Pay cash or finance ??

[Redhot2474]

I was going to pay cash for new Taycan (about 165k) given recent interest rate increase. I was able to find rates from local credit union in low 3’s. Seems foolish not to take advantage of that. Recent money market in US yields about 3% and 2 year CD’s yielding around 5%. I was thinking of putting 50-70k down and investing rest into different investment “buckets”. I’ll probably keep this car 3-4 years. Anyone in similar situation? Thoughts? I know everyone’s situation is different but just seems foolish to dump all that cash in a car. I don’t “need” the cash per se, might be nice to have extra cash on hand

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[Sidicks]

I was going to pay cash for new Taycan (about 165k) given recent interest rate increase. I was able to find rates from local credit union in low 3’s. Seems foolish not to take advantage of that. Recent money market in US yields about 3% and 2 year CD’s yielding around 5%. I was thinking of putting 50-70k down and investing rest into different investment “buckets”. I’ll probably keep this car 3-4 years. Anyone in similar situation? Thoughts? I know everyone’s situation is different but just seems foolish to dump all that cash in a car.

if you weren’t buying the car, would you borrow money to invest?

 

[Kippax]

Obvious thing to say but it all depends on your personal financial situation. We bought our Taycan with cash last week and could sell it tomorrow with a 20% premium.

 

[Redhot2474]

if you weren’t buying the car, would you borrow money to invest?

U mean leverage ? Yes, I did it with my mortgage

 

[Redhot2474]

Obvious thing to say but it all depends on your personal financial situation. We bought our Taycan with cash last week and could sell it tomorrow with a 20% premium.

yes, but that 20% would be there regardless(at least now)- I’m thinking it’s nice to have some extra cash hangin’ around

 

[TXSchnee]

3% is below inflation, it makes more sense to keep some money and finance.

 

[TDinDC]

Finance at 3%, PARTICULARLY given inflation. There are even fixed income solutions offering more than 3 % at the moment so better uses for cash. Recessions and depressions are the time for those who can to buy non-depreciating assets and longer term investments.

 

[RAHRCR]

I was going to pay cash for new Taycan (about 165k) given recent interest rate increase. I was able to find rates from local credit union in low 3’s. Seems foolish not to take advantage of that. Recent money market in US yields about 3% and 2 year CD’s yielding around 5%. I was thinking of putting 50-70k down and investing rest into different investment “buckets”. I’ll probably keep this car 3-4 years. Anyone in similar situation? Thoughts? I know everyone’s situation is different but just seems foolish to dump all that cash in a car. I don’t “need” the cash per se, might be nice to have extra cash on hand

Taycan is in the toy category for me…..I pay cash for all toys.

 

[TDinDC]

Taycan is in the toy category for me…..I pay cash for all toys.

Why does the use matter? If you can finance at 3% and earn at even 3.5%, why wouldn’t you finance, even if a toy?

 

[Redhot2474]

Why does the use matter? If you can finance at 3% and earn at even 3.5%, why wouldn’t you finance, even if a toy?

could be a billionaire ,buying the Taycan could be a rounding error for some. Some people are in a different “arc” of life , they have more cash on hand then they’ll ever need, for some I’d imagine it’s just “easier”

 

[Sidicks]

Why does the use matter? If you can finance at 3% and earn at even 3.5%, why wouldn’t you finance, even if a toy?

Because the 3.5% isn’t guaranteed, so you aren’t comparing like with like?

 

[RAHRCR]

could be a billionaire ,buying the Taycan could be a rounding error for some. Some people are in a different “arc” of life , they have more cash on hand then they’ll ever need, for some I’d imagine it’s just “easier”

Not a billionaire for sure but this sort of captures it.

 

[Archimedes]

Why does the use matter? If you can finance at 3% and earn at even 3.5%, why wouldn’t you finance, even if a toy?

After tax? Find a term matched perfect after tax hedge and then maybe. Absent that, you’re mismatching risk.

Also, not sure where people are seeing 3% car loans right now. Data I’ve seen is 4.5-7%.

 

[TDinDC]

After tax? Find a term matched perfect after tax hedge and then maybe. Absent that, you’re mismatching risk.

Also, not sure where people are seeing 3% car loans right now. Data I’ve seen is 4.5-7%.

I’m taking him at his word. And obviously tax matters but 3% is not that hard to match or beat at the moment.

 

[TDinDC]

could be a billionaire ,buying the Taycan could be a rounding error for some. Some people are in a different “arc” of life , they have more cash on hand then they’ll ever need, for some I’d imagine it’s just “easier”

Not sure I understand. Yes, you need to have cash to be considering choice as to whether to pay with cash or finance, but assuming the question is real, then the choice is the same whether you are a millionaire or billionaire. It is all about difference between cost of money and opportunity. The fact that it is a depreciating asset matters, but if you have already made the decision to buy, that variable is no longer relevant to the decision.

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