Quote:
Originally Posted by ASAP
Cash payments typically don't get people into trouble... especially if you have cash... recurring payments can and do screw everyone... that my friend is how every crisis we've ever had started.
Recurring Payments - Perfect Coming In. Screw you bad going out.
In virtually every other country of the world... cash is king, here recurring revenue / payments are king. Well, the latter is only true until everything goes to shit and we have a plethora of irresponsible parties.
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Cash is king when the only thing to worry about is interest. BUT this is a depreciating asset.
BUT that wasn't what I was asking. You said you put 50% down, but your monthly is low. Are you basing your 6% on the monthly or the total out of pocket? Your depreciation could well overtake your down payment.. meaning that you probably won't recover all of it, given that a less than 50% residual is more common than not after 3 years. Remember, your out of pocket isn't calculated until you find out what the residual will be when you sell. You can play the market by financing, or you can lock it in at a certain rate with a lease. The ratio of your car expenses vs net income is set and known. That's the advantage of recurring payments on a lease.
If it all goes to shit, and your car's residual is actually 45% after 3 years... guess what? The guy who leased with a 59% RV wins, and you just lost 19% plus the liquidity of ~$25k.