Glenn

go cowboys

FireDragon

Why are you reading it if you don't like it?





Technicality FTW!

coffeejolts

From a financial perspective, eci is completely right. If you look at the function for payment and let X be the term in years and set interest equal to some constant, you can see that for a given interest rate the function approaches 1/X as X approaches infinity. Therefore, we can use the graph of 1/X to illustrate the basic behavior of payment vs number of payments. As X moves from 1 to 2, the drop is big (50%). As it moves from 2 to 3, the decrease is smaller (17%). From 3 to 4, smaller still (8%). From 4 to 5, the decrease is only 5%, and it only gets smaller from there. The exact change in payment is a little different from 1/X, but the behavior holds true. The decrease in payment slows dramatically after year four, with two years yielding the biggest improvement over the previous terms.

I never planned on keeping the loan for ten years. What I wanted was a low payment for now while I am paying off other things and preparing to sell my house, then I will pay off the balance early. Doing so would have allowed me to have my cake (the GT500) a little early.

However, it seems that I may have a new financial obligation nine months from now who will take precedence over any new car hopes. If it's a girl, maybe I'll name her Shelby.

05fordgt

Hey bud, CONGRATS!!!

But in regards to the loan term, we never went into financing a car for 10 years. No bank will do that. The only places that will do that, are those companies that finance collector cars. You can do it at Barrett-Jackson, if your credit is good, for 144 months!!! CRAZY it is. But my argument is 6 years is typical for people nowadays. Some people, despite ECI's suggestion, can't use a small inexpensive car for their vehicle if they have a large family!! 5-7 year financing is the norm now adays and it won't change anytime soon!!!

eci

Banks should stop 6 year loans too. Know why 10 years aren't out there? The bank knows the car depreciates WAY faster than the principal decreases. It does at 6 years too. 0% down @ 6 years should be illegal. You need to put at least 25% down on a 6 year to have a chance of selling it at any time during the loan term. American cars depreciate 50% in 3 years. A 6 year loan balance on 0 down does not.

2k7gtcs

When I was younger buying cars I honestly could not afford I went 48 months and even 60 months once. Lately I've been fortunate and have been able to do 36 months and pay them off early or not depending on extra income. Conceivably I'd love to buy cars for cash, but that's not realistic when you love cars as much as I do. But I have set a limit on myself of 36 months. I went 48 months on the '07 and paid it off in 11 months. I went 48 months on my truck and paid it off in 36. I went 48 months on the wife's car and paid it off in 24. All of this was with putting 20-25% down too. I loathe owing more than a car is worth. I despise it on a personal level. Too each their own, but its just not something that's for me personally.

I went down and ordered a Raptor 6.2 yesterday and I will be going with a 36 month loan, and making every effort to pay if off before then.

I understand thats not possible for everyone simply because of income and expenses, but for the same reason I would not go buy a Ferrari and put it on 96 months because if I have to do that, I honestly can't afford the car.

In a perfect world we all go in and write a check for our new cars.

I've given my personal thoughts. Now flame away. But remember I'm not saying you're stupid for doing it. I'm just saying its not what I would do.

coffeejolts

Honestly, I think you're going to be under water in the short term regardless of years financed unless you put 30% down, since most vehicles will depreciate 30% the minute they leave the dealer's lot. Everyone knows that a car is a depreciating asset. I don't think banks should stop six year loans, but they need to be careful who they give them to.

Five Oh Brian

Just want to agree that long term loans are not a great idea, but if that's the only way someone can afford their dream car, so be it. Often times, purchases like a GT500 are done based on emotion rather than logic, so it's easy to bite off more than you can chew for an auto loan.


For illustration of how much interest a $50K GT500 loan would be on various loan terms, I've plugged figures into a real auto finance calculator to compare. Let's assume $50K loan, and 3.99% APR (we have a couple of major lenders in the area offering that right now, on approval of credit)....

• 36 month loan = $1478/month and $3217 interest paid over the life of the loan.
• 48 month loan = $1130/month and $4262 interest paid over the life of the loan.
• 60 month loan = $922/month and $5320 interest paid over the life of the loan.
• 72 month loan = $783/month and $6392 interest paid over the life of the loan.
• 84 month loan = $684/month and $7477 interest paid over the life of the loan.

So, that long term 84 month loan costs a customer $4260 MORE in interest than a 36 month loan would have (in today's dollars), but saves the customer nearly $800/month in payments, which very well could make or break the possibility of actually having a car like this for the average working guy.

On a side note, I think that paying interest on an auto loan (versus paying cash) is just fine even if you have the cash to pay for the whole car. But, only if you leverage that cash by earning more interest on it than you're paying on the loan.

petrong1186

so if i lurk a bit longer then I'm allowed to contribute to a thread that has nothing to do with a 2010 Shelby? besides, i cant see how anyone has really made many "positive contributions" when there only three pages to this forum. even before everything was lost, there wasn't a substantial amount of positive contributions.

finally, what i said was probably one of the most factual things said in this thread; the only action this 2010 forum gets is when people argue about God, money, and politics... are you trying to tell me that's untrue?

stangfoeva

AWESOMO 4000

Sincerely,

US Banking Collapse of 2008/2009

petrong1186

karman

I have seen credit union rates for 84 months at 4.74%
That is @$631 per month at $45K
Cute, but remember...
Most credit unions were not associated with the collapsed banks at all.
The one quoted indeed had nothing to do with any of that at all.
They offered no risky loan programs (as many small banks) an incurred few problems.
One would, of course, have to qualify for such a loan or they would be considered a risk.

WarpdSpazm

This here is what my Bank and Title Closing wife calls "Truth in Lending." What you have to decide in reality is whether or not that "$50K MSRP GT500" is worth $60K to you (between tax and insterest) and if you can afford a 60K car. If it is then go for it, so long as you're not financially putting yourself or your family as risk.

Then, doing as previously mentioned, paying extra each month or getting a payment or two ahead is a great way to work towards early pay off and saving some of the interest. I work with Stock market tradetrs on a daily basis - You can't live life without a small amount of risk. Just be smart about it... No need to get all "Suzie Orman" on the rest of us though. According to her, unless you have 50K liquid reserve in the bank and make 100K a year with only 2,500 a month in cost of living, you should be walking 'cause even the city bus is beyond your means.... blah...