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What's the difference. I'm buying a car without paying interest. And why would Toyota lend me anything besides buying one of their cars . I don't think they have any interest in lending me money to buy a lawnmower
At the end of the day I loaned $20k and end up paying that same amount. No weird amount of math will change that fact.
Seems to me you don't get it
You ARE paying interest, but you just don't know it. Car manufacturers love customers like you.
Could you go to your local bank or credit union and borrow $20k at 0%? No. So why do you think the car company will give you a "zero %" loan? Is it because you are such a good guy?
You ARE paying interest, but you just don't know it. Car manufacturers love customers like you.
Could you go to your local bank or credit union and borrow $20k at 0%? No. So why do you think the car company will give you a "zero %" loan? Is it because you are such a good guy?
To be frank I'm not even sure what you are trying to infer. Is it that manufacturers will overprice their cars on the low finance offers? I really can't follow what you are trying to say.
Who cares? Again, still if you look at the big picture stuff, ie "what is the total cost of purchasing this car?".
What costs you more? Buying a Land Rover at 0% or a Yaris at 4%?
Nobody is going broke buying the Yaris. In one year you'd lose more on the Land Rover than the Yaris costs new. Including interest.
The point that I am trying to make is that the teaser rates offered by the manufacturers on auto loans do not represent the true cost of financing the vehicle. The true financing cost is the stated rate plus the premium on the purchase price. Most consumers are very good at understanding the first number, but very bad at determining the second, and that's why the teaser rates are so common on auto loans.
If one truly understands this, and determines that the financing cost is negligible to them, fine. But many people (as evidenced by a prior poster) truly believe that they are paying zero % interest on their car loan. Perhaps if they pay attention, they may learn something about how the world works.
How does the old saying go? "Remain silent, and be thought a fool, or open one's mouth (or type a response on an internet forum) and remove all doubt."
Stick around and pay attention, you might just learn something.
Oh, given that you have it all wrong, you have nothing that you could explain.
Try answering the questions. I'm sure that your answers would be very insightful.
Quote:
Originally Posted by TaxPhd
Could you go to your local bank or credit union and borrow $20k at 0%? No. So why do you think the car company will give you a "zero %" loan? Is it because you are such a good guy?
The point that I am trying to make is that the teaser rates offered by the manufacturers on auto loans do not represent the true cost of financing the vehicle. The true financing cost is the stated rate plus the premium on the purchase price. Most consumers are very good at understanding the first number, but very bad at determining the second, and that's why the teaser rates are so common on auto loans.
If one truly understands this, and determines that the financing cost is negligible to them, fine. But many people (as evidenced by a prior poster) truly believe that they are paying zero % interest on their car loan. Perhaps if they pay attention, they may learn something about how the world works.
There is no premium on the purchase price. The MSRP doesn't magically go up because the automaker decides to offer 0% financing to 720+ borrowers. The sales price is negotiated with the dealership, the financing is through the manufacturer.
There is no premium on the purchase price. The MSRP doesn't magically go up because the automaker decides to offer 0% financing to 720+ borrowers. The sales price is negotiated with the dealership, the financing is through the manufacturer.
The MSRP includes the financing. It's added way upstream before you can ever isolate it or know what it is. There is no free lunch. Nobody gives you 0% anything. The cost is in there, you can count on it. It has to be, and it is, because in reality money (which is time) is not given away in the sale of consumer goods.
There is no subsidized financing, it is built in to the price of the vehicle.
There is no premium on the purchase price. The MSRP doesn't magically go up because the automaker decides to offer 0% financing to 720+ borrowers. The sales price is negotiated with the dealership, the financing is through the manufacturer.
Who pays MSRP?!?
Maybe the government. If even they do.
I think its disingenuous to think the two are not related. Everything can be calculated out for a total cost.
It's that total cost that gets people in trouble, not the small amount of interest they pay by financing, or the rebate back.
In tough times sometimes you get both. It's all about leverage.
Here is my advice. And it's free, btw, lol. Last new car I bought was in January of 1985. A VW Cabriolet. And I still have it! In the meantime, instead of paying out ridiculous monies every month, I instead put it into my portfolio. My adviser has been with me for about 30 years. In the meantime since about 2005, I have bought five (5) homes. I still have the house I bought 39 years ago, which is my main property. Three are in Hawaii, one in Utah, and another in California. I paid cash for three of the six homes and have them all rented out. My positive cash flow for all five is around $40,000.00 a year.
Since I'm getting old, I have no wish to buy a new car. I have 10 cars, all but the VW I bought used and for cash. All have served me well, and yes, there has been a lot of maintenance, but a hella cheaper than paying $50,000.00 for a new car. Heck, I paid less than that for my first home, lol.
I would go with a used car. Shop and read and see which is the best value. My advice, a 1998 Toyota sdn. Now if you need a car for looks than for just transportation, then I don't know the answer for that. I bought a 1996 Cadillac Seville for $700.00. I put in about $2100.00 to make it run perfect. And it does look good, with all the luxury options you want. $2800.00 for a luxury car? Not bad, eh?
This is an excellent example of managing your money. Instead of buying a new car you put a down payment on rental property. Instead of pissing your money down a rat hole, you built equity. Managing your money means a lot more than being able to pay your bills every month. The only problem I have with Dave Ramsey is that he stops just when things are getting good. Once you are out from under consumer debt like car loans and credit card payments, built your portfolio.
Us old codgers have been there and done that. We know very well how it adds up over 30 years. I didn't figure it out myself, I had good advice from men who started with nothing during the Great Depression and ended up very wealthy. They never kept the process a secret. Mostly they could sum it up as, "Plan your work, then work your plan." Money is a tool just like a hammer or wrench. If you trade it for something else, you don't have a tool any more.
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. I don't think they have any interest in lending me money to buy a lawnmower
