Enthusiast
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So anyone Opting In??
Anyone got recruited for Pune location recently? My interview process has been completed and asked for documents on 23rd Dec, but till now I haven’t got any update after that. Today i called HR and they said manager has not provided any update on my application. Should i wait for the offer letter or look opportunity in another organisation? Deloitte Deloitte India
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House music is life 🕺🏿
Any chance firms mandate the vaccine?
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How long did you take off time from COVID?
Has anyone done the mail in test kits for Covid?
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Enthusiast
Yes, it’s a depreciating asset and I’ve wanted a nice car; it’s a once in a lifetime purchase and I’ve come to terms with it.
People spend hundreds a month on coffee, fancy yoga classes and other stuff. Nothing wrong spending extra on a car especially one that makes you happy
I'm a car guy OP, so I believe in turning a blind eye to the financial factors of buying a car for the sake of my hobby lol. But I think that's a great rate especially for a used car and nothing down. I think you'll easily beat it with market returns.
Chief
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Chief
65 months is a reaaaaally long financing term for a car
Do you think you can beat 1.5% compounded returns over the same time period? Your returns minus investing fees minus state and federal capital gains tax needs to come out to more than 1.5% compounded for it to make sense. For your calculations, consider you’d have to be making monthly contributions to the investment mechanism instead of paying off the car.
You’ll probably also have to pay capital gains and/or sales tax on that 7.5K trade-in if you take it out, thus reducing your principal further.
(Not even factoring the risk to principal, or the reduced credit availability)
If you pencil out the math, my guess is that having a larger loan ends up being more expensive in the long run.
Chief
Spreadsheet to the rescue!
Start by pricing out the net results of both options using the same interest rate on the investment side. The delta between the options will tell you what your net costs are for having a larger loan. Then you can replicate with various interest rates so that you can see how much of a return you need to break even or come out ahead.
From that you can judge against your risk tolerance. For example, if it takes a 10% annual return on investment to come out sufficiently ahead, then you know you will need a fairly risky investment strategy.
Also don’t forget your effort when you compare options. If a reasonable low-risk return of 4-5% nets you only $40-50 after 5.5 years, it’s not worth your time to be dealing with the tax forms and managing the investment.
At 1.5% seems like there's limited risk here. $7.5k of funds for down payment only equates to few hundred dollars. Don't over think everything in your life. Enjoy the car and try to turn the $7.5k into $20k, if that's what you're interested in doing!
Enthusiast
That’s right.
So basically I got a $900 sales tax rebate since I traded in my car
Put it all in GameStop
I’m going to say no on capital gains, unless you purchased the vehicle for $10K, put in $10K to fix it up, and sold it for $40K, then you would have to pay tax on the $20K. But if you purchased it for $40K and sold it for the $7,500, you are fine.
If you are only paying $2,000 in interest and can handle the loan, I would invest the money myself.
And 65 months seemed long, but it’s 5 additional months on a 5 year old, and most loans are going for 72 months now.
Rising Star
65 months is too long for a car loan. 36 months is max advisable term.
If you really think that you can borrow additional money against the value of your car and use that capital to come out ahead through some other investment.... I would think twice. I'm risk averse, the rate does sound like you could beat it, but... something feels off about this plan.
Chief
Only if your investment savings are seeing more than 2% and have an acceptable risk profile.
As D1 said, something seems off - because it is. Tallying up the real costs of either option probably nets out in a wash. People are caught up in the hype of an asset bubble believing in an unfaltering stock or real estate market, while interest rates are stupidly low. Lots of individual investors using credit to play the market was one of the major factors leading to the 1928 crash and is why so many people were hurt so badly from under-appreciating the risk.
In the grand scheme of things OP seems to be living within their means and a 7.5K loss wouldn’t be catastrophic. If they want to follow a gambling risk profile in that situation, that’s their prerogative. But be cognizant of that decision.