FICO Range for current (thru 1/2/24) 0% financing offer

[Hammered]

People who have FICO score above 800 pay cash. ?
A few years ago I was talking to a bank manager about doing small business payroll. He started offering a loan, to which I said we didn't need to borrow, to which he replied: that's great, then we can offer a very good APR.

If you took a 3 year interest free loan and put the cash into treasuries pulling the payment each month on turnover, at the end you've earned an extra $4k by simply being smart. There's also other ways to park the cash short term as banks are offering $$$ for 90 day borrowing where it's not difficult to find 40% annual yields for short term. Last year spending just a few minutes a month moving on-hand cash around I got banks to pay me nearly $10k for simple little perks by not blowing the cash on vehicles.

Only a fool wouldn't take advantage of 'free' money. Also, you don't get into the 800s by not using credit. You get into the 800s by using credit wisely. You stay in the 800s by not being neck deep in credit usage. You can stay in the 800s by getting a new card yearly with a 0% interest period and using that for longer-term balance carrying. Don't carry a balance on typical CC interest rates -- that's an even dumber move than not taking advantage of 0% loans.

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[RedStallion]

If you took a 3 year interest free loan and put the cash into treasuries pulling the payment each month on turnover, at the end you've earned an extra $4k by simply being smart.

You are not talking about being smart, you are talking about somebody being dumb, who would give you a loan with APR below treasuries. There aren't any.

 

[RedStallion]

Not really true. IMO, persons with high FICO scores are smart enough to use “other people’s money”. You can always payoff a loan later.

Yes, it is true. People with very high FICO are those who have high cash value and low debt. You won't get high FICO score if you have a high debt to income ratio. There is zero sense paying for using somebody else's money when buying a car if you have a lot of cash. You only use other people's money when you are willing to pay for other people to assume your risks, like when you are running a business.

 

[RedStallion]

I’ve got like 840 and I finance. Just pay your bills on time, easy peasy.

This isn't about personal anecdotes. It's just a simple math. When you take a loan you pay risk free rate plus some margin. By doing that you are either willing to put the same amount into a riskier investment with higher return or put money into a risk free instrument with lower return than the loan. In any case you are either taking on more risk or losing money in lower yielding paper. It makes no sense.

 

[Scooby24]

This isn't about personal anecdotes. It's just a simple math. When you take a loan you pay risk free rate plus some margin. By doing that you are either willing to put the same amount into a riskier investment with higher return or put money into a risk free instrument with lower return than the loan. In any case you are either taking on more risk or losing money in lower yielding paper. It makes no sense.

The lack of awareness here is concerning

I have my cash sitting in a high yield savings account currently earning around 5%.

Why would I take that cash out and stop earning money on it so I could buy a car if I have the option for a zero interest loan?

That scenario makes no sense to you Dave Ramsey?

 

[SWO]

Not likely. People above 800 would rather take a zero interest loan and use our cash for other things that would grow in value.

Agree with this all else being equal, but Ford in particular likes to make you pick between incentives or financing. The effective result is the zero percent financing just has you pay the interest up front.

 

[Scooby24]

Agree with this all else being equal, but Ford in particular likes to make you pick between incentives or financing. The effective result is the zero percent financing just has you pay the interest up front.

Not sure I'm following you. If you have a choice between 0 percent promo rate or 2.9% and 2k incentives, you only get incentives if you finance at the 2.9 rate. In either scenario you finance.

Are you saying ford has incentives for paying cash? I've never been presented them...

 

[SWO]

Not sure I'm following you. If you have a choice between 0 percent promo rate or 2.9% and 2k incentives, you only get incentives if you finance at the 2.9 rate. In either scenario you finance.

Are you saying for has incentives for paying cash? I've never been presented them...

It's completely possible the salesmen were (*gasp*) lying to me, but it's always been explained to me that you have to accept ~MSRP to use the 0%, when I could negotiate a price thousands less using cash. I recall being told incentives were part of that, maybe not but the bottom line is I have saved more on negotiated price than I could have with a free loan.

 

[Scooby24]

It's completely possible the salesmen were (*gasp*) lying to me, but it's always been explained to me that you have to accept ~MSRP to use the 0%, when I could negotiate a price thousands less using cash. I recall being told incentives were part of that, maybe not but the bottom line is I have saved more on negotiated price than I could have with a free loan.

lol, they are lying to you.

The financing incentives are independent of the negotiated price. My approach is to always go in and not even discuss financing incentives/options until you've negotiated the price.

 

[Logal727]

This isn't about personal anecdotes. It's just a simple math. When you take a loan you pay risk free rate plus some margin. By doing that you are either willing to put the same amount into a riskier investment with higher return or put money into a risk free instrument with lower return than the loan. In any case you are either taking on more risk or losing money in lower yielding paper. It makes no sense.

I don’t know how to tell you this but most people don’t have 60k cash to drop on a car. Even if I did, I’d never pay cash like that for a depreciable asset, especially if it were a low interest rate.

 

[Logal727]

lol, they are lying to you.

The financing incentives are independent of the negotiated price. My approach is to always go in and not even discuss financing incentives/options until you've negotiated the price.

Pretty sure Hyundai works like this, incentives can only be applied in certain situations, so it’s an either/or situation. It’s in the fine print.

 

[Hammered]

You are not talking about being smart, you are talking about somebody being dumb, who would give you a loan with APR below treasuries. There aren't any.

Jim Cramer is that you?

 

[SWO]

lol, they are lying to you.

The financing incentives are independent of the negotiated price. My approach is to always go in and not even discuss financing incentives/options until you've negotiated the price.

I think we're in violent agreement here? Negotiate OTD first but the bottom line is that the 0% has strings attached.

 

[Jimrpa]

If you took a 3 year interest free loan and put the cash into treasuries pulling the payment each month on turnover, at the end you've earned an extra $4k by simply being smart. There's also other ways to park the cash short term as banks are offering $$$ for 90 day borrowing where it's not difficult to find 40% annual yields for short term. Last year spending just a few minutes a month moving on-hand cash around I got banks to pay me nearly $10k for simple little perks by not blowing the cash on vehicles.

Only a fool wouldn't take advantage of 'free' money. Also, you don't get into the 800s by not using credit. You get into the 800s by using credit wisely. You stay in the 800s by not being neck deep in credit usage. You can stay in the 800s by getting a new card yearly with a 0% interest period and using that for longer-term balance carrying. Don't carry a balance on typical CC interest rates -- that's an even dumber move than not taking advantage of 0% loans.

I’m not nearly as clever as you seem to be with all the money hacks, but I certainly take advantage of any 0% promotions when I’m buying something (thank you Tim Cook for subsidizing my apple habit ?)

 

[Scooby24]

I think we're in violent agreement here? Negotiate OTD first but the bottom line is that the 0% has strings attached.

I see where you're going and yes the OTD price is impacted based on which finance incentive you pick but I also negotiate on non discrete incentives.

Regardless of which incentive you opt for, I've not personally run into a scenario where I come out ahead by paying cash.

Which is largely as a result of our high credit score....so we get over 800 and have best finance options available to anyone and now we just say no thanks we'd rather pay cash? Lol ...no.

I only know one guy who does this and he's an ego maniac and pays cash for his cars solely to brag and flex on others.

I just chuckle and let him brag.

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