The Best Way to Pay for a Car (or anything for that matter)

29
Jul

The Best Way to Pay for a Car (or anything for that matter)

“You finance everything you buy – you either pay interest to someone else or give up interest you could have earned otherwise”.
– R. Nelson Nash (author of Becoming your Own Banker)

When the topic of personal finances is discussed, the typical focus is on earning a higher rate of return on an investment. However, it’s much more important to think about how you use your money as opposed to where you place it.

Let’s take the example of purchasing a car (however, the principles can apply to anything you fund).

The main options for purchasing a car are:

1. Leasing
2. Financing through a bank
3. Saving and paying in cash

Leasing a car is the most expensive method to obtain a car. Not only do you need to qualify for the lease, but you have no equity to show for all the monthly payments at the end of the lease. It’s just like renting instead of owning your own home since all of your money is flowing to another entity with nothing to show for it at the end.

Financing through a bank or finance company is a option many people take to purchase their cars. This option is typically better than leasing since you end up with an asset at the end of the loan term. It does require going through a qualifcation process, and you don’t actually own the car until the end of the loan term. The monthly loan payments are paid to the financial institution and can no longer be used to build your wealth.

Paying in cash is typically the last type of option people take. This requires “payments” similar to the first two options but does so over time through payments into an account to build up cash. The issue is that this is a sinking fund method of financing as all the money is spent to purchase the car and can no longer earn for the rest of your life. That creates a significant opportunity cost that would surpass the cost of the car itself.

As you can tell, all three options have issues and can be damaging to our long-term wealth. So what is a better option?

What if you can take ownership of the banking function for yourself? BANKING is necessary to help us finance all the things in our lives, but BANKS are not! By creating your own bank function, you can recover the interest that you would normally pay to some institution while allowing your wealth to grow uninterrupted and compounding in a tax-advantaged vehicle for your entire life.

Also, since it’s a private account, you control the terms of any loans and never need to qualify for the funds. Choosing the right financial tool to leverage is key as some come with valuable living benefits well beyond the financing option.
Does this sound too good to be true? It is but requires you have an open mind to learning new strategies and approaches that are not typically shared in the mainstream.