Investing 102

[carbuff]

Originally Posted by sik68

In my eyes, that 1.9% financing cost gets added to the depreciation cost of the car as well. If you finance a car at 1.9% that depreciates at 10%, your $25k needs to make like 11.9% per year just to keep up (this is not official math, just for demonstration). So for a depreciating asset, it may be best pay cash.

You're going to have to educate me on this...

If I choose to keep the car forever, then how does the depreciation factor into the investment equation?

But even if I don't, let's say I sell it in 3 years, I don't get any more or less money for the car at that point (all else being equal) whether I financed it or not.

But if I invested the $25k for those 3 years, then I've made money on that, and hopefully more than the 1.9% that the money cost me. If I put all $25k into the car, I have no possibility to make any return on that $25k.

So how does the depreciation factor into how you want to pay for it?