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Underwater? Viewed as an investment any car puts you underwater immediately - it's a net loss. If you borrowed money and are also paying interest on the vehicl
by dedward 16y ago
Underwater? Viewed as an investment any car puts you underwater immediately - it's a net loss.
If you borrowed money and are also paying interest on the vehicle, that's just MORE cost... I don't get the rationalization.
Yes, a new-ish used car is a better value for money deal than a brand new car - but if you have to borrow money, you are probably better off convincing your ego to let you buy a cheaper model rather than borrowing money from the bank to purchase something.
- matwood 16y agoThe general definition I use for 'underwater' is if I were forced to sell my car today would I get enough money for it to pay off the bank? Nowhere did I mention viewing a car as an investment. There is no rationalization. Of course it's more cost but there is also cost associated with reducing the amount of cash you have on hand. With that said, a car is the second biggest purchase most people make. It would be great if they all had the thousands of dollars to buy a reliable car with cash, but many don't. Personally the last car I bought was used and I got a 6% 5 year loan. I typically make double payments on cars so the loan is almost over less than 3 years in. I did the math the other day and accounting for interest I've done much better by buying the car on credit and leaving the rest of the money in my various investments. Over 2-3 years 6% isn't much to begin with so it's pretty easy to beat with other various investments.