Do hybrids last as long as naturally aspirated engine and do they make sense?

[SC Maintenance]

This is so far down in the weeds of speculation, like worrying about future tax law changes, that I'm not interested in that rabbit hole. I deal with what's here, today.

I agree, but you seemed to be the one adamant that your bank was "risk free". T-bill is even more risk free, if there could be more risk free (it technically is, but there both zero in practice).

I don't do T-Bills because I have to report certain types transactions in a financial disclosure. It can be quite burdensome.

If you stick to T-bills you get a form 1099 from your broker or Treasury direct and enter it on the same form as your bank interest. No extra disclosures. Your lending money to the US government, and they already know about it

Where do you think banks put there reserves? In T-bills of course - or park them at the fed which pays the same as T-bills practically - and they pay you less.

Honestly, put your money where it makes you happy. It just seems like your going to a lot of trouble to manage a loan so you can make a few bps in interest, then you make less interest. I hold lots of T-bills, but I just don't like loans, of any kind. I pay cash when I can, including for new cars.

 

[rijndael]

If you stick to T-bills you get a form 1099 from your broker or Treasury direct and enter it on the same form as your bank interest. No extra disclosures.

I'm not talking about tax reporting requirements, I have job reporting requirements. I'm not going to get in to my specifics, but that's not how it works for me.

I just don't like loans, of any kind.

I really like low interest loans.

It just seems like your going to a lot of trouble to manage a loan so you can make a few bps in interest, then you make less interest.

It's almost no work. Get the car, get the loan, setup direct withdrawl from the new account. Go back to it in 5 years when it's paid off and take out the interest.

 

[PandaBear]

I think most people should separate the discussions of many subjects instead of mixing them all up together:

1) Do you need that expensive vehicles. New or aged doesn't matter. Everyone has a different need regarding to what kind of vehicles to buy. Some like Prius, some like M3, some like Tesla, some like mini van. You can't force someone from a crew cab into a Prius because that's not what they want, or the other way around because they may not be able to afford it.

2) Is new or used a better deal? That depends. So far I have no regrets on all my new cars purchases. I negotiate well, typically to a point of my new car being almost the same price as 1-2 year old used, and over 20 years typical ownership I got what I want instead of buying something I don't (like instead of today's newer better car I was forced to buy something that is older and less efficient, etc). Plus I can get better interest rate financing instead of cash, so the cashflow in my investment compensate for some of the loss had I pay cash to buy a used car or finance with a higher cost. It may not work for everyone and it may not work for every kind of cars out there, but so far it works for me. I always review both new and used to see what works better.

3) Is financing a better deal? Depends on the deal. At 7% interest probably not (although I typically get about 10% market return in my investment, after tax it is less than 7%), but I once got a 1.5% rate on a car I already bought in cash, just went to my credit union to take advantage of that plan and open an account there. They ask me why I would send a paid off in cash car back into a car loan and I told them it is cheaper than my mortgage and I am using it to pay off my mortgage and pocket that 1.5% myself for free. It worked out well.

4) Is new car better or a beater that may need some repairs here and there better? Can you afford it breaking down? Do you have another car to use as a spare? Are you good at DIY? If you can't afford to miss work you probably should only buy less than 10 year old Corolla and call it a day, none of the iffy brands and none of the iffy models. I don't see buying beater being the best choice always, even if you save a few grands. I have a friend who got fired because his car broke down and he missed too many days at work. He regretted buying that beater and went back to a much newer Corolla afterward.

Split these decisions up and the answer depends on the buyer.

 

[brages]

I'm a hypothetical borrower and investor. Call me Even Steven.

I have a $100,000 investment at 3% interest. Every year it makes me $3000, but I'm taxed at 25%, so I get to keep $2250.

I also have a $100,000 loan at 3%. Every year I pay $3000 in interest. $2250 comes from my investment income and the rest comes from my discretionary spending account...

 

[CarlB]

The profits on the investment make the loan payment. My argument is simply that if you are spending the money, this is the smarter route vs pulling that money out of the investment portfolio and spending it. Sure, you could spend less and get less, but that's not the point that @rijndael had made with his two options that I originally was responding to.

I'd argue warranty is more than a "want" for somebody in their 70's.

No, I'm coming at this from a fixed spend perspective, which I thought I had made clear, IE, you are buying the vehicle anyway, these are your two options for paying for it, which is how @rijndael had presented his reply to you.

Someone in their 70's can drop $100k because a warranty is more than a want, yet can't afford to pay for repairs. Sounds like a, "want."

Again, if you are going to ignore depreciation, opportunity cost, because you have made up your mind to either pay $100k + interest or $100k in cash. This isn't a financial planning discussion anymore. Want vs need. Buying cool toys is fun, just understand it isn't a need.

 

[OVERKILL]

Someone in their 70's can drop $100k because a warranty is more than a want, yet can't afford to pay for repairs. Sounds like a, "want."

It's not about paying for the repairs, JFC. It's about the security of holistic coverage, which typically includes a loaner vehicle, roadside assistance...etc. My dad paid for the repairs on his Expedition for 20 years. More recently, those repairs got more expensive and more frequent and the vehicle's reliability became questionable. And there was the real risk of it breaking down between the house and the cottage, or coming back from a doctor's appointment in the middle of winter.

This became challenging without the availability of a loaner vehicle in the winter months, since their 2nd vehicle (a 2003 Town Car) has never been winter driven and isn't equipped with snow tires. So they were relying on others (like me) to ferry them around when the Expedition was in the shop.

So, part of the peace of mind of buying new was not only warranty and reduced likelihood of experiencing issues in the first place, but also the availability of a loaner vehicle as part of that package, on the off chance that it did end up in the shop. You may not prioritize these things in your life, and that's fine, but my family sees them as important in ensuring the safety and security our our elderly parents, while also working to meet their needs in terms of capability and comfort.

Again, if you are going to ignore depreciation, opportunity cost, because you have made up your mind to either pay $100k + interest or $100k in cash. This isn't a financial planning discussion anymore. Want vs need. Buying cool toys is fun, just understand it isn't a need.

Bro, the discussion was *IF YOU ARE SPENDING THE MONEY ANYWAY* and, *IN THAT SCENARIO* whether it was better to finance at low/zero interest, or pay cash. I've argued that it's better to finance if the cash you are going to be spending is already working for you.

It's not about the amount being spent, it could be $50K, $40K, it doesn't matter. If the same amount of money is being spent, which is the better decision? @rijndael argued that the financing made more sense and I agreed with him and have articulated why I believe that to be the case. Instead of addressing that scenario as presented, you've taken us off into the wonderful world of whataboutism where other options, not presented, like not buying a vehicle, or buying a used jalopy that already suffered from massive amounts of depreciation, are on the table.