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General E46 Forum
This is the place to get answers, opinions and everything you need related to your E46 (sedan, coupe, convertible and wagon) BMW!

View Poll Results: Stay with E46? or trade for 2010 or 11 WRX
Yes 38 59.38%
No 21 32.81%
Maybe 5 7.81%
Voters: 64. You may not vote on this poll

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Old 10-11-2010, 06:40 PM   #61
habbyguy
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Join Date: May 2008
Location: Mesa, AZ
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Originally Posted by i heart haters View Post
I guess anyone who blankets people who get loans for a car as foolish, dosn't know simple math. If you know how to invest and you know the time value of money, you know money is worth more today than it is 5 years from now.

If you pull out a car loan for $30,000 at 4.5% and you can invest that $30,000 in a stock/mutual fund/whatever at 5.0% ROI your actually making money...
Except that those low car loan rates aren't there because the dealership is feeling generous... so the low interest rates are offset by pricing the car higher (you can get a much better price paying cash). No matter what you negotiate, you'll be paying the dealer the price he wanted for the car and the price he wanted for tying his money up for the finance period - there are no free rides. If you don't think so, go in and negotiate the dealer's best cash price, and then tell him you've decided to let him finance that amount at 1.9% or 4.5% or whatever their "special rate" is.

Besides, if you don't have the full purchase price of the car sitting in the bank to start with, your scheme doesn't work out too well (since you don't have anything to invest).

Is it possible to overcome even the higher "effective interest rate" by investing wisely? Sure - it's also possible to lose your shorts (anyone who's invested much has done both). So I'm not disagreeing entirely with you - it is possible to do well enough in the market to offset the cost of financing - but I doubt many realistic portfolio managers would recommend their clients who NEED to finance a car should do that. Just sayin...
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Old 10-12-2010, 08:55 AM   #62
i heart haters
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Location: Annapolis, Maryland
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Originally Posted by habbyguy View Post
Except that those low car loan rates aren't there because the dealership is feeling generous... so the low interest rates are offset by pricing the car higher (you can get a much better price paying cash). No matter what you negotiate, you'll be paying the dealer the price he wanted for the car and the price he wanted for tying his money up for the finance period - there are no free rides. If you don't think so, go in and negotiate the dealer's best cash price, and then tell him you've decided to let him finance that amount at 1.9% or 4.5% or whatever their "special rate" is.

Besides, if you don't have the full purchase price of the car sitting in the bank to start with, your scheme doesn't work out too well (since you don't have anything to invest).

Is it possible to overcome even the higher "effective interest rate" by investing wisely? Sure - it's also possible to lose your shorts (anyone who's invested much has done both). So I'm not disagreeing entirely with you - it is possible to do well enough in the market to offset the cost of financing - but I doubt many realistic portfolio managers would recommend their clients who NEED to finance a car should do that. Just sayin...
I was just trying to simply state that anyone who blankets someone who takes out a LOAN on a car as foolish, is being ignorant. So yes you are correct in terms of you would need the entire amount to invest . But then that also says if your going to choose to only buy a 15k Honda because you have 15k in cash, instead of the e90 for $30k, you could still invest that 15k, take a loan for the Honda, and end up making money in the long run (although .5% to 2% on 15k really isnt a lot). Also gives you the ability to pull out the cash in case of emergency .

Also A loan from a 3rd party bank is just as good as cash to a dealership as "real cash" is in terms of pricing.

"A dollar today is worth more than a dollar tomorrow"
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Old 10-12-2010, 10:11 AM   #63
myksbmw
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Location: Las Vegas, NV
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Originally Posted by spage View Post
Houses build equity and increase your net worth over time.

Cars simply lose value

I beg to differ. Thats not the case here in Las Vegas, my house has dropped 52% in value since I bought it 4 years ago!
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Old 10-12-2010, 03:05 PM   #64
wat3rbug
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Originally Posted by makecopies View Post
Good point!
That's just a foolish argument. Basically you're saying your car will break down once a month in the cost of a car note for a new car. My experience, is that even cost of the occasional repair is hardly anything like a car payment. It doesn't happen that often. So after removing veiled arguments for the pride factor and the ability to impress others over what you can afford, what are you left with?

Do yourself a favor and calculate the estimated car note and the number of payments. Find out how much you would pay for the car in total. It probably comes out to the amount close to buying 2 of the same car. It depends, but based on what you're trying to get and based on what you have, I'd say I'm fairly accurate in that you will get raked over the financial coals. Do it if you want. I'd suggest getting a bit of a financial backbone and pay off your current debt and then save up. Then you can buy something you want, instead of something just cause it is new and kinda close to what you want.

I'm also a bit biased against buying brand new unless it is REALLY a car you want with all the trimmings and you have the cash, that the hit to your wallet from it's constantly decreasing value is minimized.

It's only 14 years later that I have decided to sell my truck, and not because of the cost of the repairs because they rarely exceed $100, but because of the frequency. For the record it was 12 years before I experienced anything even close to what I do now on my Xi as far as maintenance. My friends didn't care what car I drove before or after, and those that did weren't missed.

And for the record, 7k sounds about right for the year and model.
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