Car-Buy Opportunity Cost

"What does my next car decision really cost over 30 years?"

You cannot quit a toxic job if you have a $1,000 monthly car payment.

— Debugging Your Personal Finance, Chapter 6

Expensive car (financed)

Cheap alternative (paid cash)

Price ($)

Investment assumptions

Each strategy runs over the full horizon with the car replaced every cycle. A (loan): the monthly payment rolls from one loan into the next, so it is a permanent outflow, and the figure is its future value at your return. B (cash): the full price is paid again each cycle, and the figure sums each purchase grown to the horizon. C (used): the whole payment stream is invested, with a used car bought from the portfolio at each later replacement. A and B are the future wealth you give up, C is the wealth you build. All in today's dollars, inflation ignored, as in the book. The monthly payment is rounded to the nearest $10.

From Chapter 6 of Debugging Your Personal Finance. Simple calculator · Inputs stay in your browser · Not financial advice.