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Anyone buy car and pay FULL CASH? Why? Clever or Stupid?

SZY

By SZY,
in General Car Discussion

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RadX

RadX

Moderator

people like to say lady owner becos ladies usually drive the car lightly.

 

men are most likely to gun their cars....

 

 

but never service

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7007

7007

2nd Gear
(edited)

2day I saw a lady driver probably a mother with young children cut from lane 1 to lane 4 just cut queue in exiting HW....mind u w/o even signaling

Dun play play hor!!!!

 

 

Edited by 7007
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Zyrofillica

Zyrofillica

1st Gear

but never service

 

i think its better to gun a car and service it regularly with all problems rectified early rather than buy a car which is driven lightly and gently without any proper servicing

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Boyboy

Boyboy

1st Gear

True, but well diversified portfolios have always delivered returns that are more than the interest charged. (long term please.)

 

the key word here is long term. some pple like my lao peh kena lots of $$ locked away in investments, paper losses many many. [rolleyes]

 

long term maybe will get decent returns. now just sit and wait and cannot spend $. but u might argue (rightly) that my dad has invested beyond his means..

 

for me, with little knowledge of the market (besides the fact that it's volatile and many pple get burnt recently), i rather pay more upfront and pay less instalments. then i start building up my savings again [crazy]

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Boyboy

Boyboy

1st Gear

One of the reason why Spore car population is growing is that many people are buying cars when they should not. They stretch the loan to 10yrs, slog to pay and maintain their car, etc..etc... They do not have cash to pay upfront.

 

Govt should reinstate and improve the rule for downpayment of car to 30% (cash) so as to flush out those who are stretching their resources a bit too much. This is for their own good.

 

what a brilliant suggestion. not to mention possibly weed out people who can't really afford a car and are driving like snails to save petrol [thumbsup]

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Picanto

Picanto

3rd Gear

what a brilliant suggestion. not to mention possibly weed out people who can't really afford a car and are driving like snails to save petrol [thumbsup]

 

 

if car population goes down, govt will collect less in erp, petrol tax, parking etc. its unlikley they will allow the 30% DP again.

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Bencts

Bencts

2nd Gear

Consider this senario

 

If you have $100,000 cash and buying a $100,000 car. You have the option (i) to pay it in full or (ii) 100% loan @2.8% and invest the $100k.

 

The investment is DBS 6% NCPS (ie. 6% annual coupon). This is a relatively safe investment. Assuming that the investment principle remain constant ie buy $100/share and sell 10 yrs later @ $100/share.

 

Lets see what you have at the end of 10 yrs.

 

(i) 0% loan and investment

 

Interest payment = $0

Savings on interest payment = $28K

Opportunity cost of paying everything at 1 go (instead of investing) = $60K

 

In the end you will lose out $60K - $28K = $32K

 

(ii) 100% loan and investment

 

Interest payment = $100K x 0.028 x 10 = $28k

Investment returns = $100K x 0.06% x 10 = $60K

 

So you will be better off by $60k-$28K = $32K.

 

This is a simple illustration and doesn't take into account the discounted cash flow, inflation & interest rate variation.

 

For me i will take option ii anytime as it will give me a higher returns. Yearly payment of $6K coupon is enough to offset the interest payment.

 

 

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Throttle2

Throttle2

Supersonic

The investment is DBS 6% NCPS (ie. 6% annual coupon). This is a relatively safe investment. Assuming that the investment principle remain constant ie buy $100/share and sell 10 yrs later @ $100/share.

 

a one sided assumption at best.

relatively safe, perhaps but what were people thinking when it was trading at 90+?

they were dumping it, looking to just hold cash in tins. that for you is, reality.

becos assumptions only look as good as times they are in.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Throttle2

Throttle2

Supersonic
(edited)

Consider this senario

 

If you have $100,000 cash and buying a $100,000 car.

 

 

if you only have $100k cash (taking that income is not very high) and you go and buy a $100k car in cash. you are asking for it.

 

people who have only $100k cash dont buy $100k car in cash.

 

so your scenario is sibei unrealistic. [:)]

Edited by Throttle2
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Throttle2

Throttle2

Supersonic

Consider this senario

 

If you have $100,000 cash and buying a $100,000 car. You have the option (i) to pay it in full or (ii) 100% loan @2.8% and invest the $100k.

 

The investment is DBS 6% NCPS (ie. 6% annual coupon). This is a relatively safe investment. Assuming that the investment principle remain constant ie buy $100/share and sell 10 yrs later @ $100/share.

 

Lets see what you have at the end of 10 yrs.

 

(i) 0% loan and investment

 

Interest payment = $0

Savings on interest payment = $28K

Opportunity cost of paying everything at 1 go (instead of investing) = $60K

 

In the end you will lose out $60K - $28K = $32K

 

(ii) 100% loan and investment

 

Interest payment = $100K x 0.028 x 10 = $28k

Investment returns = $100K x 0.06% x 10 = $60K

 

So you will be better off by $60k-$28K = $32K.

 

This is a simple illustration and doesn't take into account the discounted cash flow, inflation & interest rate variation.

 

For me i will take option ii anytime as it will give me a higher returns. Yearly payment of $6K coupon is enough to offset the interest payment.

 

You are equating certainty with chance.

Let me show you another result using your nonetheless unrealistic one as a base.

 

 

If you have $100,000 cash and buying a $100,000 car. You have the option (i) to pay it in full or (ii) 100% loan @2.8% and invest the $100k.

 

The investment is DBS 6% NCPS (ie. 6% annual coupon). the price moves up and down and the dividend is non cumulative nor legally guaranteed.

You buy at $100/share and didnt end up with it becos you sold it mid way, when the world was coming to an end.

 

 

Lets see what you have at the end of 10 yrs.

 

(i) 0% loan and investment

Interest payment = $0

Savings on interest payment = $28K

Total peace of mind and 100% certainty (priceless)

 

 

(ii) 100% loan and investment

 

Interest payment = $100K x 0.028 x 10 = $28k

Investment at end = 0.06% x 5 - $15 (capital loss) = $15K

Complete no piece of mind when markets move wildly. = negative $50k

Stress of worrying if dividends can meet instalments = negative $50k

 

 

[rolleyes]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Throttle2

Throttle2

Supersonic

Heard authorities will come knock at your door... Hearsay nia...

 

 

of course they will if you pay income tax of only just $15k a year (for example) and buy a Porsche Turbo in full cash and stay in bungalow.

and you only sell chui kueh at hawker center.

 

oops perhaps, they will look for table wipers? i better shut up now , haha... [knife]

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