Anyone finance here?

[Drucifer]

Man, after reading this thread I feel like the minority here. I don't have the cash to outright buy the car, and I have no qualms about financing it.

I grew up working class / lower middle class. I have worked hard and been fortunate to serve in the military, attain a BA and later an MBA, and continue to have a career that was beyond what most of my family did. My point was there is no shame in borrowing for a car, even if it is a deprecating asset, because you need to look at how the car and debt (or cash used) play into your total financial picture.

For most of us, you have to drive something, and that something is going to depreciate. You can drive a Honda Civic and eat about $300/mo in depreciation or a Tesla Model S and eat about $800/mo in depreciation but save $200 in fuel and maintenance. It is all a matter of priorities and planning.

 

[Cyclone]

Those rates are way old. You're not even close now. These are the rates from Maryland CU and PenFed. When talking about rates use current rates not what they used to be. Maryland CU's MM rate is .20% APR. Nothing even close to 1.99% stated earlier.

You should reread my posts. The CDs were for my previous car in 2006. The 1.99 is current and I posted the details and you quoted a different bank.

 

[zer0cool]

Since you can buy a preferred index which returns like 6.6% in today's super low rate environment (sure it has risks but very little over long term), it's really a good financial decision to borrow if the rate is low... I got mine at DCU for 1.49%. It's pretty close to free money.

 

[GuyGadois]

You should reread my posts. The CDs were for my previous car in 2006. The 1.99 is current and I posted the details and you quoted a different bank.

i stand corrected. The bank you stated does offer 2.01% interest but only for $15,000 and the requirement to ....

• Log into Internet Banking
• Be enrolled and receive e-Statements Notice
• Have at least one monthly direct deposit post and settle the account
• Have at least 12 point-of-sale debit card purchases post and settle the account

I am not sure all of that is worth $301 bucks a year but I guess every little bit helps.

 

[Cyclone]

Thanks GuyGadois. Yup, I have my day-to-day emergency fund there and I have the mortgage and car's emergency fund in a muni bond fund.

 

[JenniferQ]

Let's assume you can easily pay cash for the car. Would you finance it if it was let's say 0% for 60 months? If yes then why not finance with cheap money as long as it is safely invested and earning more than that? It seems so simple to me, what am I missing?

Yes, at 0% I would. That's free money. Maybe it's just me - I just don't believe in financing depreciating assets, at this point in my life. Yes, I used to have to, like most of us in our early years. But I also would never buy a car that cost this much if I had to finance it. It's just a psychological thing, I guess. Enough. It definitely makes sense to use resources wisely and take advantage of financing where possible. I am not disagreeing with that and I fear we've gotten off topic.

 

[JMG]

1.24% 60 month at Digital Federal Credit Union.

 

[Cyclone]

Yes, at 0% I would. That's free money.

I think that is key here. Underneath this statement, is a basic assumption. Financing the car = affording the car. Instead, a car purchase is really two separate decisions. Deciding on buying the car/how much to spend, and payment of the obligation. Deciding on the buying the car/how much to spend is definitely the psychological issue Jennifer is talking about and going under financing just to be able to buy the car is not necessarily the smartest move (outside considerations apply such as total cost vs. spending on gas, voluntarily "wasting" money on something that is less harmful to our environment, "need" for status, etc. -- all personal decisions that I personally side with Jennifer on -- you should be able to "afford" your needs).

But once the decision to buy has been made, a separate transaction occurs -- writing a check to pay for the car. Does this check come from your checking account (and any transferring of funds that enables that), or does the check come from a lender. This separate decision needs to be evaluated on its own for which makes the most sense. At 0%, it sounds obvious, but it can be at higher rates too. Its a matter of the financing to cost you less than other sources of funds + whether that "savings" in the difference is worth the extra work (how small it may ever be) in keeping up with the loan and its terms.

So, if one tries to "buy on the payment", then I personally think they are making the wrong move and buying a vehicle they cannot/shouldn't afford. But that's different than deciding where to source the funds for a vehicle you can afford.

 

[Max*]

I think that is key here. Underneath this statement, is a basic assumption. Financing the car = affording the car. Instead, a car purchase is really two separate decisions. Deciding on buying the car/how much to spend, and payment of the obligation. Deciding on the buying the car/how much to spend is definitely the psychological issue Jennifer is talking about and going under financing just to be able to buy the car is not necessarily the smartest move (outside considerations apply such as total cost vs. spending on gas, voluntarily "wasting" money on something that is less harmful to our environment, "need" for status, etc. -- all personal decisions that I personally side with Jennifer on -- you should be able to "afford" your needs).

But once the decision to buy has been made, a separate transaction occurs -- writing a check to pay for the car. Does this check come from your checking account (and any transferring of funds that enables that), or does the check come from a lender. This separate decision needs to be evaluated on its own for which makes the most sense. At 0%, it sounds obvious, but it can be at higher rates too. Its a matter of the financing to cost you less than other sources of funds + whether that "savings" in the difference is worth the extra work (how small it may ever be) in keeping up with the loan and its terms.

Well put, I agree with exactly this. I could afford to pay off the Model S over my loan term, even though I didn't have the liquid assets up front.

But nonetheless, I spend months struggling with the psychological aspect of buying such an expensive car. I still struggle with it, in a way, I park far away in the garage, I try to keep a low profile, not all my friends know I have it, etc.

So, if one tries to "buy on the payment", then I personally think they are making the wrong move and buying a vehicle they cannot/shouldn't afford. But that's different than deciding where to source the funds for a vehicle you can afford.

I'm not sure I agree here, or maybe I'm not understanding.

I don't see anything wrong with buying on payment (even a depreciating asset) when the interest rate is low AND as long as you can make the payments and pay off the car.

Everyone has their priorities, I pay more for my kids preschool than I do for my mortgage monthly. Some of my friends think I'm insane, and I might be, but that's not the point. Most people have equity in their primary residences, 401ks, etc. but I also think that those same people would never consider pulling money from there to fund a car, at least I wouldn't.

 

[GuyGadois]

1.24% 60 month at Digital Federal Credit Union.

Thats a great rate. Is it current or something you got in the past? That looks great to me.

edit: I just called them and the best rate available today is 1.49%. Still good.

 

[Cyclone]

Max, what I meant are the people who buy vehicles with the only affordability requirement being "I can spend X pee month". These are the people who buy Kia's above MSRP with high rates because the dealer put them in a 7 year loan to "make the payment happen". You don't fit into this category based on you quoting me above.

 

[digitaltim]

NPV the cashflows of buy versus finance and you will have the answer that makes the most financial sense. However, if you don't want to be cash poor and buying outright would deplete too much of your liquid assets, financing (given the low rates) makes a lot sense.

 

[Dukeybootie]

I got 0.74% from Western FCU in Irvine back in August. This rate is only available for a 36 month term, though.

 

[asudan]

Man, after reading this thread I feel like the minority here. I don't have the cash to outright buy the car, and I have no qualms about financing it.

You are in the silent majority my friend! Welcome!

 

[Vigile]

Just got approved for 2.85% here for 72 months on a new one. Seems reasonable?

 

[Max*]

Just got approved for 2.85% here for 72 months on a new one. Seems reasonable?

Depends how much you're putting down. If you're doing a 100%+ finance, then it's reasonable. If you're putting 20+% down I'd expect a 72 month to be closer to 2.25%.

 

[irvineboy]

I think a member here said Logix who has low rates, about 1.74% for 60 months, wouldn't work with Tesla for some reason. Trying to confirm.

 

[Gwgan]

I think a member here said Logix who has low rates, about 1.74% for 60 months, wouldn't work with Tesla for some reason. Trying to confirm.

That was me, but I think the problem is only in Maine and probably also New Hampshire where Tesla does not have a store. Logix has provided a loan in California that I know of and probably others as well.

 

[msnow]

I think a member here said Logix who has low rates, about 1.74% for 60 months, wouldn't work with Tesla for some reason. Trying to confirm.

No they work with Tesla a lot. I used them and they were great! 1.49% (I think 48 months but I could be wrong). I'm in California but I know there's certain states they don't do. PM me for a referral.

 

[Vigile]

Depends how much you're putting down. If you're doing a 100%+ finance, then it's reasonable. If you're putting 20+% down I'd expect a 72 month to be closer to 2.25%.

Huh. I'm actually putting like $40k down on it. And I have a credit score of 780, just checked today. I guess I should look around some more?