Why I Bought A New To Me Car In Cash vs Borrowing.

Beyond my ethos of not being interested in owing other people money (especially for a depreciating asset), its just math.

Let’s dig in…

Currently, even with an 800+ credit score (humble brag), the best rate I could have gotten to borrow the $28,500 (or less a down payment) on the 2017 BMW X1 I bought would be 8.8% or so.

The savings I used to purchase the car was in a Personal Capital Cash account yielding 3.35%.

Use some of the money I saved for a car, or essentially pay 5.45% to borrow money on a depreciating asset?

Right now the public markets are yielding negative returns, broadly.

It’s just the price of money.

Unless you can do better by borrowing (for instance, on an appreciating piece of real estate at a 2.8% rate), use the cash.

Do this for all major purchases and you will be miles ahead financially.

Thanks for reading, be good stewards of your earnings.