Is it wise to invest my cash on hand to recoup interest paid on car loan?

**gerald_g** · October 18th, 2013 01:16 PM

This perhaps is the common dilemma for cash buyers.

If you have the money to pay for a vehicle in cash, unfortunately, you can't get in line to get the vehicle that you want since you will pay in cash - Is it wise to invest the money you have to recoup the interest (maybe 6-9%) I will pay annually to dealers?

Or maybe the better question to ask is - Where could we invest, if our money diminishes every month due to monthly amortization?

**_Qwerty_** · October 18th, 2013 01:38 PM

you can try UITFs.. PNB is offering it..

example computation if you had 100T and invested it last 2010..

**uls** · October 18th, 2013 01:46 PM

ganito...

like he has 1M in cash to buy a car but he can only get the car he wants if he buys thru installment

so he wants to invest that 1M to earn what he's losing in interest payment

the money he's investing is being used to pay monthly installment so he's taking out money every month

what kind of investment can earn back the interest while the capital is being reduced every month?

**uls** · October 18th, 2013 02:00 PM

how about investing in something that can earn the monthly car payments

like buy a condo and rent it out so the rental income goes to paying the monthly car payments

**1D4LV** · October 18th, 2013 02:06 PM

i would prefer paying it by cash.
depreciation + interests would make you at a losing end, which you need to invest it in an investment channel that is more than that.
may maintenance costs pa, gasoline and parking costs.

this way, wala ka ng iniisip.

**_Qwerty_** · October 18th, 2013 02:10 PM

sinasabi yata nya yung scheme nang mga SA ngayon na pag cash buyer ka eh hindi ni e entertain.. lalo na pag bago yung model.. gusto nila in house financing bago ka mabigyan nang unit..

in order to get your money back.. eh kailangan you have twice the amount.. yung una for the car then yung second for investment.. so kailangan yung kikitain nung investment mo mas malaki don sa in house interest na i charge nung dealer..

**jhnkvn** · October 18th, 2013 02:15 PM

You do know it's unethical for dealers to favor installment plans over cash right? That's why Toyota Philippines' Chairman and CEO once scolded Toyota dealerships for abusing T86 buyers before. Truth be told, it's better nga for them to just accept cash straight-out as this adds into their liquidity pile. But they're facing the same problem as yours -- where do I invest the cash?

Tama si uls, you go for income-generating investments.

As for that UITF, that's actually a rather poor performance. 45% in 3 years means around 13% compounded annual performance. The US' S&P 500 performance within a similar time frame is 48.75% (Oct 15, 2010 - Oct 17, 2013). And to think the US is in a slowdown and investors looked at the Philippines as a shining light.

**uls** · October 18th, 2013 02:19 PM

in short -- if the money you're investing is the same money you're using to pay the car there is no investment that can earn back the interest coz your capital is being eroded every month

you need capital that stays invested

**_Qwerty_** · October 18th, 2013 02:36 PM

ok na yang 45% in 3 years.. dito sa pinas ha.. where else can u invest your money na medyo hindi high risk...

Originally Posted by jhnkvn

You do know it's unethical for dealers to favor installment plans over cash right? That's why Toyota Philippines' Chairman and CEO once scolded Toyota dealerships for abusing T86 buyers before. Truth be told, it's better nga for them to just accept cash straight-out as this adds into their liquidity pile. But they're facing the same problem as yours -- where do I invest the cash?

Tama si uls, you go for income-generating investments.

As for that UITF, that's actually a rather poor performance. 45% in 3 years means around 13% compounded annual performance. The US' S&P 500 performance within a similar time frame is 48.75% (Oct 15, 2010 - Oct 17, 2013). And to think the US is in a slowdown and investors looked at the Philippines as a shining light.

**marjako27** · October 18th, 2013 03:42 PM

Originally Posted by uls

in short -- if the money you're investing is the same money you're using to pay the car there is no investment that can earn back the interest coz your capital is being eroded every month

you need capital that stays invested

lending 10% 1M = 100k/mo, you can avail any car you want, 1M still intact after the terms.