Quote:
Originally Posted by dsmclone
I don't care of the loan is 0%, I'm not going to have a car loan. I'd rather take the money that I was spending on a car loan and buy employee stock at a 15% discount and use that to fund future car purchases. Even if I didn't have this option, I wouldn't get a car loan. I'm fine losing the 1% or whatever is the difference between a savings account and the loan rate.
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I don't understand the logic here, unless you're
never buying a car.
If you want to take the money from the car loan and buy stock instead, aren't you implying you would buy the car in-full instead of financing? So (for example) instead of a loan of $30k over 4 years ($625/month), you're going to write a check for $30k.
Had you financed, you could have put that $30k into the stock purchase immediately, and gotten larger returns off the investment (beauty of compound interest), rather than the other scenario where you "save" $625 in monthly payments and put that towards stock over 4 years.
Let's say that stock grew at 5%/year for you. After 4 years of the initial $30k purchase you'd have $36,465.19. On the $625/month approach, assuming a stock purchase of $625 each month over 4 years at the same 5% return it would be $33,942.23. Congrats, refusing the loan just cost you roughly $2500.
I've learned to stay away from these arguments because there's
no right answer and no one-sized-fits-all approach, but scenarios like the above make me scratch my head and wonder what I'm missing...