Who REALLY owns their Z???

shadow2k

If you can get good rates, paying in cash is just...wasteful.

I actually just refi'd my Z, just because I could get a lower rate. Low enough to make me actually cash out $5k of what I'd already paid. My loan is now more $5k higher, and a couple months longer...but my payments are the same and my $5k check should arrive today.

I mean, come on...if you want to give me cheap loans, I'll take it every day of the week. At the very least, even if I were horrible with money, I'd put that $5k towards my mortgage, which has a higher interest rate of 3.75 fixed.

I understand the no debt mentatily, I used to be a cash only type of guy, but I learned something a while ago. Not all debt is bad. Certain types of debt can give you access to capital, which is how business (and you) can make money. I'm actually getting ready to take a $15k cash advance on a credit card. I'l pay 10% interest for two days ($4-$5) while I balance transfer it with no fee to a 0% APR card for a year. $15k for one year, costs me $4...yes please. And if any of you are wondering, cash advance is from PSECU, and BT deal is from NFCU. I love credit unions!

billydsz

It really depends on if you need the money. If you write a check and it empties your bank account then it's a bad idea. If you write a check and don't notice the difference in your checking account then it's a good idea.

dAvenue

Not everyone falls in the same boat of needing to earn good credit. For those of us with excellent credit, it makes more financial sense to pay in cash and not throw money away on interest.

shadow2k

Not about earning credit. It's about earning money.

How do you think banks make money? They borrow it from you and pay you whatever..1-4% interest, depending on whether it's in your checking, savings, CD, etc... Then they loan it back out at a higher rate, or actually buy investments with larger returns.

I'd rather have 35k invested and making me money than a title to a depreciating asset.

wilsonp

Assuming you have to use the 35K to payoff the loan, aren't you making a decreasing difference? How much can you actually make in the end?

And if you don't use the 35K to payoff the loan, you have to take into account that extra money you are putting into the loan instead of saving - how much would you have made saving that payment?

__________________
2014 Cayman S PDK Sport Chrono White/Black
Was 2009 370Z Touring Sport+Nav 7AT Metallic Black/Persimmon
Was 1991 NSX Auto Black/Black

shadow2k

On an auto loan of $35,000.00, with an interest rate of 2.5% for 60 months, your monthly payment is $621.16. At the end of your term, you will have paid $35,000.00 in principal and $2,269.46 in interest for a total payment of $37,269.46.

A 2.5% CD with $35,000 in it will become $39.655.04 after 5yrs.

That's at the same exact rate, because the interest you pay on a loan is based on what you owe at the time, where your interest in investement compounds on itself. Compounding interest is your friend.

Personally, even taking that $35k and putting it towards my mortgage would be better for me (and probably almost everyone else as well). My mortgage is 30yr fixed at 3.75%...which is pretty damn low for a house that's not an ARM, but still higher than my car.

ImportConvert

For those of you in that boat, just get a 0% interest loan. That way you don't lose money to inflation while you save--the bank loses it while you pay.

Also, I love using credit. I have made $120 in the last 8 months or so just buying gas/groceries on my credit-card. It's a crappy reward setup, but meh. It's still $120 for free.

That too. Invest that money while the bank carries the balance on your car. It's like you having 200% the money you really do.

cdawg410

Financed every penny at only a moderately good rate. Put 7000 miles on in two years. Could've paid off half my student loans in that time with that money. Guess what? I couldn't care less, I work for a living and my wife and are are D.I.N.K's with no one to be responsible for but ourselves. I could get hit by a car tomorrow, I do what makes me happy. When I get 35k to throw down on a car, the car is gonna cost 3x's that.

dAvenue

Financing a car will not protect you from inflation. Inflation is not limited to the value of a single item; inflation occurs when the value of the dollar goes down as a result of too many dollars in circulation (like when the Fed prints money to pay off its debts or "stimulate" the economy). This affects the cost of everything...not just a car...because it takes more of those dollars to buy the same item.

A car is a depreciating asset. Its value will always go down. It will not yield a profitable return regardless of its status being paid-in-full or financed. You will always lose money on it.

If you don't want to tie your money up in an asset like this, or if you just want it now, the more sensible option would be to lease the car. You only pay for the current value of the asset plus interest over the course of the contract. You simply pay for what you use and move on. Leases are more appealing to some because the rates are considerably lower than the traditional auto-loan.

I chose to pay in full because I actually wanted to own this car and I did not want two other things to happen: 1) money thrown away on interest which literally saves me $4,500 over the course of 60 months (nobody was offering 0% financing on Z's at the time and I doubt they are today), and 2) a car payment lingering over my head every month.

ImportConvert

Nope, your financed amount of $35K will never go up. You will just pay it off with worthless money at the same rate as before. Complete protection from inflation on that purchase, and the bank eats it.

I don't mind a car payment lingering, it's just pulled out of my check every 2 weeks. It's like making $1K less per month and I don't mind. It's a good trade for me. I never see it as it's all automated, and don't miss it. I bought my car for me to enjoy, not to sell again, although resale value is always in mind, as EVERYTHING is a liquid asset after it's paid off. Who knows? I might want a C7Z when they come out. Keeping this one in good condition with low miles for the year matters in that regard.

dAvenue

It does not protect you from inflation. The bank "eating" it does not make much sense at all because it begs the question "why are they even in the business of loaning money?" if all they do is take losses. If you mean the principle of which you financed is locked-in and will never go up, that is true only on a 0% interest loan. Good luck finding one of them for a Z!

ImportConvert

If you can finance even at 1-2% on principal on a 370Z (lots of CU's will do 1.9 from what I hear), then you will still save money at the current inflation rate. Auto loans are fixed, interest on principal.