post concerns most of us with its overtones of affluenza, I'm actually happy you're trying to buy the car with your own $$$. If your arcade income (eSports perhaps?) affords you an honest, bonafide revenue stream to purchase the car given your station in life, more power to you friend.
HeyEph
Member
Does Tesla use 3rd-party banks for the loans if you select "Tesla" is the source? I just had a couple inquiries hit my credit report. Does this mean I'm close?
rxlawdude
Active Member
Yes, they use several banks. As to how close, I don't think anyone can tell you that.
