The possible fallacy with this approach is HOW guaranteed are you to make X? There aren't too many sure things in the investment world. I'd love to hear about what you're into to get a guaranteed X.
you need to work on your reading comprehension. I never said I knew of anything that can make X. I said IF.
I would suggest a shorter term loan. If you decide to sell the car in the first two years you will still have a very large loan balance and may have to pay to sell the car.
My comprehension is just fine, your tact needs some attention however.....I was pointing out a flaw in your argument. Very few people can guarantee making a certain return. Financing toys should be the exception not the rule.
no, the flaw is in your comprehension and the assumptions you make. just because there isn't an investment that the public can buy doesn't mean people don't own private businesses that do far better than 8% a year. So if the OP owns his own business and is going through a boom period for a few years, he wld be silly to tie up his own capital in a car when he can go borrow and dirt cheap rates and keep his money in his business. this is mathematically the right answer no matter how many ifs and buts you want to throw in there.
to directly answer the OP, screw the relationship and just borrow at the lowest rate possible. If you care about what it does to your credit report then go with Ferrari.
Some people want it on their credit report to boost scores and establish history. Some people don't. If the rate is the same pick the one that works for you.
Can you lock in a 72 month investment that will guarantee you a 3-5% ROI? That is exactly what the banks are doing when they issue a loan. They are locking YOU in as their long term debtor. This argument gets murky when you factor in things like rental property. Having a loan that someone else pays for isn't a bad thing. Where that logic goes bad is when the property is vacant and you have to cover the debt. Macro view. Its probably smart to be in cash hoarding mode now. Is it just me or does everything seem 'over priced'. Many markets (cars, RE, art etc etc) seem very expensive. The 'modern collectible' car thing makes no sense. Anyway...
borrowing at these rates is the same thing as hoarding cash - there is no debating the following statement: if you are able to borrow at these rates and you currently have a healthy balance sheet you shld borrow as much as you can for as long as you can. what might or might not happen from a risk/circumstantial point of view is separate and exclusive from the point of my statement.
I would say there is a case to be made for liquidity. If the **** hits the fan for the op he can tell the bank to come get his car. He still has the money in the bank. Now I personally would not do that but if he wants the car and the experience of ownership... bully. Have some fun if you like. Know the model you seek will depreciate. Drive and polish it often.
For everyone thinking the OP owns a successful business and should borrow, the above statement by him may indicate otherwise. Sounds like he cannot afford one without a long term loan. Besides, what successful business owner would come on a public forum and ask this anyway?
Very informative.... Thank You all for participating and giving your insight..I think I should give you all some more info.. I planning to borrow about 250K for the speciale (2015 model). I am not sure it will hold its value or not for the next 4 year. I typically owned 2 Fcars for 4 years in the past before selling them.
Agree with 09scuderia, dstacy, and shark01 on this one. First, can someone please point me to the "risk free 8%" return asset. I haven't been able to find it. And i have looked. Second, assets including equities, art, vintage cars etc are trading at historically high levels and multiples. Not saying they will crash or depreciate - but this is the environment that history tells us we should be erring conservatively, not stretching out regardless of the price of money. Even "appreciating assets" that are overleveraged do sometimes go down sharply in value and lead to ruinous results. Sent from my iPhone using Tapatalk
omg - I said lets say it existed. I didn't say it exists. the reason I said lets say it exists is because there are people who own their businesses who do far better than 8% a year.
Go have a cup of coffee, or a beer, and lighten up a little. It just isn't worth being as upset as you are.
I remember clearly 07-09 when everything went on sale. Cars, RE etc. Even coveted cars and other stuff previous seen as rock solid lost value. What has really changed since then? I personally don't see a radical economic turn around that would indicate we won't be in another depreciation cycle sooner vs later. The car market is overinflated. By a ton. All the financing offers/ lease offers for everything from Hondas to Rolls Royces scares me. I get offers from the RR dealer offering a new Ghost for $3k per m with 30k down. I ran into him at C&C and ask him if anyone does those deals...he told me that 75-80% of all their sales are leases. I am passively looking for a new car to add at the end of this year. Called on a Speciale and a 675LT..in both cases I was offered 'low monthly payments' of some variety. I am all for car sales, guys fulfilling their dreams. I love car people getting their dream cars...its all wonderful. I am sincerely worried for those who are over leveraged and have forgotten what happened just a few short years ago. Hoard cash...be ready to buy when everyone says the sky is falling.
if you have a healthy balance sheet borrowing enhances and amplifies your liquidity, it doesn't hinder/deter it. borrow when you can, not when you need to.
