What Mods Do and Do Not Void the Warranty?

zrk

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Ok, but that's not investing it, that's just using it to buy more toys.

Bottom line is between spending $50k to buy a car outright, vs putting that $50k in investments making 5%+ while taking a $50k loan at 2% for the car, the latter is the better choice pretty much every time. 1) You spend less on the car in the end, and 2) you have more cash reserves available in the event of an emergency.

The monthly expense is really irrelevant, since you can just set the money that you would have used to buy the car in its own account and use that to make the payments for you, while generating more interest than you're paying on the loan. Nothing additional comes out of your monthly budget, and at the end of the loan you have thousands of dollars left over in the account that you can use for whatever.
Not really. I have what financial planners consider a "moderate net-worth." If you really want to talk about reliable net gains on an amount of money as small as $50,000-$60,000, you're looking at a 10-15 year investment. If you constantly draw down from that you're never going to see anything. Maybe a grand, two if you really hit a bull market. It's really -not- worth the risk to make a payment on a depreciating asset. Any financial planner worth their salt will agree. Even if you compound interest daily (no one is doing that), you're looking at a total 7 year net in the 3-4k range.

Something could happen to the car, GAP insurance, fees for late payment, all sorts of shit can happen when you don't own a car outright. It's -almost never- (maybe 7 figure cars excluded) the right option to make the payments and invest. When I hear this advice, it's usually from someone that either a) couldn't afford the car outright, or b) doesn't keep a close eye on their pennies.
 

suicidaleggroll

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Not really. I have what financial planners consider a "moderate net-worth." If you really want to talk about reliable net gains on an amount of money as small as $50,000-$60,000, you're looking at a 10-15 year investment. If you constantly draw down from that you're never going to see anything. Maybe a grand, two if you really hit a bull market. It's really -not- worth the risk to make a payment on a depreciating asset. Any financial planner worth their salt will agree. Even if you compound interest daily (no one is doing that), you're looking at a total 7 year net in the 3-4k range.

Something could happen to the car, GAP insurance, fees for late payment, all sorts of shit can happen when you don't own a car outright. It's -almost never- (maybe 7 figure cars excluded) the right option to make the payments and invest. When I hear this advice, it's usually from someone that either a) couldn't afford the car outright, or b) doesn't keep a close eye on their pennies.
Lol, sorry but your numbers are so far off I can't take you seriously. If you'd like I can run some Monte Carlo simulations to give you average returns and estimated probability of failure given >100 years of S&P 500 price history, but ballpark you're looking at well under a 1% chance of taking the loan and investing the money turning out worse than paying cash up front. If auto loans were at more like 5-6% then you'd have a point, but at <2% it's a no-brainer. On average you'd be looking at over $15k left over in the account when the loan is paid off. I don't know where you got $1-2k but that's very, very wrong, I think your calculator might be broken. If you don't feel comfortable with the small risk of a second Great Depression hitting the instant you put your money in the market, there are plenty of alternatives, stablecoin yield farming for example gives 7-10% with zero volatility in the balance. Investing $50k at 7% while using that account to pay off a 7 year $50k loan at 2% will leave you with over $12k left in the account when the loan is paid off. If that yield drops to a level you're not comfortable with at some time in the future, you can just pull out the balance and pay off the loan whenever you want.

Something could happen to the car? What does that even mean? How would that change matters? Gap insurance is a non-issue in this discussion since you have the entire balance in your account ready to pay off the loan at any time. Late payment? Again, you have the entire balance sitting in your account, and automatic scheduled transfers remove the risk of human error.
 

zrk

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Investing $50k at 7% while using that account to pay off a 7 year $50k loan at 2% will leave you with over $12k left in the account when the loan is paid off. If that yield drops to a level you're not comfortable with at some time in the future, you can just pull out the balance and pay off the loan whenever you want.
Yup - you're right. Reworked the numbers I had used in my sheet and had a decimal in the wrong place somewhere. But the point still stands. We're talking about 12k over the matter over 5-7 year. It's hardly an amount of money worth bothering for. That covers what, < 1 year of groceries for a family of four?

There is a world where you're incredibly lucky, and manage to hit a higher yield, but even still 24k over 5-7 years covers now two years of groceries. My point still stands. Most people who have the cash to make a largeish purchase and avoid being in debt should probably do so.

And don't forget to pay the taxman on your cap gains, if you do invest.

Screen Shot 2021-06-17 at 06.18.21.png
 

Thill444

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Lol, sorry but your numbers are so far off I can't take you seriously. If you'd like I can run some Monte Carlo simulations to give you average returns and estimated probability of failure given >100 years of S&P 500 price history, but ballpark you're looking at well under a 1% chance of taking the loan and investing the money turning out worse than paying cash up front. If auto loans were at more like 5-6% then you'd have a point, but at <2% it's a no-brainer. On average you'd be looking at over $15k left over in the account when the loan is paid off. I don't know where you got $1-2k but that's very, very wrong, I think your calculator might be broken. If you don't feel comfortable with the small risk of a second Great Depression hitting the instant you put your money in the market, there are plenty of alternatives, stablecoin yield farming for example gives 7-10% with zero volatility in the balance. Investing $50k at 7% while using that account to pay off a 7 year $50k loan at 2% will leave you with over $12k left in the account when the loan is paid off. If that yield drops to a level you're not comfortable with at some time in the future, you can just pull out the balance and pay off the loan whenever you want.

Something could happen to the car? What does that even mean? How would that change matters? Gap insurance is a non-issue in this discussion since you have the entire balance in your account ready to pay off the loan at any time. Late payment? Again, you have the entire balance sitting in your account, and automatic scheduled transfers remove the risk of human error.

Just a few things to consider. Let's assume 0 down on a 3.0 Supra Premium. Depending on your state, taxes, reg your probably looking at a $60K loan for 7 years lets say at 3.8% (some people will get a lower interest rate, some people higher). The cost of that loan for 7 years is $8400. GAP insurance is anywhere from $250-900 or so depending on many factors. Let's just say $500.

That is assuming you keep the vehicle for 7 years and make the regular payment. But banks get their interest up front for these loans. You will usually pay the bulk of the interest up front the first 3 years.

So where it gets interesting is many people who buy these types of cars don't keep them 7 years. Many people keep them 2-3 years (some keep them 1 year) and then move on to the next big thing which means they start all over again with a new long term loan and paying the bulk of the interest up front again. Over a period of 7 years if you do this 2 or 2 times, you have likely paid well over $10-11K+ in interest alone. With GAP likely another $500+.

So you just have to consider all the factors.
 
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suicidaleggroll

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We're talking about 12k over the matter over 5-7 year. It's hardly an amount of money worth bothering for. That covers what, < 1 year of groceries for a family of four?

There is a world where you're incredibly lucky, and manage to hit a higher yield, but even still 24k over 5-7 years covers now two years of groceries. My point still stands.
So now saving 25% on a $50k car for a few days of effort isn't worth it because it's only a year of groceries? And saving 50% isn't worth it either because it's only 2 years of groceries? What's next, getting a Supra for free isn't worth it because it's only 4 years of groceries?

We're not talking a ton of effort or risk here, a few hours to set things up, and maybe 15 minutes a month to verify everything is on track. That's ~24 hours over the life of the loan to save $10-20k. I don't know how much you value your time, but I certainly don't value mine at $400-$800 an hour. I understand if you value the peace of mind of not having any debt that much, but not everyone views debt in the same way, especially when you're sitting on an account that's easily capable of paying off that debt at a moment's notice.

Let's not pretend that paying for the car in cash is risk-free either. Tying up that much capital in a car instead of leaving it liquid carries risk as well. You could run into a medical emergency, legal emergency, or any other emergency that needs a bunch of cash. If you took the loan and had the money sitting in an investment account, you could dip into that if necessary and switch to using your monthly income to cover the car loan instead. If you paid for the car in cash, your only option is selling the car and eating the depreciation hit. Keeping that money liquid gives you more options.

Of course it's up to each individual to decide for themselves though.
 

zrk

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So now saving 25% on a $50k car for a few days of effort isn't worth it because it's only a year of groceries? And saving 50% isn't worth it either because it's only 2 years of groceries? What's next, getting a Supra for free isn't worth it because it's only 4 years of groceries?

We're not talking a ton of effort or risk here, a few hours to set things up, and maybe 15 minutes a month to verify everything is on track. That's ~24 hours over the life of the loan to save $10-20k. I don't know how much you value your time, but I certainly don't value mine at $400-$800 an hour. I understand if you value the peace of mind of not having any debt that much, but not everyone views debt in the same way, especially when you're sitting on an account that's easily capable of paying off that debt at a moment's notice.

Let's not pretend that paying for the car in cash is risk-free either. Tying up that much capital in a car instead of leaving it liquid carries risk as well. You could run into a medical emergency, legal emergency, or any other emergency that needs a bunch of cash. If you took the loan and had the money sitting in an investment account, you could dip into that if necessary and switch to using your monthly income to cover the car loan instead. If you paid for the car in cash, your only option is selling the car and eating the depreciation hit. Keeping that money liquid gives you more options.

Of course it's up to each individual to decide for themselves though.
Yeah - you're definitely right in a lot of ways - it's all how you manage your money, I get that.

Personally I err on the extreme conservative side of money management. I'd never buy a car that tied up more than a few pct of my net worth, I just can't do that. It hurts my brain. If I ever landed in a place where a medical emergency or something couldn't be paid for with emergency liquidity I'd consider myself failed.
 

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This thread is taking the fun out of owning a Supra. Can the bean counters dial it back a little?!? ?

-RJM
Good point. I just need the ECU unlocked and a Pure 800 turbo so I can make my wife pee her pants and go viral :)
 

suicidaleggroll

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Just a few things to consider. Let's assume 0 down on a 3.0 Supra Premium. Depending on your state, taxes, reg your probably looking at a $60K loan for 7 years lets say at 3.8% (some people will get a lower interest rate, some people higher). The cost of that loan for 7 years is $8400. GAP insurance is anywhere from $250-900 or so depending on many factors. Let's just say $500.

That is assuming you keep the vehicle for 7 years and make the regular payment. But banks get their interest up front for these loans. You will usually pay the bulk of the interest up front the first 3 years.

So where it gets interesting is many people who buy these types of cars don't keep them 7 years. Many people keep them 2-3 years (some keep them 1 year) and then move on to the next big thing which means they start all over again with a new long term loan and paying the bulk of the interest up front again. Over a period of 7 years if you do this 2 or 2 times, you have likely paid well over $10-11K+ in interest alone. With GAP likely another $500+.

So you just have to consider all the factors.
In an effort not to stretch this out too much further, I'll try keep my response short. Gap insurance is a separate matter, paying for the car in cash versus putting that cash in an investment account and taking out a loan with no gap insurance gives the same result. Gap insurance shouldn't be part of the equation since then you're not comparing apples to apples anymore.

Yes the interest is biased toward the start of the loan, but that's the case for both the car loan and your investment account, it works the same way so it cancels out. Let's say you take $60k and put it in an investment earning 7%, while simultaneously taking out a 7 year $60k car loan at 2.5% (a more reasonable rate than 3.8% for someone that has that much liquid cash sitting around). After the first month's payment, you've saved $225. After the second month you've saved $449, then $672, $893, $1113, and so on. After 2 years your auto loan balance is $43914 while your investment balance is $48974. If you want to move to a new car, fine, pull out the $43914 you owe, pay off the car, and you're left with over $5k in the investment account. That's at just 7%, at the average S&P 500 annual return of 10% it's nearly $9k. If the market takes a shit, you just set a stop-loss on the account to automatically pull out your investment when it matches the loan balance, so it ends up being a wash.

As above, it's up to each individual to decide for themselves though.
 

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My dealer replaced my trans under warranty. They wouldn't elaborate on what the issue was. Car was stage 2 on ecutek. They did wipe my tune and lock my ecu when I told them not to. Maybe I just got lucky, I was 100% sure they wouldn't cover it.
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