mrdancer

"Tony Hwang" <dragon40@shaw.ca> wrote in message
news:xh4cb.159$O85.30@pd7tw1no...
> Hi,
> Better take out a mortgae then.
> I never bought any car on borrowed money.
> By the time I need new car, I will have saved enough to pay in cash.
> Tony

Not always a good idea.

Consider a car loan with less than 4% interest (pretty standard these days).
The stock market has finally gotten back on its feet to where it's been
making more than 4% lately. So, by financing the car for less than market
gains, you can put your extra cash into the market and make more money that
way.

Of course, it's never a good idea to finance for more than four years, and
three years is even better (which is what I have on my '02 Accord at 3.9%
interest).

DragonRider

>I can sort of see where this would be useful. Lets say a customer
>comes into a dealership, is underwater in his current car but wants
>out of it and into something else.
>
>Take whatever the difference is between the trade value and still owed
>on the first car PLUS add in the new car = One 96 Month Loan

The odds are any decent bank won't carry that amount of negative
equity on that long a term. It doesn't make fiscal/risk sense to do
it unless the person has a fantastic credit score (say, 720+ beacon).

It still stands that if you can't afford a car with payments of 48
months or less, you can't afford that car.

DragonRider

>I can sort of see where this would be useful. Lets say a customer
>comes into a dealership, is underwater in his current car but wants
>out of it and into something else.
>
>Take whatever the difference is between the trade value and still owed
>on the first car PLUS add in the new car = One 96 Month Loan

The odds are any decent bank won't carry that amount of negative
equity on that long a term. It doesn't make fiscal/risk sense to do
it unless the person has a fantastic credit score (say, 720+ beacon).

It still stands that if you can't afford a car with payments of 48
months or less, you can't afford that car.

DragonRider

>I can sort of see where this would be useful. Lets say a customer
>comes into a dealership, is underwater in his current car but wants
>out of it and into something else.
>
>Take whatever the difference is between the trade value and still owed
>on the first car PLUS add in the new car = One 96 Month Loan

The odds are any decent bank won't carry that amount of negative
equity on that long a term. It doesn't make fiscal/risk sense to do
it unless the person has a fantastic credit score (say, 720+ beacon).

It still stands that if you can't afford a car with payments of 48
months or less, you can't afford that car.

DragonRider

>Consider a car loan with less than 4% interest (pretty standard these days).
>The stock market has finally gotten back on its feet to where it's been
>making more than 4% lately. So, by financing the car for less than market
>gains, you can put your extra cash into the market and make more money that
>way.

Close, but that's good for new cars (the 4% average). Most used cars
are 5-10% in interest (5% being the better interest rates). I have
seen some pre-owned vehicles go for as low as 3.7% but that's rare.

>Of course, it's never a good idea to finance for more than four years, and
>three years is even better (which is what I have on my '02 Accord at 3.9%
>interest).

0% interest is better and if you can do that for 60 months then by all
means go for it. Why? Dump the downpayment money into an interest
bearing savings account and you can sometimes make enough to cover the
insurance on the car. At the very least if you are on someone else's
money for 60 months then you have that much more in your assetts to
work with for other things, but if interest is involved then cut the
term as short as possible. Basically, if you have to fork out
interest, you better keep it less than a 48 month loan or you usually
can't afford the vehicle. (note: affording and making payments are
two seperate issues)

DragonRider

>Consider a car loan with less than 4% interest (pretty standard these days).
>The stock market has finally gotten back on its feet to where it's been
>making more than 4% lately. So, by financing the car for less than market
>gains, you can put your extra cash into the market and make more money that
>way.

Close, but that's good for new cars (the 4% average). Most used cars
are 5-10% in interest (5% being the better interest rates). I have
seen some pre-owned vehicles go for as low as 3.7% but that's rare.

>Of course, it's never a good idea to finance for more than four years, and
>three years is even better (which is what I have on my '02 Accord at 3.9%
>interest).

0% interest is better and if you can do that for 60 months then by all
means go for it. Why? Dump the downpayment money into an interest
bearing savings account and you can sometimes make enough to cover the
insurance on the car. At the very least if you are on someone else's
money for 60 months then you have that much more in your assetts to
work with for other things, but if interest is involved then cut the
term as short as possible. Basically, if you have to fork out
interest, you better keep it less than a 48 month loan or you usually
can't afford the vehicle. (note: affording and making payments are
two seperate issues)

DragonRider

>Consider a car loan with less than 4% interest (pretty standard these days).
>The stock market has finally gotten back on its feet to where it's been
>making more than 4% lately. So, by financing the car for less than market
>gains, you can put your extra cash into the market and make more money that
>way.

Close, but that's good for new cars (the 4% average). Most used cars
are 5-10% in interest (5% being the better interest rates). I have
seen some pre-owned vehicles go for as low as 3.7% but that's rare.

>Of course, it's never a good idea to finance for more than four years, and
>three years is even better (which is what I have on my '02 Accord at 3.9%
>interest).

0% interest is better and if you can do that for 60 months then by all
means go for it. Why? Dump the downpayment money into an interest
bearing savings account and you can sometimes make enough to cover the
insurance on the car. At the very least if you are on someone else's
money for 60 months then you have that much more in your assetts to
work with for other things, but if interest is involved then cut the
term as short as possible. Basically, if you have to fork out
interest, you better keep it less than a 48 month loan or you usually
can't afford the vehicle. (note: affording and making payments are
two seperate issues)