How much are you guys putting down on your BRZ?

[tranzformer]

Originally Posted by Zgrinch

I know I might be going against the grain on the financial logic, but I do not like having payments, or the feeling that i am in debt to someone.
I tend to keep my cars a very long time and utimately pass them down the family tree as long as they are still in good condition. My plan is to purchase outright.

I keep my car for a long time as well. Current car is +10 years. But I will take advantage of interest rates and free cash. I'd rather have the banks get hit with the inflation. Plus makes me more liquid.

Take the $25-30k you would pay for the car. Get a 1.99% loan for 4 years. You already have the money to pay the loan off outright. Then pay the monthly loan while you invest or leave the money in a CD/high yield savings account. Gives you money to use incase a family member gets sick, house needs a new roof, water heater breaks...etc. Why leave $25-30K tied up in a car that is depreciating? Not to mention inflation.

[Longhorn248]

Originally Posted by tranzformer

I keep my car for a long time as well. Current car is +10 years. But I will take advantage of interest rates and free cash. I'd rather have the banks get hit with the inflation. Plus makes me more liquid.

Take the $25-30k you would pay for the car. Get a 1.99% loan for 4 years. You already have the money to pay the loan off outright. Then pay the monthly loan while you invest or leave the money in a CD/high yield savings account. Gives you money to use incase a family member gets sick, house needs a new roof, water heater breaks...etc. Why leave $25-30K tied up in a car that is depreciating? Not to mention inflation.

I'm not in a position to buy the car outright, but if I were, and had that kind of cash lying around, I'd be doing the exact same thing you are.

[KaliKev]

How about this question, what monthly payments are you guys expecting?

[ayau]

fyi, even if you choose a 5 year loan, you can pay however much you want and finish the loan in less than 5 years. you just need to at least make the MINIMUM monthly payments. the quicker you pay off the loan, the less interest youre giving away.

[eikond]

Originally Posted by BigFatFlip

On a typical loan, I think you're correct, but it mainly depends on your credit and lender. There are many things that can factor in like whether the loan is "front-loaded" or a straight forward interest. In some cases, you can even apply and get the loan from your bank/credit union and come to the dealer as a cash buyer.

For me, I'd probably go 50% down, but like I said, completely depends on what kind of loan I end up with.

The concept of "front-loaded" interest is a common misconception. It is possible that an lender could charge more than straight interest early in the loan.. but they don't.

Mortgage and auto loans are all straight-forward simple interest loans. You pay interest based on the outstanding principle. Clearly the principle is higher early in the loan so the amount of interest you pay is highest early in the loan. For this reason many people believe "incorrectly" that the bank is collecting a higher rate in the beginning than they do in the end.

A simple financial theory is that you should pay in cash if you are able to do so in order to avoid paying interest. A more refined financial theory is that having debt at a low interest rate frees you to do other things with your money which can earn you a greater return than you are paying on the interest of the loan.

What you choose to do is completely up to you...


As for myself.. I'm saving up for a down payment on a house, so I'll be financing as much of the purchase price as I can. I'll probably do 2.49% for 60 months rather than the 1.99% for 48 mentioned earlier.. but that's just personal preference.

[Longhorn248]

Originally Posted by KaliKev

How about this question, what monthly payments are you guys expecting?

Less than 15% of my monthly income

[ayau]

Originally Posted by eikond

The concept of "front-loaded" interest is a common misconception. It is possible that an lender could charge more than straight interest early in the loan.. but they don't.

Mortgage and auto loans are all straight-forward simple interest loans. You pay interest based on the outstanding principle. Clearly the principle is higher early in the loan so the amount of interest you pay is highest early in the loan. For this reason many people believe "incorrectly" that the bank is collecting a higher rate in the beginning than they do in the end.

A simple financial theory is that you should pay in cash if you are able to do so in order to avoid paying interest. A more refined financial theory is that having debt at a low interest rate frees you to do other things with your money which can earn you a greater return than you are paying on the interest of the loan.

What you choose to do is completely up to you...


As for myself.. I'm saving up for a down payment on a house, so I'll be financing as much of the purchase price as I can. I'll probably do 2.49% for 60 months rather than the 1.99% for 48 mentioned earlier.. but that's just personal preference.

i also want to add that it's always prudent to have a nice buffer of cash in case of anything happens and you need access to your funds.

[zoomzoomers]

Originally Posted by MF_DEUCE

Noob question:

Doesnt putting more cash upfront lower the mothly payments?
if so,
then wouldnt it be better to place money versus going with the $0 down?

This will be my first new car purchase, so if someone could explain it as clearly as possible I'd appreciate it.

Just think of it like a sesaw effect. The more you put down, the less you pay monthly and the less you put down the more you pay monthly. But in either case it's the same net dollar amount you pay. You either pay more up front, or pay as you go. In times where the interest rates are low as they are the two scenarios I mentioned above are fairly equal in terms of net dollars out of pocket.

The main difference is if you pay more up front, you have less, or no, money to take advantages of potential opportunities to invest the money elsewhere. So basically, it's a potential loss of opportunity we're talking about.

[zoomzoomers]

Originally Posted by eikond

The concept of "front-loaded" interest is a common misconception. It is possible that an lender could charge more than straight interest early in the loan.. but they don't.

Mortgage and auto loans are all straight-forward simple interest loans. You pay interest based on the outstanding principle. Clearly the principle is higher early in the loan so the amount of interest you pay is highest early in the loan. For this reason many people believe "incorrectly" that the bank is collecting a higher rate in the beginning than they do in the end.

A simple financial theory is that you should pay in cash if you are able to do so in order to avoid paying interest. A more refined financial theory is that having debt at a low interest rate frees you to do other things with your money which can earn you a greater return than you are paying on the interest of the loan.

What you choose to do is completely up to you...


As for myself.. I'm saving up for a down payment on a house, so I'll be financing as much of the purchase price as I can. I'll probably do 2.49% for 60 months rather than the 1.99% for 48 mentioned earlier.. but that's just personal preference.

You never heard of a negative amortized loan?

[Baldeagle]

A. This is an opportunity cost question. What is the next best thing you would do with your money? If the loan interest rate is 2% and you believe you can invest your downpayment and get more than that during the life of the loan, you’re better off investing your money and paying someone for the use of theirs.

B. However cash flow may be the real priority. For example, if $300 per month is the maximum monthly payment you can afford, you may have no choice but to put down $10,000 on a $26,000 car to get the payments where you need them. If you don’t have that $10,000 (trade plus cash), it may be a sign you cannot afford the car.

[powertrip]

I never put any money down on cars, the rates are generally much better than other forms of debt (except my mortgage) so ill gladly take the loan and pay it over time. 2-4% right now is the normal rate on loans, and for you younger guys, thats ridiculously low for auto debt. I prefer to keep my funds in the bank and invested and utilize my finances to carry some leverage.

[OrbitalEllipses]

Originally Posted by zoomzoomers

The main difference is if you pay more up front, you have less, or no, money to take advantages of potential opportunities to invest the money elsewhere. So basically, it's a potential loss of opportunity we're talking about.

That really depends on each person's opportunity cost.

[tranzformer]

Originally Posted by ayau

i also want to add that it's always prudent to have a nice buffer of cash in case of anything happens and you need access to your funds.

Originally Posted by zoomzoomers

The main difference is if you pay more up front, you have less, or no, money to take advantages of potential opportunities to invest the money elsewhere. So basically, it's a potential loss of opportunity we're talking about.

This is a smart decision especially with interest rates being really low. If the interest on the car loan was 8-10%, I would not be taking out a loan and would pay cash personally. But at <2%, I will do it partly for the reason you stated.

[ayau]

let's us be realistic here, do you think the people who choose to go for a loan will really use the cash saved as an investment opportunity? i think we all know the answer to this.