I shouldn't have financed

[Terryble]

But she's all mine now.

[Evergreen6]

Ah, the !LOAN mod. The best mod there is! Congratulations!

[satxrider]

Paid it off early though? Congratulations.

[87GNX]

I dont like financing depreciating assets either...at least you own it now.

[Tricksta]

Congrats! I haven't had the first payment yet, due on Jan 14th

[K1SSRSS]

Originally Posted by Comrando

A car is not an asset. Get over your bookkeeping mind.

It is a tool you use to move from one place to another. A transit card.

There is no end to cost or maintenance.

How about you buy a house for cash and then realize you need food and water, heat and electricity,sewage...

Interesting take, but anything that holds value is an asset. A car holds value not only simply by what its worth, but it adds value to your life by providing the transportation you seek, so therefore it is an asset by multiple definitions.

I'm not sure what you imply by the house comment, but I know for a fact if you buy a house with cash, monthly food, water, heat, electricity and sewage budgets are much easier to swallow given you don't have to worry about a monthly mortgage payment.

Good job OP on paying off your car. I love my Camaro, it was my first new car and the first vehicle I ever financed. After purchasing it I swore I would never buy another vehicle unless I paid cash. I almost broke that commitment last week when I found a Z/28 for 57k, but low and behold I decided it would be much sweeter when I put the z in my garage without a payment to accompany it.

[FilibustaRhymes]

Congrats! Can't wait for my !loan mod.

[Egon]

I never understood the pay cash for a car thing. I suppose it was wise advice when interest rates were not incredibly low like they are now, but if you can manage to get decent financing it makes no sense whatsoever to pay cash for a vehicle. I financed my 1LE @ 1.99% on a 60 month note, that comes to less than $30 a month in financed interest and it has allowed me to fully fund my Roth IRA last year and this year as well as have a new vehicle. I have earned around 8-10% conservatively on that investment and the gains on that alone have exceeded any interest I will pay on my car loan in the first year and a half. In addition historic inflation rates have hovered at around 3% a year so that means that I am paying off my loan with money that is worth less than the money I received to purchase the car in 2013 which is essentially another discount on the purchase price of the car. And to top it all off I am improving my credit rating which provides a whole host of other benefits. (and if you don't have good credit why are you buying a car like this anyways?)

Yes the car is worth less now than when I bought it, but the money I would have paid off the car with is now earning me quite a bit more in interest and dividends than it would be if I sunk it all into that depreciating asset. I fully understand that there may be valid reasons why someone might pay off a loan early, or I suppose even to pay cash for a vehicle, but for most people that can get decent financing it makes no sense to pay upfront when you can take advantage of the benefits I described above.

Sorry if I sound like a jerk, it was not my intent and congratulations to the OP I am happy for them even though I probably don't sound like it.

[F-16 Camaro]

Originally Posted by Egon

I never understood the pay cash for a car thing. I suppose it was wise advice when interest rates were not incredibly low like they are now, but if you can manage to get decent financing it makes no sense whatsoever to pay cash for a vehicle. I financed my 1LE @ 1.99% on a 60 month note, that comes to less than $30 a month in financed interest and it has allowed me to fully fund my Roth IRA last year and this year as well as have a new vehicle. I have earned around 8-10% conservatively on that investment and the gains on that alone have exceeded any interest I will pay on my car loan in the first year and a half. In addition historic inflation rates have hovered at around 3% a year so that means that I am paying off my loan with money that is worth less than the money I received to purchase the car in 2013 which is essentially another discount on the purchase price of the car. And to top it all off I am improving my credit rating which provides a whole host of other benefits. (and if you don't have good credit why are you buying a car like this anyways?)

Yes the car is worth less now than when I bought it, but the money I would have paid off the car with is now earning me quite a bit more in interest and dividends than it would be if I sunk it all into that depreciating asset. I fully understand that there may be valid reasons why someone might pay off a loan early, or I suppose even to pay cash for a vehicle, but for most people that can get decent financing it makes no sense to pay upfront when you can take advantage of the benefits I described above.

Sorry if I sound like a jerk, it was not my intent and congratulations to the OP I am happy for them even though I probably don't sound like it.

Well said.

[TJ91]

Originally Posted by Egon

I never understood the pay cash for a car thing. I suppose it was wise advice when interest rates were not incredibly low like they are now, but if you can manage to get decent financing it makes no sense whatsoever to pay cash for a vehicle. I financed my 1LE @ 1.99% on a 60 month note, that comes to less than $30 a month in financed interest and it has allowed me to fully fund my Roth IRA last year and this year as well as have a new vehicle. I have earned around 8-10% conservatively on that investment and the gains on that alone have exceeded any interest I will pay on my car loan in the first year and a half. In addition historic inflation rates have hovered at around 3% a year so that means that I am paying off my loan with money that is worth less than the money I received to purchase the car in 2013 which is essentially another discount on the purchase price of the car. And to top it all off I am improving my credit rating which provides a whole host of other benefits. (and if you don't have good credit why are you buying a car like this anyways?)

Yes the car is worth less now than when I bought it, but the money I would have paid off the car with is now earning me quite a bit more in interest and dividends than it would be if I sunk it all into that depreciating asset. I fully understand that there may be valid reasons why someone might pay off a loan early, or I suppose even to pay cash for a vehicle, but for most people that can get decent financing it makes no sense to pay upfront when you can take advantage of the benefits I described above.

Sorry if I sound like a jerk, it was not my intent and congratulations to the OP I am happy for them even though I probably don't sound like it.

finally someone posted this
Congrats to the OP
And I 100% agree with this comment.

[TheHorse13]

"Use other peoples' money."

This advice came from every Internet millionaire that I know. Given 0%-1.99% rates of today for durations beyond 5 years, it's a no brainer.

The devil is always in the details though. This assumes that you're capable of servicing your debt obligations which is usually where people get into trouble.

A car, in my mind, is more than an asset or a transit card. It's a time machine which has therapeutic value that cannot be achieved through any other item on Earth.

And on a final note, no one ever won a prize for filling a 6 foot deep hole with gold.

[abaucom21]

Congrats to the OP.

Egon: Just checking the figures: $30 x 12 months = $360 per year extra you could have added to your retirement fund to earn your 8-10% interest. Your 5 year loan cost you about $1,800 and that is money you could have invested into your high interest retirement accounts. Also think about the added expense for GAP insurance while you were underwater on your loan. Sounds like fuzzy math to me if you think you come out better in the long run by financing your auto.

[F-16 Camaro]

Originally Posted by abaucom21

Congrats to the OP.

Egon: Just checking the figures: $30 x 12 months = $360 per year extra you could have added to your retirement fund to earn your 8-10% interest. Your 5 year loan cost you about $1,800 and that is money you could have invested into your high interest retirement accounts. Also think about the added expense for GAP insurance while you were underwater on your loan. Sounds like fuzzy math to me if you think you come out better in the long run by financing your auto.

But, he invested money at a higher interest rate...

If I am paying 1.99% to finance a car, but it free's up a lot of money to invest at say 5%. 5%-1.99%=3.01% net gain.

Seems pretty simple to me.

[K1SSRSS]

I don't care if you financed a car at 0% interest as I did when I purchased my Camaro, a $500 a month payment is still $500 less a month you have to invest etc. BTW you forgot to factor in the negotiating power of cash. Even if you save only $2500 on the purchase price, you can consider that earning (saving) about 8% on your 30k loan.

Next lets dispel the concept of earning more on your money than the interest you pay. If say you had invested and saved the 30-40k over 5 years before purchasing the car, lets do the math.

Lets look at a $40,000 car.

Lets take say a $2000 down payment as initial investment, add $633.33 a month for 60 months all while investing it at 8% interest (which is on the low end of decent mutual funds). You would have invested exactly $40,000, and have $51,066.37 at the end of the 5 years.

Guess what that's $11,066.37 left over to reinvest or enough to step up to say a ZL1 from an SS. And you don't have to give a squat worrying about a monthly payment for the next 5years.

Guess what also many times (not all) you give up other incentives such as cash back or rebates to receive that "good interest" rate, in essence you are just paying the interest up front.

The mentality of spending other peoples money to get what we want now is why our country is in trillions of dollars of debt and we can't dig ourselves out of the hole without insane amounts of taxes.