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a loan (with interest?), on a depreciating "asset", which obligates higher risk-premium (ie:insurance) does not seem sensible to me (and never has when I run th
by edoceo 6y ago
a loan (with interest?), on a depreciating "asset", which obligates higher risk-premium (ie:insurance) does not seem sensible to me (and never has when I run the numbers).
- jandrewrogers 6y agoIt absolutely makes sense as a matter of elementary finance to use a loan when interest rates are low rather than paying cash -- I was buying a car regardless. The interest rate on the loan is far below my average rate of return investing the same amount of cash. The profit on the invested cash exceeds the loss from loan interest; I get to keep the remainder. Similarly, I put all of my daily expenses on credit. I pay off all of that credit at the end of the month. I am still borrowing money but I am paying no interest on it.
- thekyle 6y agoWhat did you invest the cash in? Corporate bonds?
- jandrewrogers 6y agoNo, bonds are a poor investment right now. I generally invest in equities.
- thekyle 6y agoWell that is an interesting strategy. Seems kind of high risk, high reward since equities could crash and not recover before your loan is due.