Buying new car, 0% financing & large downpayment = stupid? (borrowing, buy, sell)

[broadbill]

Originally Posted by hml1976

I'd pass on the 0% financing and buy a 14K car. Assuming you have some other savings for an emergency...if you don't then I'd put the 14K away as an emergency fund and then save for a car.

But, I tend to be conservative about these things and don't like owing money to anyone.

Sounds like the OP is going to buy a car that cost more than 14K. The idea was if they should drop the entire 14K on a downpayment when 0% financing is available to get a lower monthly payment or if they should keep the downpayment to a minimum.

[ufcrules1]

Originally Posted by hml1976

I'd pass on the 0% financing and buy a 14K car. Assuming you have some other savings for an emergency...if you don't then I'd put the 14K away as an emergency fund and then save for a car.

But, I tend to be conservative about these things and don't like owing money to anyone.

Ding ding ding... winner! He/She already has their mind made up though and won't listen to you or me. The advice your are giving is from experience and the person will have to learn it on their own.

They could have a nice Honda Accord and not have to worry about a car payment at all, and instead put the money in the bank every month.

My wife and I paid off 2 cars 4 years ago ...but you know what? We still make payments on them.. thats right, we pay the payments every month to our savings account. Her payment was $350 and my payment was $375. So we make a payment of $725 every month. So thats $8700 per year times 4 years = $34,800.00.

Thats the kind of thinking people need to use. But I will admit, I gained it through experience. I wish I would have just listened to my elders earlier on because I would be in a much better position than I'm in now.(Not that I'm a bad position... I just could just be further ahead) I thought I had everything figured out early on though. You live and you learn.

[ufcrules1]

Diddyo,
Since I can't change your mind into buying a 14k car and paying payments to your savings account. I think you should put the whole 14k down on the car. If you had 14k in a CD your money will be help up the whole year in the CD and you will make approx. $365. Not a whole lot of money. If you put the 14k down your payments will be low and you can put the extra money in savings.

Get the whole 0% thing out of your head. It's nice that you won't have to pay interest but you still want to pay the car off as soon as possible.. its not like you are getting a tax write off on it or anything.

Now if you have credit cards or and outstanding loans out there that you are paying interest on you should pay them off first before putting a 14k down payment on a car.

I'm assuming you don't though.

[Oildog]

Make sure you understand if/when the interest on the loan starts being calculated and when it gets added to the total. The devil is likely in the fine print...there may be a large 'loan origination fee' or something or its 0% for a year...but interst is accruing.

If you already have a nest egg, go for it. If not I'd put 5-10k down and keep the other 5k in a rolling 3 month CD.

[Oildog]

Originally Posted by ufcrules1

Ding ding ding... winner! He/She already has their mind made up though and won't listen to you or me. The advice your are giving is from experience and the person will have to learn it on their own.

They could have a nice Honda Accord and not have to worry about a car payment at all, and instead put the money in the bank every month.

My wife and I paid off 2 cars 4 years ago ...but you know what? We still make payments on them.. thats right, we pay the payments every month to our savings account. Her payment was $350 and my payment was $375. So we make a payment of $725 every month. So thats $8700 per year times 4 years = $34,800.00.

Thats the kind of thinking people need to use. But I will admit, I gained it through experience. I wish I would have just listened to my elders earlier on because I would be in a much better position than I'm in now.(Not that I'm a bad position... I just could just be further ahead) I thought I had everything figured out early on though. You live and you learn.

Excellent payment plan...thats how I got out of student loan and other debt post-college.

[subsound]

Right now it can both ways, it's not stupid at all to wonder. If you have a big emergency fund already, and no real credit card debt...it's actually a great idea. If you have only one of those, use that money to increase on or decrease the other...CC debt is very highly priced, and emergency funds are always necessary. Putting down a big amount up front makes sure if you have trouble later it's easy to have a reduction in income and not be in trouble...plus things like CD's are earning very little at the moment. Of course I have to say I did similar with my wife's and my car, put 50% down up front...we both have small monthly payments and she paid her car off about 30 months into a 60 month loan.

Very true on the fine print, always check the conditions. Sometimes they try and make sure they get you for all the interest if you do something wrong (furniture stores are notorious for that).

[Thatguywho]

Originally Posted by diddiyo

Hi all,

so for quite a long time I've been driving a beater and saved money for a new car. I could put down about 14k (please no discussion about what car to buy). Now there are a lot of 0% financing deals out there, and people are telling me I would be stupid to put down that much money on a 0% financing deal instead of putting it into a CD. My reasoning however is, that i'd rather put down some more $$ and have a small monthly payment, because otherwise I'd run into the risk of spending the "intended" down payment elsewhere. I know myself

Is it really that stupid to put down a large amount on a 0% deal? Am I missing something here?!

you pay less for the car if you put a lot down. (over time)
you should be able to shop for a great deal on interest with that much down.

I for one would rather pay the car off in a year or two than have the payments, looks like you could do that.

simple math project for you...

does zero percent deal have fine print? Read it.
Take the payment for little down and 14k down and see what the difference is.
Then look at how much the car will cost over the term of both loans.
See how much savings there is and go with that one. My guess, the 14k will save you a lot...most likely

I have no idea if you want a 20k car or a 200k car, so this questions is hard to answer really without any details.

[induhvidual]

FREE OPM=No brainer IMO
Why even discuss

[killer2021]

It really depends. If you can't manage your money, put 100% down.

If you can manage your money and not spend it in a heart beat on stuff you don't really need then take the 0% and put the money in a high yield savings account.

However the amount of money you'll make is trivial. If you are buying a new car I am taking it you aren't exactly looking for the best way to save money because if you were you would probably want to buy a used car with 50-75k miles on it. However, some of these cheaper cars are pretty good deals, even new. I think the Nissan versa is around 10k new (base model). A used civic would be about 5-6k with 50-75k miles on it.

[wheelsup]

Originally Posted by killer2021

A used civic would be about 5-6k with 50-75k miles on it.

They are actually quite a bit more than that these days. More like $9k-$11k.