Need Financing Advise...

[miggz410]

Trying to decide which option I should go with... Want to keep my payment budget around $600 per.

1.) 2.49% with $12k down for $601.51/72 months - Interest $3,118.53
2.) 2.6% with $10k down for $547.82/84 months - Interest $4,001.25
3.) 2.6% with $7k down for $589/84 months - Interest $4,285.76

I'm leaning towards option 3 since I get to keep $5k... But my wife thinks paying that extra $1,167 in interest for a year is not worth it because were planning to sell the car in 3 years. Most likely upgrading to an X.

Which one would you go with?

 

[kpinthebay]

Trying to decide which option I should go with... Want to keep my payment budget around $600 per.

1.) 2.49% with $12k down for $601.51/72 months - Interest $3,118.53
2.) 2.6% with $10k down for $547.82/84 months - Interest $4,001.25
3.) 2.6% with $7k down for $589/84 months - Interest $4,285.76

I'm leaning towards option 3 since I get to keep $5k... But my wife thinks paying that extra $1,167 in interest for a year is not worth it because were planning to sell the car in 3 years. Most likely upgrading to an X.

Which one would you go with?

If you plan to sell in 3 years, why not lease?
What state are you in?

 

[miggz410]

If you plan to sell in 3 years, why not lease?
What state are you in?

Thought about leasing before I decided to finance... But I don't want to worry about the mileage restrictions and have to worry about the condition when returning it. Also planning to do some mild mods. Also the no buyout options killed it for me.

Also if the MY holds up it's value like the M3 then it's more worth it just to finance.

 

[Carbonfiber]

None. You guys have your mind set on the Model X. Why waste money on a car you are not going to keep? If you are in need of a car and need to save toward the Model X, I would lease a different car with a lower payments.

 

[Carbonfiber]

Thought about leasing before I decided to finance... But I don't want to worry about the mileage restrictions and have to worry about the condition when returning it. Also planning to do some mild mods. Also the no buyout options killed it for me.

Also if the MY holds up it's value like the M3 then it's more worth it just to finance.

maybe look in to a used fuel efficient car that’s around $7-12k? Then trade it in for the model x in a few years.

 

[miggz410]

None. You guys have your mind set on the Model X. Why waste money on a car you are not going to keep? If you are in need of a car and need to save toward the Model X, I would lease a different car with a lower payments.

Thanks for that but wife only wants a Tesla... She don't like the M3 and we just sold our MS.

 

[Carbonfiber]

Thanks for that but wife only wants a Tesla... She don't like the M3 and we just sold our MS.

buy the X now. Lol

 

[miggz410]

buy the X now. Lol

Yea we looked in to getting a used X but we really like the the newer X... Plus we don't want to get in another higher payments right now which also would require more money down. Thought 3 years is a good time for us. Also the Cybertruck should be out by then. We can decide between the two.

 

[czbuckeye]

I would do the 84 months and just pay extra per month to avoid paying as much interest since the rate is similar. Where were you able to get 2.6% for 84 months?

 

[N1L CO2]

If you are going to get out of the car in 3 years, the question should be whether or not you want to be under water. The longer the term, the larger the interest payment you have. Thus, a good portion of the payment for 3 years will go towards interest rather than actually paying down the loan itself. I would bet that you'd owe more to the bank (aka being upside down) in 3 years than what you can trade the car for. Hence, the $5k you think you are keeping now, you WILL have to dispense to make up the difference.

Most people think the interest payments are divided equally in the term, they are NOT. The car loan payments are amortized! And just like paying the mortgage, the lenders want and collect their interest up front.

 

[Arctic_White]

Trying to decide which option I should go with... Want to keep my payment budget around $600 per.

1.) 2.49% with $12k down for $601.51/72 months - Interest $3,118.53
2.) 2.6% with $10k down for $547.82/84 months - Interest $4,001.25
3.) 2.6% with $7k down for $589/84 months - Interest $4,285.76

I'm leaning towards option 3 since I get to keep $5k... But my wife thinks paying that extra $1,167 in interest for a year is not worth it because were planning to sell the car in 3 years. Most likely upgrading to an X.

Which one would you go with?

What are you going to do with the extra $5K if you go with option # 3?

I'd go with option 1 as it's the cheapest interest-rate wise, but I'm OK with option # 3 as well as having extra cash is ALWAYS beneficial even if it costs a bit more in interest for you.

 

[rking0122]

That’s a good rate (either of them) for a long term auto loan. There is a good argument to be made to keeping your cash in the bank, particularly during the uncertainty of the pandemic. You can always choose to add to your payments if finances allow.

Seems like you’ve calculated the TOTAL projected interest over the entire 72 or 84 month loan, so keep in mind you won’t be paying all of that interest if you are getting rid of the car at month 36. If that’s the case, you need to determine how much interest would be paid at the time you plan to get rid of the car. That’s the more pertinent analysis...how much interest would have been accumulated and paid at that time.

I think you’ll find that the difference in interest won’t be all that much between your options, certainly closer than what you have calculated here.

Quick math in my head leads me to believe your total purchase is about 52K. Scenario 1 above, after 36 payments, you’d have paid $2298 in interest not $3118. I hope this makes sense. Play around with this website and compare the three options you have at month 36.

Auto Loan Calculator | Amortization Calc

 

[im4uttx]

If you're only keeping it for 3 years, the interest isn't the issue. It will be the condition of the trade-in at the end of 3 years. Figure the end value is going to be the same regardless, so it will come down to loan balance at trade-in. Either you put more money towards the loan during the 3 years or have a higher loan balance...if you save money, then a lower payment helps with that, if you don't save money, then having a lower loan balance would be better.

 

[Klau2]

Trying to decide which option I should go with... Want to keep my payment budget around $600 per.

1.) 2.49% with $12k down for $601.51/72 months - Interest $3,118.53
2.) 2.6% with $10k down for $547.82/84 months - Interest $4,001.25
3.) 2.6% with $7k down for $589/84 months - Interest $4,285.76

I'm leaning towards option 3 since I get to keep $5k... But my wife thinks paying that extra $1,167 in interest for a year is not worth it because were planning to sell the car in 3 years. Most likely upgrading to an X.

Which one would you go with?

Are you sure that interest is for per year? pretty sure that's the total interest you pay over the life of the loan. I work for a bank. We quote you the total interest. If you are only keeping the car for 3 years, I'll do option 3. Less money up front and lower monthly payment.

 

[Physicslawyer]

You could end up underwater on a 72/84 month loan. Be careful with something like this.

https://cars.usnews.com/cars-trucks...rs with poor or,car loans or longer financing.

 

[kpinthebay]

Don't forget OP lives in Bay Area. This means over $5k in taxes alone assuming the $50k LR AWD.

 

[NWDCanada]

Option 1.
Always been in the game of 20% down and 48m max.
You'll always be ahead of depreciation in this scenario. Unless you beat up your car.

best of luck with your decision!

 

[amnesty_that]

I was in same boat in Bay Area and decided to lease a performance model instead of buying and worrying about all of this. 12K down comes out to about 492 for a performance (34K over 3 years) and 392 for LR per month.

Using your numbers for buying 601 x 36 = 21636 + 12K down = 33.6K over 3 years

You can do the math for option 2 & 3 too and see but if you know your going to not keep the car leasing will guarantee you not upside down

 

[artnalex]

Option #3.
You make a lower pmt ($12 less per month x 3-yrs = $432)
you get to keep $5K more.
You get same resale value of car after 3 yrs, because that is when your expect to sell car regardless of financing term.

not included in this analysis is the fact that you COULD take that $5K and invest it into the market and potentially create additional value (or less).

 

[Raechris]

Trying to decide which option I should go with... Want to keep my payment budget around $600 per.

1.) 2.49% with $12k down for $601.51/72 months - Interest $3,118.53
2.) 2.6% with $10k down for $547.82/84 months - Interest $4,001.25
3.) 2.6% with $7k down for $589/84 months - Interest $4,285.76

I'm leaning towards option 3 since I get to keep $5k... But my wife thinks paying that extra $1,167 in interest for a year is not worth it because were planning to sell the car in 3 years. Most likely upgrading to an X.

Which one would you go with?

I don't understand big down payments on a car so a payment equals x dollars. Why not put the 12k in a separate account and supplement your 600 desired payment? Big down payments trick the mind into feeling like your future trade value is good in three years compared to your outstanding loan balance. I finance every dollar into a car as possible (2.35 for 72 on MY) so I know what the real note value vs trade offer when I dispose of it. I paid the sales tax out of pocket bc it made the rate go up 35 basis points.