Actually, you could not be more wrong. If you get a low interest loan, you invest the money you would have used to buy the asset and come out way ahead.

My mortgage is 2.85%. I deduct the interest on my taxes, and invest the capital in the market and average 8% or higher. That's over a 3 point spread after tax.

Take the higher interest Ford loan and rebate, pay it off immediately and refinance at a low rate. Win, win.

 

The difference is that homes are generally appreciating assets and the owner can sell it for at least what he owes on the house. Not true with vehicles.

Obviously the total value of 30 years of mortgage payments is going to be a lot more than the value of the house, but most people aren't comparing the cash price of a house to the total mortgage price--they're comparing the mortgage price of the house (gaining some equity) to the price of renting (gaining no equity).

You also ignore the value of the mortgage interest deduction, even though you're quick to point out the potential tax savings of a vehicle lease.

I've never seen a lease that offered an over-mileage rate that benefited the consumer, even if he's writing off the payment.

 

I agree, I love earning 1% on my auto, and 3.5% interest on my mortgage! That is a far better return than any mutual fund or etf

 

You got your price from Ford Credit. That should be what you can work with. BTW regardless of what they said on sales tax, they are sometimes wrong. I find that the lending institution representative doesn't know the answer to the question of if taxes are included in the quoted payoff and guess.

As for the dealership quotes, they can play with these numbers anyway they want. Then can take money from/to you new purchase and move your payoff around.

I always tell people to go to Carmax. They will give you a quote any dealer will match for trade-in (wholesale) and their finance department can assist you in getting your payoff as they will need to know it to purchase it from you.

Hope that helps.

 

That's a highly inaccurate statement. You're in the wrong funds. There may be reasons to pay off the debts you are describing, but your explanation isn't one of them.

 

Ive seen/heard of some lease deals where the dealer is buying the vehicle with the boss's special finance company which is pocketing the savings on the buy in cash ford offers. Then turning around and leasing at full ford marketing prices. Then charging it out at inflated lease rates. You dont qualify for this rate based on credit score etc. Sounds like this could be the case. If the alternate dealers make contact on the lease then they arent getting the full details or they are adding on at their discretion similar to a trade in. Hard to say what to do in this case but there is always a documentation trail showing what the full details are.

 

The interest earnings on a house that you can write off doesn't compare to the huge number if you add up what you paid for the house after 360 payments. So yes, I ignore it. The write off of the vehicle is largely more beneficial vs the lease payment... The reason I stated a mortgage was to show people that are saying that financing a vehicle is a waste of money, leasing a vehicle is a waste of money.

More people see having a mortgage is okay, and financing a vehicle is no good.
I'd rather have 0 mortgage payments and a lease or vehicle payment any day. Especially at a tiny interest rate. The circumstances are different for everyone.

 

And what you are failing to include in your discussion is that the 8% return is not risk free. As an aside, the SP500 return in 2015 was 1.4%, not 8%. Look, I'm not telling you (or anyone else) that investing in equities is not a good idea....it is (over the long run) as the stock market is not a zero sum game. That is, as productivity increases overall economic wealth increases and that is reflected in equity returns. I was able to retire early because of my investments in the market.

What I am saying is that the game of borrowing to invest can increase returns, but it also increases risk. End of story. It is critically important to understand that. I can also tell you that I've made some of my best investments when those same leveraged people were being washed out of the market, either through margin calls or just scared out due to their investments collapsing while at the same time their debt remaining. I've had friends who have lost serious coin because of leverage.

There are a lot of people who think they can play the game, and say that they are in it for the long run. But when the .... hits the fan, and you are losing big bucks day after day, week after week in the market, those same people realize that they don't have the risk tolerance and get out (near the bottom). Let's put this in perspective. For example, in the 1987 crash I lost over a years salary (gross) in four hours. Four hours. That's when you learn your real risk tolerance! (I was a net investor during the crash because I had cash to invest.)

 

Paying off low interest debt (investing at 1% as in one example mentioned) is not risk free either. Inflation comes and goes but it will bite just as assuredly as short term losses in equities. Paying off low interest debt can be part of an asset mix strategy since this is somewhat similar to investing in bonds. 1987 events are great buying opportunities, as you mention.

 

Holy crap there are about a million armchair finance experts in here who have no idea what the **** they are talking about.