JoeC1982

iTrader: (1)

Looking at an 06 non nav car to replace the 05 i traded off a couple months ago. this time around i want a lower payment and i'm considering financing for 72 months if the interest rate isn't too bad. all my other loans have been 60, just wondering how many people go 72. Thanks

btw i saw my old car last night and couldn't believe i traded it. me = idiot.

LuvMyTSX

5 years. I'm a bit over one year into it and have been paying extra each month. I figure I've got about 2 or 2.5 years left and mine will be paid off.

IMO, 72 months is a long time to be paying for a car. I didn't even like the 5 year thing, but I too wanted a lower payment each month. I can't wait to get rid of it, so I pay more each month.

JoeC1982

iTrader: (1)

i work at a dealership(non-acura) and i talked to the sales dept and was shocked at how many people go 72 months. he said at least 50% go 72 these days and we are just a dodge, chrysler, mitsubishi dealership which means they aren't exactly really high end cars.

Zoopa

2.9% factory Honda rate for 36 months. No money down, I love America, where else can you buy a luxury car with no money down! Total interest after 36 months = $1,400.

FuriousGeorge83

Yeah mine was 36 months, dont remember the intereste rates.

gsrthomas

Dude 72 months is crazy for a car loan. Dont do it!

If you want a lower payment, wait a few months or up to a year. Save money like crazy and then put that money saved up down on your car.

You will regret getting a 72 month loan.

JediMindTricks

36 months and i don't remember the interest rate. 4.5% i think.

Knox

Now that's a good deal!

derbaff

I did 60. 72 seems way too long. I may want a flying electric car in 5 years.

JoeC1982

iTrader: (1)

the interest on 72 is way too high, i'm gonna hold off and see if they do a labor day sale like last year when it was 4.9 for 60 months. they are wanting 9.2% for 72 which is ridiculous.

JustK

Wow that's crazy. No wonder it seems like everyone drives a nice car these days. I'm paying for mine over 3 years and feel like a bit of a fool about it. The only reason I even went with that is because my parents offered to lend me the money. Otherwise I would have bought a less expensive car (or would have been fairly content paying for repairs on my old car). I guess some people really dig being in debt. I'm definately not one of them.

ckiggins

51 months here. (at 48 the pymt was a little too high and I didn't want to go all the way to 60 or even 54). The payment was right where I wanted it at 51.

jerzpwr

60months. ideally i want to be between 36 and 48 months

jaobrien6

I took out an 84 month loan, but I'm paying at a rate that will pay it off after 48 months.

I did this because when I bought my '04 TSX, the best rate I found was at my credit union that was offering 3.9% for any period up to 84 months. You didn't get a better rate by going with a shorter loan. So I took the 84 month loan, giving me the option to go to have a cheap payment if I ever needed to, but I've been paying extra, an only have ~10 months left.

Twisteds2k

0% forever

gftgrill

financed 36 months @ 2.9% but it will paid in 24 months or less.

paying interest on something that's losing value isn't a smart move

ninjamyst

financed 36 months at 3.9% (10 pts away from 2.9%...argh!!). I downed 15k so my monthly payment is less than $500. Not too bad.

TSXXY

60 months @ 5.6%.

ill have her paid off in ~36

jaobrien6

That totally depends on your interest rate on the auto loan, what you do with the money instead of paying it off, and how much return you get on that money (assuming you invest it elsewhere).

yuhoo22

0 months!!! I paid in full.

I wouldn't recommend you take a 72 month loan because although the interest rate seems low it will still end up being a nice chunk of money being paid in interest. I would say go 36 if you can afford the payment and if not go with the 60.

CoquiTSX

Almost same here. NFCU was offering 2.9% for 36 mo ($430.00). Funny thing is that the finance guy kept showing me the book showing NFCU rate was 4.5, I told him to go to the website and check it . Check to see if you are elegilbe to join a CU, most of the time they have better rates than banks. Can't be a member of too many (3). 72 mo is way to long for my tastes.

cmschmie

I did 60 months at (I think) 6.2%. I guess ideally I'd have it paid off in 48, but I have student loans AND an upcoming house purchase...

Was able to put $4k down though....payments are where I wanted/expected them to be.

studville

36 months @ 2.9% for me.

Incorrect. Rather than paying cash on mine (which would have been a bonehead move everytime), I took the 36 months @ 2.9%. If I would have paid cash for the car my gain =absolutely nothing. However, since I kept my money invested, my gain is the $31K that is STILL in my portfolio (which would have been subtracted if I paid cash) at a pretty reliable return of 12-13% per year.... this amounts to around $12,000 in 3 years (without subtracting out my losses from paying 2.9% interest on the financing of course). HUGE difference

gftgrill

that all sounds good an all, but don't foget to include the vehicle depreciation. is that 12-13% return garaunteed? what happens if the market goes south and your return is -5%?

SimpleWhite

when I purchased my TSX in 04 I put $10,000 down (what I sold my previous civic for) and jumped on a 5 year finance @ $276 a month. I got my TSX @ $24,000 flat w/ taxes. Hope that helps you.

studville

For the past 3 years I have been averaging about a 12% in my mutual funds/index funds of all shapes and sizes, etc etc. combined. This is not new knowledge or anything amazing. In fact, my investment returns are exactly this.... average. For the most part my 12% is guaranteed (short of a meteor smashing the earth into a million pieces). My investments are hugely diverse, so I'm pretty safe on the return. Vehicle depreciation is not included because it is quite obvious that the car is not an investment/asset it is an expense.

I think you're reading into it wrong. By no means am I making ANY money by buying the car. I merely saved money by financing it rather than paying cash on the spot.

surferdude

Did 36 months with 2.9 percent financing. We saved up and could have paid cash but intead we put 10k down and pay 500 a month. That said, the interest for the total 3 years is only 600 dollars or so. We put the rest in a 5% savings account so we at least get the 2% we'd lose on inflation...but its in the bank for a rainy day if we need it.

jaobrien6

I don't get why you think depreciation factors into this at all. The vehicle depreciates at the same rate no matter how you paid for it, and the depreciation isn't in any way related to the return on your money if you invest it rather than paying cash for the car.

gftgrill

Depreciation does factor into it when a loan is concerned.

if you ever end up in a position where you owe more than the car is worth, that's a bad move.

lets say for example that you owe 25k on a car that has a blue book of 23k. You're driving down the street and all of sudden someone runs a stop sign t-bones you and totals out your car.

now you have no car. their insurance company will only give you what the car was worth. and you get left with a bill for the difference.

now the likelyhood of that happening isn't very great. but it is something that can and does happen to people.

with a low interest rate you could in theory make more money that you spend in interest by investing it.

financing a car is one of the situtation where you have to take alot of things into consideration and look at your own personal situation.

theElio

48 months at 2.9%. Looking to have it paid off in 2 years total. I'm saving up the same amount I pay monthly into a savings account that pays 4.35% interest. God bless ING. Can't stand having to pay such a large chunk every month so might as well get it over with as soon as possible.

jaobrien6

But the car is depreciating no matter what... The only thing that 'causes you to come out behind in your example is the interest you paid.

Example A.
Buy car for 30k, pay cash.
1 year later, car is worth 23k, I crash it... I get 23k back. I'm out 7k and got 1 year of use out of the car.

Example B
Buy car, put down 0, finance 30k
1 year later, car is woth 23k, I owe 25,474 (6 year loan at 3.9%).
I've paid a total of 5,616 (468 * 12 months)... Insurance pays 23k, I owe 2,474 to pay off the loan... I'm out 8090. So, in Example B, I'm out $1090 more. Guess how much interest you pay in the first year of a 6 year loan at 3.9%?? $1089.66.

No matter how fast that car depreciates, no matter if I'm upside down on the loan or not, I'm still out the amount of the interest, and that's it.


However... stick that 30k in an HSBC savings account currently earning 5.05% (compounded daily), and take out your monthly payment of 468 each month... at the end of 1 year, you've earned $1400 in interest. Take out 35% (assuming 28% federal and 7% state taxes, just for an average approximation) and you're left with a little over $910.

Soo... in the rather extreme case where my car depreciated almost 25% in 1 year and then i crashed it, I'm out a total of $180. And that's if I'm earning only 5% return... If I get a 10% return on my money, I would earn ~$2850 in the first year, or ~$1850 after approximate taxes, or I'm ahead by $750...

If I keep the car for 6 years, you're ahead by over $4k after taxes and after you take into consideration the interest you paid.

gftgrill

^^ that's perfectly acceptable. but it still comes out to a personal decision. I would rather "loose" a couple thousand in unearned interest and not have a car payment. IMO having a car that's paid for is worth more than having a car payment and making a little bit of money.

The feeling that you own something and that no body can take it away from you is a great feeling. If you ever loose your job you don't have to worry about making a car payment. but if you have the cash to pay if off then that's another story. But I'm willing to bet that at least 50% of the people that have a loan on their car can't pay it off in 1 payment if they absolutely had too.

jaobrien6

I agree, most people have a car payment because they don't have the cash to buy the car outright.

However, I thought you were stating that if you do have the cash, it's always smarter to pay it off, than to take out the loan. There might be emotional reasons to do that (as you state above), but the best financial decision is usually to invest the money instead.

If disaster strikes, it's always better to have the flexibility of liquid assets... I'd personally rather have a $20k car with a loan on it and $20k in the bank, than a $20k car with no loan... you just have more flexibility and options if you have the cash right now.

You're right, it is a decision that people make for many different reasons. However, I still think this statement isn't true:

There are many smart reasons to take the loan, depending on the circumstances.

gftgrill

yes there are smart reasons to take out a loan, and low interest rates are definately one of them.

but the way that I personally look at it is that every month I'm putting money into an account that's loosing me money.

it's all personal and it depends on how you look at things.

I would personally rather have no cash and pay the car off. that's what I did with my last two vehicles and will do again with this one. I'll save up some extra cash and when I have enough, I will make a one lump payment to pay the balance in full.

but there is nothing wrong with investing the money and taking out a loan, as long as you do invest the money. I guess that I just know too many people who would take out the loan, then go spend the cash that they have.

jaobrien6

Yeah, that's definitely the worst of all the options.

Jurisprudent

60 months at 4.9% through Acura. They were still running the deal then (7/31)

BananaFusion

I went with 72 months, only because the interest rate was only .5% more over 60 and I wanted as low as a payment as possible until I graduate in another 4 months. And waiting wasn't really an option since I need a car.

Once I start work I've budgeted money to pay it off within 3 years, (or possibly even faster) since I have no desire to pay car payments for 6 years.

waTSX

I went with 5 years @ the then good rate of 3.9%, with every intention of paying it off in 3. Went with the longer term to get lower monthly payments. It'll be 3 years this coming January, at which time I'll pay off whatever is left on the loan.

I'll be driving the car for a while after that, as I'm getting tired of car payments. Maybe I'll take a look at new model in a few years.