new f150!

[Sackett]

C'mon gentlemen. Reading Comprehension. I beleive cbhunter is fundamentally correct in his example given. He stated, "If" you have the funds to purchase a new vehicle with "Cash", it makes more financial sense to finance the vehicle with a low interest rate. In his example of 3% on a simple interest loan compared to a return rate of 8% in the market invested......which number is higher over the length/term of the loan/investment? Hint: 8>3

[TX03RUBI]

Going to hit y'all with some math...

You find a $65k truck you like. You have $65k in hand.

You pay outright and you have no more in hand.

You finance $65k at 3% for 96 months...total with interest is $73,193. You take your $65k in hand and invest it in something that makes 8% over the same term and take out $762 per month to pay the auto loan. At the end of the loan, you still have $21k in your investment AND a car that's paid for.

Now that I think about it, just doesn't make sense!

Now, if you can't make 8% in that 8 year period, you might need to find another investment advisor!

You do realize you give up $3-5K in incentives to get that “free financing” right?

[TX03RUBI]

C'mon gentlemen. Reading Comprehension. I beleive cbhunter is fundamentally correct in his example given. He stated, "If" you have the funds to purchase a new vehicle with "Cash", it makes more financial sense to finance the vehicle with a low interest rate. In his example of 3% on a simple interest loan compared to a return rate of 8% in the market invested......which number is higher over the length/term of the loan/investment? Hint: 8>3

Fundamentally sure. If it didn’t require you giving up factory rebates in order to obtain that “free or .9% financing”.

[Monark]

C'mon gentlemen. Reading Comprehension. I beleive cbhunter is fundamentally correct in his example given. He stated, "If" you have the funds to purchase a new vehicle with "Cash", it makes more financial sense to finance the vehicle with a low interest rate. In his example of 3% on a simple interest loan compared to a return rate of 8% in the market invested......which number is higher over the length/term of the loan/investment? Hint: 8>3

That's not how I read it. He explained the 8% was over an 8 year period or 1% per year. Vehicle loan at 3% has to be 3% per year. I don't know where you would get a 3%/8 =0.375% loan anywhere. I may be dense but it doesn't look like a good plan to me. I didn't see Capital Gains tax in his equation either.

Oops. I read it again & he did not say 8% over 8 years. He said average 8% per year. I'm going to the garage fridge for another beer now.

[nchunter]

Just sold the wife’s 2018 expedition last night . Paid 51,000 in January 2019 for a new limited 4x4 expedition. Car max gave me 48,800 check and we put 49,000 miles on it. It had become a 3rd car so we can wait for inventory to get somewhat normal. But I never expected that amount but after reading here and other sites about used car prices I figured why not.


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[sasqy]

The American dollar has really lost its value these days !
Everything is a joke, thanks a lot Demmys.

[Bama]

I work at a Ford dealer we normally have about 600 to 800 new vehicles for sale we have about 70 new vehicles we are having to ramp up the number of used cars . I work in service what hurts us is we have no loaners and Interpise has very few cars to rent. So we are getting a lot of ****** off customer mad because we have nothing for them to drive while we work on their vehicles.

[Throwin Darts]

Going to hit y'all with some math...

You find a $65k truck you like. You have $65k in hand.

You pay outright and you have no more in hand.

You finance $65k at 3% for 96 months...total with interest is $73,193. You take your $65k in hand and invest it in something that makes 8% over the same term and take out $762 per month to pay the auto loan. At the end of the loan, you still have $21k in your investment AND a car that's paid for.

Now that I think about it, just doesn't make sense!

Now, if you can't make 8% in that 8 year period, you might need to find another investment advisor!

Your math is missing the biggest piece of the equation….risk. You need to risk adjust your market returns. Paying off debt or not taking on debt is considered a risk free scenario and you’re comparing it to a risk based scenario….Investing. There is no free lunch. You should risk adjust your market return and account for taxes when you’re evaluating this scenario. It’s not as easy as 8% - 3%.

The most apples to apples comparison would typically be between a “risk free” investment return such as an FDIC insured instruction or a similar duration treasury and compare the return on it to the cost of the debt.

[WItoTX]

Again, I can explain it to you, but I can't understand it for you.

The example assumes you have the money to pay cash for a vehicle.

You state Dave Ramsey folks won't get your process. But you have to be practicing Dave Ramsey in order to get to a position where you have cash saved up to buy a car or invest. And one thing I know, 90% of people aren't able to pay cash for cars. And those same 90% then read on the internet it makes more sense to take out a loan for the car then....and that's where they stop reading. And buy the car they want, not the one they can afford. And the debt cycle then repeats itself.

I completely understand what you are saying. It makes sense if a person is cool with debt. And can weather a bad year in the market. And it requires a serious level of financial discipline.

Fundamentally sure. If it didn’t require you giving up factory rebates in order to obtain that “free or .9% financing”.

You do realize you give up $3-5K in incentives to get that “free financing” right?

Exactly. Suckers born every day.

[bbqfan5909]

Thank you! I feel this was said over and over “ We can explain it to you, but we can't understand it for you”.

Capital gains, risk, etc. I’ll sit back and wait for all these folks to sell when ***** hits the fan.

Your math is missing the biggest piece of the equation….risk. You need to risk adjust your market returns. Paying off debt or not taking on debt is considered a risk free scenario and you’re comparing it to a risk based scenario….Investing. There is no free lunch. You should risk adjust your market return and account for taxes when you’re evaluating this scenario. It’s not as easy as 8% - 3%.

The most apples to apples comparison would typically be between a “risk free” investment return such as an FDIC insured instruction or a similar duration treasury and compare the return on it to the cost of the debt.

[jer_james]

Fundamentally sure. If it didn’t require you giving up factory rebates in order to obtain that “free or .9% financing”.

You do realize you give up $3-5K in incentives to get that “free financing” right?

This is flat out untrue. I know from personal experience. Not just myself, but Family being in the car business as a lender for 20+ years.

You can even google it ...

[MLank]

Your math is missing the biggest piece of the equation….risk. You need to risk adjust your market returns. Paying off debt or not taking on debt is considered a risk free scenario and you’re comparing it to a risk based scenario….Investing. There is no free lunch. You should risk adjust your market return and account for taxes when you’re evaluating this scenario. It’s not as easy as 8% - 3%.

The most apples to apples comparison would typically be between a “risk free” investment return such as an FDIC insured instruction or a similar duration treasury and compare the return on it to the cost of the debt.

Finally!

You can explain to him, but you can’t make him understand.

[CBHunter]

Ok all you smart asses...how many of you have a mortgage? Or do you pay cash for your house too? How many have a 401k, IRA or the like? If you do, you are already doing what I said, but on a larger scale. Is there risk, yes. With risk comes reward.

Historical figures on the annual rate of return on the stock market...

Last 10 years 14%
Last 30 years 11%
Last 50 years 11%
Last 100 years 10%

If you can't make 8% (below average) you're not investing in the right things.

There was a gentleman above that said he only pays cash for cars and another that said financing for 8 years would never make sense. I explained why it would. You guys started changing what I said into other things and adding or subtracting from what I said. What I said was specific.

Last question...have any of you ever financed a car? It sounds like the answer is no. If you have, what's a realistic term? 1 year, 3 year, 5 year? I would agree that 8 years is too long, but used it for my example to make a point.

I've never financed a car more than 5 years because I put a ton of miles on them. My wife and I have 3 vehicles. Two are paid off. Other will be by the end of the year. All have over 150k miles. I drive them until the wheels fall off. [emoji3]

That is all! Carry on...


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[Shinesintx]

I prefer not having a truck note. That way when the truck breaks down, needs maintenance, or tires then it is no big deal. Plus, not tied to a job or income to make payments etc. You have freedom you never realize when the things that you own don't own you.

Vehicles are not a good investment. It is a status quo for most on what is needed versus what is owned. Buying new is an even worse investment. I have done the things mentioned before so not preaching down. I plan on being wiser in the future.

I agree with your first paragraph, strongly disagree with your second.

If you buy a Ford truck in October, you can usually buy new for less than used. Mine stickered for 56k, paid 41.5k. Today, used and a year older than mine are going for 48k.

My last truck was an 07 KR F150 with 265k miles. I buy new and drive them for more than a decade. I get my money’s worth.

[Pope]

I just bought a 2020 XLT 4WD off road package with the 302A upgrade. I wonder what I could sell it for three months later.