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Originally Posted by NemesisX
Where do you get 0.09% financing? No one in their right mind would pay cash over .09% financing. Hell, no one in their right mind would pay cash over .9% financing. I suspect most people don't have access to that kind of loan.
Your analysis is correct but in a sense you're probably preaching to the choir. People don't pay cash because they don't understand the time value of money. Most generally well-educated people do. People pay cash because they don't get anywhere near the loan rates that are being mentioned in this topic.
I'm curious to delve into the mind of a lender that offers .09% financing. They're shooting themselves in the foot. Why are they giving you the opportunity at free money when they could be making (conservatively) 3-7% from broad spectrum ETFs in the stock market?
Philosophically a lender's goal is to set interest rates such that they "win out" more often than they lose. They're shedding risk from stock market volatility and replacing that with the risk of a lendee defaulting on his or her loan (which obviously is a function of credit score, among other factors like available collateral).
This is precisely why I find these topics to be useless. At the end of the day, statistics that adequately describe the entire population are meaningful. Median and standard deviation (assuming a roughly normal distribution) generally do a good job of giving people a good overall picture.
Here's one stat I've found over the years from one particular source. The median luxury car owner makes $98,000/year. Half make less. Half make more. The median price paid for a luxury vehicle is something like $45,000. We're looking at roughly 50% of AGI as a rough rule of thumb. Lastly, only about 6% of luxury car owners in the United States have a liquid net worth > $1M. 94% do not. This statistic is from the early 2000s when roughly 3% of households had a net worth > $1M. In other words, if you were a luxury car owner in the early 2000s, you were twice as likely as the general population to be a millionaire (not including primary residence).
Very few people pay less than 10% of their gross income on a vehicle.
Asking a question like this on an internet forum is going to get you nothing but inflated numbers mired by self-selection bias. If you pay a particularly low percentage of your income on your car, you're probably more likely to respond (possibly as a form of bragging rights).
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Because it's BMW financing and they get to sell a car while also doing the financing. The interest from financing, in that respect is a bonus above the sale. .09% was a promotion. I wasn't the only one who took advantage of it.
I actually didn't lie about car payment as percentage of income. I didn't do it to brag, i did it to highlight much of what you're saying. Hardly any of these answers will help the OP very much when it comes to learning because there are far to many factors to consider with each individual.