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0 pointslancewiggs13y ago0 comments

You bought a $35,000 depreciating asset on finance, and one that is substitutable by something for $5000. If you had to sell the car in a year's time then it's very likely that you may not even make back the value of the loan.

Meanwhile you could have taken the $30,000 difference, and automatically paid those earnings that would have otherwise paid off the loan into savings, a 10K or a start-up.

Yu could also have purchased a motorcycle (for the fun) and a cheap box car (for the practicality). And let's not get into the running costs, the decision to drive every day, insurance and so forth.

Buying depreciating assets with anything but spare cash is really sad.

(When I lived in the US I purchased 2 cars - for a total sum of $2000.)

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sliverstorm13y ago

First, while cars are depreciating assets, the depreciation curve is a decaying exponential. This means that while the first year you go into the red, after 3-4 years you are back around the black again.

Second, interest free loans are practically better than spare cash. How do you know your parent didn't have $35,000 in spare cash, but wisely took the interest-free loan to leverage himself? You certainly cannot dismiss the possibility, as the poster must at least have respectable credit and/or income to qualify.

Third, your parent was merely making an observation on interest-free loans, which was pertinent to the parent of said post. Where do you fit in, criticizing his/her financial decisions and telling them what they should be doing with their money?

(My first two cars cost a total sum of $1200)

mjwalshe13y ago

Well the sensible way is to buy well maitained clasic cars a nice 911 will keep its value.

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