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Scion FR-S / Toyota 86 GT86 General Forum The place to start for the Scion FR-S / Toyota 86 | GT86 |
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06-29-2018, 11:39 PM | #29 |
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Love my 17 GTI couldn't part with the BRZ though. Congrats on your 18 looks sharp!
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06-30-2018, 02:51 AM | #30 |
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At first, for a second, I thought you said traded for an STI.....
but it is a GTI.... |
06-30-2018, 07:36 AM | #31 | |
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06-30-2018, 08:20 AM | #32 | |
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06-30-2018, 12:58 PM | #33 | |
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At the time I bought my BRZ, I wasn't sure how these cars were going to hold their value, so I wanted a short loan term so that I wouldn't ever be upside down on it in case disaster struck and I needed to sell it. I put $5K down and bought a 48 month loan on the rest at a credit union at a price of 1.49%. I paid about $800 in interest over the life of the loan, which really isn't very much. I had budgeted up to $1000 per month for a new car, so my monthly payment was quite comfortable as far as my monthly cash flow went. It's really the loan term that has the biggest impact on monthly payment, with interest rate coming second. For example, if I had bought a 36 month loan instead, I would have still had a 1.49% rate, and my payment would have jumped up to $739. But I would have saved about $200 in interest with $602 total interest on the loan. A higher monthly payment would have actually been less expensive. If I had wanted a lower payment, I would have had to buy a loan with a longer term. With a 60 month loan, my interest rate would have jumped up to 2% (because a longer loan term is a bigger risk for the lender). Then my payment would have dropped to $456, but the total interest would have jumped to $1343. The lower payment would have been more expensive. My credit union didn't offer a 72 month loan, because there's too much risk to the lender in a loan term that long to be able to offer a reasonable rate. If I had found one elsewhere, my rate would likely have been at least 4%. At 4%, the monthly payment would have been $407 with a ridiculous $3,288 in interest. And I would run a high risk of being upside down on the car throughout a significant portion of the loan term, unable to sell it without taking a big loss and having to come up with additional cash out of pocket to pay off the loan so that the sale could even take place. It's likely that if you're being forced to sell, you don't have that cash available in the first place. I'd be paying the same principal no matter what. But the option with the lowest monthly payment would have added almost $2500 to the cost of the car compared to what I paid and would have been much riskier to me personally. It's all that extra interest that would be "a lot for this particular car," not the monthly payment on the 48 month loan. |
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06-30-2018, 03:56 PM | #34 |
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I picked up a new VW GTI too. It replaced my ageing MazdaSpeed-3. It's a practical sports car.
My FRS isn't going anywhere because I hate being practical. |
06-30-2018, 05:11 PM | #35 |
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What ever happened to paying cash for a car, especially a sporty type car?
humfrz |
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06-30-2018, 05:15 PM | #36 |
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06-30-2018, 06:27 PM | #37 | |
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But that's not always possible, practical or even desirable. Suppose you have $5,000, your old car is dead, you need reliable transportation for your job and you want a sports car. You can't wait four years until you can pay cash for it because you need to be able to get to work, so you're limited to $5K. A $5000 car is already going to have some miles on it and isn't necessarily going to be reliable in the long term, especially if you expect to put a lot of miles on it yourself. And it's surely not going to be the reliable sports car you want at that cost. Maybe you could spend your $5K on a beater now with the idea of saving for the new car later, but that just puts the new car further into the future since you've already spent $5K of your new car money you'll have to save again. You'll also spend more of your new car money on the inevitable repairs out of warranty your $5K bargain is going to need. And throughout it all you'll be worried that your old car may break down and leave you stranded with no way to work again. Or, you can pay a lender less than $1000 spread comfortably over the next four years to solve the entire problem now and also have a warranty to cover unexpected mechanical failure. That's $1000 to cover everything you need and get you want you want as well. Seems like a bargain to me. Or consider another scenario. You have $40K in the bank. You could go write a check for a new BRZ. But right now you're paying $1500 per month to rent an apartment, whereas if you bought a house with more space nearby your monthly payment would drop to $1000, and you'd be building equity, and you'd see a much bigger tax return each year because of the mortgage interest tax deduction. But to buy the house you need to put $30K down. Do you buy the car and forget the house? Do you buy the house and forget the car? Or do you buy the house, put $5K down on the car, have both and still have $5K cash still in the bank as an emergency fund? Or just think about an emergency fund by itself. Suppose you have $40K in the bank. You can get out the door with a BRZ for $30K and have $10K in emergency money. I can tell you from experience that if you lose your job unexpectedly, $10K disappears quickly. So what if instead you put $5K down and paid that lender $1000 interest over the next four years to finance the car so that you would have $35K in cash on hand just in case? Suppose you lose your job. You'll be a lot more likely to make it through the dry spell if you have $35K in the bank instead of $10K. All these options come with varying degrees of risk. But paying cash up front is not without its own risks in certain circumstances. When you pay out cash, you run all the risks of no longer having that cash. Or consider my own situation. I have a job that requires me to drive a large number of miles each year, and I get mileage reimbursement for using my own car. When I bought the car, I was getting more in mileage reimbursement than my payment and maintenance costs each month. In that situation, why use my own money when I had a steady source of funds from my company instead? As I said above, there's absolutely nothing wrong with debt as long as it's used responsibly. In fact, there's really nothing wrong with it when used irresponsibly as long as you accept responsibility if it goes wrong and don't try to blame your mistakes on evil banks or Republicans. |
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06-30-2018, 09:42 PM | #38 |
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The Following User Says Thank You to humfrz For This Useful Post: | extrashaky (06-30-2018) |
06-30-2018, 10:39 PM | #39 | |
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I was gonna say cause used cars aren't 200 bux anymore... |
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07-01-2018, 12:32 AM | #40 |
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Hey, you sayen I ain't in touch with reality anymore ..
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07-01-2018, 07:33 AM | #41 |
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07-01-2018, 08:59 AM | #42 | |
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You can skew the numbers any way you like,and yes at the end of the loan you are going to end up paying less money,but the reason most people stretch out loans as long as they can is because they don't make enough money per month,so for most people,it makes more sense to pay $350~$450 per month than $$500+. I'm sure you understand this,but most people's financial situation doesn't allow them to have $1000 per month budgeted for a car. You are in a small minority of people that can actually do that,and I'm pretty sure that if you take a poll,most people would either buy a better car with that money,or this car,and a beater.Hell,an even better,more financially prudent option would be to buy a beater,drive it for two years and pay $24K cash with that $1K/month that you would save. You could've also leased a car,with low payments,not have to worry about maintenance costs,and just save. |
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