A friend of mine inherited about $200,000 a couple of years ago and he put it into the bank to get some percent of interest (about 5% according to him).
Now he wants to buy a $200,000 Ferrari to fulfill his dream. He believes that he doesn't need the money at some point in the future, and if he is in luck he will be able to sell the Ferrari anyway at a later point. This question is not about to buy the Ferrari or not. Also, other cost like insurance, gas, repairs don't really matter in this question.
Having the money in the bank, is it better for him to cash it out and buy the Ferarri, or keep his investment running and take a loan for the car?
I can't give him advise, and he also doesn't know anything about financing. His bank told him he could get a loan backed with his investments and the car itself. By doing it this way, he may still earn interest while having his car.
Is this basically all there is to it or are there other things to consider to make a decision?
Now he wants to buy a $200,000 Ferrari to fulfill his dream. He believes that he doesn't need the money at some point in the future, and if he is in luck he will be able to sell the Ferrari anyway at a later point. This question is not about to buy the Ferrari or not. Also, other cost like insurance, gas, repairs don't really matter in this question.
Having the money in the bank, is it better for him to cash it out and buy the Ferarri, or keep his investment running and take a loan for the car?
I can't give him advise, and he also doesn't know anything about financing. His bank told him he could get a loan backed with his investments and the car itself. By doing it this way, he may still earn interest while having his car.
Is this basically all there is to it or are there other things to consider to make a decision?