Ford should offer 0% Financing for 60 months

[bdub2you]

This is boomer thinking brought to you by the group that refuses to use credit cards even if they offer cash back.

Use the banks cheap money and invest your own.

It's actually sound financial advice. If you're buying a vehicle that will take you more than 48 months to pay off, you're buying a vehicle that is beyond your means.

Sincerely,
A well off millennial that only uses credit cards (but they're paid off in full each month).

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[ALVA DUDE]

Totally agree. I know they have offered that in the past. Dont know if it was incentive based or as a 'favor' to the customers for their production hiccups.

 

[GaryB2220]

ARE THOSE THE APRS FOR PEOPLE WITH POOR CREDIT?

NO THOSE ARE THE APRS FOR PEOPLE WITH A VOLUME DISABILITY

 

[bdub2you]

Can't take it with you when you get hit by a bus

If I get hit by a bus my family can sue the bus company for wrongful death

 

[Gamecock]

If you're buying a vehicle that will take you more than 48 months to pay off, you're buying a vehicle that is beyond your means.

This is the type of blanket statement that makes no sense without context...let's look at an example: My bank as of this morning is offering 2.29% rates on new car loans for up to 72 months. So, I can either write a check directly from my brokerage account and pay for a Bronco in cash....or I can finance it at a super low rate and extend it for a long time and leave that $60k in the account to grow (historically, it will grow at a much, much faster rate than the 2.29% I am paying the bank). So, am I buying beyond my means? I could buy a whole bunch of Broncos for cash if I wanted, but it just doesn't make any sense financially to buy with your own money, when you can buy with someone else's and put my own money to work making more (typically much more).

Example: I finance 100% for 72 months, and leave the $60k I could have used invested: My $60k grows to $102k using average market returns (9% compounded monthly); A $60k car loan costs me $64,273 total over 6 years. I net $37,727. Maybe the PV on that money today is $30k or so....I'll still take it...and I have that cash available whenever I want it if needed.

Bottom line: I may chose to finance longer than 48 months, and it is not "beyond my means", by any means. It is just smart to use OPM when money is so cheap, and to not pay it off one day early at these rates. Of course, it requires financial discipline....

 

[rugbysecondrow]

it is clear there two main types of borrowers for vehicles:

1) people who could pay cash, or who can pay off a car note in the short term, but who choose to leverage the capital offered to them to improve their returns.

2) people who cannot afford to pay cash and who cannot pay off a car note in the short term, but are choosing to borrow a much larger amount over a longer duration to be able to afford the monthly cost of the vehicle.

For those in group 1, depreciation or being "upside down" on a note is not an issue or a real consideration. They can pay the difference to be whole.

For those in group 2, being upside down can cause then to spiral further into debt if/when they need to sell the vehicle.

Know which group you are in matters and chances the decision making process considerably.

 

[vrtical]

I just did a 72 at 1.49% small down payment deal. Excellent credit pays for itself.

 

[MayhemMike]

The interest rate offered should be equivalent to the rate Ford is acquiring on the $100 reservation deposit.

 

[Gamecock]

it is clear there two main types of borrowers for vehicles:

1) people who could pay cash, or who can pay off a car note in the short term, but who choose to leverage the capital offered to them to improve their returns.

2) people who cannot afford to pay cash and who cannot pay off a car note in the short term, but are choosing to borrow a much larger amount over a longer duration to be able to afford the monthly cost of the vehicle.

For those in group 1, depreciation or being "upside down" on a note is not an issue or a real consideration. They can pay the difference to be whole.

For those in group 2, being upside down can cause then to spiral further into debt if/when they need to sell the vehicle.

Know which group you are in matters and chances the decision making process considerably.

That’s a good way to look at it. If I were in group 2, I wouldn't be buying a Bronco....doing stuff like that prevents you from ever getting to group 1.

 

[North7]

The interest rate offered should be equivalent to the rate Ford is acquiring on the $100 reservation deposit.

Ford does not earn interest on the deposit, the money went straight into the dealers account.

 

[BroncoT]

If we are going to petition, let’s go for FREE BRONCOS!

 

[North7]

That’s a good way to look at it. If I were in group 2, I wouldn't be buying a Bronco....doing stuff like that prevents you from ever getting to group 1.

Or, keep your vehichles for 10 to 15 years instead of trading every 2-3 years. When it's paid off invest what would have been your car payment.

 

[RBF 1401]

1.) You cannot make judgements on what is or is not sound financial advice for someone else if you know nothing about their current finances.

2.) This forum brought together a crazy bunch of very diverse Bronco fans with very diverse financial situations. Keep that in mind when you are posting.

3.) Much of the "blanket" advice being given could maybe be prefaced with "in my situation" or "for people with suchandsuch situations" because money management is not a one-size-fits-all endeavor.

4.) Some of the same people who kept getting frustrated with me for not following their cookie-cutter "sound" financial advice over the last few decades are now in way worse financial shape than I am.

 

[RBF 1401]

That’s a good way to look at it. If I were in group 2, I wouldn't be buying a Bronco....doing stuff like that prevents you from ever getting to group 1.

Buying a Bronco is definitely not what prevents me from ever getting "back" to group 1.

 

[rugbysecondrow]

That’s a good way to look at it. If I were in group 2, I wouldn't be buying a Bronco....doing stuff like that prevents you from ever getting to group 1.

I agree, this is where the so-called "boomer" advice is rooted (which I find an unnecessarily pejorative label)

The reality, most Americans can't afford $50K cars without longer terms. Dealerships love this. The system forces a seller to transact only at a dealership where they will allow you to trade in a vehicle (with negative equity), borrowing even more money...it is a debt trap. Selling to a private party would be nearly impossible because the owner doesn't have the cash to bridge the gap between value and remaining balance. These people should not borrow more than what they can afford to pay-off faster than the rate of depreciation.

For some people, leveraging debt can be "smart math". For others, it can really create a debt spiral.

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