UnThreaded | Threaded | Whole Thread (26) | Ignore Thread Prev | Next
Author: telegraph Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: New passive investor looking 4 strategy crit Date: 2/6/2004 4:20 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Disagree

If you go to http://www.bankrate.com/gookeyword/calc/rebatecalc.asp

you can calculate the difference between taking a rebate, and paying interest rate.

THe current interest rate on new car is under 4% (3.85 at bankrate).

I used 4% vs 0%, with a 3000 rebate, and 48 month term.

You save $1400 by taking the rebate.

As to wrecking the car after 1 year, you might be taking worst case. I've been driving for 40 years, never totalled a car..never had more than $1300 in a car accident, and that once from a hit/run driver. Driven 500,000 plus miles. Knock on wood.....

I'd have to look at the amortization tables, but you are basically paying the same interest rate, and the 0 percent loan is most likely front loaded (meaning you pay more than half the interest in the first year).....so I doubt you would be paying it off at a much faster rate. Also, the zero down might require 'life insurance' on the remaining balance, and other crap added in to protect the car company in case you totally it, and die in the process..they want to get all their money back, even if you don't have it.

I aslo fail to see where this $100/mo more comes from. The zero down loan costs more, you pay more per month...you pay $1400 more for the privelege of thinking you got a good deal by zero percent financing. You are paying LESS per month by taking the rebate. (if you pay $1400 less over the life of the car loan, obviously you are going to pay less each month!).

In fact, at 4% vs 0%, you would be saving 29.16 per month on a 48 month loan.

Or put in perspective, if you live in California, and pay fed and Calif taxes equal to 40-45%, you have to earn more than $55 per month extra just to pay for the privelege of zero percent down financing.

Hmmmmm.......

At a 5% loan for 48 months, you would save $1000 over the life of the loan, or $20/mo. OR in California, you would have to earn nearly $40-45 per month, or over $500 each year to make the extra payments for 'zero down' financing.

ISn't it amazing how the math used by car dealers always seems to show that the 'best' solution is always the one that makes them the most money? Just who do you think pays for all the money the auto salesmen/finance manager get on commissions by selling you 'zero percent' financing?



t.





Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (26) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement