Now you are going into unnecessarily extrapolated situation… Who says you need to buy an even more expensive car? Who says you will not be conservative in your risk adjustment? Your point seems to be that it is invariably wrong to borrow against the car. This is only correct under the relatively narrow parameters that you assumed but did not qualify.
I’m not saying that the expensive car can’t be a dumb decision. But it is a consumption decision rather than an investment decision, and consumption decisions have a different set of criteria than investment decisions.
Using debt to finance consumption is a bad idea, unless you are using it to synchronize cash flows for paying off a long-lived item, the payments fit into your future budget plans, and the interest rate is reasonable.
So the first question is 1) “can you afford this car?” And the second question is 2) “should you finance this car?”
If the answer to the first question is no, then the answer to the second question should also be no. But if the answer to the first question is “yes,” then the answer to the second question might be “yes,” too.
I do agree that car salesmen frequently manipulate financing to make it look like you can afford a car that you cannot in fact afford. The fact that this can (and often does) happen does not mean that it is never a good idea to finance a car. It just means “don’t take the salesperson’s word for it. Run realistic numbers for yourself.”
Buy classic cars. They actually go up in value over time.
meh
If you buy the right one and take really good care of it.