Purchasing with Cash or Financing

[teamturbo]

At 2% interest rates with good credit, there's really no need to tie a large sum of cash on a car. You can do a 30% down payment and comfortably pay it off over 5 years. If needed, you can close on the loan earlier without a problem.

Put the money into a house.

[Chad86]

Originally Posted by teamturbo

At 2% interest rates with good credit, there's really no need to tie a large sum of cash on a car. You can do a 30% down payment and comfortably pay it off over 5 years. If needed, you can close on the loan earlier without a problem.

Put the money into a house.

This was not possible as the payments were way too high for me!

[Masago88]

I was in the same predicament as you for a while, and was just working/driving my beater around while I researched the car/financing etc. I now have enough saved in cash to just flat out buy the car, but I didn't pull the trigger because then I couldn't get over the price difference between U.S/Canada. I'm a dual citizen new transplant to Canada (fuck the prices here btw), and I find the arbitrary price difference to be an insult. Now that the Canadian dollar is a good 10% lower I'm more comfortable with buying in Canada as opposed to jumping the border to do it.

Ok that was an unnecessary tangent. I was planning to pay for the car in Cash, but it's a lot of cash. I found a great middle ground and my parents have agreed to loan me the rest (whatever down I want to put) with 0%. Now I can use the extra money to buy the mutual funds/stocks I wanted to invest in, while keeping the money in the family. Note that even with low financing via bank/dealer they will include a charge to finance, which, last I looked was over $1000 as well.

[Chad86]

Originally Posted by Masago88

I was in the same predicament as you for a while, and was just working/driving my beater around while I researched the car/financing etc. I now have enough saved in cash to just flat out buy the car, but I didn't pull the trigger because then I couldn't get over the price difference between U.S/Canada. I'm a dual citizen new transplant to Canada (fuck the prices here btw), and I find the arbitrary price difference to be an insult. Now that the Canadian dollar is a good 10% lower I'm more comfortable with buying in Canada as opposed to jumping the border to do it.

Ok that was an unnecessary tangent. I was planning to pay for the car in Cash, but it's a lot of cash. I found a great middle ground and my parents have agreed to loan me the rest (whatever down I want to put) with 0%. Now I can use the extra money to buy the mutual funds/stocks I wanted to invest in, while keeping the money in the family. Note that even with low financing via bank/dealer they will include a charge to finance, which, last I looked was over $1000 as well.

Too many dealer fees I say! They need to change the legislation.
What about just financing the whole thing and just deal with the approx $615.00 per month car payment?

Maybe this is the better way to go and then I can better hold onto my investment and pay off my car within five years or less when I go to buy a house using my Mortgage & Homeline Plan. I spoke to the bank and they said every dollar counts towards your down payment and how much you can borrow...Even if you have a car payment etc. Better to have more of a down payment and car payment, as a car depreciates they said.

[Chad86]

Originally Posted by Braces

Place most of your money into the down payment on the house. the house is an appreciating asset. your money will grow with the rising equity in your house and your interest on your mortgage is tax deductible. the car is a depreciating asset. get a good low interest loan under 2%. Penfed.org is a good place to get a loan.

My bank could not beat the dealers 3.99%

I might have to try Coast Capital. Although, this is a credit union... Hmmm. Risky?

Shoot, they are closed on Sunday. Hmmm, I can always shop around after the fact and if I find a lower rate somewhere, I can just pay out the loan with the loan from another bank...

[extrashaky]

Originally Posted by Sonolin

- No paying thousands and thousands in interest charges (even at 3% interest you're still paying at least $2000 on a brand new car over 5 years - and I'm pretty sure if you're posting this question you won't fall into the 3% category, I should know )

LOL. My total interest over the life of my loan is $817. My insurance premiums cost more than that.

Originally Posted by Chad86

My bank could not beat the dealers 3.99%

I might have to try Coast Capital. Although, this is a credit union... Hmmm. Risky?

Why would a credit union be risky? They usually have much better rates than commercial banks and are usually not out to screw their customers with fees. If they are lending you money to buy a car, they are the ones taking the risk.

As I mentioned earlier, I went through a local credit union and got a 4 year loan at 1.5%. There were no unexpected fees. I wasn't even a member before the loan. I just had to put up $10 to open a savings account to become one. The funny thing is that I found them because they advertised their 1.5% rate on one of those slides that run in movie theaters before the movie.

There are still good interest rates to be had if you shop around and include credit unions in your shopping. The loan officers are more than happy to talk with you even if you're not a member.

Furthermore, when you pay back a loan over time, because of inflation you're actually paying it back with cheaper dollars. Think about it. If we have inflation of 2% per year, each year the lender is receiving dollars that are worth 2% less. By the 5th year of a loan, the dollars have lost almost 8% of their value. If your income keeps pace with inflation, it becomes easier as time goes by to pay off the loan.

The cost of my own loan is almost all inflation premium. The credit union is making almost no money off of me.

[Chad86]

Thanks! I will shop around. I thought 3.99% was high. But as I take delivery on Monday I will have to decide whether or not to put a down payment. I would rather put nothing down and pay a much lower interest rate...

You have got it made!

[CodyFRS]

I put 15k down on mine and got $230 a month payments with a horrible interest rate...

[mush]

I would keep the cash or put it towards the house
Keeping the cash is my first option cause ull have back up money if shit hits the fan

[Chad86]

Originally Posted by mush

I would keep the cash or put it towards the house
Keeping the cash is my first option cause ull have back up money if shit hits the fan

Do you know what sort of rates Coast Capital offers
I may have to stop there on the way to the dealership, to see what they can do...Usually they can beat everywhere else. I would be sitting pretty if I could get like 1.5% and finance the whole thing.

[NOHOME]

Learn the difference between "Wants" and "Needs"

Get your priorities in order and pay off the house as much and as fast as possible. The FRS is a TOY that you want. Toys are bought with surplus cash that is just sitting around doing nothing.

While I am of the opinion that "houses are an investment" is the biggest scam ever pulled on a group of people, you do NEED to live somewhere. Mortgages are also made to screw you out of as much money as possible over a long time. Anything you do to shorten the time means you get less screwed by the bank.



Having said all that, if you NEED to buy a new car, then the FRS is not a bad financial choice in that it is cheap and so far, not too expensive to own.

[Chad86]

Originally Posted by NOHOME

Learn the difference between "Wants" and "Needs"

Get your priorities in order and pay off the house as much and as fast as possible. The FRS is a TOY that you want. Toys are bought with surplus cash that is just sitting around doing nothing.

While I am of the opinion that "houses are an investment" is the biggest scam ever pulled on a group of people, you do NEED to live somewhere. Mortgages are also made to screw you out of as much money as possible over a long time. Anything you do to shorten the time means you get less screwed by the bank.



Having said all that, if you NEED to buy a new car, then the FRS is not a bad financial choice in that it is cheap and so far, not too expensive to own.

Is it possible to save more on interest like when purchasing a home to pay bi-weekly or weekly through car financing??? (I see on Scion.ca there is a bi-weekly option)

Also, can you not have autowithdrawl on your VISA card? The dealer said in Canada, void cheque withdrawal only.

[suaveflooder]

Originally Posted by NOHOME

Learn the difference between "Wants" and "Needs"

Get your priorities in order and pay off the house as much and as fast as possible. The FRS is a TOY that you want. Toys are bought with surplus cash that is just sitting around doing nothing.

While I am of the opinion that "houses are an investment" is the biggest scam ever pulled on a group of people, you do NEED to live somewhere. Mortgages are also made to screw you out of as much money as possible over a long time. Anything you do to shorten the time means you get less screwed by the bank.



Having said all that, if you NEED to buy a new car, then the FRS is not a bad financial choice in that it is cheap and so far, not too expensive to own.

THIS!!!

[suaveflooder]

Originally Posted by Chad86

Is it possible to save more on interest like when purchasing a home to pay bi-weekly or weekly through car financing??? (I see on Scion.ca there is a bi-weekly option)

Also, can you not have autowithdrawl on your VISA card? The dealer said in Canada, void cheque withdrawal only.

Do a 15 year vs a 30 year mortgage. You will save quite a bit of money in interest.