[Hogan773]

You're over simplifying by a huge amount, I dont know why you are modeling this in one 5 year chunk these are all just formulas in excel that you can type in.

NPV of 50k at 6% discount 5 years is $42k. You are giving me 50k today that will be only worth 42k when you get it back. You get your 6% interest, netting 8k but that only makes you whole.

I got 50 into a 4.5% interest account, netting me $4790 in interest (risk free as you call it) View attachment 124653

So, the answer is no I dont agree with your math because in this scenario I make $5k and you got zilch. And I especially dont agree that the best way to invest 50k only nets you 4.5% returns.

I invested $30k to remodel the bathroom of my house which will, checks notes, net me somewhere in the range of 30-50% return in under 5 years. Mind you this is just an example of what that capital can be used for that will both give you gains and improve your life in the meantime.

Forget it. Back to regularly scheduled MDX discussion. You're mixing in and mixing up a lot of different concepts to the point that it is meaningless, and either purposely ignoring or obfuscating the simple basics. This isn't a game of Blackjack where I am the dealer and either you win or I win. Don't include "me" (the bank) in your example! Just focus on yourself. You are claiming that you made $4790 over that time period and somehow ignoring the fact that you paid out way more than that in interest! (the $8K that the bank got). You are applying the PV concept to one side of the ledger but not the other - somehow the bank's money is worth less in 5 years due to inflation but somehow you have only counted the interest you earned, conveniently forgot about the interest you also paid (which is more) AND ignored the fact that your money is also worth less due to inflation??? C'mon man that is criminally sloppy.

You obviously haven't amassed a portfolio of investments as perhaps others have here because if you did, that would be the relevant comparison (do I take some of my current stash of money and use it to buy the car in cash, or do I borrow money at a 6% interest rate so I can leave that amount of money in my current portfolio of investments and I need to look at the rate of return on where the money would otherwise come from, so if I withdraw money from a short term bond fund earning 3% to go buy the car, that is effectively my cost of money since I am forgoing that investment income). Cool story that you invested $30K in your bathroom which will pay a 50% return in 5 years (you must have a crystal ball in terms of housing prices and where they will go in the next 5 years, good for you). Again your whole premise is based on this idea that you have this magical power to turn any dollar you touch into gold with huge returns. If that is the case then sure you should go borrow as much money as you can at any interest rate you can get below your rate of return...I mean jeez since you will net a 50% return in just 5 years then you would be happy to pay really high interest rates - grab as much money as you humanly can and don't limit yourself to just financing your MDX at 6% interest! Borrow $500K, borrow millions! Sounds like you have the midas touch haha

I would stick to your engineering expertise, or to modding the MDX or whatever, and if you want to tell others they "obviously don't understand basic finance" I would look in the mirror a bit first

Back to our regularly scheduled program!

 

[IanCH]

Man you really don't understand inflation. It doesn't matter who's money it is, money next year is worth 92-94 cents on the dollar.

That fixed 998 payment is less and less valuable. The interest gleaned from that money decreasing with the principal as the payment is worth less. The full 58k paid on the 50k loan is just the full 50k in present day dollars returned. The loaner made nothing.

 

[Hogan773]

Man you really don't understand inflation. It doesn't matter who's money it is, money next year is worth 92-94 cents on the dollar.

That fixed 998 payment is less and less valuable. The interest gleaned from that money decreasing with the principal as the payment is worth less. The full 58k paid on the 50k loan is just the full 50k in present day dollars returned. The loaner made nothing.

My man. C'mon please. Again, let's pretend you had amassed a liquid investment portfolio like I'm guessing Maik has (it seems like you are probably at an earlier stage of financial assets where you have no choice but to take out a car loan...nothing wrong with that, but the only relevant example here is for someone who is making a CHOICE as to whether they take out a car loan, or whether they use some of their own savings/investment money to buy the car outright). So the comparison is what you would earn on that money if you don't use it to buy a car, vs what you are paying to borrow money so you could retain that other money in your investment account rather than using it to buy the car. It really is that simple. That is the "opportunity cost" from your Wiki - one can choose to buy the car, with the opportunity cost being that they don't have that money in their savings anymore so they are giving up whatever they were going to earn on that money, but likewise they are not required to pay interest to someone else. As the interest rate on the loan exceeds what the person was earning on their savings, taking out the loan is an extra cost above and beyond. Your supposition is that there is no question that you can always earn MORE than the interest rate on the car loan, no matter what. Because you apparently believe you will do over the next 5 years by remodeling your bathroom. Again cool story. By that logic you should have no money sitting in savings or investment accounts and you should be out doing bathroom remodels to houses to generate 50% returns in a few years time. Maybe that is indeed what you do for a living while you are not being an engineer. For many of the rest of us who may have built up some savings and investment portfolios over our lives, the finance-based analysis of whether and when to borrow money is pretty simple and not as confusing as you are making it sound. Applying inflation to one side of the equation but not the other is just confusing you. Stop focusing on the "other person" (the bank) as if it is some game where you win if they lose. This is all about whether you take YOUR MONEY to buy the car today vs borrowing some money and paying it back and the only way it works is if your money earns a higher return than what you are paying in interest.

 

[IanCH]

God damn take a writing class, or better yet feed chatgpt what you want to say because it will save you like 10 mins of typing bullshit that means nothing.

If you are not financially illiterate it is easy to achieve neutral to positive returns versus loan interest and inflation assuming you have the full capital for the car yourself.

If I have 50mil in liquid equivalent assets I would still take some portion of a car purchase (at any price) as a loan in today's market because the basic economics dictate that 5.74interest in 6%+ inflation is still free money.

 

[Hogan773]

God damn take a writing class, or better yet feed chatgpt what you want to say because it will save you like 10 mins of typing bullshit that means nothing.

If you are not financially illiterate it is easy to achieve neutral to positive returns versus loan interest and inflation assuming you have the full capital for the car yourself.

If I have 50mil in liquid equivalent assets I would still take some portion of a car purchase (at any price) as a loan in today's market because the basic economics dictate that 5.74interest in 6%+ inflation is still free money.

Again you are very certain of yourself in all these future assumptions (I sense a pattern of you being pretty sure of yourself no matter what is the topic). So you are sure that 6% inflation will persist over the next 5 years, and you are sure that your investments will automatically beat inflation (and you are kneecapping your returns for taxes too right?) and also they by definition will exceed the interest rate you are paying. 100% for sure. So as I guessed before, if you have any investments and savings I'm guessing you have 100% of it tied up in stocks, because if you have it sitting in a money market fund today you aren't beating that interest rate, and if you have it tied up in bonds you may not be beating that either. And I guess you are ignoring the fact that stocks aren't guaranteed to always go up. The S&P500 is DOWN 12% over the past year....but wait....inflation is running at 6%....how can that be.......next you will tell me that anyone who invests in stocks or bonds is "financially illiterate" and you have some secret ways to make money no matter what is going on

You've got the touch I guess!

I'm done here. You can have the next last word and since it is obvious that you don't get the bigger picture I will just leave this all be so we can get back to the MDX topics at hand. Have a good evening

 

[IanCH]

My **** around brokerage account is up 5% in the past 5 months, but to be fair nvda is carrying a hefty part of that gain
... up 50% since I bought!

 

[poofyo101]

Ok, Does anyone have any leads to a dealership with a great deal on the east coast? Reached out to Acura of Laurel and they were not interested.

 

[crepr12]

None...We are casually looking on the East Coast also...

 

[mastergunnera8]

Ok, Does anyone have any leads to a dealership with a great deal on the east coast? Reached out to Acura of Laurel and they were not interested.

Spoke to a person in the DC area said they got a good deal at Rosenthal. Radley was an MSRP dealer. I bought a certified 22 tech at Radley, amazing deal and experience, Cristian was my SP. Good Luck!!

https://www.rosenthalacura.com/new-vehicles/mdx/

 

[Luca Brasi]

Radley in Falls Church Virginia. Purchased a 2023 Aspec SH AWD today. Great price. Ask for Roland. He's been there 10 years and is a great guy. Very helpful.

 

[wasjr]

I hate that I’m late to the financial discussion. Maik and I have had this discussion before. While I am normally in the camp of financing if I can earn more from investments, a couple of points.

First, there are strictly numbers decisions and emotional decisions, and both are fine. Some folks feel uncomfortable with unnecessary debt, and that is fine. A college buddy who is a financial advisor is that way. He even paid down his low interest mortgage just because he is uncomfortable with debt. If you are not comfortable with debt, and can afford to pay cash, no need for additional stress. Life is too short.

Secondly, the financial markets are very volatile now, and the financing decision is tougher. In an era with low interest rates and double digit stock market returns, financing was a no brainer. You were ahead of the game on day 1. Now, not so much. I’ll even go so far to say that I am not comfortable that there will be annualized double digit S&P 500 returns over the next 5-10 years.

A 6% note interest rate was mentioned, and I would not finance today in that scenario as I am not comfortable that the investment return spread will be sufficient to warrant the risk.

In summary, none of the decisions are wrong. It just depends on your comfort level and risk tolerance.

 

[Hogan773]

I hate that I’m late to the financial discussion. Maik and I have had this discussion before. While I am normally in the camp of financing if I can earn more from investments, a couple of points.

First, there are strictly numbers decisions and emotional decisions, and both are fine. Some folks feel uncomfortable with unnecessary debt, and that is fine. A college buddy who is a financial advisor is that way. He even paid down his low interest mortgage just because he is uncomfortable with debt. If you are not comfortable with debt, and can afford to pay cash, no need for additional stress. Life is too short.

Secondly, the financial markets are very volatile now, and the financing decision is tougher. In an era with low interest rates and double digit stock market returns, financing was a no brainer. You were ahead of the game on day 1. Now, not so much. I’ll even go so far to say that I am not comfortable that there will be annualized double digit S&P 500 returns over the next 5-10 years.

A 6% note interest rate was mentioned, and I would not finance today in that scenario as I am not comfortable that the investment return spread will be sufficient to warrant the risk.

In summary, none of the decisions are wrong. It just depends on your comfort level and risk tolerance.

Agree with the above. As I was saying many times, the only way it makes sense to borrow money if you already have a portfolio of investments is if you strongly believe that your investments will return more than the cost to borrow the extra money. Wasjr do you agree my earlier points about portfolio construction and holdings though? This part I think is just lost in the discussion. Yes, theoretically it seems an easier call to take out a car loan when rates are lower, but to me you still need to compare to taking your own cash and using it, and what is that cash earning instead. So even if the car loan rate is 2%, in that environment you may have money sitting in a money market or short term bond fund earning even less than that, which you could use instead of taking out a loan. NOT taking out a 5yr loan is the equivalent of earning whatever the interest rate is, adjusted upwards for your marginal tax rate since you can't deduct the interest on a car loan. So if you are paying 40% federal + state taxes, in that environment you would need to be earning 3.33% on your "risk free" cash just to break even. One can lazily compare the loan rate vs some theoretical return on stocks ("I think I will earn 10% on stocks during this time period") but that's not really accurate unless you maintain a 100% stock portfolio, because if you have fixed income and could take your car money from that part, that is your "opportunity cost" return. (Unless you are truly going to sell $50K from your stock portfolio to fund your car purchase, which is probably less likely if someone has that $50K sitting in lower risk bonds or money market etc)

Agree?

 

[MDX_ASP]

Radley in Falls Church Virginia. Purchased a 2023 Aspec SH AWD today. Great price. Ask for Roland. He's been there 10 years and is a great guy. Very helpful.

Hi there, just wondering, how much did you pay?

 

[Maik]

I totally agree with wasjr .....however, I would point out that we are talking about the interest spread on $65-70k. Simply not enough to make difference to me....
If we were talking about the purchase of a significant piece of property.....different story.

 

[wasjr]

Agree with the above. As I was saying many times, the only way it makes sense to borrow money if you already have a portfolio of investments is if you strongly believe that your investments will return more than the cost to borrow the extra money. Wasjr do you agree my earlier points about portfolio construction and holdings though? This part I think is just lost in the discussion. Yes, theoretically it seems an easier call to take out a car loan when rates are lower, but to me you still need to compare to taking your own cash and using it, and what is that cash earning instead. So even if the car loan rate is 2%, in that environment you may have money sitting in a money market or short term bond fund earning even less than that, which you could use instead of taking out a loan. NOT taking out a 5yr loan is the equivalent of earning whatever the interest rate is, adjusted upwards for your marginal tax rate since you can't deduct the interest on a car loan. So if you are paying 40% federal + state taxes, in that environment you would need to be earning 3.33% on your "risk free" cash just to break even. One can lazily compare the loan rate vs some theoretical return on stocks ("I think I will earn 10% on stocks during this time period") but that's not really accurate unless you maintain a 100% stock portfolio, because if you have fixed income and could take your car money from that part, that is your "opportunity cost" return. (Unless you are truly going to sell $50K from your stock portfolio to fund your car purchase, which is probably less likely if someone has that $50K sitting in lower risk bonds or money market etc)

Agree?

While I agree with your overall analysis, I fall into the lazy camp. I am an old fart, a CPA (not public acctg), and heavily involved in investments for decades. With regard to vehicle financing, I don’t do a detailed analysis, but gut feel. I want to be comfortable that my investment return will be substantially higher than my financing interest rate, not just fractionally better (read no brainer!).

Last new car purchase was my wife’s ES300h in April 2019. Rate was 3.4, and I believed I could do substantially better than that over 5 years. I essentially used that cash in March 2020 as added investment after Covid market dip. However, as I said in my other post, today I am not comfortable that my return will be substantially better than current financing rates (except for special financing such as the 0% financing that is starting to appear again).

 

[Luca Brasi]

Hi there, just wondering, how much did you pay?

Sorry for the delay:
MSRP: 61145
Dealer discount: 4148
Conquest rebate: 1000
Dealer fee: 795
Tax: 2365
Other fees: 233
OTD: 59382

 

[Luca Brasi]

Hi there, just wondering, how much did you pay?

Did you buy there as well?

 

[bavautosport]

Hi, new member here. Been a Honda/Acura driver all my life. It's time to upgrade my 10 years old RDX to a bigger vehicle and we're eyeing the beautiful 2023 MDX A-Spec (Apex/Ebony). I received a few quotes from local dealers (DMV area) but this got our attention after some back and forth negotiation. Is this a fair offer? Anything else I might have missed that should be considered?

MSRP: $61,745
Discounts: -$4,750
Loyalty incentive: -$1,500
Selling price: $55,500
Standard tax/tag/doc fees

I was also thinking about running boards and tow hitch (for bike rack), but convinced myself to buy them and install myself (did the same with my other Pilot). These alone would add another ~3k or so. Thanks!

 

[IanCH]

Imo if you're dropping more than 10% off the msrp you are doing well. Unless they are super desperate to sell the car.

Def buy the running boards and diy, I just did mine and all in $571 shipped to me from acurapartswarehouse

 

[bavautosport]

Imo if you're dropping more than 10% off the msrp you are doing well. Unless they are super desperate to sell the car.

Def buy the running boards and diy, I just did mine and all in $571 shipped to me from acurapartswarehouse

Thank you for your feedback! Much appreciated!