What is wrong with buying a car for cash?

[kckitty]

This topic seemed to cause a lot of drama recently.

I would like to know what is wrong with buying a car for cash?

[EdgeXXX]

It has been known to result in surprise buttsecks.

We bought both our BMW and RR with cash. Why would that be problematic?

No supprise buttseks here.

[kckitty]

Originally Posted by EdgeXXX

It has been known to result in surprise buttsecks.

what does that mean? you referring to IRS or something?

[woj]

cash as in actual cash? or cash as in paying for it in full, instead of leasing/getting a loan?

[kckitty]

Originally Posted by woj

cash as in actual cash? or cash as in paying for it in full, instead of leasing/getting a loan?

paying in full with cash (paper money)

[MrBottomTooth]

Originally Posted by kckitty

This topic seemed to cause a lot of drama recently.

I would like to know what is wrong with buying a car for cash?

Sleazy got upset because he is an idiot and must have thought the person that made the comment about the car purchase was inferring he wasn't following the stipulations of his bankruptcy. At least that is my best guess.

In other words, there was absolutely no reason for him to fly off the handle like that. He is just really dumb.

[EdgeXXX]

I'm assuming you are asking this because Sleazy went all apeshit on xxweekxx after he misunderstood what Sleazy said. There is nothing wrong with paying cash for a car and in reality this episode had absolutely nothing to do with paying cash for a vehicle.

[wild johnny]

If you can afford it, paying for a car in cash. Why not.

But in the Us all transactions over I think 7500 cash (green Backs) get reported to the IRS. So if you don't want on that radar paying in full through bank transactions is better.

Other than that I accept all cash donations over 7500 and I surely would not report ya..Laughing!!

[Elli]

Weird. I've bought all but three of my cars in my life with cash. I missed the original drama thread, and from the looks of this one, I'm glad I did!

[GrouchyAdmin]

For one, it doesn't help your credit rating.

Two, it's harder than fuck to stick it to the company when they try like hell to dissolve that brand months later.

Bitterly yours,
._= GA =_.

[candyflip]

In the case of SleazyDream, the value of the car if he paid cash would probably put him in some sort of hot water with his bankruptcy proceedings. That is the only possible reason I could come up with him getting upset.

[will76]

Originally Posted by wyldweb

If you can afford it, paying for a car in cash. Why not.

But in the Us all transactions over I think 7500 cash (green Backs) get reported to the IRS. So if you don't want on that radar paying in full through bank transactions is better.

Other than that I accept all cash donations over 7500 and I surely would not report ya..Laughing!!

Pretty sure its 10K and yes if you are not reporting your income and only showing a small amount of money with the IRS you don't want to go pay over 10K for something because it will be reported to the IRS. If you only make 10K a year and you just paid 20K cash for a car, they going to get your ass.

On the other hand if you don't show any income, you probably not going to be able to get financing either.

[will76]

Originally Posted by candyflip

In the case of SleazyDream, the value of the car if he paid cash would probably put him in some sort of hot water with his bankruptcy proceedings. That is the only possible reason I could come up with him getting upset.

If he paid cash then the car would be an asset, worth what ever its current value was. Which if he bought it before the bankruptcy they would have probably wanted to sell it and use the proceeds to pay his debt. In most cases when a car is financed you owe more than it is worth (most cases).

If he bought the car after bankruptcy and paid cash they would be upset because then it would mean he was pocketing money and not following the bankruptcy deal.


most likely one or the other. but who knows with him.

[woj]

Originally Posted by kckitty

paying in full with cash (paper money)

why would you do that in the first place? seems stupid, unless you deal drugs and have ton of cash lieing around...

I don't see any obvious benefits, and there are dozens of things that could go wrong when paying with cash, from getting mugged on the way to the dealer, to having no recourse if something goes wrong with the transaction...

[pornguy]

People will tell you not to do that as you can not get back in a sale what you put in

I personally dont see it that way. I take the cost of the car and divide it by the number of years it works for me problem free. Thats how much it cost me to own that car per year. do the math its about the same as wasting a day on mass transit. At least in the US.

[Atticus]

In theory if you have good credit you can lease/finance the car at a low interest rate and then invest the money you would have paid for the car and earn a higher interest rate.

Or better yet incorporate and have the company lease/finance the car plus all the expenses.

[weekly]

I have never borrowed money for a car. It is just not a good idea. I would rather drive a beater I can afford than a Lexus I can't. Better than finance, low interest bullshit. All of the accountants I have ever had have said if you can pay cash you are much better off.

[Scootermuze]

Never use your own money for such things..

[Amputate Your Head]

I buy everything with cash.
I haven't used credit in years, and have no plans to do so in the future.

[weekly]

Originally Posted by Scootermuze

Never use your own money for such things..

Why?....

[StaceyJo]

You won't stress out your pocket of paying monthly than buying it through cash.

[DBS.US]

I had $40,000 to buy a car. I Put $5000 down, I took $35,000 and bought a 2nd home and I rent it out. I use the rent money to pay the mortgage and the car note.

[Amputate Your Head]

Originally Posted by DBS.US

I had $40,000 to buy a car. I Put $5000 down, I took $35,000 and bought a 2nd home and I rent it out. I use the rent money to pay the mortgage and the car note.

Where did you buy a 2nd home for $35k? Compton?

[DBS.US]

Originally Posted by Amputate Your Head

Where did you buy a 2nd home for $35k? Compton?

My bad,,,$35,000 down.

[ztik]

I always pay cash for cars.

Why pay interest in you don't have too?

Although I don't buy a fucking car planning to go bankrupt like a fat retard

[will76]

Originally Posted by pornguy

People will tell you not to do that as you can not get back in a sale what you put in

I personally dont see it that way. I take the cost of the car and divide it by the number of years it works for me problem free. Thats how much it cost me to own that car per year. do the math its about the same as wasting a day on mass transit. At least in the US.

Cars are the single most expensive thing that most people will buy that lose their value. Well boats if you get a really big nice one.

Where else can you go drop 50K on something that will be worth at most 10K 5 years later. Nothing like pissing away 40K.

It's sad but true, a car for some people is the most expensive purchase they will make in their lives and all it does is lose value and cost them money to use it.

Sure you need a car, but when you make 30K a year you shouldn't be buying a 30K car. Problem is everyone wants to show off and wants it now. If they bought a cheap new car for 1/4 the price, took the different they saved each month on a note and invested it, their money would be working for them making more money, they could actually acquire wealth and then in the future buy a nice car with the proceeds from their investments, not on credit paying interest and still have their investments making them more money.

all hell 90% of you probably stopped reading by now LOL

[Spunky]

Chicks dig scooters

[woj]

Originally Posted by DBS.US

I had $40,000 to buy a car. I Put $5000 down, I took $35,000 and bought a 2nd home and I rent it out. I use the rent money to pay the mortgage and the car note.

bs

[will76]

Originally Posted by Atticus

In theory if you have good credit you can lease/finance the car at a low interest rate and then invest the money you would have paid for the car and earn a higher interest rate.

Or better yet incorporate and have the company lease/finance the car plus all the expenses.

yeap, if you can get a 6% rate and can invest your money making 10% or more it is definitely the way to go.

[Sly]

Originally Posted by will76

Cars are the single most expensive thing that most people will buy that lose their value. Well boats if you get a really big nice one.

Where else can you go drop 50K on something that will be worth at most 10K 5 years later. Nothing like pissing away 40K.

It's sad but true, a car for some people is the most expensive purchase they will make in their lives and all it does is lose value and cost them money to use it.

Sure you need a car, but when you make 30K a year you shouldn't be buying a 30K car. Problem is everyone wants to show off and wants it now. If they bought a cheap new car for 1/4 the price, took the different they saved each month on a note and invested it, their money would be working for them making more money, they could actually acquire wealth and then in the future buy a nice car with the proceeds from their investments, not on credit paying interest and still have their investments making them more money.

all hell 90% of you probably stopped reading by now LOL

I have a very similar argument to that in regards to buying a house or renting a house/apartment. I usually get a lot of eye rolling and "a house is the best investment you can never make." My ass it is.

[Tanker]

Originally Posted by Sly

I have a very similar argument to that in regards to buying a house or renting a house/apartment. I usually get a lot of eye rolling and "a house is the best investment you can never make." My ass it is.

it is as long as you choose wisely Me and Ellisa are looking for a new place and we have looked at over 50 homes. haven't found the one yet but we have made great money on the homes we have bought

[JimmiDean]

Originally Posted by kckitty

paying in full with cash (paper money)

Great idea if you want the IRS all over your ass and the transaction will be reported.
In Canada the amount must be reported if its over 10 k.
Most people just go in and write a check if paying cash, thats what we did.

[slapass]

Originally Posted by Sly

I have a very similar argument to that in regards to buying a house or renting a house/apartment. I usually get a lot of eye rolling and "a house is the best investment you can never make." My ass it is.

It makes even less sense if it is a big house. taxes and insurancve are usually at higher rates and maintenance becomes a real expense. Jumbo loans over a million have much stricter requirements not because they want to but because they have to. Those houses drop in value all the time.

[ninavain]

Originally Posted by Elli

Weird. I've bought all but three of my cars in my life with cash. I missed the original drama thread, and from the looks of this one, I'm glad I did!

5 cars purchased since 06 in cash, no more car payments ever

[CaptainHowdy]

Originally Posted by Amputate Your Head

I buy everything with cash.
I haven't used credit in years, and have no plans to do so in the future.

That's was unnecessary...

[xxweekxx]

Originally Posted by Sly

I have a very similar argument to that in regards to buying a house or renting a house/apartment. I usually get a lot of eye rolling and "a house is the best investment you can never make." My ass it is.

so whats your argument.. im interested in hearing it

[kowalsky]

All the cars that I have bought I did by cash.

[Paul Markham]

Originally Posted by ztik

I always pay cash for cars.

Why pay interest in you don't have too?

Although I don't buy a fucking car planning to go bankrupt like a fat retard

This is how it works here and in the UKfor companies.

If running a company and you pay outright for it, the money comes out of the profits which are taxed. It then becomes an asset of the company and the company pays taxes on it.

If you lease rent the car al payments are tax deductible and at the end of the lease period the company pays for it with a nominal sum.

Not sure how it works in the US or Canada. And as a recent bankrupt there might be questions of where the money suddenly appeared. On the other hand it's tough to a loan or lease as a bankrupt.

[Sly]

Originally Posted by xxweekxx

so whats your argument.. im interested in hearing it

Your mortgage rate alone is going to be 5-8%. This doesn't include property taxes, homeowners insurance, regular maintenance, major repairs, and down payment. If you are lucky, overtime you might make 3% or so. So you are spending a minimum of 5% on interest, a ton on all of the additional bills, and you might make 3%. Might.

If you know how to spot value, like Tanker... sure, it could certainly work. But that takes a lot of effort and some experience and a lot of patience. Most people cannot pull it off.

Right now I can rent for about half the price that it would cost me to own. I take that extra money and invest it instead. I do also own a rental that pays for itself. If I lived in my own rental, it would significantly increase my personal cost of living. I don't need much, I'm perfectly fine with my low-cost of living and do not want to increase it.

[Atticus]

Originally Posted by Sly

Your mortgage rate alone is going to be 5-8%. This doesn't include property taxes, homeowners insurance, regular maintenance, major repairs, and down payment. If you are lucky, overtime you might make 3% or so. So you are spending a minimum of 5% on interest, a ton on all of the additional bills, and you might make 3%. Might.

If you know how to spot value, like Tanker... sure, it could certainly work. But that takes a lot of effort and some experience and a lot of patience. Most people cannot pull it off.

Right now I can rent for about half the price that it would cost me to own. I take that extra money and invest it instead. I do also own a rental that pays for itself. If I lived in my own rental, it would significantly increase my personal cost of living. I don't need much, I'm perfectly fine with my low-cost of living and do not want to increase it.

First off, not sure where you get the 3% figure. The avg annual real estate appreciation in this country since 1968 is 6.4%.

Second, compare apples to apples. If you're renting a place instead of owning if you're lucky you're going to be paying what the owners mortgage is, most likely a little higher. You cant make your argument by saying I would have a $1200 mortage on a $225,000 home but I'm living in a $100k home so I'm only paying $600 and investing the rest. You have to compare what the mortgage costs would be on owning the $100k home.

Third, you're completely discounting the tremendous tax benefits home owners receive that renters do not.

Real estate for investment purposes (ie 2nd and 3rd rental properties) you might have more of a case as you have to put additional money down and the tax breaks arent as great but there is zero argument or sense in choosing to rent when you could buy. Unless of course you only plan on being in a location for a limited amount of time.

[Sly]

Originally Posted by Atticus

First off, not sure where you get the 3% figure. The avg annual real estate appreciation in this country since 1968 is 6.4%.

Second, compare apples to apples. If you're renting a place instead of owning if you're lucky you're going to be paying what the owners mortgage is, most likely a little higher. You cant make your argument by saying I would have a $1200 mortage on a $225,000 home but I'm living in a $100k home so I'm only paying $600 and investing the rest. You have to compare what the mortgage costs would be on owning the $100k home.

Third, you're completely discounting the tremendous tax benefits home owners receive that renters do not.

Real estate for investment purposes (ie 2nd and 3rd rental properties) you might have more of a case as you have to put additional money down and the tax breaks arent as great but there is zero argument or sense in choosing to rent when you could buy. Unless of course you only plan on being in a location for a limited amount of time.

You are right, I was off on my 3%.

U.S. Census data

The price of new homes increased by 5.4% annually from 1963 to 2008, on average. (U.S. Census, PDF) New homes aren't the best yardstick -- we'd really prefer to see sales of existing homes. But if new homes are all the U.S. Census gives us, then that's all we have to go on.
First, let's account for the fact that the average new home size exploded from 983 s.f. to 2349 s.f. from 1950-2004, or about 1.6% per year on average. (NPR) So a big chunk of the increase isn't inflation, it's that bigger homes cost more money. Once we factor that in, the price of new homes per square foot went up by only 4.2% annually from 1963 to 2008.

And now let's compare that rate to the general rate of inflation, which was 4.4% for the same period. (CPI, BLS) As predicted earlier, the rate of real estate inflation and the general rate of inflation are almost identical.

New home appreciation is 5.4%, general inflation is 4.4%.

Tax breaks, sure, those are nice... but is it enough to justify the rest? If you want to buy a house, buy a house. Don't buy a house because you think it's something amazing investment. It isn't. The math says the opposite time and time again.

[shimmy2]

you should buy a house to live in it, nuff said... youre gonna lose your shirt trying to flip shit. thats best left to 'reality' tv

[Atticus]

Originally Posted by Sly

You are right, I was off on my 3%.



New home appreciation is 5.4%, general inflation is 4.4%.

Tax breaks, sure, those are nice... but is it enough to justify the rest? If you want to buy a house, buy a house. Don't buy a house because you think it's something amazing investment. It isn't. The math says the opposite time and time again.

Not saying its a fantastic investment and you should be buying 10 rental properties.

But if you're planning on living in one location for an extended time you should be buying and not renting. The tax break on mortgage interest alone makes it worth it.

[Sly]

Originally Posted by Atticus

Not saying its a fantastic investment and you should be buying 10 rental properties.

But if you're planning on living in one location for an extended time you should be buying and not renting. The tax break on mortgage interest alone makes it worth it.

For extended living I agree. I just hate the saying "it's the best investment you can ever make." :-)

[96ukssob]

as in walking into a dealership and paying with bills? some might have a problem with that, which is retarded.

when i went to buy my car, the bank gave me the money in my account and i went to use my amex to buy it and they wouldnt do it because they have to pay the 3% fee. pretty stupid IMO

[xxweekxx]

but say i rent.. assume mortgage/rent same thing..

so i spend 15k/yr on rent,(a little over $1k a month) in 30yrs id have spent $450k in rent..

NOW assume a house with same mortgage, in 30yrs id have spent $450k in mortgage, EXCEPT i still have an asset worth at least $450k assuming 0% appreciation in 30yrs(which is impossible)

so tell me how renting is better..

its like flushing money down a toilet.. you are paying someone every month and you dont own shit.. while buying yeah im paying every month, but its still an asset...

[woj]

Originally Posted by xxweekxx

but say i rent.. assume mortgage/rent same thing..

so i spend 15k/yr on rent,(a little over $1k a month) in 30yrs id have spent $450k in rent..

NOW assume a house with same mortgage, in 30yrs id have spent $450k in mortgage, EXCEPT i still have an asset worth at least $450k assuming 0% appreciation in 30yrs(which is impossible)

so tell me how renting is better..

its like flushing money down a toilet.. you are paying someone every month and you dont own shit.. while buying yeah im paying every month, but its still an asset...

Lets work with easy numbers, lets say you have 20k for a down payment on a 100k house...

option a:
take 20k and invest in stocks for example, get 12% annual return
in 30 years that 20k will turn into close to 600k (20k*1.12^30=599k)

option b:
put 20k down, and buy a 100k house, it appreciates at 6%
in 30 years the house is also worth around 600k (100k*1.06^30=577k)

So your "assets" in 30 years are basically the same...

If you look at the cashflow during those 30 years, without spelling out the details, it actually turns out that you spend about the same whether you buy or rent... (When you own a house you pay mortgage, taxes, maintenance, insurance, etc)

In some cases you may actually end up paying less when renting, in some cases a little more...

[woj]

Originally Posted by xxweekxx

but say i rent.. assume mortgage/rent same thing..

so i spend 15k/yr on rent,(a little over $1k a month) in 30yrs id have spent $450k in rent..

NOW assume a house with same mortgage, in 30yrs id have spent $450k in mortgage, EXCEPT i still have an asset worth at least $450k assuming 0% appreciation in 30yrs(which is impossible)

so tell me how renting is better..

its like flushing money down a toilet.. you are paying someone every month and you dont own shit.. while buying yeah im paying every month, but its still an asset...

When you are read for it, have a family, want to settle down, etc, it probably does make sense to buy a house... but if you are not, and you buy a house just because you think it's a good financial move you will most likely be disappointed...

[xxweekxx]

thats assuming you make 12%/yr on stocks for 30 years in a row..

you are missing a very important part of the math, the fact that the person who DID not buy has to pay rent..

so the guy who basically decided to take the 20k and invest in stocks, will have spent say $500/month on that same house in rent..

so thats $6kyr = $180k in 30 years..

so in 30 years, the guy who bought a house, is paying for it, BUT LIVING in it, hence after 30 years he still has an asset worth a lot more than he paid..

the guy who didnt buy and put the money in stocks, had to pay RENT, so in 30years, he might have made money from stocks, but he also spent a minimum of $200k in rent for that period.. makes sense?

the bottom line is ya im renting now, but when i get cash i'll buy a house...

its simple, everyone has to pay rent.. but at least when im paying mortgage its going towards an asset.. when you are paying rent and u dont own, its basically going nowhere.. so you are dumping your $1k-2k/month rent payment down the drain.. while when you buy you are dumping a large part of your "rent" into an asset..