Whenever one purchases a depreciating asset, it cannot be looked at as any kind of investment but as an asset net value judgment. The money is going away as you use up the asset. The way I have always looked at it is “what is the cost per month and is there value in that cost?” The value part is where we all have different judgments. In BLow the Dough threads, excess money is spent on expensive food, drink, and travel. Judgment calls are being made. For financially saavy people leveraging debt makes you money or simply reduces net costs. Whether you pay for a service, or expensive food, it is a choice you make for the use of your money, ie: the reason You worked.
Being able to afford that cost is a different discussion. You can pay cash for a well negotiated $70k car. You want the car, and you have made the judgement that it is worth its cost to you, which is peanuts to your bottom line. Then the dealer offers you a 7 year loan for $50k at 0.9%. You would be a fool not to take it. Even if you parked the money at 2% you are getting a discount over paying cash. Preaching to the choir, I’m sure.
The terrible part is of course as everyone has said, is that the same loans are being made to people that can’t really afford the item, just like the housing bust if 2008. I applaud 7 year loans for those that can make money on them, though like others here, I cannot see myself doing that. Just too much ingrained aversion, plus I have never seen the favorable rates for that long a period on my purchases.
