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Cash or Finance?

Cash or Finance?

I’ve been batting this around, having ordered a Model 3 AWD and anxiously awaiting its arrival. There are benefits on both sides, but I’m wondering what everyone thinks, and what your reasons are for paying for your purchase in cash, or financing. I’ve been getting roughly 12 - 15% or so on my investments, so a 2.5 - 3.5% loan makes sense (I’d hate to be missing out on potential returns from $60K over, say, 5 years). But in the other hand, the convenience factor and not having to think about a monthly payment (not to mention those returns could change) is attractive also.

Opinions?

Xerogas | 27 settembre 2018

@Rayhend: I financed for 2% through a Credit Union and never looked back. Borrowing is so cheap these days.

NOLEK SUM | 27 settembre 2018

Cost me a little over $900 a month to drive an S85 for almost 5 years (Cash price+tax-rebates-sales price). At the time a Tesla offered a 5 year loan at 2.9%. Had I gone that route the cost would have been almost $1100 per month.

I paid cash because I love being debt free and in terms of that vs finance it worked out. However, when looking at opportunity cost, it did not. Had I invested the borrowed amount in VTI, the cap gain to yesterday’s closing would have been $33,550.

bharej30 | 27 settembre 2018

@Xerogas: How long ago did you get the 2% rate? Rates have increased lately so I was curious and if you would let us know what CU? Thank you.

NOLEK SUM | 27 settembre 2018

12-15% on your investments? Really? Over what time frame? What in the world are you invested in?

reed_lewis | 27 settembre 2018

Get a loan, and then pay it off early if you wish. Then it will not cost you anything.

ODWms | 27 settembre 2018

@NOLEK SUM, I invest in a mix of real estate/stocks, and in other people’s businesses. My actual earnings have gone as high as 20% over the the last 5 years. My 10 year average have reflected the 12 - 15 I mentioned because that’s the likely time frame I’d use to finance.

I do know a lot of folks pay cash and I just wondered if they know something I don’t. I haven’t financed a car in decades. But I bought used cars for which I’d pay cash and drive them for years. That was during my “build up.” I’m retired early now and have pretty much achieved what I’ve set out to. The method of payment isn’t an issue for me either way. Besides the convenience factor (and not wanting to be “in debt”), I can only think it’s better to finance a vehicle of this price level and keep using that that money, unless there’s something I’m missing.

kcheng | 27 settembre 2018

" I’ve been getting roughly 12 - 15% or so on my investments, so a 2.5 - 3.5% loan makes sense"

Yeah, I've returned 33% annually over the last 11+ years, (mix of Apple, Amazon, Google) so 2.75%, which is what my local credit union is offering make sense. And if you're worried about having to make monthly payments, just automate it.

Xerogas | 27 settembre 2018

@bharej30: "@Xerogas: How long ago did you get the 2% rate? Rates have increased lately so I was curious and if you would let us know what CU? Thank you."
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It was about 3 months ago with Point Loma Credit Union

ODWms | 27 settembre 2018

@kcheng, those are awesome numbers to get consistently, overall. I’ve done as much, even better. But not consistently. Kudos!

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