I always warn people, if you give them a monthly payment amount, they'll make it work. They'll still squeeze in their extended warranty, gap insurance, wheel/tire protection plan, etc too.
84 month car loans
- Thread starter Hirev
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Well, that isn't really how things work.
If a concessionary rate is on offer and you can borrow the money and keep whatever you would have paid out invested at a higher rate of return than the financing cost of the loan, then the loan is the smart way to go.
This is what is known as an arbitrage gain and any good investment advisor can do that math.
Incidentally, everyone needs to build and maintain good credit whether they own their own business or not.
There’s a pattern for young men in Canada. They lease a truck for three years. The dealer is happy to get it back and puts it on car hauler be sold in the USA. The kid then signs up another lease on a new truck. Rinse and repeat. I believe there is even a deal regarding no penalties for early lease return. The dealer really wants to get that truck back and sell it in the USA.
I'm guessing a GM dealer
Is he planning to increase his payment so as to pay off early, or did he get a "good" APR?
This thread, with the inevitable responses it invokes and will only invoke more, needs to die a quick death. I publicly offer, to the first mod who shuts it down, that I will mail $2 a month for 84 months, with 7% interest, just so I dont get tempted to read any more of it.
I'm not really that old, compared to a few here.... but I remember when a 48 month car loan meant you were a financially destitute idiot living way, way beyond your means, 60 month car loans were certainly going to summon the four horsemen of the Apocalypse to do their thing, and then when the 72 month car loans started, we were absolutely facing the financial heat death of the observable universe. So we're up to 84 months now?
Cant wait until 5-6 years from now when 96 month loans get common and the internet's collective heads explode.....
If you had told me a decade or two ago I'd be alive in an era of $40,000 Corollas, $50,000 Hyundais, and $65,000 pickups, I probably would have laughed, but here we are. Maybe that has something to do with it?
I'm not really that old, compared to a few here.... but I remember when a 48 month car loan meant you were a financially destitute idiot living way, way beyond your means, 60 month car loans were certainly going to summon the four horsemen of the Apocalypse to do their thing, and then when the 72 month car loans started, we were absolutely facing the financial heat death of the observable universe. So we're up to 84 months now?
Cant wait until 5-6 years from now when 96 month loans get common and the internet's collective heads explode.....
If you had told me a decade or two ago I'd be alive in an era of $40,000 Corollas, $50,000 Hyundais, and $65,000 pickups, I probably would have laughed, but here we are. Maybe that has something to do with it?
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= Poor person or someone milking off the taxpayers
= High risk rate
Nothing is risk free in investments. And especially when you are at retirement age. It is safer to have a much lower risk rate vs return.
There is no such thing as a risk free interest bearing account that it makes sense to not pay cash for a vehicle. I do caution consumers to be careful to not disclose the fact you are paying cash until you get a OTD price.
Congratulations. Here's a
.Well, let's say that I financed a car at 0% or .9%, both of which I have done.
Let's say that the 90 day T-bill rate, generally considered the risk-free rate, is something in excess of that.
Yes, some things are risk free and that is the definition of an arbitrage gain.
Let's say that the 90 day T-bill rate, generally considered the risk-free rate, is something in excess of that.
Yes, some things are risk free and that is the definition of an arbitrage gain.
My last dealership experience had my wife and my salesperson try to convince me that the 5 year loan is much better for me because the payment is lower and I could always pay more if I want. I politely reminded them both that the interest rate was more favorable on the lower term loans, I could easily afford the payment either way and unless I was able to pay on principal only (more work for me), I would pay more in aggregate for my new truck.
BTW - there was a Youtube channel of "Lifetime Financing" with financially ignorant folks buying cars they couldn't afford for $XXX dollars per month for life. I hope & think that was a spoof, but I don't see it anymore.
Edit - its on IG.
BTW - there was a Youtube channel of "Lifetime Financing" with financially ignorant folks buying cars they couldn't afford for $XXX dollars per month for life. I hope & think that was a spoof, but I don't see it anymore.
Edit - its on IG.
The 84-month car loan has been a thing for 20+ years. When I worked at a Kia dealership back in 2006-2007, they put out ads for $99/month Kia Rios (not a lease). The fine print was that it was the rare ultra-base model with a manual transmission, possibly no power steering, no a/c, crank windows, no stereo, non-folding rear seat, unpainted bumpers, and painted steel wheels with tiny plastic hub caps. …and it was an 84 month loan …and it was a discount to $9995 from the sticker price of $11,700 or $10,700 (can’t remember which) …and it was with $5,000 and TTL down. To add to the confusion, the dealership group ran TV ads that said “New Kias from $99 down (very brief pause) and $99/month.” It was fun explaining to all the interested callers that those were two separate deals. In the seven months I worked there, I only saw one base Rio and it had to be a dealer trade so they could legally advertise the $9995 car.
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Thank you Sir much appreciated. I worked and saved hard for what I have. I may not have the "latest greatest" but am grateful for what I can afford and being 100% debt free for last 25 years.Congratulations. Here's a
I am thinking 8% on 96 months will be a good arbitrage when were at 12% inflation in a few years.
Can you back end balloon payment these things?
Can you back end balloon payment these things?
Why would you ever tie up liquid funds in a deprecating asset?
That would be the Dave Ramsey school of personal finance.
For those who really can't balance spending, income and savings, this is a simple way for simple folks to keep their heads above water.
THIS, all of this! I find the car I want, usually lightly used, see the price, see if that is the price I'm willing to pay, and go buy it. Pass on everything else. Helps to pay cash too because you can cut them off at the knees when they start the "Protection Plan" discussion.
"One of the sensors on this car costs $1000!"
"Which sensor?"
"I'd have to check...."
No thank you!
it really is simple math and how bank and manufacturers keep people buying new. Much of our society takes a payment approach versus the save and buy approach. In order to manage the cost of those payments extending the term is a balancing act. 84 month loans are here to stay with cars getting upwards of $100k.
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Any car or truck that doesn't depreciate is a very special vehicle. Some rare exceptions turned out to have been rather usual cars when new: HEMI Cuda, 396 Chevelle SS are examples.
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