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Car-Buying Advice Uses Faulty Logic

September 29, 1985

I disagree with S. J. Diamond's advice to car buyers, namely, to put the cash for a new car in an 8% investment and finance the car with a 14.2% loan. The simple flaw in this logic is failure to recognize the cost of the out-of-pocket money required to make the monthly loan payments.

If such out-of-pocket money is available, the buyer is better off by paying cash for the car and putting the $225.97 monthly payments into an 8% investment. The difference makes the buyer $1,399.29 richer after four years (before taxes).

ROGER D. HICKS

Lancaster

The preceding three letters, along with more than 100 others received by The Times, are correct. S. J. Diamond will address the issue further in her column Monday.--Editor

Letters to the Business Editor should be as brief as possible and are subject to condensation.

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