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NE1 that pays $42k cash for a car is stupid.
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What are the chances that someone who can pay cash for a car is stupid? Unless they're a professional athlete, entertainer, etc....?
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#1 Has tons of excess cash (ie. makes $150k/yr),
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Of course, if your monthly cash flow is quite high and you're still meeting your investment needs, why not just pay for the car outright? My interest rate is 0% because my monthly car payment is $0!
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Financing the car (especially if the rates are low, or if you use a home equity loan for deductible interest) makes sense because it leaves more money available to invest in "appreciating" assets rather than putting it into something that loses money the second you drive off the lot.
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As an alternative, you could instead add the amount that you would have spent on a lease/car payment into your investment stream and get the effects of dollar cost averaging. I personally don't like the idea of using home equity loans for non-home related items because your home is used as the security on other things, but that's just my opinion
