Originally Posted by Sly

If you have $10,000 sitting in a bank account you are making 1-2% at best, which you still have to pay taxes on, all while inflation is typically around 3-5%. If you have a $10,000 credit card debt, auto loan, whatever it may be... odds are your rate is anywhere between 5-20% depending on what it is. In this case, let's say it's 6% for an auto loan. You are losing money by doing this, not making money, not creating leverage, you are losing money.

Now if you take that $10,000 and invest it in something that you absolutely know will make you a higher percentage return than your auto loan PLUS cover the taxes, then it makes more sense to borrow. Borrowing money for luxury items at a high rate (yes, even 6% is high compared to cash) all while you have the cash sitting around does not make financial sense. Period.