r/WallStreetbetsELITE • u/GenericAptName • 9d ago

MEME Didn't see this coming

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u/Maximum-Cupcake-7193 9d ago

Yeh so that individual couldn't afford the car. They needed the bank.

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u/DETpatsfan 9d ago

Taking a loan doesn’t mean you can’t afford a car….there are multiple reasons to finance a vehicle vs paying cash.

  1. Manufacturer incentives often don’t apply if you pay cash so you end up paying a higher price up front.
  2. If interest rates are below ~5% then you are better off financing the vehicle because you can reliably get 5%+ returns with your cash in an SP500 ETF over the life of the loan.
  3. Even if you have the cash up front to buy a vehicle but you don’t want to deplete savings in the event of an unforeseen circumstance (job loss, health issue, natural disaster) you can use the loan to spread the burden out over time and put your savings into an ETF/CD/other financial vehicle that will cover the cost of interest but also leave you liquid.

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u/Maximum-Cupcake-7193 9d ago

Seems like you are equating book value and face value. Also seems like you are then not including depreciation