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Because often interests on car credits are lower than the inflation, and maintenance costs on second hand are very hard to foresee.
by maigret 15y ago
Because often interests on car credits are lower than the inflation, and maintenance costs on second hand are very hard to foresee.
- nostrademons 15y agoInterest on car loan is still higher than any investment I can think of with equivalent risk characteristics. 3-year treasuries are currently yielding about 0.75%, 3-year car loans are about 3-4% on a quick Google search. I don't see how you could arbitrage that into a profit. Also, paying off (non-tax-deductible) loans essentially buys you after tax dollars, while investments must be bought with pre tax dollars (though some are capital gains taxes if you hold them long enough). That's an additional 15-40% you have to chop off the return rates of investments when comparing them to paying off debt.
- maigret 15y agoOK. Car-dealers loans (made by the car-marker banks) run usually around 1% where I live. Inflation is currently around 2.5% yty. Also some investments are quite tax-free, but most investment run about 25% taxes here in Germany.