Best Vehicle Financing Rates

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Originally Posted By: JHZR2
Originally Posted By: LT4 Vette
Not many can pay with cold hard ca$h.


Then people need to quit the "I deserve" mentality and realize that they are beggars who can not be choosers.




Pompous, arrogant, condescending and totally unresponsive to the original query.
Not bad for a one sentence retort.
 
Assume you were in the market for a $20k car in 2008. Buyer 1 pays cash. Buyer 2 takes out a low interest loan and invests the $20k in the stock market - let's say a S&P 500 Index fund.

Fast forward to today - who would be the smart car buyer?
 
Originally Posted By: JHZR2
Originally Posted By: LT4 Vette
Not many can pay with cold hard ca$h.


Then people need to quit the "I deserve" mentality and realize that they are beggars who can not be choosers.

It is un American to abstain from instant gratification or to keep up with the neighbors or out de the friends or fellows at work.
 
Originally Posted By: dishdude
Assume you were in the market for a $20k car in 2008. Buyer 1 pays cash. Buyer 2 takes out a low interest loan and invests the $20k in the stock market - let's say a S&P 500 Index fund.

Fast forward to today - who would be the smart car buyer?
Assume it was 2006. Probably a would have lost the house as well as the car and the money in the stocks.
 
Originally Posted By: dishdude
Assume you were in the market for a $20k car in 2008. Buyer 1 pays cash. Buyer 2 takes out a low interest loan and invests the $20k in the stock market - let's say a S&P 500 Index fund.

Fast forward to today - who would be the smart car buyer?


That's a convenient date to select. Lol.
 
Pick any date...how about 2009? 2013? Any date on any year in between...I'll put my money in an investment any day over a depreciating asset.
 
Originally Posted By: CT8
Originally Posted By: dishdude
Assume you were in the market for a $20k car in 2008. Buyer 1 pays cash. Buyer 2 takes out a low interest loan and invests the $20k in the stock market - let's say a S&P 500 Index fund.

Fast forward to today - who would be the smart car buyer?
Assume it was 2006. Probably a would have lost the house as well as the car and the money in the stocks.



Did his wife leave him and his dog die too?

If all the man had to his name was 20K and buying a new car would have caused that kind of catastrophic fall, he had no business 1) buying a new car or 2) being in the stock market.

Instead he should remain at home, become a hermit, earn .01% on savings, and sustain himself on cheap bologna and day old sandwich bread.
 
Originally Posted By: LT4 Vette
Not many can pay with cold hard ca$h.


You can't withdraw $40k in $100 bills from a bank and buy a new car with it, try it. The dealer will make you come back with a bank check.
 
Last edited:
Originally Posted By: CT8
Originally Posted By: dishdude
Assume you were in the market for a $20k car in 2008. Buyer 1 pays cash. Buyer 2 takes out a low interest loan and invests the $20k in the stock market - let's say a S&P 500 Index fund.

Fast forward to today - who would be the smart car buyer?
Assume it was 2006. Probably a would have lost the house as well as the car and the money in the stocks.


Unless he lost his job and need the $$ or invested in junk stocks like Enron he would have been fine. We survived 2006-2008+ just fine.
 
Originally Posted By: hattaresguy
Originally Posted By: LT4 Vette
Not many can pay with cold hard ca$h.


You can't withdraw $40k in $100 bills from a bank and buy a new car with it, try it. The dealer will make you come back with a bank check.



+1 I used to sell cars and had a person offer that. We had to turn them away
 
Someone asks about vehicle financing rates and it turns into a pay cash vs finance debate? That's sooo surprising.
smirk.gif
18.gif


It'd be nice to just answer the OP's question without going off-topic only to have the SAME argument for the 439,828th time.
 
Well there's really nothing left to talk about, best rate is typically Penfed.

As for the S&P 500, it's an index so the closest you can come is the Vanguard Index 500 Admiral shares which require at least 10k to buy in. Since 2000, the average return is about 5%. 2008 was a real killer year, fund was down 37%. 2013 was a great year, up 32%. 2001 and 2002 were also bad years, down about 12 and 22%.

I don't think interest rates were that low back in 2000 so it made more sense to just pay cash then as you would have lost money in the stock market. Not only that, but you'd have to pay taxes on the gain so the spread is narrower than you think.

I wouldn't really fault anyone who pays cash though. The last three years have been great and if you've made a lot of money in the market, it isn't too crazy to take some out and spend some of it at some point.
 
Originally Posted By: dishdude
Pick any date...how about 2009? 2013? Any date on any year in between...I'll put my money in an investment any day over a depreciating asset.


Did you actually do the analysis? On paper, it seems like it's a pretty good bet over the last 3 years, but lately the market has been a bit sideways down about 1/4 point for the year. Also you'd have to spell out the loan period. In theory, if you buy a 20k car and have the choice of cash or finance, in one scenario, you just pay cash. The other requires a fixed loan period, 5 years at 1.5%. So you have to apply the analysis to a 5 year period where the monthly payment comes out of the 20k invested in a fund. The reason you do that is because you just have the 20k to start, either pay cash or invest it and use the returns to pay the monthly payments and see how much you have left at the end of 5 years. If the market is good, you will have more so this works over the last 3 years. If you get a 2008 year or a 2001/2002, then the money in the fund gets drained earlier and you have to make additional payments out of pocket so you would have been better off paying cash to start. If you just make payments out of a paycheck, it's not the same because you could always just invest the paycheck money into a fund instead of making a car payment.
 
Another thing most people who advocate paying cash for a vehicle forget: emergency fund.

If you only have $20k and use all of it to pay for a vehicle then you don't have any money left for emergency, only after saving the monthly payment for a while you start to have emergency fund.
 
Originally Posted By: HTSS_TR
Another thing most people who advocate paying cash for a vehicle forget: emergency fund.

If you only have $20k and use all of it to pay for a vehicle then you don't have any money left for emergency, only after saving the monthly payment for a while you start to have emergency fund.


I think you may be coming up with a problem that may or may not actually exist. How many times have you heard people say "I just paid 20k in cash for a car, now I need to borrow some money because I'm now broke.". Personally, I've never heard that. This may be true for smaller amounts though. People who have the option of financing or paying cash can just use their credit cards if there's an emergency, but more likely, they have other money saved up. Worse case is that you just get a loan on the car.
 
Originally Posted By: HTSS_TR
Another thing most people who advocate paying cash for a vehicle forget: emergency fund.

If you only have $20k and use all of it to pay for a vehicle then you don't have any money left for emergency, only after saving the monthly payment for a while you start to have emergency fund.


I am a heavy "pay cash" advocate. In the example above, I would never buy a $20k car if I had only $20k saved up. Why? Because that would be out of my financial reach. Instead I would look into $5-$7.5k car, pay cash and keep on saving/investing. I do not think anybody on here suggesting paying cash forgets about the emergency found.

Having $20k as life savings, doesn't mean you can afford a $20k car IMO.
 
I don't think you have to be active either. I joined nearly 20 years after I got out of the Army. So as a veteran you can join.
 
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