The exception is the super low interest rate sometimes offered by the vehicle manufacturer. Why not use their money for free?
Do you make a car payment??? Details please!
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This is similar to another site that I post on. Someone asks for info to help them finance a purchase more smartly. The overwhelming response is "I never finance anything, you shouldn't either"
I've never taken too much loan (small portion of my monthly expenses) and I've always overpaid on the loan. Well, the one with 0% APR I was not aggressive on, but the others I was. I don't recall any loan being above $330 or so, but I've made plenty of payments at beyond double that to knock down principle. Finally I think the only time I might have been upside down on a car was my first one, and that was because I put so little down--everything since then was big down payment, no fears of needing gap.
Not sure if I want to sign up again for a loan, but I don't have enough in cash to do so on a new car, and every time I go looking people tell me "buy new!" even on this board. You have to admit, buying new is buying the best years. Anyhow, I'd probably play the risk: keep money in savings but put down enough that I'm never upside down on the loan. If finances change and I need to ditch the vehicle, sure I'll lose some money but as long as I can get out and still have cash, well, that's the gamble, right? I mean, I can't change a transmission in my car, I can't have a garage queen, and from where I sit, I still have least 10 maybe 20 years of employment ahead of me. [If not at this job then certainly because I need to work to pay for life!]
I will say that manufacture financing was the easiest. I did a loan through a semi-local bank on used once, and the loan got flipped to some not-so-local bank that didn't do online banking (had to use Western Union of all things to transfer money). Left a bad taste in my mouth, would avoid that in the future.
Not sure if I want to sign up again for a loan, but I don't have enough in cash to do so on a new car, and every time I go looking people tell me "buy new!" even on this board. You have to admit, buying new is buying the best years. Anyhow, I'd probably play the risk: keep money in savings but put down enough that I'm never upside down on the loan. If finances change and I need to ditch the vehicle, sure I'll lose some money but as long as I can get out and still have cash, well, that's the gamble, right? I mean, I can't change a transmission in my car, I can't have a garage queen, and from where I sit, I still have least 10 maybe 20 years of employment ahead of me. [If not at this job then certainly because I need to work to pay for life!]
I will say that manufacture financing was the easiest. I did a loan through a semi-local bank on used once, and the loan got flipped to some not-so-local bank that didn't do online banking (had to use Western Union of all things to transfer money). Left a bad taste in my mouth, would avoid that in the future.
I do finance because I have other things to pay for as well and have never been able to save up $15K to comfortably plop down on a car.
I try and get in the sweet spot of used cars. 3-5 years old, $10-12K, under 60-70K miles. My last two I paid TTL out of pocket and financed the rest for 4 years @ 3.5% interest. It equates out to like $230 a month.
That's what works for me while I work on paying off other debt like school loans, mortgage etc. I also need to put money away for retirement. I do pay extra payments whenever possible when everything else is accounted for including retirement and savings.
Eventually I would like to be able to pay cash for a vehicle.
I try and get in the sweet spot of used cars. 3-5 years old, $10-12K, under 60-70K miles. My last two I paid TTL out of pocket and financed the rest for 4 years @ 3.5% interest. It equates out to like $230 a month.
That's what works for me while I work on paying off other debt like school loans, mortgage etc. I also need to put money away for retirement. I do pay extra payments whenever possible when everything else is accounted for including retirement and savings.
Eventually I would like to be able to pay cash for a vehicle.
can you actually get an interest rate at 4% on a car when mortgage rates are close to 5%. Most car loans would normally be 2-4 percentage points higher than a mortgage rate
Originally Posted by Imp4
Originally Posted by BMWTurboDzl
Inflation (Official): 2 percent
Inflation (Unofficial via Shadowstats): ~5 percent.
Help you decide your real cost of financing.
What is Shadowstats?
The US Govt changed the formula used to calculate the official rate of inflation. The argument was that the change resulted in a more accurate number and the naysayers argued that it was designed to reduce the actual rate of inflation in order to justify lower COLA adjustments for Social Security recipients among other things. Shadowstats is a site which tracks inflation using the old formula.
Originally Posted by BMWTurboDzl
Inflation (Official): 2 percent
Inflation (Unofficial via Shadowstats): ~5 percent.
Help you decide your real cost of financing.
What is Shadowstats?
The US Govt changed the formula used to calculate the official rate of inflation. The argument was that the change resulted in a more accurate number and the naysayers argued that it was designed to reduce the actual rate of inflation in order to justify lower COLA adjustments for Social Security recipients among other things. Shadowstats is a site which tracks inflation using the old formula.
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Yes, I do. I went without one for about two years, but jumped back in this fall. It was 0%, so I signed and walked out. Real estate is not a particularly good investment around here, so we decided on keeping the smaller house and have a nicer car and take better vacations. We will be the only owners of the vehicle so we're going back to no payments after we're done.
Originally Posted by Spector
can you actually get an interest rate at 4% on a car when mortgage rates are close to 5%. Most car loans would normally be 2-4 percentage points higher than a mortgage rate
Yes, I just got a 3.5% though VW finance on my used VW Golf I picked up 2 months ago.
can you actually get an interest rate at 4% on a car when mortgage rates are close to 5%. Most car loans would normally be 2-4 percentage points higher than a mortgage rate
Yes, I just got a 3.5% though VW finance on my used VW Golf I picked up 2 months ago.
Originally Posted by SeaJay
This is similar to another site that I post on. Someone asks for info to help them finance a purchase more smartly. The overwhelming response is "I never finance anything, you shouldn't either"
That's a huge understatement! A few people here sway the discussions with their narcissist tendencies. When challenged, they retort with "I must have struck a nerve" or "you feel insulted" to appease their insecurity. There's nothing wrong with being proud of one's accomplishments. But, people that are comfortable in their skin tend not to have a need to preach to others about their greatness. Often times these same people tend to be hypocrites, giving out advice and criticizing, then turning around and doing exactly what they preached against. It gets tiring not being able to have discussions without the interruptions.
The bottom line is that a person can finance a vehicle and still be fiscally responsible. As shown above in several good responses, there are numerous ways to finance vehicles without going down the dark road of anti-Dave Ramsey. Off my pulpit now - continue on.
This is similar to another site that I post on. Someone asks for info to help them finance a purchase more smartly. The overwhelming response is "I never finance anything, you shouldn't either"
That's a huge understatement! A few people here sway the discussions with their narcissist tendencies. When challenged, they retort with "I must have struck a nerve" or "you feel insulted" to appease their insecurity. There's nothing wrong with being proud of one's accomplishments. But, people that are comfortable in their skin tend not to have a need to preach to others about their greatness. Often times these same people tend to be hypocrites, giving out advice and criticizing, then turning around and doing exactly what they preached against. It gets tiring not being able to have discussions without the interruptions.
The bottom line is that a person can finance a vehicle and still be fiscally responsible. As shown above in several good responses, there are numerous ways to finance vehicles without going down the dark road of anti-Dave Ramsey. Off my pulpit now - continue on.
Originally Posted by Spector
can you actually get an interest rate at 4% on a car when mortgage rates are close to 5%. Most car loans would normally be 2-4 percentage points higher than a mortgage rate
Yes, new car loans through PenFed are running right around 3.75%.
Used is around 4.25%.
can you actually get an interest rate at 4% on a car when mortgage rates are close to 5%. Most car loans would normally be 2-4 percentage points higher than a mortgage rate
Yes, new car loans through PenFed are running right around 3.75%.
Used is around 4.25%.
I like to have a car payments close to what it costs me to own the vehicle on AVERAGE, given that the interest is close to the inflation rate - using credit union. I calculate the average from the new car purchase value (out of the door with all the fees) and keeping the car for 10 years. The 10-11 years assumption would roughly evens out the residual car value and the cost of eventual repairs. So $20-30k purchase value results in $167-250/month. Then I look for 3 years old car, typically coming off lease and priced at 65-70% of the new car value. This way I can structure a payment plan (5years) with similar $167-250/month if I put a down-payment of equivalent of 2years of the average car cost - i.e 20% of the new car value. Also is more obvious if this model year has a design issues - after these 3 years of existence. To define the car age I prefer to look at manufacture date instead of the posted model-year. For 3 years old car it makes a difference. Then after paying the car off I have 2 years to save for the next car's down-payment at the same rate.
I have no issues with a car payment. I like to put money down and I usually get a very low i-rate. I like to have a car through the 5 year powertrain warranty period then either keep it until it gives me a problem, then I trade it in and move into another car. If you can keep a car 10 years with minimal maintenance, that's great, but if it starts needing major repairs, no thanks. Ain't nobody got time for dat!
I just bought a used car last week - my 2013 Sienna van. Total out-the-door price was around $13,500. I put $4k down, and financed the remaining $9.5k. I got a loan at my credit union, as they had the best rate - 3.49%. The car salesman was amazed I got a rate that low, and told me straight-up there was no way the dealer financing could beat that rate. They would only finance it a maximum of 42 months, so that's what I did. Monthly payment is $242. I hate having a car payment and I would've paid cash if I could. Hopefully I'll have it paid off early.
Originally Posted by Spector
can you actually get an interest rate at 4% on a car when mortgage rates are close to 5%. Most car loans would normally be 2-4 percentage points higher than a mortgage rate
It's because the financing arms of the car companies don't have to make a huge profit, they're there basically to help sell cars so they can offer artificially low rates. You're thinking of banks and credit unions, their rates tend to track the markets, but they're not as high as mortgage rates because those are typically 15 to 30 year loans and car loans are only 3-7 years.
can you actually get an interest rate at 4% on a car when mortgage rates are close to 5%. Most car loans would normally be 2-4 percentage points higher than a mortgage rate
It's because the financing arms of the car companies don't have to make a huge profit, they're there basically to help sell cars so they can offer artificially low rates. You're thinking of banks and credit unions, their rates tend to track the markets, but they're not as high as mortgage rates because those are typically 15 to 30 year loans and car loans are only 3-7 years.
There are two financial issues to consider. Paying interest and owning a depreciating asset.
Buy the time a car gets >10 years old, the depreciation slows way down. If you can find an older car with low mileage, you can usually just pay cash.
I will buy a 10 - 20 year old car with < 50k miles on it. Drive it for several years. Then sell it for not much less than what I gave for it.
Owning vehicles doesn't have to be expensive.
Everyone has their own tolerance level for debt. Mine is very low.
Buy the time a car gets >10 years old, the depreciation slows way down. If you can find an older car with low mileage, you can usually just pay cash.
I will buy a 10 - 20 year old car with < 50k miles on it. Drive it for several years. Then sell it for not much less than what I gave for it.
Owning vehicles doesn't have to be expensive.
Everyone has their own tolerance level for debt. Mine is very low.
Originally Posted by Oil_Whisperer
There are two financial issues to consider. Paying interest and owning a depreciating asset.
Buy the time a car gets >10 years old, the depreciation slows way down. If you can find an older car with low mileage, you can usually just pay cash.
I will buy a 10 - 20 year old car with < 50k miles on it. Drive it for several years. Then sell it for not much less than what I gave for it.
Owning vehicles doesn't have to be expensive.
Everyone has their own tolerance level for debt. Mine is very low.
Makes sense.
There are two financial issues to consider. Paying interest and owning a depreciating asset.
Buy the time a car gets >10 years old, the depreciation slows way down. If you can find an older car with low mileage, you can usually just pay cash.
I will buy a 10 - 20 year old car with < 50k miles on it. Drive it for several years. Then sell it for not much less than what I gave for it.
Owning vehicles doesn't have to be expensive.
Everyone has their own tolerance level for debt. Mine is very low.
Makes sense.
Originally Posted by SeaJay
This is similar to another site that I post on. Someone asks for info to help them finance a purchase more smartly. The overwhelming response is "I never finance anything, you shouldn't either"
No one is saying that. The OP needs to do what makes the most sense to him. He has stated that, "The painfully frugal side of me just winces at the notion of a car payment." That pretty much says making car payments of any kind, for any reason doesn't sit well with him. Trying to prove to him otherwise isn't going to change his feelings. If he does finance, it will simply reinforce them. And he will most likely regret it.
So in his case he shouldn't do it. Some people don't like debt... Any debt. Others can sleep like warm puppies drowning in it. You have to do what's best for you. I can relate to the OP's feelings because I share much the same one's. I'm frugal and hate debt. So I don't carry any, and I'm the happier person for it. I interpret the OP as someone who is similar. Because of that my advice to him was to go with his inner gut feelings, and don't finance. Because whatever his decision is, he and he alone is going to be the one who has to live with it.
This is similar to another site that I post on. Someone asks for info to help them finance a purchase more smartly. The overwhelming response is "I never finance anything, you shouldn't either"
No one is saying that. The OP needs to do what makes the most sense to him. He has stated that, "The painfully frugal side of me just winces at the notion of a car payment." That pretty much says making car payments of any kind, for any reason doesn't sit well with him. Trying to prove to him otherwise isn't going to change his feelings. If he does finance, it will simply reinforce them. And he will most likely regret it.
So in his case he shouldn't do it. Some people don't like debt... Any debt. Others can sleep like warm puppies drowning in it. You have to do what's best for you. I can relate to the OP's feelings because I share much the same one's. I'm frugal and hate debt. So I don't carry any, and I'm the happier person for it. I interpret the OP as someone who is similar. Because of that my advice to him was to go with his inner gut feelings, and don't finance. Because whatever his decision is, he and he alone is going to be the one who has to live with it.
For our daily drivers, I always finance the majority of it and always will with auto loans being so cheap and easy to get. I do it only after I find the deal I want and the interest rate I want. I haven't had a loan rate higher than ~3.5% in many years with terms from 48-72mo. Again, it depends on the deal, the mileage, condition and usage of the vehicle. I typically buy late model used. I try to put enough cash down so that I wont be upside down should I need to sell/trade early. For our two daily drivers, my 2017 Ram 1500 and the bride's 2016 Nissan Quest, our monthly loan payments are ~$650. Insurance is ~$110/mo. Both of my current loans are under 2.75%
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Originally Posted by Oil_Whisperer
There are two financial issues to consider. Paying interest and owning a depreciating asset.
Buy the time a car gets >10 years old, the depreciation slows way down. If you can find an older car with low mileage, you can usually just pay cash.
I will buy a 10 - 20 year old car with < 50k miles on it. Drive it for several years. Then sell it for not much less than what I gave for it.
Owning vehicles doesn't have to be expensive.
Everyone has their own tolerance level for debt. Mine is very low.
That is very wise and the way to keep your cost per mile the lowest. That scenario is very difficult to achieve living in the rust belt. Not impossible! Just takes some doing.
There are two financial issues to consider. Paying interest and owning a depreciating asset.
Buy the time a car gets >10 years old, the depreciation slows way down. If you can find an older car with low mileage, you can usually just pay cash.
I will buy a 10 - 20 year old car with < 50k miles on it. Drive it for several years. Then sell it for not much less than what I gave for it.
Owning vehicles doesn't have to be expensive.
Everyone has their own tolerance level for debt. Mine is very low.
That is very wise and the way to keep your cost per mile the lowest. That scenario is very difficult to achieve living in the rust belt. Not impossible! Just takes some doing.
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