Cash or finance new truck

I like your mindset; similar to mine. I bought a truck last summer and got 0.0% financing for 36 months. I could have paid cash but didn't.

Here is my recommendation: Get a 30K truck, finance 15K of it for 48 months. Medium sized payment, and you can take 15K and invest it and start learning?

**an aside**
I like how all these people think they know how to invest but are making less than $250,ooo a year on their investments... Until those folks can make a living off of their investments only and are above middle class average, the investment is only a hobby. That example of SPY?? that money isn't there until you pull it out, and tomorrow could be worthless, and it is easy to point out what happened in hindsight, but predicting the future is hard.

 

https://www.tacomaworld.com/threads/cash-or-finance-new-truck.758827/page-2#post-27048073

Time in market >>>>>>> Timing Market

 

I meant my statement as a joke, but I have to admit, this .pdf is very helpful to a novice investor. Thanks!

 

I'm a year away from 20 years Navy, a full pension with 100% disability for the rest of my life. Which if I live to be 80, will pay me over 1.5 million.....thanks for your concern, but I enjoy my "hobbies" just fine.

 

The fact that we dont have a REQUIRED course (or any course for that matter) for all high schoolers in personal finance, investing, and taxes is just beyond me. It'd probably be the single most important thing they'd learn in school

money managers try and make it seem like an unlearnable club to justify their existence but it would go miles to make a more prosperous community

 

I'd pay with gold if it was feasible.

How much did you put down? because that sounds like a $2500 a month payment

 

This is right on. I never understand paying hard earned cash for a depreciating asset

 

If the interest rate is less than 2 percent then finance and hold the money. Things are too volatile right now to tie up your cash in any vehicle. When things stabilize you can always pay it off. (my response assumes the op has the cash to pay for it at time of sale)

 

Im not an educator. Do your own research and evaluate your own risk vs. reward. I have done my own and have put a decent amount of money into USDC myself and every month receive interest paid to me in direct deposit. It is a stable coin and the price will not fluctuate, it is backed 1-1 by the dollar invested.

 

I'm just ribbing you man

I bought $200 worth of Bitcoin in 2017 and have preceded to spend ~$1200 worth of bitcoin over the last 5 years and have $200 worth of Bitcoin today, so as far as I'm concerned, its an ever-refilling bucket of money. Not that I'd call that one "stable" but whatever!

 

Excellent analysis. Now I'll add one more morsel in the food for thought category. INFLATION. On one hand, sitting on cash isn't good because its value will erode substantially over time. On the other hand, taking on a 3, 4, or 5 year loan... those payments in years 3, 4, and 5 in today's dollars will be meaningfully less than current dollars. So perhaps consider a low interest loan (while rates are still low) and then take that cash and put into an investment portfolio that takes into consideration assets that can hedge against inflation and the likelihood of rising interest rates over the next several years)

 

It is generally best to take a low interest loan and invest the cash. But since you said right now, I’d pay cash. I don’t have a warm fuzzy about the market, and I have most of my eggs in it.

 

You’re already overpaying if there’s dealer markup. If you finance thats a double whammy. So logic says cash

 

I’m getting 7-12% annually in the market. My interest rate on my new Taco is 3.9%. Paying cash makes no sense.

 

Logic says finance....we've already established this. And to make the case for financing even more convincing, based on what we have seen with Truck prices recently, depreciation isn't nearly as bad in this market. The burden of proof is for you to argue why cash is a better choice as opposed to financing.

 

You are wise!

 

No mark up

 

oh boy there’s a whole lot to unpack here, it’s not about predicting the future, it’s just simple math. I could walk you through it if you have some time!

 

Hahaha yes if you want to get into present values of car loans you can squeeze out some more rerun but using debt in any speculative market is a bad idea. If the risk low enough the payments will be low too, the only time this doesn’t hold is when you’re dealing in the 100s of millions, if you’ve got that I can get you some absolutely fire investment grade debt that will outpace inflation by a large margin.

 

I've been in a position to pay cash for the last few but chose to finance. I've also had a vehicle to trade in along with a small down payment to keep the amount financed low. I financed for 5 years but paid all of them off early. The total interest I paid on all of them was well under $2000 on the life of the loan. I don't have a ton of money invested, but I'm earning a lot more than $2000 in five years on it.

The exception is the Ford Explorer we bought just over a year ago. I ended up financing 100%. I then sold a car instead of trading it in and the 2nd payment was what would have normally been the trade in. It did cost me a little more on taxes by not trading.

The key is to never get upside down on the vehicles value. By having a decent trade value and down payment you avoid this. One thing that concerns me in today's market is that I think all vehicles right now are overvalued. I'm concerned that the people paying $5000-$10,000 OVER sticker value may find themselves upside down for a long time if things get back to normal. That could bite someone in the butt with insurance if a truck gets totaled in a few years and the insurance payout isn't enough to cover the loan.