Why You Should Never Buy a Car With Cash: The Secrets of the Top 1%

Millionaire Codes
Jul 6
5 min read

You need to understand the game of Leverage, Liquidity and the Wealth...

Why the Rich Almost Never Pay Cash for Cars — And Why You Shouldn’t Either

The wealthiest people in the world don’t just spend money they strategically allocate their wealth like tacticians. "If buying car with cash was great, rich people would do it. But even though they almost always have cash for a car, the almost never do.". Here’s the reasoning behind this approach:

1. Productive vs. Unproductive Capital

Before making a purchase, they ask themselves one crucial question:

“Will this make me money, or will it cost me money?”

When it comes to a car you need to keep in mind that the car loses value the moment you drive it off the lot, it requires maintainence and regular upkeep and lastly it give you zero return on your investment.

For the ultra-wealthy, smart capital is allocated to assets that grow in value, not things that depreciate in value overtime.

2. Make Every Dollar Work

To the rich, cash is a tool. Every dollar is an army of freedom fighter that will bring you freedom.

What kind of freedom: Financial Freedom without needing for you to work 10-14 hrs a day. Also, remember money never sleeps it works, works harder than any of your worker. No worker works for 24 hrs a day. It is a worker that should always be moving, growing, or multiplying.

Let’s understand this through an example:

You bought a $50,000 car. It just sits there. NO RETURN. LOSES VALUE OVERTIME.

You invested $50,000 at 10% annually. COMPOUNDED GROWTH OF OF $5000 each year.

See the math. This is the exact reason why the wealthy keep their money in motion. By financing a car, they can keep their capital working elsewhere while still enjoying the use of the vehicle.

3. Leverage Cheap Money

Why drain your own account when the bank offers you financing at a low interest rate of just 3-5%?

In the above example demonstrated: You can invest your money for a 10% return while borrowing from bank for your car at the interest rate of 3-5%. This yields like 5-7% in positive arbitrage.

The rich borrow at low rate and invest at higher rates, this is called positive arbitrage. They don’t fully fund purchases; instead, the control them while their money grows elsewhere.

This is the power of leverage: you need to use someone else’s money to fund your lifestyle while your own assets keep growing. For the rich, someone else’s money generally means the government.

4. Cash = Options

Emergencies, opportunities, and downturns happen unexpectedly. Understand that having cash on hand is crucial for you seizing opportunities and handling unforeseen events.

When your cash is tied up in a car, it’s not available when life happens, it’s not available when an oppurtunity strikes, it not available when something unexpected happens.

The ability to quickly access cash is a key factor that keeps the wealthy powerful and prepared, this is known as Liquidity. This allows the rich to capitalize on oppurtunities, reverse the unexpected downturns, and fight emergencies.

5. The Time Value of Money

A dollar today is worth more than a dollar tomorrow. The average global inflation rate amounts for 5.73%. That means every year your money loses its value by 5.73%.

That’s why financing makes sense for the wealthy. It allows them to spread out their payments and keep more of their money in circulation, where it can grow. Grow more than it is acutally depreciating.

Financing helps freeing up capital to invest in long-term returns, stretching the value of today’s money into tomorrow’s gains.

6. What’s the Opportunity Cost?

When you spend $50K on a car, you instantly lost $50K that didn’t go toward funding a business, investing in real estate or growing an audience or launching a new product.

The question to ask yourself isn’t just “Can I afford this?” It’s “What am I giving up?”

Understand $50k is not just money. It’s late nights, early mornings, sacrifices, stress, missed parties, and discipline.

It’s the time you traded—your life energy—in exchange for that money.

So, TAKE A PAUSE—ASK—”HOW CAN I BUY MY TIME BACK.”

The wealthy understand the opportunity cost of every decision they make. Measure the cost of your choice in time, energy and missed oppurtunities.

7. Debt Isn’t Dangerous. Misuse Is.

The wealthy don’t fear debt—they understand how to use it effectively. Debt for the poor means stress, lost sleep, missed chances, lifetime slavery. Why? Because they don’t know how to control the money effectively, they don’t know how to allocate their time and capital. Every successful person uses debt so why the middle-class people still fear debt—because they don’t have self control, they don’t have the knowledge to multiply money.

If debt used correctly it can build businesses, make you ready for oppurtunities(the concept of liquidity mentioned above) and multipl your financial flexibility(allowing to invest in multiple oppurtunities).

Debt, when used wisely, isn’t a risk. It’s leverage that will help you stay ahead in the game.

8. Write It Off — Don’t Just Drive It

Are you an entrepreneur, business owner, or creator? Use the tax code to your advantage. Did you know? Section 179 allows you to deduct a significant portion of your car’s cost upfront. Lease and finance payment are often tax-deductible, allow to reduce your taxable income.

Use this to get tax benefits provided by the government. This will help you save a lots of money, further increasing your money in hand that can be used to capitalize more financial oppurtunities.

Paying cash means you are gonna miss out on these tax benefits. It’s not just about driving—it’s about making your money work for you in multiple ways.

[Section 179 of the Income Tax Act allows businesses to deduct the full purchase price of qualifying equipment and assets in the year they are purchased, rather than depreciating them over time.]

9. Corporations Don’t Pay Cash. Neither Should You.

Big companies like Apple, Amazon, and Tesla don’t pay cash for their assets, even when they have billions in the bank. As of 2025, Apple cash reserves amounts to $4.146 Trillion, Amazon cash reserves amount to $94.56 Billions, Tesla cash reserves amounts to $36.996 Billion. Why?

Because growth requires capital, and capital shouldn’t be sitting idle in a garage. These companies understand that financing gives them the flexibility to keep their capital moving and working for them. The wealthy mirror this thinking in their personal lives, and that’s how they stay wealthy.

The Takeaway

A car isn’t just a mode of transportation. It’s a financial decision. While paying cash may make you feel satisfied in the short-term, it’s a strategy that doesn’t align with long-term wealth-building principles.

By using leverage, maintaining liquidity, and optimizing taxes, the wealthy stay powerful and ahead in the wealth game. Cash buys pride. Leverage buys freedom.