Pay your charm of cash or not?

I’m still going to give it, my opinion: Toyota Corolla in tailgate.

Whenever I come across one, and I often see, I repeat the same thing, it is a reflex. In addition, “If I had to buy a tank of the year, that would be this one.” Brunette ignores what I say, aware that I am still causing for nothing, I have never bought a new car. Therefore,

I went to check on the website of Auto guide What is said of the Corolla 2025. For example,

“Best purchase” in the category of compact cars, nothing less, according to the specialized media. Similarly, Reliability rating of 10 out of 10. Consequently, Experts assign it a safety note of 9 out of 10 and 8 out of 10 for petrol consumption.

It does less well than the civic on the conduct of driving. In addition, but can we still talk about driving pleasure now that vehicles are driving more and more alone? Therefore, And in traffic?

(And what is CIVIC still in the “compact” category, it is more imposing than a honda agreement 10 years ago?)

My second choice, perhaps more controversial: Hyundai Assard Electric.

Oops! Meanwhile, I mean Kona. However, I tend to distort Char names, like the Nissan Qashqai which I systematically call “Casse-Current”. In addition,

Kona, therefore. Consequently, Far from being excessive, its format seems practical to me. For example, There is also that the Korean models offer all the gadgets of luxury cars. Meanwhile, without the price that comes with it. Meanwhile,

Well. Therefore, my pif has still targeted in the thousand: pay your charm cash not? the asshole rose to the top of its category, still according to the Auto guide.

Financing question

But hey. For example, our reader Suzanne did not ask me for my infallible instinct for the choice of the best vehicle. Moreover, “You are not very tank …”, she says. However. Moreover, I have that in my blood, madam, as long as I am not asking me to lift the hood and explain how it works.

Why then she writes to me?

To have lighting on the funding mode. And again, this is not quite the question. His dilemma is a concept called “the cost of opportunity” in finance. This cost represents the gain to which one gives up by choosing an option rather than another. In other words: where does his money work the most?

What are Suzanne’s options? pay your charm cash not? Partially or completely borrow the sum necessary for the purchase of its next vehicle. This is not how she presented it, but that’s what it means.

Our reader says that she replaces her vehicle every four or five years. She bought it using a sum by counting, plus the exchange value of her previous car. A slight loan remains nevertheless necessary to cover the cost of the transaction, depreciated over 24 months. Once the debt has been adjusted, the monthly payments used to reimburse it are spared for the next vehicle.

It is returned there to the next vehicle. This time she is thinking of turning to rental to spare her liquidity and make them grow.

“If I do as before, I could have around $ 18,000 in exchange for my Mazda CX-5. I have $ 17,000 cash, for a total of pay your charm cash not? $ 35,000 that I can put on the coveted vehicle of $ 45,000. I would finance the rest. “

“Otherwise, would it be more advantageous to opt for a rental over 48 months and place $ 35,000 over four years?” So I would have a payment over 48 months. As I do between 16. 000 and 18,000 kilometers per year, I would not have to pay any mileage supplement at the end, when I give back the car. And I would start again… ”

Many elements are lacking to assess the options. The financing rate is unknown to purchase and rental. We do not know what the yield of the $ 35,000 would be placed.

However, these are the key factors in decision -making. If the net earnings of his investments surpass the cost of interest on the debt. we finance as pay your charm cash not? much as possible, whether for purchase or rental.

Pay your charm cash not?

Credit rental

It should be remembered that rental is nothing other than a financing formula. the rate is however higher than that offered on a loan for purchase. If the monthly payments are less. it is because the amount of the loan on the rental corresponds to the price of the vehicle, less its residual value estimated at the end of the lease, registered in the contract. At the end of the rental. the vehicle must be returned in good condition to the concessionaire, or buy it at the residual price.

Suzanne could also borrow the entire amount necessary to become the owner of the car. and invest its liquidity so that they fruit. This is the same financial strategy as recommended by the rental. underlines Éric Brassard, author of pay your charm cash not? the book Steering wheel finance.

She would always leave her used Mazda in exchange ($ 18,000) at the dealership. Taxes (15 %) on its new vehicle ($ 45,000) will be calculated from the difference between the two prices (45,000 – 18,000 = $ 27,000), points out Éric Brassard.

“She can recover through her loan-author these $ 18. 000 to invest them, she only has to ask for it,” said the retiree from the financial services industry that I caught on the phone as he passed the door to a Baie-Saint-Paul art gallery.

There is therefore no solution that stands out. If it is easy to know the financing rate. and again, it is less obvious to know the yields in advance. Unless our reader is a placement champion, I would continue to buy and use funding as little as possible.

What costs the most in the Suzanne situation is the choice to replace your new car every four years. years during which a vehicle is most depreciated.

There is a price to pay to roll in a car that still smells new. a price that our reader assumes without remorse.

But I think about it, a little corolla hatchbackwouldn’t that tempt you by chance? In four years, it could interest me.

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