car loan

[mak15]

[ QUOTE ]

Look at it like this;
Best case circumstance: You continue to earn money, get raises that keep up with inflation and able to both pay all your bills and your current lifestyle.

Worst case: You get laid off, file banktruptcy, are allowed to keep your home since it is in the homestead laws but lose your car to compensate your other debtors. Would you rather own your home outright or your car?


[/ QUOTE ]

You answered your own question incorrectly. You're right that you want to have debt in the depreciating asset, but the reason is so that by some chance the asset becomes worth less than what you owe on it you can default.

The homestead act has nothing to do with depreciation or appreciation.

[Jimbo]

[ QUOTE ]
You answered your own question incorrectly. You're right that you want to have debt in the depreciating asset, but the reason is so that by some chance the asset becomes worth less than what you owe on it you can default.


[/ QUOTE ]

Reading comprehension 101 please.

[ QUOTE ]
The homestead act has nothing to do with depreciation or appreciation.

[/ QUOTE ]

Looks like you may need an advanced class to understand my reason for including that bit of information there.

Jimbo

[Henry17]

Jimbo's reasoning makes perfect sense for someone who considers the possibility of hardship. I'm just not sure how often that would be a realistic consideration. For someone involved in very speculative ventures maybe but for most people I can't see it being relevant.

If the thought of bankruptcy entered my head at a car dealership my reaction wouldn't be to finance the car but instead to not buy it at all. I'm not sure if this is typical thinking or not. That there is a $100k+ car at the bankruptcy auction at least 3-4 times a year actually makes me think Jimco is right.