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So you would rather pay 4.49% for almost 9 years or pay 1.49% for 3 years or less?
You will pay more in the end. It is that simple. Why do this if you don't have to and can afford to pay it off in 3 years?
paying more in interest is meaningless if im extending the term. now if you are comparing a 4.49% rate and 1.49% rates, that becomes a calculation. i probably wouldnt want to pay the 4.49% rate.
Yeah, his fortune has dwindled to, what, 15 billion?
What a loser.
Now, come. If you gave an adviser your 30 billion fortune and he reported that he only had 15 billion left after a stock market run up of 25%, would you celebrate?
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.
There are a whole lot of financially responsible people out there who all these "IFs" apply to.
Not everyone is as dumb/irresponsible as you seem to think.
There are a whole lot of financially responsible people out there who all these "IFs" apply to.
Not everyone is as dumb/irresponsible as you seem to think.
Not everyone, true, but a lot more than you seem to think. Most, in fact. This kind of behavior is why well over half of Americans have savings of less than $25k.
paying more in interest is meaningless if im extending the term. now if you are comparing a 4.49% rate and 1.49% rates, that becomes a calculation. i probably wouldnt want to pay the 4.49% rate.
That is what I'm saying! Can you read? Per your own graph I am talking about the 4.49% for the extended period loans.
1.49% for 3 years isn't bad or even 8 years....but 4.49% for 8 years will be A LOT more extra money.
Also how is it meaningless. 1.49% for 3 years or less or 8 years. Which would you choose?
Quote:
Originally Posted by shamrock847
There are a whole lot of financially responsible people out there who all these "IFs" apply to.
Not everyone is as dumb/irresponsible as you seem to think.
A lot of people are stupid. Hell I didn't even know what a interest rate even meant a few years back. My parents nor my highschool ever went over this. I literally had to google it at 18/19 years old. I'm 23 now.
I can see the young 20 something who thinks their on top of the world at a 40k job and extending the loan to have cheaper payments, but will be paying 4.49% interest rate.
Also how is it meaningless. 1.49% for 3 years or less or 8 years. Which would you choose?
Eight years, without a doubt, especially if no pre-payment penalty. I'm self-employed which means my income is highly variable I can go a month or two making less than a $1,000 and then turn around and make $10,000 in a week. Typically, I either buy things with cash or try and stretch the payments as long as humanely possible. The problem with stretching out most things is the interest hikes up to where it's not worth it.
I'd rather borrow @ 1.49% than spend cash, regardless of be that 1 year or 30 years. I'm reasonably sure I can beat 1.49%, maybe not with a risk-free investment but I'm not that risk averse. Get up to 4.9% and the risk/reward just wouldn't be worth it.
Now, come. If you gave an adviser your 30 billion fortune and he reported that he only had 15 billion left after a stock market run up of 25%, would you celebrate?
He wasn't just handed 30 billion dollars only to lose half of it. He's a person who has managed to go from an average shlub to amassing a 15 billion dollar fortune. That's someone I'm probably going to consider listening to before I listen to, well, certainly you.
That is what I'm saying! Can you read? Per your own graph I am talking about the 4.49% for the extended period loans.
1.49% for 3 years isn't bad or even 8 years....but 4.49% for 8 years will be A LOT more extra money.
Also how is it meaningless. 1.49% for 3 years or less or 8 years. Which would you choose?
A lot of people are stupid. Hell I didn't even know what a interest rate even meant a few years back. My parents nor my highschool ever went over this. I literally had to google it at 18/19 years old. I'm 23 now.
I can see the young 20 something who thinks their on top of the world at a 40k job and extending the loan to have cheaper payments, but will be paying 4.49% interest rate.
It's not that simple. If you understand markets, the 4.49% for 8 years is better than 1.49% for 3 years.
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* This chart plots all the points on a monthly basis(since that's how auto loans work). My previous charts, while still calculated on a monthly basis, only plotted points for each year. Also, this is off of a $30,000 loan.
The fact that you're paying off the principle so quickly hurts you pretty bad.
Per NJ's on post it is almost 4.49% for a very long loan versus 1.5% for a shorter term loan. That is a substantial amount of money paid for a longer term loan.
Why anyone would do this I'm not sure. There might be certain scenarios where I can see it, but going for the longer term loan your just paying more.
I didn't overlook anything. My comment was based on a specific exchange between you and another poster where the other poster stated that you (meaning someone with an 8-year loan) would pay $30,000 and he would pay $25,000, and you - based on the statement in your reply - thought he was talking about the up front purchase price of the car. I just pointed out that he wasn't and illustrated the difference. It had nothing to do with any previous discussion whatsoever.
The interest rates themselves are irrelevant. Based on the table you posted:
3 years @1.49% on a $20,000 note = $568.41 x 36 mos = $20,462.76 total outlay
8 years @ 4.49% on a $20,000 note = $248.37 x 96 = $23,843.52 total outlay
Difference of $3,380.76, compared to $3,555.84 in my previous illustration. It tells the same story, the longer you finance, the more you'll pay, especially if the interest goes up with the repayment term.
You aren't paying attention to the charts I posted. Look at the one I just posted today (a couple posts up). Longer term at higher rate creates a better loan opportunity for you. If you consider the S&P500 average return, you're giving up a loan opportunity of $2500.
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