Hi,
I am looking to buy a new used car soon. The interest rate on a loan is 2.74%.
I have $25k in cash, and the car I want will be $18k.
When I crunched the numbers based on an annual return on 25k in the market of 8%, I'd net $2,000 each year. Financing the car would cost me $493.20 if I just looked at 2.74% on 18k (pretending I never paid down principal). It's even better in the real math.
instead of writing an $18k check, should I just finance the car, and sell enough equities to pay the payment each month (using only commission free ETF's)?
Thoughts?