First Payment

oops · May 28, 2021

When interest cost on a ~$70k loan is ~$4k, you’re much better off taking the loan and putting your ~$66k in Vanguard or any other account that’ll easily yield a compounding return much greater than the interest on the loan.

There’s no financial wisdom handing $70k in cash over to Ford.

For example: If you put that $66k in an account with a relatively modest 4% yield you’d earn ~$14k over 5 years on your money. So you’d be $14k richer after 5 years than if you had paid in cash.

And in reality you would be even better off since you wouldn’t be paying the points on the loan as a lump sum. But keeping the numbers simple here.

Now, that said, there’s certainly some wisdom in paying a premium by paying in cash just to not have to think about any of this bullshit. ?

STDevil · May 28, 2021

Thanks to financial discipline (thanks mom, and dad), a good job, and a lot of luck, I made just two payments on the truck:

1) $2k on my new Ford Credit Card.
2) Then wrote a check for the rest.

One less thing to worry about. Probably could have made a buck or two by investing the money (at least in this market), but to each his own...

PapaRaptor · May 28, 2021

soop said:
When interest cost on a ~$70k loan is ~$4k, you’re much better off taking the loan and putting your ~$66k in Vanguard or any other account that’ll easily yield a compounding return much greater than the interest on the loan.

There’s no financial wisdom handing $70k in cash over to Ford.

For example: If you put that $66k in an account with a relatively modest 4% yield you’d earn ~$14k over 5 years on your money. So you’d be $14k richer after 5 years than if you had paid in cash.

And in reality you would be even better off since you wouldn’t be paying the points on the loan as a lump sum. But keeping the numbers simple here.

Now, that said, there’s certainly some wisdom in paying a premium by paying in cash just to not have to think about any of this bullshit. ?

I just want to be done with it. An investment may require income or capital gain taxes plus commission so there can be a huge debate now. Plus you still need to make the car payments.

LT75 · May 28, 2021

I’m all for helpful advice to give people. But let’s not knock people for their decisions. Let people do what they want and then you do what you want. There’s no point in bashing people for taking a car payments that you think they can’t do. But you have no idea what they can afford.

Sccritterkiller · May 28, 2021

21KRTremor said:
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.

Add to this 8 month delivery times. I ordered in Feb I was gonna pay 50% down...I put that in the market as I was given a June delivery date...by the time 10/31 gets here probably be closer to 75%. I gonna look at the numbers again if my truck ever gets here I may be better off just financing the truck purchase and letting my initial down-payment ride in the market.

I get hammered by capital gains every year anyways...what's a few more $$ to uncle sam...

21KRTremor · May 28, 2021

Sccritterkiller said:
Add to this 8 month delivery times. I ordered in Feb I was gonna pay 50% down...I put that in the market as I was given a June delivery date...by the time 10/31 gets here probably be closer to 75%. I gonna look at the numbers again if my truck ever gets here I may be better off just financing the truck purchase and letting my initial down-payment ride in the market.

I get hammered by capital gains every year anyways...what's a few more $$ to uncle sam...

We have to pay for the non stop checks that everyone is using to get those TV's and not work right!!!

RedZilla · May 28, 2021

LT75 said:
I’m all for helpful advice to give people. But let’s not knock people for their decisions. Let people do what they want and then you do what you want. There’s no point in bashing people for taking a car payments that you think they can’t do. But you have no idea what they can afford.

I couldn't agree more. It's easy for those with comfortable wealth to advise those without, not realizing that all comfortable wealth is built 100% on the credit and lending system. If nobody borrowed a dime starting tomorrow all those equity funds and market values would hit zero in days. No more comfortable retirement for anybody. Even cash would be worthless because it's value is also based on speculative growth. I know it's not a perfect system, but it's the system we are stuck with and it makes all these "necessities" possible. We need people to borrow money regularly or there would be nothing to invest in. It's a big pie and we all share in it. And some people get to take a bigger slice. Meanwhile 90% of the people in the world could never dream of owning a Tremor, or even retiring by our standards. We should count our blessings. ???