84 month car loans

danstraylee said:
Why in the world would anyone get a loan on a depreciating asset? Makes no sense whatsoever. I always pay cash or cashiers check for my vehicles.
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LOTS of people can't pay cash for a $10,000 car much less a new car. Car loans are a fact of life. Great that you're in that position. (y)
 
danstraylee said:
Why in the world would anyone get a loan on a depreciating asset? Makes no sense whatsoever. I always pay cash or cashiers check for my vehicles.
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If you can afford a vehicle and can borrow the money very cheap, like under 3% interest. I would borrow the money every time for as long a term as I could, if the purchase price is what I want, not sticker. That keeps my money invested and growing, while using someone else's money for cheap. If the interest rates are high like today, then pay cash.
 
RooflessVW said:
Why would you ever tie up liquid funds in a deprecating asset?
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Because I can afford to

fdcg27 said:
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.
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Dave Ramsy advice is horrible. I would not take advice from anyone who suggests investing everything into high risk growth stocks.
 
wwillson said:
If you can afford a vehicle and can borrow the money very cheap, like under 3% interest. I would borrow the money every time for as long a term as I could, if the purchase price is what I want, not sticker. That keeps my money invested and growing, while using someone else's money for cheap. If the interest rates are high like today, then pay cash.
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That's my take as well. I typically keep my cars a long time after they're paid for. If I could get a very low rate on a 84 month loan I'd at least consider it. Problem is the rates get worse as the loan length increases.
 
wavinwayne said:
That's my take as well. I typically keep my cars a long time after they're paid for. If I could get a very low rate on a 84 month loan I'd at least consider it. Problem is the rates get worse as the loan length increases.
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By afford, I mean you are saving a sizable amount for retirement, are saving for your kids' education and have a good rainy day fund. Else, buy a used car that provides transportation from A to B.
 
wwillson said:
If you can afford a vehicle and can borrow the money very cheap, like under 3% interest. I would borrow the money every time for as long a term as I could, if the purchase price is what I want, not sticker. That keeps my money invested and growing, while using someone else's money for cheap. If the interest rates are high like today, then pay cash.
Click to expand...
For me that makes no sense as my passive income from investments fluctuates between 2% and 5%. When I was much younger and could afford the occasional crashes and wait 5 to 10 years to build back up while still working then it might have made sense. I live a very comfortable (to me) life and retired so no way on earth would I put myself in a situation of living beyond my means by taking out a loan.

Even though I can both afford and get a low interest loan then no not going to do it.
 
Of course all this depends on the situation, but if someone can get a decent APR on an 84 month loan and buys something basic like a new K5 or Elantra so they can have a low payment and a reliable car with a 10 year warranty to get to and from work I think it makes sense. The car will last the life of the loan without major repair expense. Depending on the numbers, I think this can make more sense than buying an overpriced used car, dealing with repairs and aftermarket warranty companies.

If they're rolling negative equity in to buy some blinged out bro truck that's just insane.
 
I would consider it at 0% for 96 months on an EV, because that's the length of the battery warranty.

Anything north of 0% though would be a probably not. Too much compounding.
 
danstraylee said:
Because I can afford to


Dave Ramsy advice is horrible. I would not take advice from anyone who suggests investing everything into high risk growth stocks.
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Except that you just repeated a couple of Dave Ramsey’s favorite tropes - Why finance a depreciating asset? If you can’t pay cash, you can’t afford it!

And I’ve listened to his show, not once did he ever recommend high risk growth stocks.

He recommends “good low cost mutual funds.”

Big difference.
 
Cars last longer nowadays so it's possible to have the transportation during the life of the loan. But if you are going to finance it for that long, leasing might be a better option. At least you avoid the possibility of costly repairs as the car slowly turns into a POS.
 
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