Thread 28682074

Car Loans are they ever justified. I know people say that you should buy a car in cash but this seems to be like outdated advice when even 5 year old cars are like $20k now.

Do people really expect you to drive in a shitbox all your life?

>>28682074 (OP)
>hey /r/cars, can you help me justify that bad financial choice Im about to make

>>28682074 (OP)
if you cant even bother to save up a measly $29k, yes you should drive a shitbox.

>>28682077
I do have it saved up but it all in VOO and people said dont sell it. So i’m stuck at ground zero. So the only option is to sell VOO to buy it outright or let it sit and keep the financing.

>>28682074 (OP)
Anything below $30k is easy cash buyer threshold. If you can't save up that much in the amount of time between thinking that you'd like a new car and finalizing the deal on the car that you end up getting then you shouldn't be buying that car.
Past that, they're only worth it if you got 10%+ off MSRP/retail and you can envision yourself driving the car for the next 10+ years

>>28682089
Is disagree if the loan amount is like 5% or lower you can make money of the spread keeping the money invested. Plus inflation also wittle aways the real interest of the loan so it actually pretty cheaper. If you keep playing the delayed gratification game you’re just gonna end on a never ending loop.

>>28682074 (OP)
>Do people really expect you to drive in a shitbox all your life?

Yes, if you're such a failyouare at life that you don't make enough money to buy cars, then you don't deserve having a car. Amerilards are so entitled they think they automatically should have things just because. You have to slave away and earn it.

>>28682074 (OP)
I'm honestly wondering what will happen in another 10-15 years.
The used car market is fed by people trading in their cars and buying new ones; and the cunty faggot nucars that are being made today to satisfy insane efficiency/emissions standards are completely engineered to fail around 100k miles; and so they won't be viable.

What happens then?

You can still buy 100k mile used cars for like 5-7 grand where I live. Do you all live in blue shitholes or something?

>>28682074 (OP)
>Car Loans are they ever justified
When the interest rate is lower than the returns you could get on investing the lump sum for the duration

>>28682074 (OP)
Life is too short to regret things, just get what you’re comfortable with and what you’ll be happy with.
Don’t go into car debt if you’re going to trade it in later, but if you know that car will be the one you’ll keep for good and make you happy then go for it (assuming the loan terms aren’t retarded)

>>28682074 (OP)
Car loans are fine as long as you can get good interest rates. Not sure why is /o/ do allergic to debt, probably poorfags being poorfags.

>>28682194
there's nothing wrong with taking out a car loan to buy a car you need.. one that doesn't make you car poor. Like okay, no one can fault you for spending ~$300/month for an econobox to drive to work, that's life.. hopefully you can pay it off and not have a car payment in the future.

But these 20 something dudes with a 1.2k/7yr note on a fucking silverado or something similar is insane; and not to mention a disturbing number of them never actually pay it off, they just continue to roll the disequity into the next overpriced vehicle.

lending requirements should be stricter, and cap auto loans at 5 years. otherwise the tendency is going to be continuing to inflate the costs and draw out loan periods as long as possible. (see also: student loans)

>>28682216
>not to mention a disturbing number of them never actually pay it off
Literally me. As long as my portfolio outperforms the interest rates that I keep refinancing at I will only pay the interest and invest the rest.

>>28682092
if it was that easy to beat the spread, the bank would be doing it instead of having your permanently broke ass guarantee 5%

>>28682074 (OP)
Only poor people worry and say "pay cash" because they have bad credit and are high risk, which also means they lose more money on a loan they can't afford to make payments on.

>>28682224
so uhh.. what happens if there's an actual downturn? I don't take investment advice from YT and tiktok, so i'm a bit clueless =P

>>28682216
>he pays off his car loan
imagine spending money on the bank's car

>>28682225
the bank believes that you're more trustworthy than slimeball ceo #500, and understandably so

>>28682235
>He made no down payment.

>>28682074 (OP)
If it's a given that you need a $20k car, getting a loan is smarter than paying cash. Why, because you can invest the $20k and make more returns than you'd pay for the interest on the loan. Average stock market returns are like 10% and car loans are like less than 5% if you don't have black credit. So if you get a $20k loan and simultaneously buy $20k of index funds you will statistically make money compared to someone who spent the $20k directly on the car. Doing it that way also gives you more liquidity which is safer. Example: you have an emergency expense and need $15k in a hurry. The first guy can sell $15k of stocks quickly and he still has $5k assets, a car, and a 5% loan for $20k. The second guy has to sell his car to get the money, and since it's short notice he will get less than market value and end up with nothing and no car. Or he can take out an emergency personal loan at like 15% interest because they rape you on those, in which case he ends up far worse off than the first guy anyway.

People who disagree with this post by just claiming it's Jewish or something are certified retards who don't have basic financial literacy

>>28682229
>10.94%
>good credit
bruh, those rates are confiscatory.

>>28682245
What about NPV, the cost of financing is actually pretty small since you need to discount the future cash flows.

>>28682141
Doing this is more expensive than driving new cars because of all the repairs you have to do. And that's without even pricing in the risk. Cheap cars are a trap for broke idiots to stay more broke. The most cost effective car is a 3 year old economy car like a civic

>>28682232
You're an idiot lol

>>28682259
How so, explain in your own words.

>>28682229
where the hell did you get those rates from lmao
those are way out of line

>>28682247
I see you can't read.

>>28682264
Those are money lender rates, not bank rates.

>>28682261
If his portfolio earns more than the car loan interest on average, then it's a good idea to keep holding and not pay off the loan. This is because he is statistically likely to keep making money. Asking "what if there is a downturn" is nonsensical because the negative situation is less likely than the positive situation. It's like if I offered you an asset that has 80% chance to double in value and 20% chance to halve in value and you turned it down because "what if it goes down in value." It isn't rational thinking.

That level of risk avoidance might make sense if you have literally no other money and you need that cash to buy food, but the guy you replied to obviously has a secure enough situation that taking gambles with positive expected value is smart behavior.

Plus, having an emergency need for money like a medical issue or a storm damaging your house is both more likely and more catastrophic than a massive market failure. Having more liquidity makes a person better able to deal with these situations without incurring extra losses. So even if he's extremely risk avoidant his situation is still more secure and smarter than a man who has no assets or loans and just a car. That's why even corporations run by professionals to maximize profits and avoid risk will take out loans for their company cars rather than paying cash for them, despite also having cash on hand and a bunch of other assets including stock holdings that they could spend on the cars.

You can learn this information from school, not tiktok.

>>28682279
What about the 7 year loan anon? I feel like it gets shit on but could actually make sense since the dollar is shitting the bed lately.

>>28682273
This is the second result on google, and is much more in line with what banks/dealerships are currently offering at my credit score.
US News is smoking crack

>>28682083
>I do have it saved up but it all in VOO and people said dont sell it.
Take out margin, which will probably have a lower interest rate than any secured loan you could get on a 5 year old car, won't require fees, you can pay interest only for a bit, and can be repaid on your own terms. Buy, borrow, die. Inb4 "don't borrow to buy a depreciating asset," they use debt in the form of federal reserve notes

When we bought a new (used late model) farm truck, price was 49k, we decided to do 15 down and finance the rest because an additional 50k write off would have been overkill, and the minor interest write off for the next 4 years will more helpful, plus an extra 35k in the bank gives us more flexibility if a good opportunity comes along

>>28682284
>average APR
Again you can't read.

>>28682303
Are you retarded? Tell me what the "interest rate" is then, and why it would be higher than the APR.

Car loans are a decent solution but might encourage overspending on a car.

>>28682232
I stop putting money into the portfolio and start paying the debt. Downturns don't last a lifetime.

Dont forget the replacement insurance
Very expensive
Was cheaper for me to buy cash and self insure

>>28682138
Return to the past
Average car age used to be sub 6 years
Can you believe that
A staggering amount of cars bought and sold every year
Cars today last waaaay longer than before too

>>28682232
You buy the dip? Zoom out to the great financial crisis. If you had bought the absolute peak before that crash, you'd still be pretty damn happy today

>>28682283
So my p90dl was less than $20k used at 8%apr last month but I was able to get the tax credit. $6k down and payments are less than $300 a month for 48 months. With me investing the rest I make that back easily. I could've paid it off but then I would not be making extra on the other $12k that I have to play around with every month. Alternatively I could be driving around in a $6k shitbox and still earning the same with remaining invested money.

Anyone saying "save 30k" is retarded and has never experienced life before. If the car is under 15k then buy, over 15k then finance and invest any additional funds

>>28682074 (OP)
Don't buy shit you can't afford. Always cash and always an amount that won't hurt your savings too much. Cars are pieces of shit that depreciate and end up broken in 5 years. They shouldn't cost more than $10k.

>>28682074 (OP)
I just look at it like a little service fee. Yeah you COULD spend years and years saving but maybe you want that particular car right now and you might never have the chance to get it again. Or you really need a reliable mode of transportation. Times when it's worth it to pay a little extra, it's worth paying for the convenience.

>>28682283
it's the interest rates that are usually the problem, and people taking out these loans usually have bad interest rates too, for new cars it's a different can of worms because the manufacturers usually offer low interest rates just to move inventory, and usually (but not always) it's because they're undesirable cars you can get much cheaper on the used market

>>28685109
the car loan is just a red herring, at the end of the day, when you buy the car, that $10k or whatever you spend is taken from your account all the same, and if it's taken from an asset that makes more than the loan's interest, then you're losing money by paying cash vs. financing (altho like someone else said, usually a loan on margin to buy a car will beat an auto loan)

I make enough in trade options to cover my car bill, gas, insurance with a little left over. I literally don't care. Seeing my mom's failing health take it's toll while she worked her whole life to save a little money broke something in me. I will spend my money on the now.

>>28682255
Yeah but life's way too fucking short to drive ugly, slow, gay, boring bullshit

>>28682346
*old cars today last longer than old cars of the 2000s, but current cars will go to shit at 80k miles
Swret spot was late '80s to 2014

>>28682457
Instead you drive around in an ugly slow gay $20k shitbox

>>28685109
>end up broken in 5 years
This is just the goyotas, right?

>>28685246
A bird in hand is worth two in the bush
One today is worth two tomorrows

>>28685269
See >>28685398

>>28685246
>maybe you want that particular car right now and you might never have the chance to get it again
>it's worth it to pay a little extra, it's worth paying for the convenience
>invest any additional funds
>youre the smartest goy! nothing bad will ever happen to (You)!

>>28685401
>noooo you MUST drive a 25 year old corolla because otherwise you're juat being FLEECED by jap and nazi kikes!!!

>>28682083
Honestly selling right now wouldn’t be a bad idea. The S&P 500 is held up by a handful of tech companies that are massively overvalued because of AI hype. I’d just sell it and buy a car cash and dollar cost average your would be payment back into VOO and hope the AI bubble pops while you’re doing that.

>>28682341
Retard
Downturns are when you want to be putting money in.

>>28685401
If anything "bad" happened then you would even more glad that you financed, because all the cash you would've spent on the car could be used as a cushion. It would be infinitely worse to plop down a ton of cash on a car and then something bad happen.

36mo or you can't afford it