Need advice on buying a Kirkham cobra

[mln385]

Originally Posted by Got the Bug

Agree with Rodney 100%

This is a circular conversation. One size doesn't fit all and each person's financial situation is different.

I've leveraged a HELOC many times over the years, but I've always balanced that with the knowledge that I could liquidate other assets to pay off the equity line if needed. You just need to be disciplined and pay down the principle. I'm also the guy who always takes advantage of 24 month 0% financing for large purchases, because I know I'm going to pay it off before the interest kicks in.

Exactly.....

use the tools of finance to your advantage....
Here are 2 scenarios.

1 an individual has the cash to buy a 100k car plus say 10% extra for unforseen issues.
So they buy the car and have 10k left over,said person then looses job or becomes seriously ill and can't work for months no income.
Now said person goes thru said 10k left over in a couple months and is now broke can't pay bills what does he do??

2 nd individual has the cash to buy 100k car but elects to keep it invested or in a cd, takes out "fixed" equity loan which is also tax deductable.
So they buy the car said person then looses job or becomes seriously ill and can't work for months no income.

However said person has the 100k in bank or security's to ween off of untill things get better.

I ask you who is better off in this situation 1 or 2??

[jhv48]

Originally Posted by mln385

Exactly.....

use the tools of finance to your advantage....
Here are 2 scenarios.

1 an individual has the cash to buy a 100k car plus say 10% extra for unforseen issues.
So they buy the car and have 10k left over,said person then looses job or becomes seriously ill and can't work for months no income.
Now said person goes thru said 10k left over in a couple months and is now broke can't pay bills what does he do??

2 nd individual has the cash to buy 100k car but elects to keep it invested or in a cd, takes out "fixed" equity loan which is also tax deductable.
So they buy the car said person then looses job or becomes seriously ill and can't work for months no income.

However said person has the 100k in bank or security's to ween off of untill things get better.

I ask you who is better off in this situation 1 or 2??

Let's use number two as an example:

Loses job and has to draw money out of investments (like now? Not a good idea?) or 401k or CD's (both have subsantial penalties and tax consequences, not to mention may take a serious loss on 401k investments to boot). And because of the economy, he's unable to sell the car for what he owes and get out from under the equity loan on the house. Is this scenerio beginning to sound familiar?

So, now he can't sell the car for what he owes, is faced with a loss and taxes on whatever he must liquidate in order to make his house and equity payments and if it runs out. HE STILL LOSES HIS HOME!

However, if he had gotten an AUTO loan to buy the car and his world tanked. He could (worst case again) give it back to the bank (voluntary repo) and use whatever assets he has left to keep him afloat a little longer.

Net worth in this day and age means nothing if that worth is all on paper (equity of a home, rental property, business property, hard assets like art or coins, classic cars, etc). If it is comprised of liquid assets then it is meaningful.

It's how much cash you can get your grubby hands on RIGHT NOW (without trying to liquidate assets) that really matters. Try to sell your rental property in this market and what do you get. Probably next to nothing. Doesn't help does it?

That's why cash is king! Money tied up in assets is worthless in this economy.

It' good to be the King!

And by the way, in either scenerio, he can sell the car and recover SOME of the $100grand. In scenerio one, he just loses some cash. In #2, he can lose his home.

You decide!

[patrickt]

If the individual went with Benny the Loan Shark, he would get his car, keep his bank account intact, and if did lose his job he could work with Benny to move a couple of kilos up the I-95 corridor in lieu of having to pay Benny back right away. C'mon, he could even use the Cobra for the Miami to NY run. That's clearly the way to go.

[jhv48]

Originally Posted by patrickt

If the individual went with Benny the Loan Shark, he would get his car, keep his bank account intact, and if did lose his job he could work with Benny to move a couple of kilos up the I-95 corridor in lieu of having to pay Benny back right away. C'mon, he could even use the Cobra for the Miami to NY run. That's clearly the way to go.

See! I knew we could find a solution that we all could agree on!

[RodKnock]

Originally Posted by jhv48

Let's use number two as an example:

Loses job and has to draw money out of investments (like now? Not a good idea?) or 401k or CD's (both have subsantial penalties and tax consequences, not to mention may take a serious loss on 401k investments to boot). And because of the economy, he's unable to sell the car for what he owes and get out from under the equity loan on the house. Is this scenerio beginning to sound familiar?

So, now he can't sell the car for what he owes, is faced with a loss and taxes on whatever he must liquidate in order to make his house and equity payments and if it runs out. HE STILL LOSES HIS HOME!

However, if he had gotten an AUTO loan to buy the car and his world tanked. He could (worst case again) give it back to the bank (voluntary repo) and use whatever assets he has left to keep him afloat a little longer.

Net worth in this day and age means nothing if that worth is all on paper (equity of a home, rental property, business property, hard assets like art or coins, classic cars, etc). If it is comprised of liquid assets then it is meaningful.

It's how much cash you can get your grubby hands on RIGHT NOW (without trying to liquidate assets) that really matters. Try to sell your rental property in this market and what do you get. Probably next to nothing. Doesn't help does it?

That's why cash is king! Money tied up in assets is worthless in this economy.

It' good to be the King!

And by the way, in either scenerio, he can sell the car and recover SOME of the $100grand. In scenerio one, he just loses some cash. In #2, he can lose his home.

You decide!

Worthless? Not where I live and work. Me likes hard assets such as rental property, art, coins, gold, silver, oil, pork bellies, orange juice, etc. Cash is good too.

You're not persuading me and I'm not persuading you. We can all agree to disagree.