Originally Posted by
HTupolev
My impression is that the scenario being discussed is a 0% loan of X dollars versus an up-front payment of X dollars. In the former case, if the money that you didn't pay up-front ends up making money in an investment while the loan is being paid off, you end up with more money than in the latter case. There's no "opportunity cost" compared with the latter case, since you didn't have any opportunity in the latter case: the money is all gone right from the start.
Sure, okay, as long as we acknowledge that this is far, far from
BoraxKid 's scenario in which a person finances a purchase because he doesn't have the cash -- can we agree that does not make the purchase "more affordable"?
Now, in your scenario: Sure, that is exactly the outcome of my new car purchase example. However, the purchase did not make me money - the purchase did not make me a profit. That still entailed
spending money that would have otherwise been in an investment fund earning a nice return. I made a nice return by financing the car, but (theoretically) I could've made a similar return by just skipping the car, borrowing money (say, through a HELOC, which had pretty low interest back then, or from one of the million offers I got to write a check, made out to myself, on a credit card at 0% interest for a couple years), and putting the loan proceeds into my investments. Bottom line: spending money on anything takes it away from other uses, and that entails opportunity cost. I didn't make that rule - it just
is.