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Started By
Message
re: Any baws with a $600+/month car note
Posted on 6/24/18 at 11:16 pm to Mike da Tigah
Posted on 6/24/18 at 11:16 pm to Mike da Tigah
Prices will only continue to rise. Imagine what they’ll be in 10 years.
1
Posted on 6/24/18 at 11:50 pm to lsu xman
84 months.... holy shite. Why not put like 20-25 down and pay the rest of it off in 3 years if you’re going to be paying 600
Posted on 6/25/18 at 4:00 am to TigerstuckinMS
quote:
Let's use a simplified interest model with no compounding (as is pointed out later, the below is not an actual simple interest calc, just a very simple model to illustrate a point), just to make it easier. In reality, the interest is a little more complicated, but the principle is the same.
Let's assume that your car loan interest is 3% of the principal annually and the note is 4 years. You also are able to invest your money and make 5% of the principal yearly. Again, we're using simple math without compounding to make the concept easier.
You take the 50k cash you have on hand and you invest it, then you borrow 50k to buy the car. At the end of the 4 years, your investment making 5% will have generated $10k (50000 * 0.05 * 4). You also will have paid off the $50k loan plus $6k in interest (50000 * 0.03 * 4). So, you end up with a car and $4k more than you started with. If you think this way, you likely are a "well qualified buyer" and will be eligible for a 0% interest deal when it periodically comes available. If you wait to buy then, you get to keep the entire $10k your investment makes over the life of the loan. Again, this math is extremely simplified, but it makes the point and keeps the numbers nice and round.
On the other hand, you can take your $50k and buy the car outright. After 4 years, you'll just have a car. The idea is that if you have the cash flow to pay the note, you can usually make more money by investing your cash on hand over the life of the note than you'll save in interest by using the cash on hand to buy outright up front. Also, if you don't have the cash flow to pay the note and have to dip into that cash on hand, maybe you can't afford the car you're buying.
Of course, as I B Freeman pointed out, there are a lot of intangibles that go into deciding where your money will best be served, but this is the general idea behind why you might choose to finance large purchases even if you have the cash on hand to buy it outright.
thanks....i neglected considering them as separate pots of money.
duh
Posted on 6/25/18 at 4:06 am to lsu xman
Was $1100 for 36 months but that fricker is paid for now.
Posted on 6/25/18 at 4:13 am to Paul Allen
quote:
Prices will only continue to rise. Imagine what they’ll be in 10 years.
If interest rates normalize, you'll see offerings become more streamlined and less expensive.
Posted on 6/25/18 at 4:25 am to ByteMe
I was a plant baw for years until I got moved in to the office. I worked in a oilfield welding shack for a year or so as well. The stereotype is pretty spot on. "hey i just graduated from ITI lemme finance a can am side by side"
Posted on 6/25/18 at 4:36 am to stout
quote:
Porsche is making all of their race cars based on the Caymans now because of this.
Lol no.
The 911 RSR is in no way based off the 718.
The salesman was trying to sell you a car.
Posted on 6/25/18 at 6:53 am to JohnnyKilroy
My 2011 F150 has been paid off since 2015 and I am going to try and keep it a few more years since I only just broke 100k miles. From time to time I look at new trucks and it pains me to think what I am going to have to pay to get into a new one these days. I thought $400 a month was enough back in 2011 but the prices of half tons now are crazy high.
Then I drove around and see all these brand new F-250 diesel's on the road and I think: "Damn I must be an OT Poor"
Then I drove around and see all these brand new F-250 diesel's on the road and I think: "Damn I must be an OT Poor"
This post was edited on 6/25/18 at 9:02 am
Posted on 6/25/18 at 7:04 am to lsu xman
Based upon what is posted in vehicle purchase threads here, I would assume a $800 84 month note is normal.
Posted on 6/25/18 at 7:14 am to kywildcatfanone
quote:
Based upon what is posted in vehicle purchase threads here, I would assume a $800 84 month note is normal.
$800.00 a month is getting awfully close to a mortgage payment. For some, it’s more than their mortgage payment. I would find that disturbing.
Posted on 6/25/18 at 7:21 am to Mike da Tigah
"They actually had to shut down some service centers because the cars weren't breaking down enough."
Posted on 6/25/18 at 7:29 am to RogerTheShrubber
quote:
If interest rates normalize, you'll see offerings become more streamlined and less expensive.
Do you think? Or do you think they'll just extend the term? As cars last longer, I think financial institutions are going to extend loan terms longer and longer.
Posted on 6/25/18 at 7:32 am to Mike da Tigah
quote:
$800.00 a month is getting awfully close to a mortgage payment. For some, it’s more than their mortgage payment. I would find that disturbing.
People will pay that truck note before rent or mortgage when they're in trouble.
Posted on 6/25/18 at 8:40 am to lsu xman
I bought a 2002 Toyota Camry for $1200 with 220k miles. It doesn't look bad and gets 28 mph. I make about $650 cash monthly after mileage reimbursement with maintenance. Minus $50 for insurance, I make $600 cash monthly driving it.
Posted on 6/25/18 at 8:53 am to TigerstuckinMS
quote:
Let's assume that your car loan interest is 3% of the principal annually and the note is 4 years. You also are able to invest your money and make 5% of the principal yearly. Again, we're using simple math without compounding to make the concept easier.
You take the 50k cash you have on hand and you invest it, then you borrow 50k to buy the car. At the end of the 4 years, your investment making 5% will have generated $10k (50000 * 0.05 * 4). You also will have paid off the $50k loan plus $6k in interest (50000 * 0.03 * 4). So, you end up with a car and $4k more than you started with.
The number of people with $15k+ in liquid savings is probably 10% of the population. There was an article recently about how most people cant afford an unexpected $1000 item in their monthly budget
.Posted on 6/25/18 at 8:54 am to kywildcatfanone
quote:
Based upon what is posted in vehicle purchase threads here, I would assume a $800 84 month note is normal.
And we wonder why most people carry credit card balances and are financially insecure
Posted on 6/25/18 at 8:57 am to Mike da Tigah
quote:
$800.00 a month is getting awfully close to a mortgage payment
Yeah mine was $863.22.
Couldn’t imagine paying that for a car.
Posted on 6/25/18 at 9:04 am to TH03
quote:
Yeah mine was $863.22. Couldn’t imagine paying that for a car
Had someone say the other day that they sold a car because the note was too high. Was $800+, but when they bought, they were making so much money (150k+, but eventually laid off). It was so hard not to just say, "well that wasn't the smartest thing ever. If you can afford the note, you can afford to save for a bit to put a down payment so that you aren't stuck with a super high note when you do lose your job". I probably have higher notes than I ever thought I'd have, but I could pay off both vehicles if needed, plus have pretty decent cash flow. I have to have both to be comfortable. Can't just have savings or cash flow to feel comfortable with a 400+ note personally.
Posted on 6/25/18 at 9:06 am to KG6
I got $10k for my 10 year old truck trade in so my note is next to nothing. Like $289 I think. I usually just pay $400 a month on it.
Paying extra because you can afford it is one thing. Paying extra because your note is that high just stresses me out.
Paying extra because you can afford it is one thing. Paying extra because your note is that high just stresses me out.
Posted on 6/25/18 at 10:38 am to lsu xman
yep
$1217 a month for 36 months 0% interest
At 0% interest I'll use their money for 36 months instead of my money up front
$1217 a month for 36 months 0% interest
At 0% interest I'll use their money for 36 months instead of my money up front
This post was edited on 6/25/18 at 10:41 am
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