Your M3 price vs. your disposable income

[kbM3]

I wasn't talking about fixed rates of return investments. It's hard to make money that way, especially if you need money from a vehicle loan to invest. Take away your fixed rate of return and your whole post falls apart. Keep it and it's a waste of my time to make pennies if anything at all since I'll take the cash back instead of low APR.

When I bought TSLA I knew I could lose all or substantially all of my money much like most of my investments. So I invest what I can afford to lose. If you need money from a depreciating investment loan then you can't afford to lose it. There's a huge difference to me between investing money I have to invest and money borrowed to invest which I would never do. I'm surprised you see no difference.

But thanks for the lecture even though it's was better saved for old ladies or men when selling reverse mortgages. They make the same arguments never being honest and saying you could lose it all -- then many elderly do. I'm not old enough yet to fall for your number game.

It was also like listening to so many investment advisors who set out simple but fatally flawed ways to invest because most people of all ages don't look past the shell game they play with numbers like in your post.

Once again. Whether the asset appreciates or depreciates is an absolutely irrelevant factor in the decision of whether to finance or not.

If you think that it is relevant, post the math. Quantify the amount of difference it makes in each case.

 

[Canuck]

The fact that you tell me to "post the math" shows that you don't understand how to invest because the math is unknown at this stage unless we are dealing with fixed investments which will not make you anything.

 

[kbM3]

Actually the equations should have been:

Pay cash:
Gain = Appreciation.

Borrow:
Gain = Appreciation + Net investment gain - total loan costs.

 

[SageBrush]

Whether the asset appreciates or depreciates is an absolutely irrelevant factor in the decision of whether to finance or not.

Would you be happier if we said "think twice about buying a depreciating asset if you do not have the money." ?

 

[kbM3]

The fact that you tell me to "post the math" shows that you don't understand how to invest because the math is unknown at this stage unless we are dealing with fixed investments which will not make you anything.

Then show me a case with a fixed investment. There cannot be any case in which it makes a difference.

 

[kbM3]

Would you be happier if we said "think twice about buying a depreciating asset if you do not have the money." ?

The smartest thing to do is to look at the true cost to own (including a guess at depreciation) and weigh that against the pleasure you expect to get from the purchase. It is a very personal decision for any purchase.

Getting back to model three, I expect it to have an incredible resale value-

 

[SageBrush]

The smartest thing to do is to look at the true cost to own (including a guess at depreciation) and weigh that against the pleasure you expect to get from the purchase.

To be clear, financing is being used here in the context of indebtedness.

Debt is a harsh master. You take from your future; and if you are unlucky and lose your job and income stream you may have little separating you from a life on the street.

 

[gambit48]

To be clear, financing is being used here in the context of indebtedness.

Debt is a harsh master. You take from your future; and if you are unlucky and lose your job and income stream you may have little separating you from a life on the street.

I understand where you're coming from and why you posted that.

Just a bit odd seeing that statement on a Tesla site. That's the M3 demographic coming into play I guess. When it was just S/X and Roadsters, I bet nearly all of the posters would be screaming, "No! At 1% financing rate, I'm taking that deal and using their money to buy the car so I can use MY money to make more money and totally beat that 1% rate." Whether it's in real estate, stocks, etc.

 

[kbM3]

I understand where you're coming from and why you posted that.

Just a bit odd seeing that statement on a Tesla site. That's the M3 demographic coming into play I guess. When it was just S/X and Roadsters, I bet nearly all of the posters would be screaming, "No! At 1% financing rate, I'm taking that deal and using their money to buy the car so I can use MY money to make more money and totally beat that 1% rate." Whether it's in real estate, stocks, etc.

It is very true. The ability to choose between paying cash or financing a Model 3 only applies to a very small percentage of the population.

 

[jbcarioca]

It is very true. The ability to choose between paying cash or financing a Model 3 only applies to a very small percentage of the population.

Roughly 40% of US new vehicle buyers do so in cash. Remember that an absolute majority of all US buyers over the age of 50 either buy for cash or lease through a company.
For people in their 30's or younger the proportion of cash buyers is quite small, but varies enormously with vehicle cost, the more expensive the more cash buyers.
Sadly, I do not have nonproprietary data to quote. There must be some public data somewhere on this point.

 

[sleepingawake]

I don't imagine too many people are getting approved for loans for cars that cost double their income.

What kind of bank is stupid enough to approve such a risky loan and what would the interest rate be?

The exception could be people who mooch off their parents and have relatively high paying jobs. Even then I doubt that's "plenty" of people. Someone driving $80K car that earns $40K a year? Doubt it's possible.

In every car forum the same thing happens, on one side the person who argues that anyone not paying cash is an idiot, on the other side the person who is car poor and trying to convince everyone that's just ducky and the rest of us in the middle looking around saying "WTF, how did we get here"?

Well, in Turkey, we win something like 9.000$. But an average car is lets say Honda Accord 2.0 is 60.000$ thanks to our governments *sugar* tax system. So winning 40.000 and spending 80.000 is a cheap thing in turkey. And %50 of people vote for this government. They love giving tax.

 

[206er]

just LOL at the financing-shaming posts here.

My home and car are currently financed, and my college education was partially financed. Personally, I feel completely at peace with financing and am happy with my financial health/outlook.

 

[kbM3]

just LOL at the financing-shaming posts here.

My home and car are currently financed, and my college education was partially financed. Personally, I feel completely at peace with financing and am happy with my financial health/outlook.

You should be. Unfortunately, some people love to judge.

 

[EVNow]

... and my college education was partially financed.

Terrible. I'd personally not go to college until I can pay cash.

As soon as I can get an education & job, I'll be able to earn enough money to pay cash !

 

[jbcarioca]

just LOL at the financing-shaming posts here.

My home and car are currently financed, and my college education was partially financed. Personally, I feel completely at peace with financing and am happy with my financial health/outlook.

And why should you not be? Realistic people understand that most people spend 2/3 of their lives establishing themselves and 1/3 spending what they've established. More or less it has always been thus, although the sources and uses have changed over the centuries and decades.

 

[Stolz25]

This is an interesting article The 1/10th Rule For Car Buying Everyone Must Follow | Financial Samurai

To be honest I did not quite follow that rule....

Sounds like you could buy a new car every year following his rule, and spend way more money than I do buying one and keeping it for 10.

 

[jbcarioca]

Sounds like you could buy a new car every year following his rule, and spend way more money than I do buying one and keeping it for 10.

Financially, really prudent people tend to follow something like your rule. Most of us are not financially quite that prudent.

 

[Stolz25]

Financially, really prudent people tend to follow something like your rule. Most of us are not financially quite that prudent.

It's not really a rule. I was just saying I don't generally go crazy on cars, but his rule would have me paying 10k for one, which is way cheap even for me. However, I could spend 100k over 10 years with that rule, which is a ridiculous amount.

My basic point was just that the rule is stupid.

 

[Sully's8]

The whole reason our children's children won't own a car is because of the poor investment that all vehicles represent. This petty argument about financing / paying cash underscores that position. . . Would be better to have cash and pay as you go rather than suffer evaporating equity / negative equity and opportunity cost loss. There will likely be a vehicle subscription service for either a small fixed amount, or a pay as one goes plan for a la carte vehicle use. No one will own vehicles. . . Once they drive themselves (eliminating drivers- be they uber, cabbie and / or livery) the consumer's position on vehicle ownership will change.

IMHO we are in the last throes of individual vehicle ownership (aside from those who own and drive as a pastime- if human drivers retain the legal right to drive).

Sorry to change the subject but vehicles are essentially a really expensive "consumable." They last a bit longer than toilet paper, but we still call them investments because they cost so damn much money.

Anyway. . . Take or leave and happy Monday.

If I was a bit younger I'd start planning to renovate my garage. Can't bring myself to do it, especially since I already brought a second 50 amp circuit to await the model 3.

I justify the expense (NB: I did not use the term "investment") as I consider myself an "enthusiast".

M

 

[GeekGirls]

In chatting with my wife about this thread we realized that there’s another significant variable that contributed to our financial situation: neither of us chose to have children. I suspect number of children someone is responsible for has a much more significant bearing on their financial situation than whether they choose to finance their car!