<prompt> Human: I keep seeing advice that if you can afford to pay cash for a vehicle, that this is the best way to buy a car. I cant quite figure out where that advice comes from. Tell me how my math is wrong here.Lets say I want to buy a 30,000 car. I have 30,000 in cash, and I also qualify for a 2.83 loan through my credit union with 5k down. That is a payment of 447 a month for 60 months, and I can afford that payment. If I pay 5k down, and make 60 447 payments I will have payed 31,320 for the car. That is a loss of 1,820 I would not otherwise had to pay. But, I can keep my 25000 in my portfolio. Assuming a 7 return, 15 tax rate, and 3 inflation, after 5 years I have 33377 in the account, subtracting out the 25000 I started with and the 1820 I payed extra for the car leaves me 6557 in the black. If I pay 30000 down and put the 447mo into the same sort of account, the account value after 60 months is 32601, subtract out the 26,820 I payed in, and Im only 5781 ahead. So, 5k down and investing the rest, and making auto payments leaves me with 6557 plus a 5 year old car Paying 30k down and investing monthly payments leaves me with 5781 plus a 5 year old car. What am I missing?Assistant: I think the reality is, you should HAVE the cash to buy the car you want, regardless of whether you pay for the car in cash or not. If you have 0 and buy a 30000 car, youre not going to be ahead.Human: That I agree with. But thats not the question Im asking. Actually in both of these scenarios, Im out the 30k cost of the vehicle, so its not like in either way I come out wealthier at the end of the 5 year period. But it actually seems that from a risk mitigation perspective unless one assumes NEGATIVE returns, its always better to invest the larger portion up front.  <response>: Its a risk mitigation strategy, mostly. You have the 30k, so if something bad happens you can clear the debt immediately and start over. Most people arent justifying loans on cars because they have the cash, theyre justifying it because they dont, so they dont have your investment side to offset the depreciation and interest payments. Also, a monthly pay structure makes people feel like they can afford more car than they actually can. It comes down to not being a math problem, but more a risk and personal behavior problem. Just need to decided if the possible 5k or so gains are worth the risk associated with having debt on a depreciating asset. 