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Still having a car payment by the time you start needing tires, brakes, repairs, etc. is a recipe for financial disaster. The first thing the person will do is skip the car payment and justify it by saying they need the repairs to get to work.
Actually that's about the last thing your average person will do. Banks and finance companies have learned that when times get tough, people will pay their car note before virtually anything else, including the rent/mortgage. That's a big part of why car sales have remained relatively robust throughout the down economy, because it's one area where banks are still willing to lend quite freely. I'd guess that's also why finance companies are willing to extend the repayment periods.
too bad for the average american for not being smarter about their spending. i like the idea of lower interest rates and longer terms. i will take advantage of them in order to grow my net worth.
i dont want to invest an education curriculum for all grades, but i think education is failing to teach children some of the most important things to know. i think basic finance and money management should be there.
Even by your own terms, you FAIL. Lower interest rates for a longer term = more money in the pockets of lenders. Why? Because history has shown us time and time again that Americans aren't that smart at all. They use the 'savings' to A: upgrade their original planned purchase, wiping out the savings on the lower interest, or B: use the the money for other unnecessary consumer purchases, often also on credit, so no net worth gain.
But maybe you are indeed one of the brilliant ones. Hint: if you pay for a new car with anything other than cash, you are not.
Even by your own terms, you FAIL. Lower interest rates for a longer term = more money in the pockets of lenders. Why? Because history has shown us time and time again that Americans aren't that smart at all. They use the 'savings' to A: upgrade their original planned purchase, wiping out the savings on the lower interest, or B: use the the money for other unnecessary consumer purchases, often also on credit, so no net worth gain.
But maybe you are indeed one of the brilliant ones. Hint: if you pay for a new car with anything other than cash, you are not.
i applied it to myself, you responded to that and then you went on about "Americans arent that smart at all." i know what i do with my money. i know that i save about 40% of my net income and that is after paying 2 car loans every month. what other americans choose to do isnt my problem.
it doesnt take brilliance to understand basic finance. just because you dont seem to understand that doesnt really make it all that difficult. if i can make more money investing my cash than i will pay in interest, im making the right move. you are obviously not qualified to make your silly little hint statement suggesting you know whats a good or bad move. you clearly dont know because your "hint" is wrong.
But maybe you are indeed one of the brilliant ones. Hint: if you pay for a new car with anything other than cash, you are not.
That or you actually understand PV and opportunity cost. Both are elementary principles taught in any freshman finance course in college... probably should be taught in high school, but at least I didn't have them there. But yeah, average Americans aren't the so-called brilliant ones. They seem to be in two camps. One has an allergic reaction to debt because they're ignorant of how it works while the other thinks in terms of monthly payments because they don't understand how it works.
That or you actually understand PV and opportunity cost.
Quote:
Originally Posted by stoutboy
Lower interest rates for a longer term = more money in the pockets of lenders.
the guy is clueless and he is lecturing me. its probably been repeated a million times why its worth it to finance if the interest rate is low enough. but noooooooooo interest is the devil and if its 10 years at 1%; thats paying more interest than 5 years at 1% and more interest paid is evil so its a bad idea.
the guy is clueless and he is lecturing me. its probably been repeated a million times why its worth it to finance if the interest rate is low enough. but noooooooooo interest is the devil and if its 10 years at 1%; thats paying more interest than 5 years at 1% and more interest paid is evil so its a bad idea.
It could make sense to finance IF you can afford what you'd planned to finance in the first place and IF you weren't susceptible to low rates resulting a temptation to upgrade your original purchase to something you can't afford and IF you had the discipline to use the 'savings' to increase net worth by investing. But good on you, you're somehow different.
the guy is clueless and he is lecturing me. its probably been repeated a million times why its worth it to finance if the interest rate is low enough. but noooooooooo interest is the devil and if its 10 years at 1%; thats paying more interest than 5 years at 1% and more interest paid is evil so its a bad idea.
Haha
It's like all the people asking why Zuckerberg was soooo stupid and financed his house. 1.05% for 30 years (adjustable rate tho). It's like the adjustable rate loans are bad, mmkay, "truism." Yeah, true for me. True for most people. Not true for Zuckerberg. If interest rates shoot up, he can always just pay cash.
It's like all the people asking why Zuckerberg was soooo stupid and financed his house. 1.05% for 30 years (adjustable rate tho). It's like the adjustable rate loans are bad, mmkay, "truism." Yeah, true for me. True for most people. Not true for Zuckerberg. If interest rates shoot up, he can always just pay cash.
At the rate Zuckerberg is losing money (more than you and I have ever made) these last two years, why would anyone follow his lead?
Yeah, his fortune has dwindled to, what, 15 billion?
What a loser.
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