Car loan question

[capitalcityguy]

I would be willing to bet my retirement savings that most people commenting aren't nearly as financially sound as they claim to be on here.

???

I don’t see anyone sharing their net worth.

That fact that you would find it difficult to believe that it is unrealistic that many of us actually save money up before making large purchases, speaks volumes.

Believe or not, this used to be how most people bought things before this age of hyper consumerism we find ourselves in now.

 

[cycloneworld]

Cool! You find it freeing to not have any debt, I find it freeing to be able to purchase things I like and incur some minor debt, that doesn't mean I am financially dumb. I could understand if you were lecturing people about incurring a boat load of credit card debt, but we are talking about a freaking car loan.

And a car loan that could be as low as 2%!

 

[MNCYWX]

Yeesh. I guess it all depends on your credit and length of term. If credit is in good standing you should easily be able to get better than 6%. Also shorter terms usually hold better interest rates.

 

[clonetone]

That fact that you would find it difficult to believe that it is unrealistic that many of us actually save money up before making large purchases, speaks volumes.

Believe or not, this used to be how most people bought things before this age of hyper consumerism we find ourselves in now.

Clearly you have an agenda you are pushing with your advice about society/politics. If you want to save cash before a major purchase to incur no debt, more power to you. The people who responsibly use debt are making a decision as good if not better than yours with where their finances will be when their debt is paid. The people who irresponsibly use debt are making a worse decision than you. This shouldn't be controversial.

 

[Judoka]

If I read the responses and not the original question I'd think the OP was asking about rolling over a 72 month loan to upgrade his monster truck while homeless or something.

 

[CyArob]

So did cmjh buy a car yet?

 

[Cyclonefan710]

I wrote a check for the car with money that was sitting in checking because I saved for several years. Then I decided I'd rather have the money freed-up so I got a 16k loan at 3%. That money will go back into my savings/brokerage account. I didn't reduce retirement savings, I didn't touch my emergency fund, and I didn't touch my kid's 529 plan. What exactly is the problem here? All our non-business-related debt is only 18% of our gross. Doesn't sound irresponsible to me.

I really wanted a 45k car but I'm not the type of guy to do that. Worse MPG, higher insurance, etc., so I bought a very nice car and a price I know I could afford.

Lol you "freed-up" money by taking out a loan.....

 

[0u812]

debt is not always a bad thing, but a car loan nearly always is. Getting a loan with interest on a rapidly depreciating asset is the issue....real estate and other investments may not be a bad thing to incur debt with.

That being said, I have only had three loans in my life.....student loan, car loan, and mortgage on one house (own three currently). Guess which was the worst financial move?

 

[Cyclonefan710]

Clearly you have an agenda you are pushing with your advice about society/politics. If you want to save cash before a major purchase to incur no debt, more power to you. The people who responsibly use debt are making a decision as good if not better than yours with where their finances will be when their debt is paid. The people who irresponsibly use debt are making a worse decision than you. This shouldn't be controversial.

I prefer to stick to the habits of the common millionaire even though apparently the common person can be smarter by taking out a little debt.

 

[Mtowncyclone13]

Lol you "freed-up" money by taking out a loan.....

yep. i'm paying $1,246 in total interest to keep 16k in my accounts. That's $20/month. Is it worth $20/month for me to have immediate access to 16k for other needs? I can do much more with 16k than that $20/month I would be saving by not taking out the loan.

 

[dmclone]

I wonder if warren buffet has a car loan?

 

[Ficklone02]

.......And then there's people like me. I live in a big enough city that I rarely drive my car. Thinking of selling and going exclusively to zipcar. Winner winner chicken dinner.

 

[cycloneworld]

I wonder if warren buffet has a car loan?

So because Warren Buffet doesn't have a car loan they are terrible?

Not sure why people talk in such absolutes. In general, if you are crappy with finances and can afford to pay for a car in cash, then do it. If you invest your money and can leverage the savings to yield a much higher interest rate than the 2-3% you could get for your auto loan, why not do that?

 

[Cyclonefan710]

yep. i'm paying $1,246 in total interest to keep 16k in my accounts. That's $20/month. Is it worth $20/month for me to have immediate access to 16k for other needs? I can do much more with 16k than that $20/month I would be saving by not taking out the loan.

I'm sorry but you did not free up money lol it's that type of thinking that's gets people into a financial hole.

 

[DeereClone]

Is not everyone who finances a car, house and education doing just this?

Essentially.

Does that make it right or mean that it makes sense to do?

 

[chuckd4735]

I'm sorry but you did not free up money lol it's that type of thinking that's gets people into a financial hole.

How in gods name can you read even one of mtowns responses and say it the type of thinking that gets people into a financial hole? Seems to me he has a pretty good grasp on what he is doing. All you have offered to this discussion is trying to make yourself look like some financial genius while providing zero specifics on what you actually do with your money.

 

[DeereClone]

yep. i'm paying $1,246 in total interest to keep 16k in my accounts. That's $20/month. Is it worth $20/month for me to have immediate access to 16k for other needs? I can do much more with 16k than that $20/month I would be saving by not taking out the loan.

I'm sorry but I highly doubt that any rich people out there say that a key for them getting wealthy was taking out car loans. I just can't see it.

 

[CycloneErik]

???

I don’t see anyone sharing their net worth.

That fact that you would find it difficult to believe that it is unrealistic that many of us actually save money up before making large purchases, speaks volumes.

Believe or not, this used to be how most people bought things before this age of hyper consumerism we find ourselves in now.

That's a nice idea, but 100% false. Debt has been a major tool for lifestyle advancement since the early colonization of North America. It's the only way those early English settlers increased the size of their estates once things became officially English.

 

[Mtowncyclone13]

I'm sorry but I highly doubt that any rich people out there say that a key for them getting wealthy was taking out car loans. I just can't see it.

it's absolutely not key to getting wealthy at all. i don't know where anyone said wealthy people take out car loans.

Let's be hypothetical. Let's say my total net worth is $150,000. My mortgage is $125,000. I could pay off my mortgage with all my cash but that would leave me with $25,000. While that might be nice I think most people would rather see the $150,000 grow in the market and use for living expenses than have a debt-free house but not much cash on hand.

That's the same with certain car loans if people are honest with themselves and their abilities and intentions.

 

[AgronAlum]

The thought that financing a vehicle is bad in any situation is just wrong. You need to do what makes sense to you financially.

The financial landscape has changed. A person coming out of college isn't the same as it used to be and the days of paying for school while attending is getting much more difficult if you don't have external help. People are in a world of debt before their "adult" lives even get started. After paying living expenses, money is thin but you still need a reliable vehicle. The cost of vehicles have dramatically increased from when (I'm assuming) a lot of you started paying for them in cash and then rolling what you would have been paying into savings. The high and mighty, pay everything in cash or you don't need it people here need to chill. The days of buying a junker for a couple grand aren't here anymore. Chances are if you buy a car for a few grand, you're going to end up dumping another few into it within a couple years just to keep it running. Getting a more reliable vehicle by financing can actually pay in the end.

On the other side, everything isn't always about 20-30 years from now. If you are a little more stable and want to treat yourself to a decent car at 2-3% (assuming you're not upside down on it), why not? You can finance a car and still be financially stable.