Best financing route to take

[Coloradoeco]

Best of luck to those financing these days, I thought my 2.9% rate 6 years ago sucked. With all my money going to home repair these days I knew a new car was never in the cards… so I’ll keep enjoying what I got and hopefully get another decade out of it.

Sponsored

 

[Zig]

Bad decision, but you do you. I prefer to have my money working for me and earning more than I am paying in interest. Plus a car is a depreciable asset.

Wasn’t aware the ‘loss’ was deductible. Why would you want to finance something that by definition loses value? Some used to roll it into the house (although good luck with todays rates) …. Can we use appreciation to offset depreciation?

 

[Ryunker]

Wasn’t aware the ‘loss’ was deductible. Why would you want to finance something that by definition loses value? Some used to roll it into the house (although good luck with todays rates) …. Can we use appreciation to offset depreciation?

Future value is irrelevant, buy what you desire and avoid interest. Have paid zero interest on anything in the past few years. So much extra room in the budget since then.

If Ford would just build my 700A Ember blue grocery getter.

 

[RJV15]

Future value is irrelevant, buy what you desire and avoid interest. Have paid zero interest on anything in the past few years. So much extra room in the budget since then.

If Ford would just build my 700A Ember blue grocery getter.

Congrats on avoiding interest.

Realistically, who has 60k cash sitting for a car?
If you have the cash then Investing should also net you more then the 6-7% interest.

 

[Ryunker]

Congrats on avoiding interest.

Realistically, who has 60k cash sitting for a car?
If you have the cash then Investing should also net you more then the 6-7% interest.

People that live in "Free America"

Its more in the hood of $7.5k

 

[friscoaggie]

Congrats on avoiding interest.

Realistically, who has 60k cash sitting for a car?
If you have the cash then Investing should also net you more then the 6-7% interest.

Really just a risk/reward, if you acquired the dough, play it safe now and earn a guaranteed 5% in CDs waiting for your car. You COULD earn 8-10% or more, but some world leader can also do something stupid and you end up losing 8-10% and now maybe you have to finance or walk away. Now if Ford offers me (they won't) 2.9%, I would finance in a heart beat.

 

[Zig]

.. 2.9%, I would finance in a heart beat.

2.9% for 36 and I’ll let them buy me cup of coffee ….

 

[friscoaggie]

2.9% for 36 and I’ll let them buy me cup of coffee ….

They should be buying us a bourbon given how much we are paying them.

 

[Stratman397]

So a lot of my friends and coworkers are telling me that i should go through my bank for financing to get the lowest APR possible. Some people say i can just go to my bank (chase bank) and see if i would qualify for an auto loan through them. Some people are telling me i should go through a credit union for even better rates. Some people say the dealerships will find the banks that best suit me. ..i guess where im trying to get at with this post is...

-What are you guys doing as far as your plan for financing?
-Would a credit union be a better route to take, and if so how do i go about getting into one?

I dont want to constantly be running my credit from banks trying to get pre-approved for auto loans, so how would i go about getting as many rates as i could without having my credit being hit each time? Should i wait til my vehicle comes in the dealer. See what they run me for and then,leave the dealership momentarily that morning, go run around town to the banks. Get quotes that same day, then head back to the dealer with my decision?

I appreciate the help and support. Ive been building my credit for the last 2-3 years very strictly for this very moment (S650), and im just trying to make sure i can put the cherry on top and make it all worth the effort by getting the lowest interest rate possible. Thanks!

Best thing to do is when you have time, do some research yourself. I haven’t checked, as I have enough to pull it all out for the car, but,we will have to get a new heat pump n the near future. I’m sure we will have plenty of time, unless my dealership can get ford to start on my car sooner. I am calling dealer again tomorrow!
I wish all these dealers would start getting theirs in. Would like to go look at one first and drive one

 

[Stratman397]

This should be a stickied thread going forward.
There's the potential for some great information here.

Generally speaking, credit unions are going to offer the best rates. However, pretty much everyone has abysmal loan rates right now. Like 6.5% minimum.

I'm heavily considering 72 month financing and refinancing when applicable. However, it will likely be years before the Fed can get inflation under control

Unfortunately I don’t EVER see them getting us out of the mess we are in

 

[friscoaggie]

What should i do in order to open up an aforementioned money market savings? I have most of my money saved away in my savings account. But whats the difference between this and mt savings account already and would this affect me saving up for my s650? Whats step 1

Discover Bank is a recognized name and they pay top rates on savings, all online, easy peasy. I have a money market and savings account. Difference all really boils down to transactions/month. Savings pays more than money market, but fewer transactions and they also pay good CD rates if you go there.

 

[friscoaggie]

I'm going to preface everything that follows by saying I'm not a financial advisor. I'm not certified in any way. Just a general person with some life experience. You'll could get some good, general infromation from us today, but this is not the place to get financially savy. I'll offer some suggestions in the following:

If you have not done so already, create a budget. Most people use a spreadsheet. Some like an actual ledger. You need to account for your inflows and outflows in some fashion; this will give you insight as to how you're getting ahead (or not). It will also help you realize where you might be able to do better.

Always live within your means. It's the only way you're going to get ahead.

Good times, bad times, always set money aside for the future. Find an amount you can consistently save.

For now, at your level, it probably best to park everything in a checking account. General awareness and eduction is probably best for you right now. After you get some more insight, what you have saved you can then invest.

Probably a good time to head to the library/bookstore. Start pulling books and review topics. Stay away from anything exotic; it will be a turn-off and it's unnecessary. Stay away from anything with "rich" in the title. Anything that proposes you'll become a gazillionaire by next week.

Saving and investing is a long-term play. It's often like watching paint dry. It's boring. Yea, you need to watch your money, have good awareness. But if anyone proposes some scheme or how easy and quick it is to make a fortune, it's best to run.

If you don't understand it, if you cannot explain it, don't invest in it.

If you cannot explain why you should invest in something, don't.

A general rule of thumb is to have six to 12 months of monthly expenses parked somewhere. A checking account or Money Market account. Something you can have immediate access to which is safe.

Most checking accounts are insured, but the downside is many pay no interest. If you have $1 in your account and inflation is 5%, at the end of the year you effectively have .95 . Long-term, that's not good. Short-term, it gives you comfort to pay for your immediate needs.

A Money Market account is an interest-bearing account that invests in very short-term financial instruments. It is NOT FDIC insured. There is a risk, slight, it will lose money. The additional risk is compensated in that many Money Markets are paying 4+% right now. These accounts are liquid and you can often write checks against them.

Certificates of Deposits (CDs) are interest-bearing and insured.. They pay possibly a bit more interest than a Money Market. But the CD is a contract, a commitment, to lock those funds with the provider, for six months to five years.

Goals, needs and timelines. All the topics in this post relate to goals and timelines.

I'd like a new fridge. I need to replace it this Summer. Whatever money I can save in that is going into Checking. I'm going to retire some day, I've got some money for that. Those dollars are going into some of the more riskier and volatile things.

Most short-term needs, 1-3 years lets say, belong in short-term instruments (checking, Money Market, CDs). Further out, 3-5+ years, it allows one to ride out volatility. I need my fridge and we're in a recession. I've got that, in Checking. I'm saving for retirement, the economy and US market has been going way down the last several months. But I'm not going to retire for another 20 years. Whatever. If anything, it might be a great time to buy or invest in things at a discount. Everyone likes a sale.

Long timelines give people an advantage to invest in things which pay better (stocks and bonds). The risk with these instruments is they can be volatile and you can lose money, potentially all of it. Long-term, things tend to smooth out and net gains. Stocks and bonds are not insured.

The advantages of stocks and bonds is, while riskier, you're compensated for that risk. You invest $1. You earn .07, grossing $1.07. Inflation is a cost, currently 5%, or thereabouts, reducing purchasing power. $1 + .07 - .05 = $1.02. Now you've earned something, over and above what inflation has taken away. And compounding that over time can allow you to get much further ahead. In the Checking account mentioned earlier, you were short money.

This also ties into the notion of risk. Checking is boring, but that's your immediate needs, what you know is coming up. Stocks, bonds and other items often take years to work. You have good times, bad times, but in-general, overall, you net positive and gain, compounding all the way.

Stocks are shares in companies where the shareholder owns a piece of that company, the idea, the product and profits. As the company grows and makes money, so do the shareholders.

Bonds often are loans a company seeks and secures with their physical assets. Plant, product, land, etc. Often because physical assets are involved, bonds are relatively safer than stocks. Bonds in-general pay less.

Asset allocation is how an investor divides and invests their funds. Short-term probably goes to checking, Money Market, CDs. Long-term, for retirement maybe, is often divided amongst stocks and bonds. Asset allocation can also involve overseas investing, maybe investing in an index fund that purchases only companies outside the US. Eighty percent of the global economy is outside the US.

Diversification. Stocks, bonds, US, overseas. Spreading your risk out over a variety of instruments often lessens risk while improoving returns. The US is going to have a recession. I can garauntee that. When, IDK. But when the US does, others countries might be doing very well. While you'll lose in the US, you could gain elsewhere.

Risk Tolerance. Everyone has a different amount risk they can tolerate. Age is often a big driver. There are questionnaires you can take on-line. Younger people can generally tolerate more risk. Older people, less. But a young single mother with a kid, younger. Maybe less still. Everyone is different. Only invest in what you can risk, what you're comfortable with. This can change over time, as you educate yourself more. Early on, it's probably more awareness and safety first.

I think maybe some good goals right now are:

1. Create and maintain a budget

2. Save and set aside six-12 months of expenses in a Checking or insured account. Something liquid

3. Consistently save something from every paycheck; consider this money spent or gone. It's for retirement or something else

4. Start reading, learning, educating yourself. You aren't sure what some of this stuff is. Dive in. Start Googling. Look in the library or book store

I understand you might be doing some of these things now. Great.

Over time your going to develop a foundation and you can explore other things (stocks, bonds, funds, etc.)

Once you have something committed for the long-term, something you can invest, seek out companies like Vanguard, Fidelity, Schwab and others. These companies will offer funds and instruments at very low rates you can invest in for the long haul.

* Disclosure: I have an active interest in Fidelity. I've been using them for years. They are a fine company, but not the only one offering financial products.

Index funds are often the best way for people to invest in for the long-term. Index funds invest in baskets of stocks and bonds, are not actively traded and cost very little in fees and commissions. You'll learn more about these as time goes on. Several out there are very simple and low cost, which is what most people need, myself included.

Commissions, fees, terms, etc. Pay attention to these. If you were to go to your bank and discuss this topic, they probably have a variety of items to invest your money in. Many could involve fees of different types. This will be disclosed in the applications. Many people invest in things they might have a relationship with or be familiar with. They're comfortable with their banker for example. But what they often don't realize are fees and commissions which might be costing them. You make 7%, but you lose some of that to fees and commissions and net 5%. Someone in an index fund: they net 6.9%. That's a huge difference over the long haul.

Real Estate. I own a house. That's my depth of real estate investing. I'm not a fan of real estate investing because it's a very illiquid instrument. I realize some have done very well in this area. Good on them.

Gold. If you buy a dollar's worth of gold, bury it in your backyard and dig it up 100 years from now, it will be worth $1, adjusted for inflation. That's cool. But you haven't made anything from it. You haven't earned anything. So, I don't invest in gold. Some do like putting a portion of their savings in gold to cushion against shocks and disruptions.

Insurance and annuities. Simple term life insurance is all anyone needs. Something that will pay off outstanding debt, cover the funeral, put kids through school, etc. Insurance can be complicated, but doesn't have to be. Annuities: don't. Annuities are a vehicle involving saving, investing and maybe insurance; they are often heavily laden with fees and commissions.

Crypto. No. And it's not a topic I'll be discussing further.

Options, futures, leverage, shorting, hedges and other exotic instruments are unnecessary in building savings for now and the future. If someone proposes you using these instruments, hard pass.

401(k)s and IRAs are vehicles that one can put money into towards retirement. All the things we've discussed thus far (cash, stocks, bonds) can be placed within these entities and dedicated to retirement. There are numerous tax advantages and they are a good thing. You can study these as you have time.

Getting rich. Anyone who chats something up involving getting rich quick, how easy it is, how they made truckloads of money: run from these people.

That's a lot. Could have been overwhelming. That's expected. Budget, park cash, educate. Those three things. There's never a bad time to save or invest. You're not going to miss out. Once you have some more insight, you can move to more long-term things for your future.

Not everyone is going to agree with my guidance. Others will be posting theirs'. I wish you all the best in this topic. Don't be concerned you're missing out and need to immediately jump into something. It's a long-term (probably used that too many times today) endeavor.

All this.

I hate monthly payments, they normally charge a fee on top. I created an annual expense account, mine is with my CU; however, interest rate sucks so I should move it but I have not. Anyway all my predictable annual expenses are paid from here. House insurance, Car insurance, Property taxes on the house, etc. Add them all up and divide by paycheck frequency so that you can pay them once a year and don't have to scramble to find the money. As stated in previous post, it is money already spent. I actually put them on the Credit card when they are due to earn points then immediately make the payment. If they all come due around the same time you probably want to prepay your credit card if you are worried about your credit score, as charging 15K in a month doesn't look good to the score gods. Reward points no interest. Get started with just one, then add others as you can, Lord knows I wasn't diligent enough financially when I was young, but one step at a time.

 

[friscoaggie]

Debt free is the way too be.
Financing stuff is a culture in some countries. They grow up with that way of life and don't see why it is bad.

In my country we don't buy stuff we can't afford.

People here don't like this sentence and will tell me that they CAN afford it, but they choose to finance it anyway so that they still have that money for something else.

Well, that's exactly what I said. You can't afford it if you feel the need to use that money for something else.

But yeah. The land of the great. Where the banks are laughing their asses. Muricah

Please don't listen to this guy when it comes to financial matters, he may be smart with cars, but sorely lacking in the money world.

My apologies for making a non-positive post, but this guy and finances, OMG.

 

[Stratman397]

Debt free is the way too be.
Financing stuff is a culture in some countries. They grow up with that way of life and don't see why it is bad.

In my country we don't buy stuff we can't afford.

People here don't like this sentence and will tell me that they CAN afford it, but they choose to finance it anyway so that they still have that money for something else.

Well, that's exactly what I said. You can't afford it if you feel the need to use that money for something else.

But yeah. The land of the great. Where the banks are laughing their asses. Muricah

We go by the wants and needs in this house. Lol
Is it something you just want or you need it? If you need it by all means, buy it, BUT If it’s a want, and you can afford it, get it, if not then you don’t need it! Thank GOD, I need my mustang!

 

[dfwford]

We go by the wants and needs in this house. Lol
Is it something you just want or you need it? If you need it by all means, buy it, BUT If it’s a want, and you can afford it, get it, if not then you don’t need it! Thank GOD, I need my mustang!

Some folks go by the "contributions" they can grift from unsuspectong donors with their GoFundMe accounts...

Sponsored