Discussion
Oh god....
Without wishing to start that debate again look at
www.pistonheads.com/gassing/topic.asp?p=1&f=23&t=59192
www.pistonheads.com/gassing/topic.asp?t=59503
That's the last word from me on it! Email me direct if you have any other questions.
J
Without wishing to start that debate again look at
www.pistonheads.com/gassing/topic.asp?p=1&f=23&t=59192
www.pistonheads.com/gassing/topic.asp?t=59503
That's the last word from me on it! Email me direct if you have any other questions.
J
joust said:OK, let's balance the debate here.
Cheers for the sheets BTW J - much appreciated
Pleasure. If anyone else wants the same, just email me.
J
Pay cash for your cars. Email me through my profile and I'll send you a tenner to get you started.
not really, that was a fib
Cash is only a commodity though. If you can use it to earn money faster than the loan is costing you, clearly its dumb to pay cash.
I've got a mate waiting to buy his house cash. I've made 200 grand profit (minus mortgage losses, but he's been paying rent) in the time is wasted so that he can pay cash.
>> Edited by DanH on Friday 21st May 00:30
Cars tend to depreciate while houses (at the moment) appreciate - definitely more appropriate to buy a house with a loan, than a car, as the debt is (increasingly) backed up by the asset. In car terms you can end up owing more than the car is currently worth.
Having said all that, I'm just too impatient and will be financing the majority of the GTC purchase!
Having said all that, I'm just too impatient and will be financing the majority of the GTC purchase!
My example is bad I guess as its moving away from the point I was trying to make. Regardless, there's an opportunity cost in tying up your money in an asset (even a rapidly depreciating one like a car). If you can do better with the cash put elsewhere then why buy cash?
Anyway can't wait to see the GTC pics
It makes no difference if the item depreciates or appreciates - whether or not you use cash is down to firstly your own personal values, and secondly if you can be guarenteed to gain a greater return on the cash by investing it than the finance company wants to charge you.
PCP at the moment of 7.9% APR requires a return on inveseted capital of around 5.75% compounded over 3 years to make the whole thing "neutral".
So the crunch comes down to you "do you feel lucky and able to make more than 5.75% per annum return on your cash"?
I'ved gained between 10 and 12% each year over the term of the Noble and so am quids in, but that is down to quite a bit of "luck" as well as a good healthy dose of judegement. Of course if the market really turns unprofitable (you can of course still make money in a falling market by going short) they you can be totally stuffed, as you've lost money on your capital and you have still to pay the finance company.
Risk is not for everyone - me, I personally like playing the markets and so far over the years I've always come out better - but I'd be a fool to say to everyone they should finance the car as the risks are real and you can loose all your cash if you cock up or the market goes against you.
J
>> Edited by joust on Friday 21st May 16:52
PCP at the moment of 7.9% APR requires a return on inveseted capital of around 5.75% compounded over 3 years to make the whole thing "neutral".
So the crunch comes down to you "do you feel lucky and able to make more than 5.75% per annum return on your cash"?
I'ved gained between 10 and 12% each year over the term of the Noble and so am quids in, but that is down to quite a bit of "luck" as well as a good healthy dose of judegement. Of course if the market really turns unprofitable (you can of course still make money in a falling market by going short) they you can be totally stuffed, as you've lost money on your capital and you have still to pay the finance company.
Risk is not for everyone - me, I personally like playing the markets and so far over the years I've always come out better - but I'd be a fool to say to everyone they should finance the car as the risks are real and you can loose all your cash if you cock up or the market goes against you.
J
>> Edited by joust on Friday 21st May 16:52
joust said:
It makes no difference if the item depreciates or appreciates -
>> Edited by joust on Friday 21st May 16:52
I agree with everything you said, except this!
Your point is relevant in the scenario that the buyer has the cash to spend. If you look at the thread we had (maybe diverged slightly off topic) been discussing the example of someone "saving" to be able to pay cash for a house.
Under such a scenario appreciation and depreciation are entirely important as you expand the variables to include the impact of time on the value of the asset acquired, and the difference in approach between buying a house and a car become obvious.
Essentially, you are commenting on the difference between spending cash on an asset, or spending cash on an investment to pay off the loan on an asset...but you are ignoring the potential investment value of the asset acquired.
If I waited till I could buy a noble GTC with cash, I could no doubt pick one up at a sizeable depreciated discount (well, it might take me that long...the thing may appreciate initially, but that is by the by)...with a house, second hand doesn't seemingly detract from value, and currently at least your expenditure will actually yield its own return.
Its all about the narrowness of definition being applied to the point in question...in my case I was adopting the wider definition seemingly implicit in the thread.
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