Maverick financing vs investment challenge

[Maverick123]

I remember seeing someone here (or on Reddit?) who had the cash to pay for their brand new Maverick, but decided to finance it and invest the money instead and they were going to track if they were coming out ahead.

I searched but I can't find the thread, does anyone know where I can find it? And if the OP reads this, I'm curious how it's going so far?

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[JJTech]

I mean, seems like it would be quite difficult to pull that off right now, what with high interest rates and poor market performance.

 

[Robert_C]

That might have been me. I remember posting something on Reddit about it.

My decision was to take the money out for a cash payment. I did this just before the current turmoil. Considering what is going on, I am glad I did. (I removed some text that could have been seen as political)

While, in the long run, indexed funds are hard to beat. However, I felt that I was safer to take the money out and then put a payment a month back into the funds.


Here was the initial post:

Better to pay very large down or make regular draws from a stock acount?
Background: I am a teacher looking at retiring in about 9 years. I currently drive my 07 Toyota FJ which is in reasonable condition. I am considering a new car which I would expect to hold onto for 15-20 years.

Would I be better off taking: 100%, 75% or about 50% out of a brokerage account (mostly Ford and Bank of America) and paying that, assuming that the monthly payments will involve smaller draws from the account on a regular basis to supplement the payments?

You probably can't find it because:

Sorry, this post has been removed by the moderators of r/FinancialAdvice.

. . . all I can say is Reddit has weird rules

 

[Maverick123]

Financing is 4.99% and lease is 5.99% here so the rates aren't crazy high, and the investments were pretty good so I could see it working, I'd love to follow the results

EDIT: Just saw Robert C's post (above), thanks for the update! You had me curious

 

[scottp01]

Might have been during the 2022 model year when they were offering 0% and 3.9% rates when inflation alone was around 4-5%.

 

[Robert_C]

Might have been during the 2022 model year when they were offering 0% and 3.9% rates when inflation alone was around 4-5%.

That's like on my motorcycle. While there is a safe rule of "Never finance a toy." The rate came in at 0.1%, yes, a tenth of a percent. I didn't hesitate to finance it at that rate.

 

[Ryom]

I remember seeing someone here (or on Reddit?) who had the cash to pay for their brand new Maverick, but decided to finance it and invest the money instead and they were going to track if they were coming out ahead.

I searched but I can't find the thread, does anyone know where I can find it? And if the OP reads this, I'm curious how it's going so far?

I think the topic title was "Car Inflation" and I posted in it. Went to my history and the thread was deleted.

 

[Robert_C]

I think the topic title was "Car Inflation" and I posted in it. Went to my history and the thread was deleted.

I wouldn't be surprised that a lot of people have posted similar questions in various forms.

So, what did you decide, and why?

For me, I am just uncomfortable with debt. I live in a house I was able to buy outright. Yes, it is a dump. That said, I think sleep better in a paid-for dump instead of a mortgaged-to-the-eyeballs nicer house.

 

[Glen Baker LLC]

I think the topic title was "Car Inflation" and I posted in it. Went to my history and the thread was deleted.

"Ryom"
This might be the thread you were looking for
You posted in this thread on the related subject cash versus financing.
https://www.mavericktruckclub.com/f...outright-and-not-have-to-make-payments.54988/

 

[zen_]

The yield on SPAAX is 3.95, while new car loans /w excellent credit are around 5.5, if not a bit more if the dealer throws in a discount to finance with them at a higher rate, but still less money in the end without the discount.

I mention SPAAX because that's about the highest rate you'll get for liquid cash. Everything else is a big question mark. Sure, investing in an index fund would beat the pants off a the car loan rate historically, but we are living in an incredibly unstable and unpredictable time. Would you straight borrow money from a bank at 5-6% to invest in an index fund? I'm sure some with the financial acumen and risk tolerance would, but most would not.

 

[Ryom]

I wouldn't be surprised that a lot of people have posted similar questions in various forms.

So, what did you decide, and why?

For me, I am just uncomfortable with debt. I live in a house I was able to buy outright. Yes, it is a dump. That said, I think sleep better in a paid-for dump instead of a mortgaged-to-the-eyeballs nicer house.

Glen found the link, not sure if it's a different thread or it got renamed and broke the link in my history. My posts on the topic start below:

https://www.mavericktruckclub.com/f...d-not-have-to-make-payments.54988/post-936824

 

[Gray Goose]

Don’t forget to net out taxes. Depending on combined state/federal tax rate, seems like a losing scenario without some luck and good timing.

 

[smoreho2]

I remember seeing someone here (or on Reddit?) who had the cash to pay for their brand new Maverick, but decided to finance it and invest the money instead and they were going to track if they were coming out ahead.

I searched but I can't find the thread, does anyone know where I can find it? And if the OP reads this, I'm curious how it's going so far?

You lose all leverage paying cash for a car. You can always get the bank involved if you are not getting warranty work etc done. Get a three year loan and keep your cash

 

[Maverick123]

You lose all leverage paying cash for a car. You can always get the bank involved if you are not getting warranty work etc done. Get a three year loan and keep your cash

Oh no, I f***d up! ... wait, the owner of the dealership is a friend ... I should be OK

 

[Gray Goose]

You lose all leverage paying cash for a car. You can always get the bank involved if you are not getting warranty work etc done. Get a three year loan and keep your cash

I have never heard of a bank getting involved in service issues. Please share more details. What was the service issue and how did the bank help resolve?

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