With interest rates rising, how many won’t be completing their R1 purchase?

[R1T-8171]

As much fun as it is listening to people engage in endless financial dick measuring, I personally think the classic advice about avoiding vehicle debt at all costs has some weaknesses in the modern market:

- Vehicles will never be investments but EVs that get meaningful OTA updates depreciate slower than gas vehicles that do not.
-EVs generally have lower, more predictable operating costs
-Driving has never been more dangerous due to huge vehicles operated by distracted drivers. EVs have higher safety due to additional crumple zone, lower fire risk, lower center of gravity and higher mass.

The chink the armor is losing value from an accident, but it's risk I'm fine shouldering after seeing how well our Tesla performed being T-boned at 60 mph.

Haha some of us only have 3" inches in this contest while the others are packing heat!

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[milliemc]

I'm just going to pay cash and stop eating food.

us, too

 

[jphillips97]

The count's view is that of old money. Chances are, when he started, he wasn't throwing money around because unless he was gifted it, he didn't have it. He was borrowing just like the rest of us. Don't start at the bottom, get to the top and then look down on those climbing the ladder, telling us we are broke or what we can't afford.

I make solid money, I am not rich by any means but I am not broke. I have a rental property that is on borrowed money, so yes...I would take out a loan to invest. I net about $750/mo from that property. Why use my money? What benefit do I get from risking all my money? Doing so I have everything to lose and the same to gain as the next guy who borrows. Difference is the borrower's only liability is their credit. The same is said for auto loans.

Unless you are willing to default you are the one at risk whether you borrow or use savings. If you are willing to over extend and default then I do not know what to tell you.

 

[Count Orlok]

The count's view is that of old money. Chances are, when he started, he wasn't throwing money around because unless he was gifted it, he didn't have it. He was borrowing just like the rest of us. Don't start at the bottom, get to the top and then look down on those climbing the ladder, telling us we are broke or what we can't afford.

You couldn't be more wrong. Everything we have we earned and retired at 52. WTF is your problem?

 

[jphillips97]

The count's view is that of old money. Chances are, when he started, he wasn't throwing money around because unless he was gifted it, he didn't have it. He was borrowing just like the rest of us. Don't start at the bottom, get to the top and then look down on those climbing the ladder, telling us we are broke or what we can't afford.

I make solid money, I am not rich by any means but I am not broke. I have a rental property that is on borrowed money, so yes...I would take out a loan to invest. I net about $750/mo from that property. Why use my money? What benefit do I get from risking all my money? Doing so I have everything to lose and the same to gain as the next guy who borrows. Difference is the borrower's only liability is their credit. The same is said for auto loans.

I should add the count probably did what I did early on; I bought cars I could afford

 

[Count Orlok]

I should add the count probably did what I did early on; I bought cars I could afford

Exactly. In fact in my 20s while in graduate school I live for years without a car and only a bicycle.

Just to be clear, I never said I never borrowed. Certainly when I was younger I (had to) borrowed for cars, homes, and education. But we didn't get to a place where we could retire at 52 by consistently carrying debt on depreciating purchases. That was my point ?

 

[R1T-8171]

Exactly. In fact in my 20s while in graduate school I live for years without a car and only a bicycle.

Just to be clear, I never said I never borrowed. Certainly when I was younger I (had to) borrowed for cars, homes, and education. But we didn't get to a place where we could retire at 52 by consistently carrying debt on depreciating purchases. That was my point ?

If it makes you feel better, I'll be retiring in about 18 months when my son graduates high school at just under 41. To each their own, right? Make your way how you want, and I'll do mine.

 

[domoplaytime]

The rise in interest rates certainly deflated the used car market bubble. My own experience getting estimates this summer vs. yesterday for my existing car shows an overall decline in values ranging from 10% to 30%. Basically if I had configured my R1T for BM to get a summer build instead of OC for a fall build, I could have nearly $5,000 more in trade in value. Analysis and charts here: https://www.rivianforums.com/forum/threads/trade-in-process-and-value.9112/post-223186

But oh well, I learned long ago not to have FOMO about bubbles. I'll not envy those who get rich from speculation, nor will I sympathize with those who get burned. I don't need a ruler or a contest to feel good about my personal choices.

 

[Jac]

30+ years in the financial services industry taught me folks have varied tolerances for risk and your personal risk tolerance can change over time. Personally, I’m in the “pay cash for depreciating assets (cars/motorcycles/boats), borrow to buy appreciating assets (houses)” camp —- but that’s what works for me.

What’s most important is being able to sleep at night.

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