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Message
House note vs car note
Posted on 2/28/21 at 5:03 pm
Posted on 2/28/21 at 5:03 pm
My wife (no pics) is in the market for a new vehicle. She brought up a plan that I'm trying hard to find the holes. So I wanted to run it by the smart folks on the MTB to get your view.
Our only debt is our mortgage. We have 6yrs left on our house at 3.125% where we owe about 80k. Her idea is to pay of the house now with current savings and finance 100% of the new vehicle (minus payed off trade-in) on a 0% loan for whatever term is required.
Would you take that deal if your wife brought it to the table?
EDIT: We're in our forever home and don't ever plan on moving.
Our only debt is our mortgage. We have 6yrs left on our house at 3.125% where we owe about 80k. Her idea is to pay of the house now with current savings and finance 100% of the new vehicle (minus payed off trade-in) on a 0% loan for whatever term is required.
Would you take that deal if your wife brought it to the table?
EDIT: We're in our forever home and don't ever plan on moving.
This post was edited on 2/28/21 at 5:05 pm
Posted on 2/28/21 at 5:09 pm to GCTigahs
She has a good head on her shoulders baw. Go with it.
Posted on 2/28/21 at 5:35 pm to GCTigahs
Finance 100% of a brand new car? You’ll be upside down so quick.
I know you didn’t ask for my opinion on buying vehicles but I just don’t get the obsession with new vehicles. They're too damn expensive. Their values drop like rocks. They fall apart, get dinged/dented in no time. The technology gets dated, etc. All really quickly. By the time you’re close to paying it off, you’re sick of it and the process repeats itself.
At the end of the day, the way I look at it is: vehicles are depreciating tools meant to get you safely from A to B. I don’t want to pay a note on that tool.
I know you didn’t ask for my opinion on buying vehicles but I just don’t get the obsession with new vehicles. They're too damn expensive. Their values drop like rocks. They fall apart, get dinged/dented in no time. The technology gets dated, etc. All really quickly. By the time you’re close to paying it off, you’re sick of it and the process repeats itself.
At the end of the day, the way I look at it is: vehicles are depreciating tools meant to get you safely from A to B. I don’t want to pay a note on that tool.
Posted on 2/28/21 at 5:46 pm to GCTigahs
There’s a lot of potential questions with this plan.
Is the vehicle ~$80k?
What’s that $80k payoff do to your savings?
Why not get the car at 0% financing and continue as-is, knowing you have the savings to cover any expenses/notes/etc.? Both rates are low. Basically, why is this a trade-off question?
And ultimately, as the other poster mentioned, if this is her idea, and it makes financial sense in terms of savings/payoff and it’s just a matter of this vs that, GO WITH HER PLAN.
Is the vehicle ~$80k?
What’s that $80k payoff do to your savings?
Why not get the car at 0% financing and continue as-is, knowing you have the savings to cover any expenses/notes/etc.? Both rates are low. Basically, why is this a trade-off question?
And ultimately, as the other poster mentioned, if this is her idea, and it makes financial sense in terms of savings/payoff and it’s just a matter of this vs that, GO WITH HER PLAN.
Posted on 2/28/21 at 5:55 pm to GCTigahs
My opinion (not a financial advisor) you have 6 years left on the mortgage. Which means you have paid mostly interest and have almost all principle left for the remaining 6 years. Assuming a 20-30 year loan term. I wouldn’t pay it off now as the interest savings can’t be much.
I’m also going to assume that in order to get 0% finance the note term is probably short like 36 months so disregard the upside down comment because you will be paying it off so quickly that you won’t be upside down after the first 6 months.
The other poster had the best question. What does this do to your savings? Personally I would take the 0% finance and not pay off the house. And put that 80k into your investments.
I’m also going to assume that in order to get 0% finance the note term is probably short like 36 months so disregard the upside down comment because you will be paying it off so quickly that you won’t be upside down after the first 6 months.
The other poster had the best question. What does this do to your savings? Personally I would take the 0% finance and not pay off the house. And put that 80k into your investments.
Posted on 2/28/21 at 6:13 pm to GCTigahs
If you can afford the car note at 0% for whatever the term is, then just get the car. I bought Tacoma last May at 0%/60 mths. Financed 100% plus TT&L, so no out of pocket, just signed papers and left with the truck.
Posted on 2/28/21 at 6:27 pm to GCTigahs
This is a historic time in the car industry. I'm normally not a proponent of 0 down or even using OEM financing, because they usually don't let you have the rebates WITH the special rates, but things are different now and probably for a couple more months at least. Now they are letting you have rebates AND the special 0% rates, so its a great time to buy if you're going to do it. I bought last summer for that reason. I was going to have to have one more car anyway, might as well not tie up capital in one. Looking at the five year cash flow, I couldn't make a used car make sense.
WRT to the mortgage, do you need the interest deduction on your taxes? Might want to take a good look at what it does to your tax status, though as another poster said, you're paying mostly principal at this point.
Is there another option that gets you better returns? I hear some cat on here called Ancient Tiger can make you some bank in penny stocks!
WRT to the mortgage, do you need the interest deduction on your taxes? Might want to take a good look at what it does to your tax status, though as another poster said, you're paying mostly principal at this point.
Is there another option that gets you better returns? I hear some cat on here called Ancient Tiger can make you some bank in penny stocks!
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