To Finance or Not to Finance

[backtoschool]

With Chase you need to make payments divisible by the monthly payment to get the month pushed back. My monthly payment is 352.90 so times that by the number of payments you'd like to make to decide how much you want to pay.

I just made a large payment and pushed the due date to 03/2012. Currently I have my bill pay make a payment once a week and occasionally I add another payment. I'm just not ready to take a big dip out of my cash on hand to pay the whole thing off.

BTW..Beautiful daughter born on 10-03-10 and the wife is recovering well.

It sure changes your life priorities.

Logan

Congratulations on your daughter!!!!!!

Taking a huge chuck of cash at this point to pay the whole thing off would not give you much benefit for your money. There are more important things you can use that money for, like your growing family.

[freedomnow7]

@Logan - Yes, you better get that car paid off as quickly as possible...us "girls" are expensive. ;-)

As I posted on another thread, I was watching the news a few mornings ago. They were reporting from the outside of a foreclosure seminar and interviewed this woman that had put down 200k on a house, which is now worth 232k, and the bank is trying to foreclose on her home. The BK has taught me that the banks don't care how much you put down (although the cost of borrowing money does go down with a larger down payment). Watch how fast they'll snatch back the car or the house if you miss a few payments for unforeseen circumstances.

I like Logan's/Backtoschool's approach because it is a creative strategy to keep the bulk of money in my pocket, get a newer (not brand new) vehicle with a warranty that will give me peace of mind, and help to re-build my credit. Making a car payment is much easier when you have a chunk of cash in a separate bank account JUST FOR making that car payment, and constantly adding to it every month. I'm not going for a BMW or Mercedes...just a Prius, so I'm being sensible. Plus with 40 to 50 mpg, the gas expense won't be a big concern (like it is now for our SUV).

Thanks for all who advised the cash payment option. It is definately something that I would do if I had the 16k needed to pay outright. But, I want a car with a warranty (Prius's have an 8 year warranty for the most expensive (hybrid) parts, and 3 year for everything else), and finding a reliable car dealer, or car for that matter, is not my best strength. And, I don't want to plunk down 10k for a problem car...then I'd be really SOL.

[LSUTiger32]

As I posted on another thread, I was watching the news a few mornings ago. They were reporting from the outside of a foreclosure seminar and interviewed this woman that had put down 200k on a house, which is now worth 232k, and the bank is trying to foreclose on her home. The BK has taught me that the banks don't care how much you put down (although the cost of borrowing money does go down with a larger down payment). Watch how fast they'll snatch back the car or the house if you miss a few payments for unforeseen circumstances.

I like Logan's/Backtoschool's approach because it is a creative strategy to keep the bulk of money in my pocket, get a newer (not brand new) vehicle with a warranty that will give me peace of mind, and help to re-build my credit. Making a car payment is much easier when you have a chunk of cash in a separate bank account JUST FOR making that car payment, and constantly adding to it every month. I'm not going for a BMW or Mercedes...just a Prius, so I'm being sensible. Plus with 40 to 50 mpg, the gas expense won't be a big concern (like it is now for our SUV).

Thanks for all who advised the cash payment option. It is definately something that I would do if I had the 16k needed to pay outright. But, I want a car with a warranty (Prius's have an 8 year warranty for the most expensive (hybrid) parts, and 3 year for everything else), and finding a reliable car dealer, or car for that matter, is not my best strength. And, I don't want to plunk down 10k for a problem car...then I'd be really SOL.

I mean, really? You get it but still don't care? You see what the banks will do to people, but you are going to go running to them for a loan. Huh?

If your payment is going to be $400, you can buy the car you want for cash in one year. Buy a $10,000 car, which will be just as reliable as a $16,000 car so long as you do the research and have the car checked and then pay yourself a $400 payment for a year. Then go get your $16,000 car for cash. Why would you want to play with the scum that you described in your first paragraph?

No one in this country knows how to delay pleasure, which is why our economy sucks. The word sacrifice is non-existant these days. Gotta have it NOW!

[goon]

If you are going to pay cash, try to buy from a private party ( often you can find a mechanic that will look at a car you are very interested in for a reasonable fee).

If you decide to buy a used or new car from a dealership and intend on paying cash, here is a little known tidbit.
The car dealerships often get a commission/kickback from the bank for setting someone up with an auto loan, this can be sizable, and you can use this to your advantage!!!!!

dealerships will budge less on the price on a cash deal than they typically will on a financed deal for this exact reason. For example if you are buying a car at a dealership for $10k, be open to the idea of getting a loan, putting down $5k and then as soon as you get the payment information (account number, address), send in a check for $5k. if you work it right you just might be able to get a better price on the car than you would have walking in with your $10k cash. (the feasibility of this may vary by state)

This also gives you a chance to get back at the banks for the crap they pull ;) They pay out a commission expecting to get interest off you over the next x years and they basically get nothing.

This is also why (this scenario aside), normally if you are going to get a loan for a vehicle you should research and get a pre-approval somewhere first. The dealerships will screw with you and set you up with a higher interest rate than you could have gotten, all because they get a bigger commission from that particular bank.

[msm859]

I mean, really? You get it but still don't care? You see what the banks will do to people, but you are going to go running to them for a loan. Huh?

If your payment is going to be $400, you can buy the car you want for cash in one year. (400 x 12 = 4800?) Buy a $10,000 car, which will be just as reliable as a $16,000 car (well not if it is the same car except a much newer model) so long as you do the research and have the car checked and then pay yourself a $400 payment for a year. Then go get your $16,000 car for cash. Why would you want to play with the scum that you described in your first paragraph? (To build credit. What if 2 years down the road your economic situation has improved and you want to buy a house or business property? It might come in "handy" to have some credit.)

No one in this country knows how to delay pleasure, which is why our economy sucks. The word sacrifice is non-existant these days. Gotta have it NOW!

Although there is certainly some truth in your last statement, it probably does not help to go to the extreme either way. Maybe buying everything with 0 down is bad, but only paying cash gives you pretty limited options. The real problem from a philosophical perspective is we don't know how long we are going to live. What good is it to live so frugal that all you do is save for retirement and then never live long enough to enjoy it. Something like 1/3 of all people spend their life savings on their last few months of medical expenses -- to me this seems a waste. We should all try to enjoy life as much as possible -- you never know when it will be gone. If one gets more pleasure from having a little nicer of a car with a comfortable payment they should go for it. If one cannot stomach any car payment then they should buy whatever they can pay cash for. There is no single "right" answer. For me I intend to start a car fund when this is all over, save up for 2 years when my current car is off lease and put 1/2 down on a low mileage 1 -2 year old car. For me this is a big change , but I can still enjoy and save some money over the next 20 years.

[backtoschool]

Although there is certainly some truth in your last statement, it probably does not help to go to the extreme either way. Maybe buying everything with 0 down is bad, but only paying cash gives you pretty limited options. The real problem from a philosophical perspective is we don't know how long we are going to live. What good is it to live so frugal that all you do is save for retirement and then never live long enough to enjoy it. Something like 1/3 of all people spend their life savings on their last few months of medical expenses -- to me this seems a waste. We should all try to enjoy life as much as possible -- you never know when it will be gone. If one gets more pleasure from having a little nicer of a car with a comfortable payment they should go for it. If one cannot stomach any car payment then they should buy whatever they can pay cash for. There is no single "right" answer. For me I intend to start a car fund when this is all over, save up for 2 years when my current car is off lease and put 1/2 down on a low mileage 1 -2 year old car. For me this is a big change , but I can still enjoy and save some money over the next 20 years.

I totally agree with you. Life is too short to drive around in a clunker and fear the future. A fresh start to me means learning to be responsible with credit and to work towards my goals such as buying a house.

[freedomnow7]

@MSM & Goon - I was thinking about this. In the past 10 years, I've paid for a car with cash, financed a car, and had a lease. I paid for a 1996 Pontiac Sunfire in 2002; Financed a 2006 Nissan Maxima in 2006 (it was a lemon and ended up getting back my entire down payment plus all interest paid 6 months later); and Leased a 2007 BMW in 2007.

I've learned from my prior car experiences (with leasing one being the most unfavorable) and now have crafted a strategy that works for ME. I'm happy about that.

Back to school you've summed it up quite nicely.

[pris72]

Well if a prius is what you want the best thing to do is put the 10K down on it, and you'd only be financing around $8,000. I do not see you finding a good used one with low mileage for less than 10k. That is one car which is in high demand. I live across the road from a Toyota dealership and see Prius' all of the time out front with sticker prices of $16,000 up to $18,000 on the window. If reestablishing credit is what you want to do, you are going to have to finance something or get a credit card in order to boost that score. Some here will criticize us for doing that, but it's what we "choose" to do in order to purchase homes in a couple of years.

[LSUTiger32]

Although there is certainly some truth in your last statement, it probably does not help to go to the extreme either way. Maybe buying everything with 0 down is bad, but only paying cash gives you pretty limited options. The real problem from a philosophical perspective is we don't know how long we are going to live. What good is it to live so frugal that all you do is save for retirement and then never live long enough to enjoy it. Something like 1/3 of all people spend their life savings on their last few months of medical expenses -- to me this seems a waste. We should all try to enjoy life as much as possible -- you never know when it will be gone. If one gets more pleasure from having a little nicer of a car with a comfortable payment they should go for it. If one cannot stomach any car payment then they should buy whatever they can pay cash for. There is no single "right" answer. For me I intend to start a car fund when this is all over, save up for 2 years when my current car is off lease and put 1/2 down on a low mileage 1 -2 year old car. For me this is a big change , but I can still enjoy and save some money over the next 20 years.

Answering your thoughts into my quote: Yes, $4,800 plus the fact that a $16,000 car will have depreciated more than the $10,000 car should be pretty close to enough to get that $16,000 next year. I wasn't being to the cent, I think you get the picture. Next, why in the world does everyone think a newer car means more reliable? My parents have the same exact car as me, just 4 years newer. They have had to change the tranny and the alternator in the last month.....I haven't changed a thing in mine in the two years I've owned it. Newer doesn't mean better. Lastly, right.....gotta build that FICO score. The famous last words.

I love this argument......live life now, it's too short. It's going to be even shorter when you spend yourself back into the stress again. No one said live like a homeless person, just DELAY pleasure. I love the quote, so I am going to use it. "LIVE LIKE NO ONE ELSE, SO LATER YOU CAN LIVE LIKE NO ONE ELSE." I am driving my car (I mean junker clunker as some feel the need to call any used car) so that I can drive something better soon. I am not going to drive a used car the rest of my life, but I am going to drive it until I can pay cash for a new car....which will probably take me another two years. I am sacrificing now, so that I can win later.

[LSUTiger32]

I totally agree with you. Life is too short to drive around in a clunker and fear the future. A fresh start to me means learning to be responsible with credit and to work towards my goals such as buying a house.

Never mind.

[Logan]

I totally agree with you. Life is too short to drive around in a clunker and fear the future. A fresh start to me means learning to be responsible with credit and to work towards my goals such as buying a house.

Why are people so critical of a guy who wants to buy a new car? If that's what he/she wants to do let them do it. Personally, I prefer new cars since I keep them for a long time. After 100K cars begin to cost money and since I drive 20K a year I will get a few extra years out of the car and any problems are from me or my wife driving the car.

If you want a clunker or a nice used car that is great. Let people spend the money the way they see fit. If a BK hasn't taught them a lesson then they will never learn.

Logan,

PS, As soon as I get last years car purchase paid off that I bought my wife I will be buying myself a TDI Audi!! I'm sure that makes you anti-finance guys cringe

[backtoschool]

Why are people so critical of a guy who wants to buy a new car? If that's what he/she wants to do let them do it. Personally, I prefer new cars since I keep them for a long time. After 100K cars begin to cost money and since I drive 20K a year I will get a few extra years out of the car and any problems are from me or my wife driving the car.

If you want a clunker or a nice used car that is great. Let people spend the money the way they see fit. If a BK hasn't taught them a lesson then they will never learn.

Logan,

PS, As soon as I get last years car purchase paid off that I bought my wife I will be buying myself a TDI Audi!! I'm sure that makes you anti-finance guys cringe

That's awesome about the Audi Logan! That is probably my next car as well, although I just bought a car, so it is a good 6 years down the road for me, and by then we will probably have electric cars to choose from.

Here is my philosophy on why most of the anti-credit ranters troll this part of the forum. I think that a few of them, like the credit repair professionals, the bk lawyers and/or the mortgage finance people that come to this board to give expert advice, are simply trying to advise us from their professional point of view. They deal with people with credit issues all day, and have seen irresponsible behavior on the part of their clients, and want to advise us against the same.

The other type of anti-credit ranters to these threads in my opinion seem to be afraid of their own past behavior and are projecting into the future. When they are fighting with all of us, they are really fighting their own fear of credit, and condemning and judging their own past behavior. Which of course, is counterproductive emotionally to moving on with a fresh start.

Of course each person must make their own decisions and every credit situation is different. I approach the constant negative posts by reading the advice of the professionals who post and seeing if it is right for me, and then putting the emotional ranters on ignore.

How are your daughter and wife doing?

[LSUTiger32]

PS, As soon as I get last years car purchase paid off that I bought my wife I will be buying myself a TDI Audi!! I'm sure that makes you anti-finance guys cringe

With all that money you have, why would you need to finance it?

[LSUTiger32]

That's awesome about the Audi Logan! That is probably my next car as well, although I just bought a car, so it is a good 6 years down the road for me, and by then we will probably have electric cars to choose from.

Here is my philosophy on why most of the anti-credit ranters troll this part of the forum. I think that a few of them, like the credit repair professionals, the bk lawyers and/or the mortgage finance people that come to this board to give expert advice, are simply trying to advise us from their professional point of view. They deal with people with credit issues all day, and have seen irresponsible behavior on the part of their clients, and want to advise us against the same.

The other type of anti-credit ranters to these threads in my opinion seem to be afraid of their own past behavior and are projecting into the future. When they are fighting with all of us, they are really fighting their own fear of credit, and condemning and judging their own past behavior. Which of course, is counterproductive emotionally to moving on with a fresh start.

Of course each person must make their own decisions and every credit situation is different. I approach the constant negative posts by reading the advice of the professionals who post and seeing if it is right for me, and then putting the emotional ranters on ignore.

How are your daughter and wife doing?

Oh my god, you cracked me! I am also afraid of my own shadow. LOL! By the way, good job getting your favorite word in there. Maybe we could do like Pee-Wee and all go crazy when you say troll.

[Logan]

With all that money you have, why would you need to finance it?

Well LSU, I may just pay cash. We'll just have to see when the time comes....