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So it's time to make the last loan payment on my 4C, purchased 6 years ago. I financed the whole thing, zero down, and left the money invested in the S&P500 index fund. Turns out after interest and loan payments calculated every year with the gain in the fund, I ended up ahead $15,363, plus the value of the car as it is now, perhaps $45K at best. So I ended up making $60K on the deal. I told my wife not only did the car pay for itself, but it paid for her car too! She's like, right.
 

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Nice! to me any interest rate under 3% is no brainer :). I tried to put as least down possible on my 4C as well.
 

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So it's time to make the last loan payment on my 4C, purchased 6 years ago. I financed the whole thing, zero down, and left the money invested in the S&P500 index fund. Turns out after interest and loan payments calculated every year with the gain in the fund, I ended up ahead $15,363, plus the value of the car as it is now, perhaps $45K at best. So I ended up making $60K on the deal. I told my wife not only did the car pay for itself, but it paid for her car too! She's like, right.
Not sure I understand. If you borrowed the value of the car with zero down and left the money in the market for 6 years, how did you pay for the car? Or are you buying the car now and have enough money to cover all the payments in the money put into the S&P index fund to buy a car at today’s prices and have money left over? Or did you put $70k into the index fund and used the fund proceeds to make the car payments and have about $15k left over?
 

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Simply the luck of (or good judgement of) the stock or real estate markets. Sometimes you win, sometimes you lose. I prefer to own my toys, not have the bank own them in my name. It allows me to sleep more easily that way. Note the rash of sales from job loss due to Covid.
 

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"the market can beat that" until it doesn't. It may work out great, but you are speculating. You are exchanging a certain liability for an uncertain, and taxabl, asset return. It's not a no-brainer, you need to have some propension for risk.
 

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I went the opposite route and paid cash in August of last year.

Quite a few factors went into the decision. Multiple CDs coming mature and terrible rates on new ones. The desire to not increase debt load while refinancing the house. Possibly needing a new commuter car for my wife in 2021 which I would rather finance. Speculation that the depreciation curve would level off to almost nil with the end of production. Not seeing any viable forms of family vacation or travel for the time being. Etc.

And just a general Covid induced yolo fuck it moment.
 

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This is why you don't pay for a car in cash, especially with interest rates so low.
With rates this low, it does seem to be prudent to finance the car. If you are gainfully employed and have the funds set aside, it seems to me financing the car and investing your funds, even moderately, will make it all worth it in the end. I bought mine in early 2018 I think, whenever I joined this forum, I didn't do any math, I just liked the car...but without question it was better to finance the car in retrospect, and that's with a correction earlier this year.
 

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With rates this low, it does seem to be prudent to finance the car. If you are gainfully employed and have the funds set aside, it seems to me financing the car and investing your funds, even moderately, will make it all worth it in the end. I bought mine in early 2018 I think, whenever I joined this forum, I didn't do any math, I just liked the car...but without question it was better to finance the car in retrospect, and that's with a correction earlier this year.
I agree, if your situation is stable and you could get an interest rate close to zero.
 

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Surely you made $15k, as the rest was just cash payments against the car which have accumulated (that you also could have invested and made gains on)
 

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Simply the luck of (or good judgement of) the stock or real estate markets. Sometimes you win, sometimes you lose. I prefer to own my toys, not have the bank own them in my name. It allows me to sleep more easily that way. Note the rash of sales from job loss due to Covid.
Exactly. Kind of like Vegas casino gambling. Some win. Most lose. Over time ... the gambling houses ALWAYS win.
 
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Surely you made $15k, as the rest was just cash payments against the car which have accumulated (that you also could have invested and made gains on)
I read it as he invested the cost of the car (say $75k), and had a net gain of about $65k (the value of the car today plus interest, plus $15k). So the account would have about $140k in it. Truly a great investment, and worked out extremely well for the OP. Life is good!
 

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Investing in the market is totally unlike gambling in Las Vegas, not comparable at all.
I stand corrected. You are correct. Historically over time the stock market has always been a good investment. I've also taken advantage of those low interest loans from time to time. I love the no interest if paid in full by a certain time.
 

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@foleydb - Agreed it has been a good 10+ years for the S&P500 and you make a good choice to borrow at low interest rates and invest the cash in hand. So congrats on your wise/lucky investment strategy. I paid cash for mine, as I'm not a huge fan of taking auto loans as traditionally I haven't gotten rates that I deemed acceptable (even when doing some basic shopping around). I never seem to qualify for those 0.9% or very low interest rates. They always seem to be greater than 3%, so I tend to save $ up prior to buying a car and I also tend to keep them long term (10+ years) so this is viable for me.
 
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