How long do you finance a new vehicle purchase?

[Disoblige]

Technically, most of us are financing food. For a month @ 0%.

Credit card, newbs.

[killramos]

Originally posted by Disoblige
Technically, most of us are financing food. For a month @ 0%.

You shouldn't buy food you can't afford!

[RealJimmyJames]

So currently 60% of poll respondents finance for 4 or more years.

[lilmira]

The moment you touch a cheeseburger it depreciates. Buy used cheeseburger instead.

[Xtrema]

Depends on how well does it hold value over time.

Lose 50% over 4 year? Find a cheap lease with high residual.

Price holds over time? Cash.

[mazdavirgin]

If you are pulling money from your TFSA to buy a car you are doing it wrong... If you have 30k kicking around not locked up in either RRSP/TFSA I have no clue wtf you are doing financially. Either you are making so much you are above the contribution limit or you seem to have trouble grasping the concept of investment and compound interest.

[Strider]

Definitely depends on interest rates, but quite often you forego a cash discount by taking a 0% or 0.9% finance, so it's really not free in the end.

Speaking of cars as investments - yes, 99.9% of the time they're not, but lately there seems to be more used car appreciation bubbles ranging from air-cooled Porsches and limited edition Porsches "the more letters it has the more it appreciates", to E46m3s, GT-Rs, S2ks

Originally posted by Xtrema
Lose 50% over 4 year? Find a cheap lease with high residual.

These are the ones to buy used.

Originally posted by mazdavirgin
If you have 30k kicking around not locked up in either RRSP/TFSA I have no clue wtf you are doing financially. Either you are making so much you are above the contribution limit or you seem to have trouble grasping the concept of investment and compound interest.

Doesn't take that much to max out RRSP and TFSA, then $30k could be a bonus or other lump sum, or accumulated savings kept liquid for the anticipated car purchase.

[max_boost]

Originally posted by ercchry








*heloc is basically the only reasonable form of financing a used vehicle since dealers don't subsidize the rates, and banks want too much for unsecured loans

I thought heloc meant you can't afford it

[max_boost]

Originally posted by Strider
Definitely depends on interest rates, but quite often you forego a cash discount by taking a 0% or 0.9% finance, so it's really not free in the end.

Speaking of cars as investments - yes, 99.9% of the time they're not, but lately there seems to be more used car appreciation bubbles ranging from air-cooled Porsches and limited edition Porsches "the more letters it has the more it appreciates", to E46m3s, GT-Rs, S2ks


These are the ones to buy used.


Doesn't take that much to max out RRSP and TFSA, then $30k could be a bonus or other lump sum, or accumulated savings kept liquid for the anticipated car purchase.

E30M3

[mazdavirgin]

Originally posted by Strider
Doesn't take that much to max out RRSP and TFSA, then $30k could be a bonus or other lump sum, or accumulated savings kept liquid for the anticipated car purchase.

Must be pretty ballin because by my math if you're maxing both those out that's ~31,000 after tax contributed to your TFSA/RRSP per person.

[Disoblige]

Originally posted by Strider

Doesn't take that much to max out RRSP and TFSA, then $30k could be a bonus or other lump sum, or accumulated savings kept liquid for the anticipated car purchase.

Even then, why not put it in High Interest savings account? You'll be gaining more than $0.17 a month.

[Strider]

Originally posted by max_boost
E30M3

Gotta find out what the next bubble car is gonna be.

Originally posted by mazdavirgin
Must be pretty ballin because by my math if you're maxing both those out that's ~31,000 after tax contributed to your TFSA/RRSP per person.

I could swear there was a poll on here where everybody maxes out everything

In either case, one common strategy is max-RRSP, tax refund into TFSA.

Originally posted by Disoblige
Even then, why not put it in High Interest savings account? You'll be gaining more than $0.17 a month.

Not even sure how this hypothetical came about, but I don't see why one couldn't/wouldn't do that.

[ercchry]

Originally posted by mazdavirgin


Must be pretty ballin because by my math if you're maxing both those out that's ~31,000 after tax contributed to your TFSA/RRSP per person.

You make it sound like it's an annual amount

[mazdavirgin]

Originally posted by ercchry


You make it sound like it's an annual amount

That's the annual max(income indexed) for 2015 for RRSP and TFSA... Next year it will be even higher. I'm at a loss as to how people are running out of contribution space... I guess everyone is making 140k per person or something.

Year Contribution limit
2013 $23,820
2014 $24,270
2015 $24,930
2016 $25,370

[heavyD]

Originally posted by Darkane
Historically 3 years have the best dealer rates.

My last big time purchase was 8 years financed, got an additional couple bucks off the car and a free cover. Your haggling has much better punching power if you're 8 years up front - tell them this is the reason you want max loan time.

Immediately move that loan to Heloc much lower interest and power pay.

Never more than 3 years total.

Yeah three years is what I typically go for as I like no interest loans.

[rx7_turbo2]

Originally posted by FixedGear
you must either be the wolf of wallstreet or investing in a different market than I. "modest return" This is a terrible time to be saving. My Roth IRA hasn't made any money since end of 2011 and my 401k (vanguard index fund) isn't making shit either. Actually the US market has been stable if not decreasing for over a year. If I took your advice, I'd have lost even more money than I have.

I guess that was a back handed compliment? I'll take it!

Even in markets like this there's areas to make money. Where? Fuck if I know, someone else gets paid to do that For the record, none of my current fleet is financed, all vehicles were purchased outright, my point was that there are absolutely circumstances where financing a vehicle makes more sense than paying cash.

As for cars being investments, I bought a car about 4 years ago now, it's worth well over double what I paid, it was a complete fluke but it can happen.

[blitz]

Originally posted by 01RedDX

But the ST has that "fun factor" that makes it more appealing to keep for 6+ years.

Sucks to keep paying for a car you don't like, even at 0%, because you can't even sell until the depreciation is paid off.

Originally posted by AE92_TreunoSC
Problem with 5 years or over (0% or not) is the depreciation is so rapid that the loan becomes larger than the equity in the car.

I prefer 5 years or under with at least 20% down. But everyone has different situations.

There is zero difference between a down payment upfront and putting money on the loan before you sell. That is unless you run out and spend that money on shit you don't need

In a 0% @ 72 or 84 month situation, you can even start factoring inflation into the math. If it's "0% or cash discount" than it's a different situation.

At the end of the day each situation is a math problem and you just need to workout what provides the lowest cost for your circumstance.

[Team_Mclaren]

Originally posted by ercchry


The point is that 0% financing is a trap and depreciation on a brand new car is the real killer financially vs paying cash/heloc* on a used vehicle

Read the title again, it's new vehicle purchase. I take that it means "NEW" vehicles only?!

All things equal (final price), why would one not take a sub-par rate of finance?

[ercchry]

Originally posted by Team_Mclaren


Read the title again, it's new vehicle purchase. I take that it means "NEW" vehicles only?!

All things equal (final price), why would one not take a sub-par rate of finance?

This was more in response to the "omg I r leet investorz, cash is lulz!!!"

Seriously... Beyond... Off topic... Etc, etc

[RY213]

I wonder how many of the people in this thread talking about cars being depreciating assets go out and drop $100's every weekend on drinking and eating out?