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How long do you keep cars? If you can pay cash that's always the way to go, imo. Sell after 3 years or keep forever, paying cash saves money. Even with low borrowing costs, cash in the bank isn't earning much these days.
 

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Any opinions on this?

Should I lease, pay 100% up front or monthly. What's the rational for each of these for Outbacks currently?
The way a person chooses to "buy" a car is completely up to them and their situation...

Personally...
I put on too many miles and we keep our cars for years so leasing it not an option and financing makes sense.

For this car I put 20% down to keep the payments low.
 

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I would think that it varies for each person's preferences and financial situation.

For instance, I just went with a 6 year loan and paid maybe 5% down. My justification though was because it was a way out of my lease one full year early without much of any penalty (just $300 from market value difference from the buyout). Now my monthly payment is almost the same but I'm at least paying towards a loan instead of spending a year paying towards nothing. I don't normally suggest a 6 year loan (I did get the extended warranty to match) but for my situation it worked out well.


If finances weren't a concern I would either:

- Buy the car 100% up front if money was truly not a concern and if I intended to keep it for at least 3 years. Or with 10-20% down and a 3 year loan if I didn't want to dump the entire amount into it at once.

- Lease the car if I tend to replace them regularly (less than 3 years) and drive less than 12-15k annually.
 

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Discussion Starter #5
Before I added any information about my own situation I just wanted to get some general opinions.

I make 10% on my money with no risk so I'd rather take out a loan instead of paying 100%.
 

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How long do you keep cars? If you can pay cash that's always the way to go, imo. Sell after 3 years or keep forever, paying cash saves money. Even with low borrowing costs, cash in the bank isn't earning much these days.
Even in the good years, savings rates were lower than borrowing rates. That doesn't really change (where do you think the bank skims their margins from?). I was lucky enough that my CD rates are high enough that I make more on the CDs I hold in 2 years than this loan costs me in 3. But that's specific to my situation.

Also consider that the car someone currently owns is a depreciating asset. If the value lost in the time taken to raise up the cash to avoid the loan is more than the interest/fees paid on the loan, then the loan is the better choice if our criteria is strictly the money you saved.

Everyone's situation is just too specific to make hard and fast rules about what is "the best choice". The reality is that being able to do a bit of analysis and pick an option is important.

tertius:

Since you say you can make 10% ROI on money, a loan doesn't sound that bad. Depending on where you live, the resale value of the Outback tends to be pretty good, so buying vs lease seems to really be based on how many miles a year the car will get, and how long you intend to keep it. I like kpk02's comments about lease vs buy.
 

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Maybe I’m not seeing/reading the OP question fully. With today’s 0.9/1.9% APR basis, I wouldn’t consider -pay 100% up front- if I had a points spread from no-risk 10%.
 

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with NO risk?? :confused: great for you but :confused: NO risk?
I'd doubt no risk too. There are options out there I'd consider reasonable risk that get close to 6%, ignoring the rest of the growth that option also experienced since I invested. 10+% this year is not that bad, but it is still investments that have some level of volatility and risk.

That said, if he as an EPP stock program at a company that has a stable stock, where he can buy at a discount, I could believe 10% (one-time gain, plus any dividends). And yes, this does exist.
 

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Purchased a 10 OB for the wife and a new for 10 Impreza for my son. Those 2 cars are keepers. I'm currently leasing a 12 Impreza Sport. I'm not sure that is a keeper so I leased it. $500 down 250 a month for 42. 13k is the residual buyout. I think I will keep it, pay it off, and sell it for about a 2-3k profit. I put a max of 5k miles a year on it. I live in Denver so these cars sell like hotcakes. Does that make sense?
 

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Discussion Starter #11
See, I knew that would skew some answers.

I have savings (insured) in my country of birth/citizenship in a mortgage account. Outside of the account I can get 8.5% in long term insurance. I only deposit when the exchange rate is favourable. The local economy is quite stable and is not in the Euro zone.

Thanks so far for the other replies, you're getting my thoughts rolling!
 

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See, I knew that would skew some answers.

I have savings (insured) in my country of birth/citizenship in a mortgage account. Outside of the account I can get 8.5% in long term insurance. I only deposit when the exchange rate is favourable. The local economy is quite stable and is not in the Euro zone.
Technically this is NOT zero risk. You still have currency exchange risk. I assume the sabving are in the foreign currency. That currency can collapse...Who knows!

anything Europe nowaday are kind of Iffy!!! even though they are Not in the Euro Zone, If the Euro ZOne collapse, That may bring down the entire continent with it...and yes, USA will probably be affected too... It all depend how that economy is tied to the greater Euro zone... And trust me, There's red/orange flags all over europe zone lately...
 

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Discussion Starter #13
Technically this is NOT zero risk. You still have currency exchange risk. I assume the sabving are in the foreign currency. That currency can collapse...Who knows!

anything Europe nowaday are kind of Iffy!!! even though they are Not in the Euro Zone, If the Euro ZOne collapse, That may bring down the entire continent with it...and yes, USA will probably be affected too... It all depend how that economy is tied to the greater Euro zone... And trust me, There's red/orange flags all over europe zone lately...
When it comes to classifying investment risk it is then by your definition extremely low risk. I'll give you that. The risk of economic collapse and bank default is always there. It's generally not figured into risk level of investment though.

And if I figure in currency fluctuation I'm making more than 10%.
 

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...I make 10% on my money with no risk so I'd rather take out a loan instead of paying 100%.
I'm no finance guru, but isn't this a no-brainer? Why would you take money out of your investment that nets 10% return when you could finance for 1.9%? Your only choices should be whether you should lease or buy, which just depends on your situation.
 

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Purchased a 10 OB for the wife and a new for 10 Impreza for my son. Those 2 cars are keepers. I'm currently leasing a 12 Impreza Sport. I'm not sure that is a keeper so I leased it. $500 down 250 a month for 42. 13k is the residual buyout. I think I will keep it, pay it off, and sell it for about a 2-3k profit. I put a max of 5k miles a year on it. I live in Denver so these cars sell like hotcakes. Does that make sense?
With the numbers you posted you will ultimately pay $24k for that car. The Sport Limited stickers for only $23k before options. People pay MSRP for their Subarus?
 

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With the numbers you posted you will ultimately pay $24k for that car. The Sport Limited stickers for only $23k before options. People pay MSRP for their Subarus?
Ok, so whats your point? Thats what happens when you lease, My car was 23,100 with options.
 
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