How much to spend on a nice first car?

[EmpireMaker2]

Just ball out and get a nice BMW, Mercedes, or Audi 50k min.

[KRANTZ]

buy a sick car, you will be happy you did and enjoy it way more now than you will when you're older and have more money

there's something to be proud of when you can look at your maserati and say damn, i'm 16 and i was able to buy THAT?

besides, with a sick car you will save so much money on pussy over the years, way more than you would keeping that extra 40 or 50k in a brokerage account

[guids]

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I'm not going to go through all the math, but there's no way that borrowing money at 5.9% and investing it at 5% is going to result in him having more money.

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i'm no accountant or anything, but aren't you borrowing 20k at 5.9 and investing 90k at 5%?

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yeah but the other way you are still investing 70k at 5%. bob is right, what guids is talking about is impossible.

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with a car loan, you arent paying interest every year, just 5.9% of whatever you borrowed. I borrowed 19k, and pay 372/mo, which equals about 22500, or about 6% of 19k + 19k. With the investment you are geting 5% per year, not 5% of your investment over teh span of 5 years. Im not saying Im not missing soemthing, but my math works out as far as I can tell? Id rather start out with more capital and invest it, in this case, and "eat" that 1% difference.

if you can find an investment that exceeds 6%/yr, you are gravy.


edit: if it is impossible, let me know what Im missing.

[BigPoppa]

That would only be a good idea if you had a risk-free way to earn more than you were getting charged interest, and then only if it was enough to offset the taxes.

So if you get some dealer incentive 1% interest rate, it could work. But if you're investing at 5% and paying that amount or higher, you lose money.

[slickpoppa]

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I'm not going to go through all the math, but there's no way that borrowing money at 5.9% and investing it at 5% is going to result in him having more money.

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i'm no accountant or anything, but aren't you borrowing 20k at 5.9 and investing 90k at 5%?

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yeah but the other way you are still investing 70k at 5%. bob is right, what guids is talking about is impossible.

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with a car loan, you arent paying interest every year, just 5.9% of whatever you borrowed.

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Are you sure about that? I've never gotten a car loan before, but I thought it was standard in any kind of borrowing transaction for the principle to be compounded monthly.

Look at it this way, why would anyone lend money to someone for a car when that same amount of money could earn more interest in a risk free savings account?

[guids]

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I'm not going to go through all the math, but there's no way that borrowing money at 5.9% and investing it at 5% is going to result in him having more money.

[/ QUOTE ]

i'm no accountant or anything, but aren't you borrowing 20k at 5.9 and investing 90k at 5%?

[/ QUOTE ]

yeah but the other way you are still investing 70k at 5%. bob is right, what guids is talking about is impossible.

[/ QUOTE ]

with a car loan, you arent paying interest every year, just 5.9% of whatever you borrowed.

[/ QUOTE ]

Are you sure about that? I've never gotten a car loan before, but I thought it was standard in any kind of borrowing transaction for the principle to be compounded monthly.

Look at it this way, why would anyone lend money to someone for a car when that same amount of money could earn more interest in a risk free savings account?

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no, Im not sure how it works honestly enough...haha...Im paying about 22300 for a 19k loan, so I guess it is a yearly deal. I still think Id rather have 5% interest on 90k, and pay 6% on 20k though, not sure, hopefulyl someone whos brain is working will elaborate, because mine aint.

[mmbt0ne]

20k at 5.9% annual over 60 months = $385.73 per month for a total cost of $23,143.60

Investing 90k at 5% annual will earn you $375 per month.

[BigPoppa]

Please tell me this a level.
You'd get 5% on 70k of that regardless.
How is that hard to understand?

[TheMetetron]

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Please tell me this a level.
You'd get 5% on 70k of that regardless.
How is that hard to understand?

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You can't be serious.

There is no way that financing is better than paying cash here. Don't make me do math please.

[Isura]

This depends a lot on how much you enjoy cars and where you plan to live. I would just reinvest a lot of it in my bankroll since right now in your life (with current experience and knowledge) this is the best way to make your money work for. 100k is like 1 good month at 10/20