How **NOT** to FIRE

[The Cosmic Avenger]

Well, I don't know if the economy would collapse without irresponsible spending, although if nothing else changed except for eliminating irresponsible spending it would certainly take a big hit! But I always joke that people who don't haggle or seek out sales or discounts or cheaper alternatives subsidize my ability to do so. A lot of those would either be for much less or not exist if everyone shopped like we do!

 

[Texas Proud]

It's not free money: the "0% interest" is baked into the purchase price.

If you don't need financing, you should be able to negotiate an appropriate discount for paying 'cash on the dash'.

I see others have answered...



But I also disagree... the financing is coming from the company and not the dealership... the dealership is going to sell you at the same price no matter what... and most 0% rates only go to people with great credit...


Now, if there is a choice between cash back and 0 rate then there is a choice... for my sister the 0 rate got her a lot more money than the cash back offer...

 

[daylatedollarshort]

I asked the last time we bought a car what the price would be if we paid cash and they said the same. I think they get a kick back from the credit union for facilitating the financing, even at 0%. After we bought the car with 0%, we kept getting offers for a higher rate but lower monthly payments. I think converting the 0% crowd to lower payments but higher rates is where the credit unions and other financing companies make their money.

 

[jazz4cash]

I see others have answered...



But I also disagree... the financing is coming from the company and not the dealership... the dealership is going to sell you at the same price no matter what... and most 0% rates only go to people with great credit...


Now, if there is a choice between cash back and 0 rate then there is a choice... for my sister the 0 rate got her a lot more money than the cash back offer...

I think we are in agreement on the auto sales scenario. Maybe I wasn’t clear in my previous reply.
Whenever I hear 0%, I always think 0% of what? I suspect some buyers don’t negotiate as hard because they are saving so much on interest. Plus so many are fixated on the monthly payment. In addition to excellent credit the length of contract may be shorter making it still beyond the means for many buyers.

 

[jazz4cash]

I asked the last time we bought a car what the price would be if we paid cash and they said the same. I think they get a kick back from the credit union for facilitating the financing, even at 0%. After we bought the car with 0%, we kept getting offers for a higher rate but lower monthly payments. I think converting the 0% crowd to lower payments but higher rates is where the credit unions and other financing companies make their money.

We’ve bought quite a few cars with credit union financing but I’ve never seen 0 %. The ones I belong to promote refinancing your loan and sometimes offer a bonus but I never looked at the terms and assumed it was only for bringing a loan from another lender. It stuns me that many will loan over 100% and the rates are better than mortgage rates!

 

[segfault]

Most banks / CUs provide a dealer kickback of around a flat $200 in exchange for the dealer sending a financing customer to the bank. Usually it's about the same as the "prepaid finance charge" shown on most contracts. Generally, if you refinance or otherwise pay off the loan within about six months, the kickback gets clawed back by the bank.

 

[Lewis Clark]

Don't forget 0% loans! We were ready to pay cash for our last car, but they offered us 0% financing...so we took the cash we had saved for the car and paid off our mortgage early! Now our monthly expenses are lower...including putting even more money aside for the next new car.

I wonder if it might have been possible to negotiate a lower price for the vehicle and pay cash, instead of financing at zero percent.

 

[Texas Proud]

I wonder if it might have been possible to negotiate a lower price for the vehicle and pay cash, instead of financing at zero percent.

Usually no... when my mom bought her car back in 2010 she was going to write a check... they knew it... we got a price and then they said...


If you finance the car we can take an extra $1,000 off the price... there is no penalty for paying it off on your first payment... so we did... and before people come and say we could have gotten it lower... nope... it was already on the low side of what various websites said we would have to pay...



People seem to not want to admit it but there are times where financing is cheaper than paying cash...

 

[bmcgonig]

Usually no... when my mom bought her car back in 2010 she was going to write a check... they knew it... we got a price and then they said...


If you finance the car we can take an extra $1,000 off the price... there is no penalty for paying it off on your first payment... so we did... and before people come and say we could have gotten it lower... nope... it was already on the low side of what various websites said we would have to pay...



People seem to not want to admit it but there are times where financing is cheaper than paying cash...

Same with me. I got $500 off for financing it. Just paid it off straight away.

 

[GravitySucks]

Same with me. I got $500 off for financing it. Just paid it off straight away.

Agreed. In 2011 I bought DM a new 2010 Hyundai. We got 5 year 0% loan and an extra $500 off for financing through Hyundai. I ask what deal i could get cash and they said if have to pay $500 more. Brought the deal to the competing dealer and he accused me of lying to him. A new Elantra for under $15k. Don't question the rules when they're in your favor.

 

[MarieIG]

Well, I'm not a fan of debt, but admit that I (we) did take out a mortgage to buy our house. It took me seven years to pay it off.

 

[Katsmeow]

People seem to not want to admit it but there are times where financing is cheaper than paying cash...

We just took out a car loan with a high down payment. We had the cash and could have paid it in cash. But, if we did that then next year we would have had to withdraw more money from the IRA. The extra taxes made it cheaper to pay the interest on the loan. I am sure we will pay off the loan early but will do it in a way to manage taxes.

 

[JoeWras]

We just took out a car loan with a high down payment. We had the cash and could have paid it in cash. But, if we did that then next year we would have had to withdraw more money from the IRA. The extra taxes made it cheaper to pay the interest on the loan. I am sure we will pay off the loan early but will do it in a way to manage taxes.

That's smart.

I think the worry is more about the "only $399 per month payment" crowd. They don't do the math like you did. Yes, indeed there are times it makes sense.

 

[MI-Roger]

Quote:
Kate: Like, when my son went to prom, we didn’t rent a tux because we didn’t have the cash, but we bought a suit because we have a Nordstrom card.

Actually, at the shockingly high cost of Tuxedo rentals, buying a suit might have been the far smarter decision.

$150 for one night or $450 for 2-5 years of use. Assuming they didn't go crazy with suit prices.

 

[pjigar]

Usually no... when my mom bought her car back in 2010 she was going to write a check... they knew it... we got a price and then they said...


If you finance the car we can take an extra $1,000 off the price... there is no penalty for paying it off on your first payment... so we did... and before people come and say we could have gotten it lower... nope... it was already on the low side of what various websites said we would have to pay...



People seem to not want to admit it but there are times where financing is cheaper than paying cash...

Same thing happened with my last new car buying experience. No cash discount but $2000 discount if financed. We took finance and paid off as soon as allowed by the terms (3 months).

 

[pjigar]

That's smart.

I think the worry is more about the "only $399 per month payment" crowd. They don't do the math like you did. Yes, indeed there are times it makes sense.

Yes, my buddy's GF had such loan before they met. I think 10 year at ridiculously high rate. By buddy did the math and realized she would end paying *way* more than car's purchase price in interest over the years. He had GF pay off the car ASAP.

 

[The Cosmic Avenger]

Quote:
Kate: Like, when my son went to prom, we didn’t rent a tux because we didn’t have the cash, but we bought a suit because we have a Nordstrom card.

Actually, at the shockingly high cost of Tuxedo rentals, buy a suit might have been the
far smarter decision. $150 for one night or $450 for 2-5 years of use. Assuming they didn't go crazy with suit prices.

That's assuming a teenager would ever have another use for a tuxedo after their prom. I never have. A regular suit might be a good investment if they are fairly certain that they'll go to a few weddings and/or funerals in the next few years....assuming the teenager is done growing.