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August 08, 2007

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It's also good to keep in mind the same thing applies for Acuras, which are made by Honda. If you're shopping when they're trying to get rid of last year's models, there is typically at least a $1000 dealer incentive for those cars.

Of course this applies to anyone that is crazy enough to actually go in debt on on a new-to-one year old car. My advice, pay cash and/or BUY USED!

Crazy? I bought an Acura last year and went into debt. My debt is at 2.9% I put the $20K I financed in stocks. Today, I've got about $24,600, while paying out less than $600 in interest. By my count, I'm $4K better off than if I'd paid cash. A disciplined investor can afford to use debt wisely. I do agree with Tyler, though, if you're not disciplined, or you can't beat the interest rate you're paying on the loan, use cash and buy used -- it makes sense in most cases.

Joe --

Basically you were lucky. There's no way to predict what the stock market will do in the short term -- especially in a year or so. Your $20,000 could as easily be at $15,400 right now.

He was fortunate that his money grew in that time period, yes. But he could still have beaten the 2.9% in a risk-free investment and come out ahead in the end by financing. I agree with him that there's nothing crazy about it if you have the right opportunity.

I don't think it's fair to call someone who buys a new car crazy. For some of our jobs, keeping up appearances (including owning a 'nice' new car) is expected. When you can get an interest rate lower than your ING or HSBC savings account, it's more crazy to pay cash.

I would have liked to have bought a used Honda in 2006, but the resale values of Hondas is very strange. This is what I ended up with:

Price paid for new CRV in 2006 - $24,500

Today’s Kelly Blue Book price for 2006 CRV with 22,000 miles
Retail - $24,950
Private Party - $21,600
Trade In- $18,450

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