dullard
Elite Member
- May 21, 2001
- 26,024
- 4,650
- 126
1) The uptight people CAN afford to pay a $40,000 loan in 36 months. It is people who don't think of money that cannot afford those loans.
2) If you have near perfect credit, a $40,000 loan in 60 months is just under $800 a month. For the same person, a $40,000 loan in 48 months is just over $900 a month. Honestly, if you truely can afford $800 a month, then you can afford $900 a month. What is the difference? The $800 a month payment has ~$1300 more interest, 26% more than the $900 a month payment. If you are not a baller, can you afford $1300 more interest?
2b) If you have average credit, add ~$25 a month to those numbers, but the comparison is the same.
GasX
Lifer
- Feb 8, 2001
- 29,033
- 6
- 81
Maybe if you aren't a "baller" and can't afford to pay of a car in 36 months, you should rethink your purchase choice...
Remember, he is talking about a used car not a new car. A new car may be financed over a longer period of time, but only if you plan to keep the car for longer than the length of the loan.
Ultimately, 36 months is a guideline for people who are smart with their money. If you want to finance that 97 Mustang with 135,000 miles over 4 years and can find a lender who is willing - more power to you - but that doesn't make you a wise spender...
Eff that. My mortgage is only $1000/month. No way I'm paying ANOTHER mortgage for a freakin' car.
That said, financing a "depreciating asset" is only a financial blunder if you don't realize that a car depreciates and are expecting to somehow leverage the equity in it later on.
kranky
Elite Member
- Oct 9, 1999
- 21,019
- 156
- 106
Probably, but not necessarily. It depends on the type of loan. A simple interest loan is what you described - you only pay interest on the amount of time the loan exists. This is required for home mortgages but not for all types of loans.
Some loans are structured so that an early payoff hardly saves you anything. Some loans will rebate unearned interest based on the "Rule of 78's" and if you see that statement in your loan documentation you know you will get screwed by paying it off early. They can screw you even if the loan says "no prepayment penalty". Yeah, there's no penalty, but there's no benefit either!
But anyway, chances are your loan is a simple interest loan and all is well.
Meh, I have you beat badly.
I bought a new hyundai for 17k, forgot to bring a check so only put 2k down on the CC, and financed it at 6.25% for 5 years.
The loans keep piling up! This is fun
I bought a new hyundai for 17k, forgot to bring a check so only put 2k down on the CC, and financed it at 6.25% for 5 years.
The loans keep piling up! This is fun
if it makes you feel better my ex just told me she paid almost 14k for an aveo (5 year plan) before TTL, she didnt even try to get h price down, just took it...
you didnt get an aveo did you....?
your not one of those guys in the car threads always talking about how stupid it is to finance a car are ya.....
JulesMaximus
No Lifer
- Jul 3, 2003
- 74,578
- 982
- 126
There is no such rule. Get over it, you're experiencing a little buyer's remorse is all.
Now go enjoy your new car!
Now go enjoy your new car!
- Mar 20, 2000
- 102,402
- 8,572
- 126
lemme ask everyone else:
what the fsck should you do with a car, then? buy it outright and have all that money tied up in a depreciating asset? if you can get a rate of return equal to or higher than the interest rate of the loan on the car then you should finance the car and make the money that hasn't been paid into it work for you, pay off the interest and maybe have some extra. you know you'd be a fool for paying for a car outright if you can get 0% interest rate on it, right?
what the fsck should you do with a car, then? buy it outright and have all that money tied up in a depreciating asset? if you can get a rate of return equal to or higher than the interest rate of the loan on the car then you should finance the car and make the money that hasn't been paid into it work for you, pay off the interest and maybe have some extra. you know you'd be a fool for paying for a car outright if you can get 0% interest rate on it, right?
If you can't then you probably shouldn't be buying a $40K car.
People spend crazy money on cars - I can't imagine spendiong that much on a car.
My friend works at Carmax and he told me this crazy story from the other day. Some mother and daughter come in to buy a car for the daughter. The mom is co-signing. The daughter is early 30s.
Background info.
Daughter filed for bankruptcy two years ago.
She makes 70K a year now.
Lives with her mother.
They come in and they like the Mercedes ML500. Carmax price=$30K. Out of 6 banks, one will approve them for 22% interest for 72 months. Total price with interest comes to about $50+K. They decide to do it.
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