Person doing the calculation is double dipping because he essentially takes the difference in monthly installments twice (lower loss as what you paid for is lowered, and the lowered again because he adds this same difference back as a positive cash flow when calculating his 'gain').

If you're going purely by cash flows then only the first part of his calculation holds true and will suffice. You are paying 76k to drive a Camry for 5 years, and 85k to drive a 407 for the same period. So the extra bling bling and driving pleasure here will cost you around 1.8k annually, provided that maintenance costs, fuel consumption etc are similar.

TS debunked himself really.

This post has been edited by madmoz: Mar 12 2013, 12:11 PM

No. During year 5, you are getting back 100k for the camry as opposed to 70k for the 407.

For your argument to hold through, then you are going to take the cost over the entire period of the loan (early settlement penalty etc at point of disposal). It is no longer a simple net loss calculation based on how much you have paid (which is the basis for part 1 of your calculation) but rather a the gain/loss against the actual loan amount.

Like I mentioned earlier, Part 2 of the calculation at the moment is wrong as you have factored in the difference in installments twice.

An oversimplification and a wrong one at that. If you substitute in the amount that you would need to pay up to settle the loan and then net that off against the 'resale value' of 100k and 70k you would get a much better estimate.

I suspect that the Camry would still be cheaper as the % depreciation is much lower, even after you factor in the interest rate of say 3%.

Oh your loan tenure is 5 years also, lagi senang then. Your reasoning just plain doesn't hold water cause it is then nothing but a cash flow computation. You paid more out in cash for the 407 as compared to the Camry (disregarding the time value of money of course).

I maintain that the second part of your calculation is double dipping.

This post has been edited by madmoz: Mar 12 2013, 10:08 PM

the first part of your calculation is correct.


the second part is wrong.
that's all there is to it - cash flows.