Car Loans - keeping America poor?

[jayhawk]

This thread will expose many more people that dont understand how money and interest rates work and how to use it to your advantage.

 

[TaperPin]

This thread will expose many more people that dont understand how money and interest rates work and how to use it to your advantage.

Your advice is to get a cash out refinance on a paid off car? Lol

 

[flyfisher117]

Yeah it'll keep most of us poor. Instead of teaching us how to get ahead in life our schooling system teaches us how to write a mean Haiku. Im not buying a Tahoe with my Haiku writing skills.

 

[Reburn]

Your advice is to get a cash out refinance on a paid off car? Lol

I'm gonna respond to you since I could read your response without getting bored. Good job keeping it under 2 sentences.

First advice.
Dont be stupid and buy a car at above prime interest rate. This was hard between 20-23. But now you can wait for special interest rates to come back. 3.9% to 0%. Yes that means you have to buy what is left. Yes that might mean you dont get the color you want. Yes that means you normally give up the 3k incentive back. Yes that means you have to time your purchase.

 

[TaperPin]

I'm gonna respond to you since I could read your response without getting bored. Good job keeping it under 2 sentences.

First advice.
Dont be stupid and buy a car at above prime interest rate. This was hard between 20-23. But now you can wait for special interest rates to come back. 3.9% to 0%. Yes that means you have to buy what is left. Yes that might mean you dont get the color you want. Yes that means you normally give up the 3k incentive back. Yes that means you have to time your purchase.

So is it safe to assume you would suggest a 120 month loan rather than just paying cash?

 

[Tahoe1305]

So is it safe to assume you would suggest a 120 month loan rather than just paying cash?

At 3% sign me up.

 

[Reburn]

If you need to take out an 84 month loan to afford a vehicle you can't actually afford the vehicle. Anything past 4 years is not a good idea.

While I agree with you statement.

The longer terms has as much to do with the finance companies receivable valuation as it does making the monthly payment palatable.

Thats why they normally tie the low interest rates with longer financing. Coupling with getting a tiny bit more interest back.

So is it safe to assume you would suggest a 120 month loan rather than just paying cash?

Again. First line of my response after complimenting you.

Dont be stupid and buy a car at above prime interest rate.

I paid cash for my truck in 23 because the financing interest rates SUCKED.
If its possible to wait to use their money at sub prime interest rates then do that.
WITHIN REASON.
No I wouldnt reccomend a 10 YEAR loan. Thats not smart. 48-60 months. I financed my wifes car at 72 but it was at 0% so who is winning there.

 

[CorbLand]

So is it safe to assume you would suggest a 120 month loan rather than just paying cash?

Are we really going to have the same damn argument and just change it from a mortgage payment to a car payment?

If the interest rate you are paying is less than the rate you can earn, you are money ahead financing it and investing the money. It’s not a horrible idea, especially if you can invest in near zero risk investments.

 

[Reburn]

At 3% sign me up.

Problem with that is you can end up pretty far upside down. While you saved the interest rate you may own more at 7 years then the car is worth.

 

[hunterjmj]

I drive an 09' 2500 Silverado free and clear with permanent plates. Has 270,000 miles and I plan to keep driving it for the rest of my life. I paid $14k for it and put maybe $1000/ year into it. I'll throw an engine in it before I'd pay for a new pickup. I plan to buy a mid 70's Ford or Chevy pickup for personal use in the next couple years. To each his own though. What you do with your money is none of my business. I can't imagine paying 50-100k for a pickup that gets you to point A to point B.

 

[Tahoe1305]

Problem with that is you can end up pretty far upside down. While you saved the interest rate you may own more at 7 years then the car is worth.

But I invested my payment elsewhere and made more $.

Cars are different than houses for sure. I’d have to keep the car past the time when it’s paid off, and fully depreciated to make it worth it. Which is always my goal.

Can’t be upside down if you keep the car for the life of it. It’s “value” is keeping you from buying another car out of need. Said another way, It doesn’t matter what it’s worth if you don’t sell it.

 

[cnelk]

Houses appreciate. Cars depreciate.

 

[MuleyFever]

So many people fall into the point of the title on this thread. Look at housing areas usually associated with low income like crappy apartments and trailer parks and some of the vehicles parked there. I see vehicles worth more than the trailer home. Rather than save for a decent home people will spend half their income on a vehicle. Part of the issue is that in this country we have made the vehicle a status symbol. I also think that people have lost hope of affording a home so they say screw it and and go finance an expensive vehicle.

 

[Reburn]

But I invested my payment elsewhere and made more $.

Cars are different than houses for sure. I’d have to keep the car past the time when it’s paid off, and fully depreciated to make it worth it. Which is always my goal.

Can’t be upside down if you keep the car for the life of it. It’s “value” is keeping you from buying another car out of need. Said another way, It doesn’t matter what it’s worth if you don’t sell it.

Sure thats could all be true but you make assumptions on how long you keep the car. I personally dont expect the life to last 10 years for me so I dont amortize that far out.

You could also find yourself with a 9 year old car with 15k annual miles on it needing a transmission out of warranty that you are still making payments on.

The single biggest mistake people make is rolling an upside down car into a new car note. It happens all the time. I didnt list that as my first advice as if someone is doing that then they are too far behind anyways and they need dave ramsey.

 

[Speaks]

I used to always pay cash for cars. I still would not take a loan on a car that I would be uncomfortable paying cash for. That said I am not keeping $30-$50k in checking, its invested through one of my brokerage accounts. When faced with the choice of selling stock to pay cash now or financing at a low rate I will still finance. I will typically do a 3 year and pay off early either because I had decided to sell some stock and do that vs reinvesting or off my annual bonus. In theory if someone is willing to loan you money at a rate much lower than what your investment return is you should take full advantage. I only partially do that. If a rate was creeping up on 5% I would likely still pay cash.

 

[Colorado Cowboy]

I havn't had a car payment since 1980. I have payed cash for everything I bought. I also don't get rid of or replace cars for about 10 years. I drive a 2014 Ford F350 4x4 diesel that just turned over 100,000 miles. I usually only drive it while towing my 5th wheel or hunting. Just bought my wife a 2024 Bronco for our 60th anniversary(traded in a 2015 Explorer) and paid cash for it. I mostly drive my old Ranchero for errands, go to town or just go for a drive. I do make a payment to my money market instead of a car payment.
Here is my Ranchero and my F350.

 

[survivalistd]

 

[go_deep]

Cash, and never buy new. 2 year+ old vehicle eliminates a large amount of the depreciation.

 

[survivalistd]

Cash, and never buy new. 2 year+ old vehicle eliminates a large amount of the depreciation.

Buy a lease return

 

[BRTreedogs]

Yeah it'll keep most of us poor. Instead of teaching us how to get ahead in life our schooling system teaches us how to write a mean Haiku. Im not buying a Tahoe with my Haiku writing skills.

For all I know you mite be selling yourself short.
There has to be a Haiku market of some sort.