06-21-2016, 06:47 AM
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#1 (permalink)
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A True Z Fanatic
Join Date: Nov 2011
Location: Houston
Posts: 12,265
Drives: 2011 370ztt
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Quote:
Originally Posted by scottIN
Another thing that came up in here was 0% financing then investing the cash you would have paid. That works until it stops working. Let's say you did that on a zero down car. Two months later, the economy tanks, the market crashes, your investment is worth 50% of what it once was, and you lose your job. Oh - and you're upside down $5K in your car already. You can't make the payments or sell the car. Trying to arbitrage 0% / investing doesn't factor in risk. If you don't believe there is any risk, you should go borrow as much money as you can on your house, your cars - whatever - and put it into the market.
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You're right to a point. You absolutely can arbitrage the difference assuming the interest rate you're trying to beat is low enough. Hell, you can get a bank CD that'll beat a 0.9% car loan.  Now if you're paying 6%, you're absolutely right, it's too much risk to try and beat that.
The one thing you left out of that scenario where everything goes to **** is your savings. If you don't have six months to a year's worth of an emergency fund sitting in cash you have no business trying to be slick and make a couple of bucks by investing what you would have put down on a car.
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