Keep it or get out now

[stealthytolkien]

So if an automaker offers a very low, or 0% finance rate, or an incentive, you wouldn't take it? That's just bad money management.

One vehicle we got a $1,000 rebate for financing. Paid it off that week, kept the $1,000. No brainer.

Bought our Mach-e with 0.9% for 4 years. No brainer.

Bought our Lightning. Rate was like 7%. Wrote a check. No brainer.

0% interest rate is fair game of course! And the scenario you describe is also very fair - getting paid to finance that you can pay off in a week. You’re essentially citing scenarios where you’re technically financing on paper but you’re really just paying in full “next week”. I am not talking about those scenarios. I have bought 2 new cars in the last 20 years (the one before was a starter 8 year old used trash off Craigslist haha) and on both occasions these scenarios were not possible. One was a Tesla so it was a no negotiation deal with rebates. The other was Mach E and that was used so no point in financing and 0% wasn’t offered.

I am talking about traditional financing where people have car payments for YEARS paying interest because they bought something they couldn’t afford to begin with. Eg, buying a Taycan when my real financial ability allows me a Corolla and then paying for that Taycan for 20 years isn’t wise.

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[DennisD]

100% with you on that! I additionally decided right before buying my first car in 2006 that I’ll ALWAYS buy a car outright in cash. If I don’t have enough cash, I will wait or buy something cheaper that my cash can buy. Financing a car (especially a people mover grade car or a very new technology car that’s rapidly evolving) just seems weird to me.

I totally agree with you. Many on this forum suggests that it would be financially wise to invest the money in stocks and borrow from the time of purchase of said car but what they fail to factor in is that many people are not "wise" consumers and they look at it as "free" money when no interest is applied. Could you be better off to not pay cash and borrow the money, sure but you are staring down a barrel of higher risk at the end of the day.

They fall into the trap of purchasing way more than they can really afford. And also, if their stock price goes down the rest of the cards usually tumble along with it.

 

[stealthytolkien]

I totally agree with you. Many on this forum suggests that it would be financially wise to invest the money in stocks and borrow from the time of purchase of said car but what they fail to factor in is that many people are not "wise" consumers and they look at it as "free" money when no interest is applied. Could you be better off to not pay cash and borrow the money, sure but you are staring down a barrel of higher risk at the end of the day.

They fall into the trap of purchasing way more than they can really afford. And also, if their stock price goes down the rest of the cards usually tumble along with it.

Your last paragraph is what I wrote in my reply above exactly. It’s the illusion that grips you that you can afford something “over time”.

Again, a 0% is isn’t a bad way to go about it. But. Taking on a 0% interest loan is STILL a loan. And you’re still liable to pay off the principle lol, and if you’re living paycheck to paycheck in this economy in a volatile job market (where you can lose your job just like that), and don’t have enough saved to pay it off on a moment’s notice, without, like, starving you and your family because of this unforeseen circumstance, it is absolutely still a risk.

EDIT: Ideally, buying a new or used car should make absolutely no dents or waves in your life a day after, a year after, five years after, IF you bought something you can “easily” afford on the spot without even giving it a second thought. Disposable income and all…

 

[Mach1E]

I totally agree with you. Many on this forum suggests that it would be financially wise to invest the money in stocks and borrow from the time of purchase of said car but what they fail to factor in is that many people are not "wise" consumers and they look at it as "free" money when no interest is applied. Could you be better off to not pay cash and borrow the money, sure but you are staring down a barrel of higher risk at the end of the day.

They fall into the trap of purchasing way more than they can really afford. And also, if their stock price goes down the rest of the cards usually tumble along with it.

Who says you have to take on risky investments with the money?

Half the world of investing is just loans.

Borrow at 0% and loan that money out at a higher interest rate (CDs, bonds, fixed annuities etc). I’ll take that arbitrage any day.

 

[BigMach-E]

Back to the OP, get out now. You aren’t happy with the car. You won’t be happy with the car in the future. Roll your significant depreciation hit into the next car, just make sure it’s the car you want. You don’t want to keep rolling negative equity over and over. Everyone’s calculus is different.

 

[Phil Martin]

Your last paragraph is what I wrote in my reply above exactly. It’s the illusion that grips you that you can afford something “over time”.

Again, a 0% is isn’t a bad way to go about it. But. Taking on a 0% interest loan is STILL a loan. And you’re still liable to pay off the principle lol, and if you’re living paycheck to paycheck in this economy in a volatile job market (where you can lose your job just like that), and don’t have enough saved to pay it off on a moment’s notice, without, like, starving you and your family because of this unforeseen circumstance, it is absolutely still a risk.

EDIT: Ideally, buying a new or used car should make absolutely no dents or waves in your life a day after, a year after, five years after, IF you bought something you can “easily” afford on the spot without even giving it a second thought. Disposable income and all…

I agree.

My wife and I bought a new car a few years ago. We went to the dealership and test drove it. We were happy with it. We left and slept on it. The following week we went back and carried through the purchase. I negotiated and came to a final price of $35k. I told my wife get to the checkbook out and write it for $35k. While $35k isn't much for us, we've never had urges to spend much on a vehicle. We try and teach our kids the same, in that when you purchase a vehicle it should be an easy payout, and the newness and novelty will wear off.

 

[DennisD]

Who says you have to take on risky investments with the money?

Half the world of investing is just loans.

Borrow at 0% and loan that money out at a higher interest rate (CDs, bonds, fixed annuities etc). I’ll take that arbitrage any day.

More times than not, when the Dealership offers 0% it comes with a caveat. You can either take the 0% or cash back.

If you factor in the cash back, it is almost a wash. The Banks are not loaning out 0% loans. It does cost someone something and at the end of the day, you in effect are not really getting a 0% loan but rather a feeling of getting 0%.

Also, like I have said before many more times than not people generally spend more thinking that it is "free" money to add to their death spiral of payments in the future.

You and I may be good to go with this but the general masses are in deep debt and whether it is 0% or not, many shouldn't pursue said loan.

 

[Mach1E]

More times than not, when the Dealership offers 0% it comes with a caveat. You can either take the 0% or cash back.

If you factor in the cash back, it is almost a wash. The Banks are not loaning out 0% loans. It does cost someone something and at the end of the day, you in effect are not really getting a 0% loan but rather a feeling of getting 0%.

Also, like I have said before many more times than not people generally spend more thinking that it is "free" money to add to their death spiral of payments in the future.

You and I may be good to go with this but the general masses are in deep debt and whether it is 0% or not, many shouldn't pursue said loan.

That isn’t the case for the Mach E right now though.

You get 0% plus $3,000 cash back.

Take the 0%. Invest the funds you would have used to pay cash.

Of course people have to do both things for it to be a good idea. If they spend the funds on bubble gum and pac man video games instead….. probably better off paying cash.

 

[Space_Pony]

Save your money until you can pay off your MME. When it's paid off, then you can think about a different car without worrying about the loan on the car that you're trying to get rid of. I've been driving for 50 years and never had a loan on a car that I was going to sell or trade. If you can't catch up, you need to find a lower priced used car. You should have enough cash to pay for at least half of any car you're buying, if not wait until you've saved more money.
I know gas is expensive in Canada and I would think you could save a lot of money by charging your MME at home, so I would keep it and eat rice and beans until you've saved enough to pay it off. You'll never get out of the hole with your current method of operation.

 

[GreaseMonkey]

So if an automaker offers a very low, or 0% finance rate, or an incentive, you wouldn't take it? That's just bad money management.

One vehicle we got a $1,000 rebate for financing. Paid it off that week, kept the $1,000. No brainer.

Bought our Mach-e with 0.9% for 4 years. No brainer.

Bought our Lightning. Rate was like 7%. Wrote a check. No brainer.

I did the same and have done the same in the past. Paid $15 in interest and made one phone call to save a $1,000. No brainer.

I do think that in normal situations auto loans have a premium over deposit interest rates and if auto companies offer them at a discount, they would also provide an option for an equivalent cash discount. The last five / six cars we bought were cash purchases. Nothing more satisfying that holding that title in your hand.

 

[RickMachE]

I did the same and have done the same in the past. Paid $15 in interest and made one phone call to save a $1,000. No brainer.

I do think that in normal situations auto loans have a premium over deposit interest rates and if auto companies offer them at a discount, they would also provide an option for an equivalent cash discount. The last five / six cars we bought were cash purchases. Nothing more satisfying that holding that title in your hand.

Yes, most of the time, Ford Credit's offer on discounted rate or cashback offsets something else, i.e. they give you 0% but no cashback, or they give you $1,000 back but instead of 0% you get 5%.

However, sometimes they don't offset. Those opportunities are where it is crazy to not take advantage. And if you 0% or 0.9%, it is insane to pay it off early.

 

[DennisD]

That isn’t the case for the Mach E right now though.

You get 0% plus $3,000 cash back.

Take the 0%. Invest the funds you would have used to pay cash.

Of course people have to do both things for it to be a good idea. If they spend the funds on bubble gum and pac man video games instead….. probably better off paying cash.

There is a good reason WHY Ford is offering 0%. Currently, when you drive off the lot with a new EV, your "value" has dropped at least 25% if not more.

If you are really a "savvy" purchaser, you would not take the current deal Ford is offering.

The old adage that you get nothing for free is usually true.

If you truly have cash in hand and are going to invest it, do that instead and NOT purchase an EV. Purchase a non EV that would be most likely lower in cost. Take the money that you saved from said purchase and spend on gas/investments. Your depreciation will be less and you will have more money in your pocket book.

From a strict financial view, that would be the best.

If you really desire an EV, purchase a used one and pass on the zero percent.

You are NOT saving taking Ford up on their current offer. Yes, you would be better off to take said loan with zero percent if you bought a new one but the housing crisis back in 07/08 started because many people thought that it was "too good of a deal" and they got stuck with an albatross around their neck.

I get your point but at the end of the day, YOU are paying dearly for that 0%.

 

[GreaseMonkey]

Yes, most of the time, Ford Credit's offer on discounted rate or cashback offsets something else, i.e. they give you 0% but no cashback, or they give you $1,000 back but instead of 0% you get 5%.

However, sometimes they don't offset. Those opportunities are where it is crazy to not take advantage. And if you 0% or 0.9%, it is insane to pay it off early.

Completely agree. We’re saying: do the math! Simple as that.

 

[vortix]

That isn’t the case for the Mach E right now though.

You get 0% plus $3,000 cash back.

Take the 0%. Invest the funds you would have used to pay cash.

Though there is another option. Leasing a ‘23 Mach-E comes with a $7500 cash incentive instead of the $3000 you get when financing at 0%. You can lease and capture the additional $4500 savings - then pay off the lease right away. It’s a question of whether you want $4500 now or whether you want to finance and pay over 72 months.

 

[vortix]

There is a good reason WHY Ford is offering 0%. Currently, when you drive off the lot with a new EV, your "value" has dropped at least 25% if not more.

If you are really a "savvy" purchaser, you would not take the current deal Ford is offering.

The old adage that you get nothing for free is usually true.

If you truly have cash in hand and are going to invest it, do that instead and NOT purchase an EV. Purchase a non EV that would be most likely lower in cost. Take the money that you saved from said purchase and spend on gas/investments. Your depreciation will be less and you will have more money in your pocket book.

From a strict financial view, that would be the best.

If you really desire an EV, purchase a used one and pass on the zero percent.

You are NOT saving taking Ford up on their current offer. Yes, you would be better off to take said loan with zero percent if you bought a new one but the housing crisis back in 07/08 started because many people thought that it was "too good of a deal" and they got stuck with an albatross around their neck.

I get your point but at the end of the day, YOU are paying dearly for that 0%.

Why not take an ionic 6 lease for $239/mo?

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