84 month car loans

[jhs914]

If you look around, a lot of the real deals across many brands involve leases, although there are some concessionary retail installment contract rates out there as well.
As always, a buyer needs to look carefully at what's out there.
Also as always, the most powerful negotiating tool a buyer has are his two feet.

Yep, the last new truck I bought they wouldn't agree to my offer. I said bye, I'm going down the road to the other dealer. Before I could get to the next red light they were on the phone telling me to come back, they would accept my offer.

 

[fdcg27]

Yep, the last new truck I bought they wouldn't agree to my offer. I said bye, I'm going down the road to the other dealer. Before I could get to the next red light they were on the phone telling me to come back, they would accept my offer.

Surprised they let you make it to the door.
You should have played that as you need a bit more to turn around and come back

 

[spasm3]

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.

Well - while, I agree that people take loans that are far too long, and that they spend way too much money on cars, I’m not sure the hard and fast rule of “ If you can’t pay for it in 36 months, you can’t afford it” is true in every case.

I’ll give you an example: I bought my Tundra with 0.9% financing, and I financed it over 60 months. Way over that rule, which I’ve heard many times before.

Why?

Well, I got a couple grand off the price of the truck and at the time my savings account was paying a lot more than that. So I took the longer note, at low interest, and left the cash in the bank, where it was making more.

In addition to a good price on the truck, Toyota was willing to loan me money for much less than I was making on interest on the cash.

I could’ve written a check.

I chose not to.

Sounds like we got the same deal on our Tundras!


And, while I could've also written a check for $47,500, for the cost of a couple hundred dollars per year, I knew there were quite a few other uses for that money that would (did) give me a return several orders of magnitude more than it cost me to borrow that money over 6 years.

Chat did the math here:

$47,500 Truck: Finance vs. Pay Cash (6 Years)

• Truck price: $47,500
• Loan: 0.9% APR for 72 months
• Monthly payment: ≈ $677
• Total interest paid: ≈ $1,265 (about 2.7% of the truck's price over six years)

If instead of paying cash you finance the truck and invest the $47,500 in the market:

• 8% annual return: Investment grows to ~$75,400 (gain of ~$27,900). After subtracting loan interest, you're ahead by ~$26,600.
• 10% annual return: Investment grows to ~$84,100 (gain of ~$36,600). Net advantage after interest: ~$35,400.
• 12% annual return: Investment grows to ~$93,800 (gain of ~$46,300). Net advantage after interest: ~$45,000.
  
  QQQ returned about 21.5% per year since 2020 and so that $47,500 became $152,700. I don't know many people who wouldn't pay $1265 to get $152,700! Six years later, I still own the truck but I have an extra $105,200.

Exactly, why would I pull money from investments that can be getting anywhere from 8-16% or more when you can borrow that money for 2-3% or even less , like 0.9 or 1.9%. Even money market might net more.

Dave Ramsey has a target audience that has trouble managing debt and is not yet disciplined with spending. So his advice is appropriate for that segment.