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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.
So your saying you couldn't get a 4.49% gain over 8 years (per year?) In the stock market so it is better to waste it on a car?
What about the 10k drop in 2 years from a brand new car?
Your clueless.
Keep paying those rates and have a great life. I'm done with you.
So your saying you couldn't get a 4.49% gain over 8 years (per year?) In the stock market so it is better to waste it on a car?
What about the 10k drop in 2 years from a brand new car?
Your clueless.
Keep paying those rates and have a great life. I'm done with you.
That's not what I'm saying. I'm not even talking about buying a new car or an old car. I'm talking about taking out a loan. Whether you buy a 2 year old car or a brand new car... it's always better to take a car loan given the current rates.
It's not my problem that you are finance-challenged. If you're willing to give up a 9% return (S&P500 average) on your money just so you don't have to pay 4.49% interest, that's your prerogative. However, many people prefer to be financially savvy.
One of the regrets I have right now was buying my cars with cash. I wish I had taken out a loan.
That's not what I'm saying. I'm not even talking about buying a new car or an old car. I'm talking about taking out a loan. Whether you buy a 2 year old car or a brand new car... it's always better to take a car loan given the current rates.
It's not my problem that you are finance-challenged. If you're willing to give up a 9% return (S&P500 average) on your money just so you don't have to pay 4.49% interest, that's your prerogative. However, many people prefer to be financially savvy.
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?
those were the numbers in the question you asked me and i answered accordingly. im not sure what you have said in the past, but i have never suggested that you not take interest rate into account when the loan term is lengthened.
That's not what I'm saying. I'm not even talking about buying a new car or an old car. I'm talking about taking out a loan. Whether you buy a 2 year old car or a brand new car... it's always better to take a car loan given the current rates.
It's not my problem that you are finance-challenged. If you're willing to give up a 9% return (S&P500 average) on your money just so you don't have to pay 4.49% interest, that's your prerogative. However, many people prefer to be financially savvy.
One of the regrets I have right now was buying my cars with cash. I wish I had taken out a loan.
So your saying you couldn't get a 4.49% gain over 8 years (per year?) In the stock market so it is better to waste it on a car?
What about the 10k drop in 2 years from a brand new car?
Your clueless.
Keep paying those rates and have a great life. I'm done with you.
Irrelevant.
Once one decides on a new car, its the method of purchase that matters. If the only thing we were talking about was cost of ownership, we'd all be driving 10 year-old Toyota Corollas or similar.
NJ, you are ignoring risk. Basically, what one is doing is borrowing (on a car) to avoid paying cash to invest the cash in the stock market at 4.49%. This isn't completely risk free. For someone who is 65 and about to retire, borrowing money at 4.49% to invest (inherently risky) is maybe not the greatest idea. For someone like myself in their 20s, it's more reasonable. Going back to 1900, the CAGR of the S&P is around 11.5%. However, if you just look at the 2000 to 2012 period, it's only 1.5%. You'd be better of paying cash than borrowing at 4.49%. It all depends on your window and tolerance for risk. If you're looking at the long term, say 30 years or more, you have to be very, very risk averse to prefer to spend cash. In the more moderate term, say 10 years, I wouldn't be so keen to borrow money at 4.5% to invest it in the markets.
I think about a long term car loan like this.
I need a car to get to work, or I can't work. I can't afford to
loose my job. I refuse to lease, which in my opinion is a waste of money,
so I get a car loan for as long as I need to take the loan for. I am not
a senior citizen, I work, and I need transportation.
The last car loan I had was for 5 years, for an Oldsmobile, at 350 per month.
I think I paid 9 percent interest on the loan, and was happy to pay it off
in 2001.
The car was brand new when I bought it in January, 1996.
I drive the car today, 750 miles a week, to and from work and it runs great.
It's 17 years old.
I am thinking of getting a new car, a Honda, to drive all those miles every week.
I don't have the money to buy the car cash, and I want a nice new car.
But guess what? I bet I'll be driving that car for a long time too.
So, it all depends on the borrower. Will you keep the car til it dies?
I will still drive my Olds, til the engine dies. Literally,
I got my money's worth out of it, and I keep getting it.
I can take a 10 year car loan, you know why? I'll drive it til the
engine dies.
I'd never stretch out the financing that far on a strictly depreciating asset. Better off just leasing and let the finance companies assume the risk of letting you drive around in it. I honestly don't know why I'd ever traditionally finance a car again. Either lease or pay cash IMO.
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