No, you are taking out a mortgage on a depreciating asset and investing cash at your level of risk tolerance. If your level of risk tolerance is a savings acco

No, you are taking out a mortgage on a depreciating asset and investing cash at your level of risk tolerance. If your level of risk tolerance is a savings account at 0.5% so you can always have an emergency buffer, that's fine. The argument is that to make an apples-to-apples comparison of total cost of ownership of one car and another, you should always include financing costs. They are basically your lowest cost of capital. Think of it this way: even if you're going to pay cash, leaving the finance cost in allows you some basis of comparision between the cost to you of putting say, $30K cash into a car versus putting $20K cash in. It's not exact but it's a useful simplification.