Paying cash for cars though? Everything I’ve read says that’s not a wise use of cash. The asset loses a ton of value and by paying cash you’ve used it all chasing something that will never appreciate. That being said if you can get value from something for 10+ years that only needs upkeep and insurance maybe the savings pays for that? I dunno.
You pay cash for it and then run it into the ground. Cars will never be an investment (they're a depreciating asset, except in 2021), but this way you can keep your consumption to a minimum.
I've got a 14-year-old Honda that I paid $14K for. That amortizes out to about $1K/year. Annual repair bills and smog checks are still way less than $1K/year (I think I spend amortized $200-300/year, plus vehicle registration renewal, which is less on super old cars than new). I hear there are people out there now who spend $1K/month on their car payment. It's pretty nice to not have to deal with that.
It's got plenty of life left too - I'm hoping to keep it until EV technology stabilizes a bit and then just upgrade straight to whatever EV gets it right.
There is tons of great investment cars. Latest example of something nobody wanted until everyone does is VW Porsche 914, 2-4x in value in last ~5 years. You can never go wrong with any 911, Mercedes Pagoda or old BMW M. Even "newer" nineties BMW are starting to climb up from $1000 scrap value drift missile to $20-40K.
This is why you move somewhere with little rust and buy old classics. So many old mercs and porshes and rolls royces here in socal, among everything else you can imagine. A car like that bottomed out in depreciation 30 years ago. I've seen model A's, those probably bottomed out 90 years ago.
For starters I don't buy brand new, the family car was a low mileage, well specced 18 month old car. I'm not concerned if we lose a bit more money on it than we would have spent on finance; we can afford it. I worked for a bank for some time and it left me very much averse to using credit if I don't need to - I saw some horror stories there of people who ended up with so much debt that they would never clear it. Here in the UK it's ludicrously easy to get crazy amounts of credit. Maybe I'm old fashioned, but I like to own things outright.
The other car is my fun car (2018 BMW M3), I don't see myself selling anytime soon.
What’s the alternative to paying cash for a car? Borrowing to buy it (more expensive), leasing it (usually more expensive), or taking Uber everywhere (way more expensive).
Borrowing to buy it isn't necessarily more expensive.
You could pay $50k for an average new car, or $10K + $40K over 5 years at 5% (~$5k extra in interest)
If you put that $40k into the stock market, average annual returns for the S&P500 are ~10% going back to 1928, so you would have made ~$24k over 5 years on average. That would put you ~$19k ahead after you pay off the loan with interest.
You could certainly buy at the wrong time and lose out by taking a loan. There are plenty of +/-30-40% years in those "average" stock market metrics. But historically it's been a pretty good bet if you're a gambling sort.
