Originally Posted by
HTupolev
Given how our financial markets work, being able to spread payments out into the future at no interest generally does make something more affordable. And not just in the sense that you can buy something before you would otherwise have adequate liquidity. Even if you have cash in hand to buy something now, you'll nearly always end up richer in the long run if you dump the money into reasonably-safe investments and then pay the cost of the item later.
True, if you can handle the volatility. The last time we bought a new car, I went to the dealer with my checkbook. Then they offered me .9% financing for five years, so I took the loan and left the money in an S&P 500 Index fund. Over those next five years, the S&P 500 rose about 65%, so I made a nice profit on the loan. However, while the financing may be smart in such a case (and that won't always happen - I got such a low rate because our credit score is crazy-high, and I lucked out on the market...If I'd done this five years earlier, I would've gotten hammered), it does not make the purchase
more affordable. Whether you pay the money up front, or make payments, that money - whenever you fork it over - means giving up other things. For example, without the monthly payments, you could be putting MORE money into those alternative investments.
And by the way: that's not semantics. It's just economics.