Holy crap, if I had to finance a vehicle for more than five years, I would seriously be considering something else. I know "payments" seem to be the American way but yikes!
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- OP 🔹 jhblaze1
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Funny cause I usually set aside a few hundred a month to build up for the next vehicle purchase, but the prices and my taste go up much faster than the savings. ? That's OK because my savings usually reaches the pay off amount in a couple years and I just knock it out early. ?
I just pay $2k a month to get it over with... and not have to layout that much cash.. it’s an embarrassing number to pay for a vehicle lol ... and well worth it. I wish folks would stop asking “how much?” Lol I lie and aww $50k or so ..
I got teased a little by the guys in the shop at work when I got the truck. They were saying stuff like, "now we know who gets all the money around here". My reply was, "now you know who has the most debt in the shop".
But hey, that's why we work our asses off for 40 plus years. A man deserves something nice now and then. ?
If you are under 30 and financing any vehicle, let alone one that is $80,000, you're 50 year old self is going to hate your younger self. If you're over 30 and doing it you've just resigned yourself to the fact you're going to be on the debt treadmill forever and you will never have financial freedom. Most of you will hate me for saying that, but the truth hurts.
I get what you're saying and, in general, it is good advice. The only issue is that everyone's situation is very different. Just because someone finances a vehicle, doesn't mean it is wrong. If they are savvy enough with their finances and truly understand interest, etc., borrowing isn't always a bad thing. For instance, if the money is being loaned at a low enough rate, you have to decide if you are better to expend cash for a purchase or borrow money and keep the cash for other purposes. It is heavily dependent on one's specific situation though. The pandemic has hopefully taught people that what we think is stable (jobs, economy, etc.) is far from it. Things can change quick, fast, and in a hurry. A good goal in my opinion is to be completely debt free (house and all) and have enough saved up one can maintain the same lifestyle in retirement they enjoyed while still in the working world.
Some of us can swing it fine. But, we don't buy cars often. This replaced one that was 12 years old, and the wife's car is 10 years old and should last another 5 at least.
I financed about 50% of it as I didn't want to dip into the brokerage account or emergency savings. And ~2% interest is stupid cheap money.
I've found local credit unions tend to have he best rates. Within the last three years or so, their rates have ranged from 1.9% to 2.9%. I was offered a 1.9 for up to 84mo on the purchase of my 18 F250 back in 2018. With a rate that low, I choose to finance the truck. My wife's car was 2.49 for up to 60 when it was purchased in 2019. Still not a bad interest rate. The question is, what do you do with the cash while in these loans? If done properly, you can get more return on the cash than it cost you in interest to buy the car.
Agreed. Really makes me question the wisdom of many of my peers who are going out and buying new expensive homes just because they can get a lot for their current place and have a minimal increase in payment (though restarting the clock on the mortgage interest).
We refinanced our house due to the low rates, but I did it to reduce interest payments to pay it down faster. I want to be debt free on a reasonable timeline while still investing and enjoying life. Dropping my payment by a few hundred dollars won't get that done.
I imagine in some cases you are correct, maybe more often than not. Having a few degrees, including an MBA from a real University, I would politely say some people have the ability to make very educated spending decisions. I can pay cash for the truck, or finance 75% or 50% and use that cash on an investment which will far offset the 2% interest I am paying on this loan. If the payment on the truck truly is a nerve wracking experience each month, you might fall into the group that is debt loaded. To counter that, anyone getting financed for this truck must be doing reasonably okay financially, otherwise an $80K loan wouldn't fly. I applaud anyone on here that is swinging this truck and is not sitting on their ass taking all of the freebies, and hope they never get into a position to lose the truck.
I refinanced as well but it wasn't a no brainer decision. I have to stay in my current home for about 5 years to make up for the cost of the refinance. It is highly unlikely that won't happen but you never know. A good mortgage broker will do the math for you and tell you. For example, a savings of a few hundred a month on a mortgage, it will take quite a while to make up for the costs and re-amortization of the mortgage.
After reading this, I won’t complain about my $12k loan at 2%.
Same here. Break even was a little over 4 years for us as well, so it wasn't easy-peasy. But, with a 3 and 1 year old, moving in that time is not likely for us. We're more likely to put more into the house than move as anything that suits our tastes and needs is too expensive.
I think the comments above are centered around this type of information:
https://www.autoblog.com/2021/05/27/car-loans-consumers-borrow-more-for-longer/
That said, anyone financing a $60-80k vehicle is likely:
1. In a good financial situation
2. Will qualify for the lowest rates
3. Can understand interest
4. Are putting a substantial amount down
We're talking BMW M3, C8 Corvette, Audi S6 money. It's a different economic class.
https://www.autoblog.com/2021/05/27/car-loans-consumers-borrow-more-for-longer/
That said, anyone financing a $60-80k vehicle is likely:
1. In a good financial situation
2. Will qualify for the lowest rates
3. Can understand interest
4. Are putting a substantial amount down
We're talking BMW M3, C8 Corvette, Audi S6 money. It's a different economic class.
My objectives was/is to (1) always owe less on the truck than it can resell for but to (2) put as little cash into the truck as possible up front and over time (i.e. to always owe what it's worth.) In order to achieve the balance implied by those objectives I employed the following tactics:
I believe if the market were “normal” right now I'd be able to sell the truck for a bit more than I owe. The market happens to be crazy so I could sell it for a lot more than I owe. I don't view that as a good thing. I'd rather not have meaningfully positive equity in a depreciating asset. But that's better than negative equity.
All of this to say there's a logical basis to strategies like this, which prefer longer payment schedules. Just as there's a logical basis for other strategies that may not. It just depends what you're trying to achieve, how you manage your personal balance sheet, and what you're doing with your cash. For me, putting a bunch of cash into anything that cannot meaningfully appreciate and can be secured with a low-interest, long-duration loan would be hard to justify.
- Get a Tremor Lariat on the low end of the cost range for that configuration. Ended up finding what I wanted for about ~$67k. This is considerably less than the top end of this configuration (~$85k?) that helps anchor resale pricing higher.
- Get as long a term loan as possible at the best interest rates available at the time of purchase. Ended up getting a 72 month (6 year) loan at 2.19%. (It turned out I could have probably gotten the same rate at 84 months which would have been even better, but I didn't want to deal with another bank.)
- Put just enough cash into the truck upfront to ensure positive-equity with lowest possible payments. Ended up putting $10k down. I figured this roughly covers tax and fees plus drive-off depreciation. (It turned out this was more money than I needed to put into it, and wish I had been more rigorous in calculating this number.)
I believe if the market were “normal” right now I'd be able to sell the truck for a bit more than I owe. The market happens to be crazy so I could sell it for a lot more than I owe. I don't view that as a good thing. I'd rather not have meaningfully positive equity in a depreciating asset. But that's better than negative equity.
All of this to say there's a logical basis to strategies like this, which prefer longer payment schedules. Just as there's a logical basis for other strategies that may not. It just depends what you're trying to achieve, how you manage your personal balance sheet, and what you're doing with your cash. For me, putting a bunch of cash into anything that cannot meaningfully appreciate and can be secured with a low-interest, long-duration loan would be hard to justify.
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All depends on how strong your financial house is. Some people save nothing, others save over 25% of their cash before it even hits the bank. If you start at 20 years old you only need to save 15% to retire at 60 years old comfortably.
I have been working for the last couple years so I could pay ? cash when I bought mine...retirement ride ?
Spot on sage wisdom, I could not agree more ??????????.
I will add if you don’t have at least a million or two mil in retirement, keep working. Or you will have to keep working post retirement. And even working part time in retirement is not retirement its work. I have been retired going on 6 years and so glad that my wife and I worked hard, planned ahead, and saved. Pay yourself first, retire comfortably later its a beautiful thing.
Just another view point.
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- Jan 22, 2020
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Spot on brother! ??????
I don't care how cheap the money is. It still cost money. If I can't pay in full I don't buy and don't need it. I am old school.
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