By cash price you mean mazda rebates - if they truly amounted to $4000 instead of 0% then you may have a winner. But the 0% is in place of $1000-$1500 (standard mazda finance incentive) - the other rebates are available regardless of how you pay. But even if you got back $4000 and paid $30K out of pocket, 0% is a better strategy.
And again, you are ignoring the cash flow part of the argument. If you printed money, then yes, paying cash would be better. But even millionaires are going to look at the $30K and realize they are giving up $3000+ in interest earned when they hand it over to mazda. On a 5 year plan, if you invested that $30K at 5% (lower risk mutual fund) you would earn $8000 over 5 years.
If you had paid cash for the car, you would not have $30K to invest as you gave it to mazda. Saving $4000 now is not better then earning $8000 later. Since there are no incentives that get me more then $1000 or $1500 (compared to taking 0%) - it is a no brainer. If your investment strategy is only a 1.5% savings account then even a $2000 rebate from mazda, bringing the price down to $28000, you would still come out ahead taking 0%; your interest earned would be more then $2000 so your net cost would be lower then $28000.
If you don't see this, then i guess we just agree to disagree.
Hey, I do see what you are saying, and in a perfect world, it makes sense. I get the math. Appreciate it.
Taking that 30K and investing it for five years is a sound strategy, if it works.
Investing is always risky though, especially in today's world, and unless you are an investment guru, or your name is Warren Buffett, or you have a crystal ball, you are as likely to lose money as win.
I don't know about the USA, but in Canada, interest rates on savings accounts, GIC's etc, are abysmal. No way will you make any money sticking your cash in the bank.
There's also the fact of annual inflation, cost of living increases.
I think that we can both agree that $30K today will not be worth $30K in five years if you stick it in a mattress.
Taking a five year inflation rate of 2.5%/year, then a 1.5% return on investment is a negative cash flow. You're losing money.
You need to make at least 4-5% per year on your investment to make it worthwhile, and that's never guaranteed.
Let's face it though, the majority of car buyers do not have the cash to pay for their purchase, so they have to finance it/borrow the money.
That's where the money is for car dealers.
If you finance it, you will pay interest. What that interest actually is, is hidden in this 0% sales pitch.
I just wish that there was some sort of legislation that forced car dealers to spell it out (in the contract), exactly how much the interest charges actually are.
My beef is with the dishonest way in which the 0% financing BS is presented.
It's like going to the bank, asking for $30,000 and telling them you'll pay it back in 5 years.
The bank then says, no problem, we'll give you the money, and in the next five years, you'll give us $32,000....at 0%.
That's my beef.
