Does financing give me any leverage?

[DrewBronc21]

So you are not making 8%. This logic has been proven wrong many times, but good luck with it.

Math doesn’t lie. The interest you pay on a 2% loan over 6 years on a $50k Bronco is less than $4k. Take that same cash and put in an investment account even at a modest return and you will probably net $10k. with that said, I’ve taken 6 year loan and paid it off in 2 because of the emotional effect of “not owing” anyone but It still wasn’t financially the right decision.

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[Ground_zero298]

2. The portfolio and investing d**k measuring

Portfolio is what you bring when you show up in a bronco and try to tell people you’re rich.

 

[RalBronco]

My dealer didn’t offer any such deal although I tried. With the extreme Bronco demand and limited supply, they have zero reason to include an ESP and reduce their profit margin. I wound up going with my own financing as I see little reason to pay cash with borrowing costs under 2.5%, especially when I can earn about 10% on my money elsewhere. That 7% opportunity cost would add up to me paying an extra $22k over 5 years if I pay cash for my Bronco.

You speak the truth that so many people need to hear. Don't make big purchases in cash when your money can be working for you elsewhere. If someone tells you to pay cash on a new car, they're either ignorant to the workings of today's world (your hayseed uncle) or they're an idiot positioning themselves as a guru (Dave Ramsey).

 

[vzqhsg]

Math doesn’t lie. The interest you pay on a 2% loan over 6 years on a $50k Bronco is less than $4k. Take that same cash and put in an investment account even at a modest return and you will probably net $10k. with that said, I’ve taken 6 year loan and paid it off in 2 because of the emotional effect of “not owing” anyone but It still wasn’t financially the right decision.

Be honest...how much debt do you have?

 

[pimpjuice]

I was in the same position. I ended up paying $10k on my credit card for points (the max my dealer would allow. I paid it off immediately).
I applied online at Penfed.org (some of the lowest rates in the country) and got a super low interest rate.
I had the money the stock market which was paying my loan each month but it's gotten too risky, so I'm using it to open a business that will hopefully pay off the Bronco.

 

[Bronc-O]

Can't hurt to ask. In normal times and buying a normal vehicle, they may offer something. Perhaps at least a couple of free oil changes. Dealers make money on financing, so they wouldn't want you to buy with cash. If you have good credit, start with financing and then you can always pay it off any time you want.

 

[Mr. Nice]

no because there would be little upside because they’re low ticket items but taking $50k cash out of the bank and putting it all into a Bronco when you can get a 2.5% loan for 6 years and put your cash in an investment account and probably make at least 8%(market depending) over 6 years is mathematically the wrong choice. Emotionally it makes us feel better though.

With that logic a person should refinance their house to the max and invest that money in the stock market. Great idea, not.
I have already lost enough money year to date in the market to buy a small fleet of Bronco's being a conservative investor with Vanguard. Now you think it's a great idea to finance one to invest more?
No, I'll take it out of my .6% earning cash account. A diverse portfolio is a must.
I guess people have forgot 2008 and the time it took for the market to rebound.
Sometimes talk is cheap and cash is king. Debt elimination is a key ingredient to financial security.
Loan interest is real and investments are all about timing and speculation.

 

[DrewBronc21]

With that logic a person should refinance their house to the max and invest that money in the stock market. Great idea, not.
I have already lost enough money year to date in the market to buy a small fleet of Bronco's being a conservative investor with Vanguard. Now you think it's a great idea to finance one to invest more?
No, I'll take it out of my .6% earning cash account. A diverse portfolio is a must.
I guess people have forgot 2008 and the time it took for the market to rebound.
Sometimes talk is cheap and cash is king. Debt elimination is a key ingredient to financial security.
Loan interest is real and investments are all about timing and speculation.

Actually If you could refinance at the rates of 18 months ago at around 2ish% then by all means the smart financial thing to do would be to extend it out for another 30 years and invest the cash. It’s a long term investment and while we have some bad years you should easily be able to make 7-8% over 30 years. Look at historical returns . With that said, again I took the emotional route and refied my mortgage so like 2.6% for 15 years before rates went up just to pay it off sooner but I could have made a lot more money at 30 years

 

[Heart2]

You speak the truth that so many people need to hear. Don't make big purchases in cash when your money can be working for you elsewhere. If someone tells you to pay cash on a new car, they're either ignorant to the workings of today's world (your hayseed uncle) or they're an idiot positioning themselves as a guru (Dave Ramsey).

A lot of people on here don't have to worry about making that decision. They don't have $50K to purchase a Bronco or invest in the market.

 

[heynow14]

I've got great credit. Where are the best places to find the lowest APRs?

With good credit, go to your bank or CU. They will likely give you .25% for auto payment, too.

 

[Mr. Nice]

Actually If you could refinance at the rates of 18 months ago at around 2ish% then by all means the smart financial thing to do would be to extend it out for another 30 years and invest the cash. It’s a long term investment and while we have some bad years you should easily be able to make 7-8% over 30 years. Look at historical returns . With that said, again I took the emotional route and refied my mortgage so like 2.6% for 15 years before rates went up just to pay it off sooner but I could have made a lot more money at 30 years

Yah I’m with you, people must invest for a the long term. But they certainly shouldn’t carry debt into retirement. It’s called a balance, no debt, and big portfolio. My point is paying off debt is guaranteeing a pile in non-taxable home equity. Any investment is pure speculation and taxable. Sometimes it works and sometimes it doesn’t. Been there done that.

 

[bigblueboing]

Hi,

Fortunately I'm in a position where I can buy my Bronco outright. However, I was curious if I did agree to finance some of the price if I could use that to leverage the dealership to include an extended warranty. If so, I would finance but then pay it off in about 6 months.

Thoughts?

Yes you have leverage as far as negotiating rates and including warranty’s and such into the deal. But if you can pay cash you can still negotiate extended warranties. Negotiate everything. IE can you include accessories and etc

 

[Abundigas]

When you tell a car dealer you are paying cash, what you are really telling them is they will make no money on the financing so they better make all their money on the sale. As far as leverage through financing, it might get you the warrenty closer to cost but I would be suprised if it gets it for free.

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