Purchasing with Cash or Financing

[subiestyle]

I think a lot of you also agree with me that the value we get out this car far exceeds the monetary value of the car.

It is about $30K, but to me this is a $50K car. In other words, for me to have as much fun as I get from this car, I would have to buy a $50K car if this car didn't exist. (i'm talking brand new car value). No financial advisor can give advice based on this.

And you should definitely take a loan out for this car. Most of us are buying this car before buying a house. Car loans are non-revolving credit, so it boost your score much more than regular credit card expenses.

[suaveflooder]

Originally Posted by subiestyle

I think a lot of you also agree with me that the value we get out this car far exceeds the monetary value of the car.

It is about $30K, but to me this is a $50K car. In other words, for me to have as much fun as I get from this car, I would have to buy a $50K car if this car didn't exist. (i'm talking brand new car value). No financial advisor can give advice based on this.

And you should definitely take a loan out for this car. Most of us are buying this car before buying a house. Car loans are non-revolving credit, so it boost your score much more than regular credit card expenses.

Lol, a financial advisor will give you advice on what's best for your FINANCES! . Buying a depreciating asset, that was designed to be a "toy" (not a necessity) doesn't make a whole lot of financial sense. Everyone is free to make their own decision on cars like this, but I would never encourage a client to do it. The car is great and is SUPER fun! Just not a lot of practicality





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[Atticus808]

im saving for a house.
but i have another savings on the side (misc money from other sources besides my main income) to use on a fun car and only that
i figure i would do it this way otherwise i would never be able to justify a fun car

[thill]

A few things. Estimates are that an average car loses 11% of their value the minute you drive it off the lot, and this only worsens over the first year or two as you add miles. So depreciation is steepest early on and then lessens the longer you keep the car. Cars are a horrible investment. That said, many of us love cars and it is more than just something we drive for our commute.

Many people also don't factor in the lost sales tax, dealer fees, etc. You can't get that money back once you drive off the lot (some states may let you recover some of your sales tax, but no state I have lived in has).

So for someone who puts little to no money down, you are upside-down on your loan the minute you sign the papers and drive off the lot, typically by $3-6K+ on a $30K car depending on the vehicle, taxes, dealer fees, condition, etc.

The rest is math. The longer you you take to pay back the loan the more interest you payback. The higher your interest rate the more you pay in interest. And while most banks do offer lower interest rates on a 2-4 year loan, that is not always the case.

Also when someone says that loans are "cheap and free money and can invest my money somewhere else and make a lot more" there are a few things to consider:
- Very few investments are sure things. Ask how many people back in the early to mid 2000's lost their shirts borrowing and investing. Including houses.
- Many people have intentions of putting little to nothing down and then saying they will pay it off early to avoid interest and they never do it. Most of these people are the same people who also max out their credit to have things "now" and kick the can down the road. Not everyone, but many.
- The more debt you take out, the more it affects your credit and borrowing power for things like a house or your interest rates on future loans.
- There is a certain freedom you feel when you pay off your debts and are free and clear on things like credit cards and cars.

If the only way you can afford a car is with a 5-8 year loan, you are buying too much car.

[Chad86]

Originally Posted by thill

A few things. Estimates are that an average car loses 11% of their value the minute you drive it off the lot, and this only worsens over the first year or two as you add miles. So depreciation is steepest early on and then lessens the longer you keep the car. Cars are a horrible investment. That said, many of us love cars and it is more than just something we drive for our commute.

Many people also don't factor in the lost sales tax, dealer fees, etc. You can't get that money back once you drive off the lot (some states may let you recover some of your sales tax, but no state I have lived in has).

So for someone who puts little to no money down, you are upside-down on your loan the minute you sign the papers and drive off the lot, typically by $3-6K+ on a $30K car depending on the vehicle, taxes, dealer fees, condition, etc.

The rest is math. The longer you you take to pay back the loan the more interest you payback. The higher your interest rate the more you pay in interest. And while most banks do offer lower interest rates on a 2-4 year loan, that is not always the case.

Also when someone says that loans are "cheap and free money and can invest my money somewhere else and make a lot more" there are a few things to consider:
- Very few investments are sure things. Ask how many people back in the early to mid 2000's lost their shirts borrowing and investing. Including houses.
- Many people have intentions of putting little to nothing down and then saying they will pay it off early to avoid interest and they never do it. Most of these people are the same people who also max out their credit to have things "now" and kick the can down the road. Not everyone, but many.
- The more debt you take out, the more it affects your credit and borrowing power for things like a house or your interest rates on future loans.
- There is a certain freedom you feel when you pay off your debts and are free and clear on things like credit cards and cars.

If the only way you can afford a car is with a 5-8 year loan, you are buying too much car.

I ended up getting a 4 year loan at 3.99% and I put half down. I think I did pretty well.

[ZionsWrath]

Originally Posted by suaveflooder

Not going to make a difference. Statistics say that you won't do it for the entire loan. Better to put more money down. We all love to say, "I'm going to pay it off early" and I truly hope you are someone who will, but studies show otherwise. There is a reason why dealerships are so willing to jump through hoops to get you into a financing option even when someone can't afford the car (I'm talking about others here, because it sounds like you actually can)

Honestly, do what you want and don't ask people here. If you can get anything under a 2% loan, you aren't loosing much (Although, I agree that this is a "toy" car and should be paid for in CASH. The car is FAR from practical). Make sure that your downpayment will at least cover the depreciation for the first year. (mine went down $10k in a touch over a year, but I drive a lot)

I find it quite practical for a single individual. Instead of driving some sedan and wasting gas on 4 unused seats and a boot, you waste gas on 1 unused seat and performance

[thill]

Originally Posted by Chad86

I ended up getting a 4 year loan at 3.99% and I put half down. I think I did pretty well.

Good job

I am surprised your interest rate was that high, but it could be your credit history. You may be able to shop that loan around once you build your history and knock it down to 2% or less.

Congrats on the car!

[Chad86]

Originally Posted by thill

Good job

I am surprised your interest rate was that high, but it could be your credit history. You may be able to shop that loan around once you build your history and knock it down to 2% or less.

Congrats on the car!

I was surprised I could not get any lower as well. The Monogram was at a set 3.99% rate and yet the base FR-S could go as low as 1.99%

I might call up Scion and see if this is legit, as I ran the figures through Scion.ca and I was able to do 1.99 on a 3 year and 2.99 on a 4 year loan. I asked the dealer and they said those rates do not apply to the Monogram and it was lowest at 3.99%

I will definitely be shopping around and if I find a lower rate at the bank I will pay out the loan with Scion.

Coast Capital could only get me prime +2.5 which ends up being 5.5%
My credit history is perfect and have been building a credit history since I was 19. (Just turned 34 today!)

Let me know if you have any other advice.
I think the dealer might have been screwing me around, so I will check it out directly with Scion as nowhere on the site does it says fixed rates on Monogram edition.

[thill]

Originally Posted by Chad86

I was surprised I could not get any lower as well. The Monogram was at a set 3.99% rate and yet the base FR-S could go as low as 1.99%

I might call up Scion and see if this is legit, as I ran the figures through Scion.ca and I was able to do 1.99 on a 3 year and 2.99 on a 4 year loan. I asked the dealer and they said those rates do not apply to the Monogram and it was lowest at 3.99%

I will definitely be shopping around and if I find a lower rate at the bank I will pay out the loan with Scion.

Coast Capital could only get me prime +2.5 which ends up being 5.5%
My credit history is perfect and have been building a credit history since I was 19. (Just turned 34 today!)

Let me know if you have any other advice.
I think the dealer might have been screwing me around, so I will check it out directly with Scion as nowhere on the site does it says fixed rates on Monogram edition.

Join this bank
https://www.penfed.org/New-Auto-Loan/

I got qualified for 1.9% on a 5 year loan with about half down on the car and Subaru suddenly matched it even though they told my I qualified for 2.9%.
I did it all online through Penfed and was approved within 24 hours.

[suaveflooder]

Originally Posted by ZionsWrath

I find it quite practical for a single individual. Instead of driving some sedan and wasting gas on 4 unused seats and a boot, you waste gas on 1 unused seat and performance

Lol, what!? Wasting gas!? There are plenty of 4 door sedans that will out run our cars WHILE getting better gas mileage, lol.


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[Chattanooga FR-S]

Originally Posted by Chad86

Just turned 34 today!

Happy Birthday!

[ZionsWrath]

Originally Posted by suaveflooder

Lol, what!? Wasting gas!? There are plenty of 4 door sedans that will out run our cars WHILE getting better gas mileage, lol.


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Do tell

[suaveflooder]

Originally Posted by ZionsWrath

Do tell

Google is your friend, good sir . Go take a look.


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[strat61caster]

Originally Posted by ZionsWrath

Do tell

Maybe there aren't sedans that can run away from the FRS but there are a few that could give a Toyobaru a run for it's money, in the same price bracket (<$30k), returning equivalent or slightly better fuel economy, with 4 doors.

Mazda 6 comes to mind since suave came up empty handed.

Mid to low 7 Seconds 0-60 time for the 'sport' version in MT
http://www.zeroto60times.com/Mazda-0-60-mph-Times.html

FRS Auto is mid to low 7s
http://www.zeroto60times.com/Scion-0-60-mph-Times.html

The Mazda 6 is a large 4 door sedan with a 4 banger with better mpg than the Toyobaru:
http://www.fueleconomy.gov/feg/bymod..._Mazda_6.shtml

Ford Taurus EcoBoost ~7 seconds 0-60, 26 mpg mixed
http://www.caranddriver.com/reviews/...st-test-review
Ford Fusion with nearly identical numbers:
https://www.fueleconomy.gov/feg/noframes/34086.shtml
http://www.zeroto60times.com/Ford-0-60-mph-Times.html

Of course, the always touted V6 Camry with a 5.7s 0-60 and 25mpg combined:
https://www.fueleconomy.gov/feg/noframes/34292.shtml
http://www.zeroto60times.com/Toyota-0-60-mph-Times.html

Nissan Altima with 3.5L V6 is about 6 seconds 0-60:
http://www.zeroto60times.com/Nissan-0-60-mph-Times.html
https://www.fueleconomy.gov/feg/noframes/34248.shtml