View Poll Results: How did you pay
Loan
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50
39.37%
Lease
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22
17.32%
Strait Cash
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51
40.16%
Gift
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4
3.15%
Voters: 127. You may not vote on this poll
How did you pay for your car ?
#31
Driver School Candidate
Join Date: Feb 2006
Location: CA
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![Smile](https://www.clublexus.com/forums/images/icons/icon7.gif)
I have a lot of equity on my house. So, I took out a fixed rate HELOC at 6.5% for 5 years, which was only slightly higher than an auto loan. This way I can deduct the interest and have more flexibility. I also was able to get title on the car immediately.
#32
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by kensteele
Hehe, all those numbers, they kinda get tricky don't they. ![Wink](https://www.clublexus.com/forums/images/smilies/wink.gif)
It is better off for me, based on risk and my financial situation...you just gotta trust me on that.
Generally, after I have paid this car off by March 07, I will have paid a lot less total interest to the bank than the person who takes 5 years to pay it off.
![Wink](https://www.clublexus.com/forums/images/smilies/wink.gif)
It is better off for me, based on risk and my financial situation...you just gotta trust me on that.
![Stick Out Tongue](https://www.clublexus.com/forums/images/smilies/tongue.gif)
Generally, after I have paid this car off by March 07, I will have paid a lot less total interest to the bank than the person who takes 5 years to pay it off.
I am doing basically what you are doing. About half in cash up front and then paying off the other half by the end of this year.
I just hate having debt.
#33
Lexus Champion
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by Scooter24
I am doing basically what you are doing. About half in cash up front and then paying off the other half by the end of this year.
I just hate having debt.
I just hate having debt.
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
#35
Racer
iTrader: (3)
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by kensteele
Everyone knows that dropping a huge load of cash in a depreciating asset like a [new] vehicle is not the smartest financial move.
#36
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by Shinobi-X
Then again, neither is paying interest on top of that depreciating vehicle. If you're going to buy the car, its better to pay less on the total 'cost' of the car by waiving the cost to borrow money by as much as possible. If anything, I'd finance to assist in building credit, but buying the car period isn't an investment, as the full cost must be payed sooner (less) or later (more).
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
At the end of the day, different strategies are best for different people, and this is why so many options exist. If one thing were best for all car buyers, everyone would do it!
#37
Racer
iTrader: (3)
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by diablo1
This is only true if you have nothing else to do with your money. If it's a question of paying upfront vs. getting a 6% loan and keeping the money in a 4% savings account, then paying upfront is better. However, if you get a 6% loan but you have your money invested in stocks and are expecting a return of 10%, then it makes sense to get the loan. Along the same lines, it pretty much always makes sense to take a 0% car loan, if it is being offered. Take the money and put it in a savings account, and you are guaranteed better off. But no one is getting 0% on a hot car like this one. ![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
At the end of the day, different strategies are best for different people, and this is why so many options exist. If one thing were best for all car buyers, everyone would do it!
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
At the end of the day, different strategies are best for different people, and this is why so many options exist. If one thing were best for all car buyers, everyone would do it!
![Thumb Up](https://www.clublexus.com/forums/images/smilies/thumbsup.gif)
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
#38
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by kensteele
It's my intention, I planned this way so I am flexible for the 2007 and/or 2008 models; mainly the latter. I will probably order the 2008 or the 2009 which should give me about a year or two with no car payments. Plus I intend to purchase a condo in 2007, under construction: http://parkplaceleawood.com/ ![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
I ask bc i'm in that boat and dont know wut to do...also i can only out down about 10K as a downpayment, so not as much as u.
#39
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by Shinobi-X
Yep, in a nutshell. I was looking more at the total cost of the car specifically, which won't get lower- added to that, its only indirectly affected by outside investments, save for the ability to pay the car off sooner (some loans have a pre-payment penalty). Given your hypothetical, unless it was absolutely necessary to buy a car now, I'd just wait until my investment saw its return, and then buy the car outright if possible, once again minimizing the cost to borrow. Other options should be explored if the safer finanicial move were critical enough that buying a car were to intefere with other abilities. As you say though, its whatever works.
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
![Thumb Up](https://www.clublexus.com/forums/images/smilies/thumbsup.gif)
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
Think about it this way.
Scenario 1: You pay $40k cash upfront. All of that money goes to Lexus. In 5 years you have a car and you owe no money, but you have no extra money.
Scenario 2: You take out a loan and pay off $8k per year for 5 years plus interest. You still have most of your money except the downpayment. You invest this money and it makes you $3k per year. You pay $2k per year in interest. Five years from now, you have the car, plus $15k from your investments, you have paid $10k in interest, and you are no longer in debt. You are better off than Scenario 1 because everything is the same except you have an extra $5k, whereas in Scenario 1 you made no extra money.
If you have a use for your money that you expect to have higher returns than your loan interest rate, you should take the loan, in most cases. If you have no better use for the money, you should pay cash upfront. I hope that makes sense.
Last edited by diablo1; 03-31-06 at 01:08 PM.
#40
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by diablo1
I don't really agree with this. Right now, if you buy a car for $40k, you are giving up whatever return you could have had on that money invested elsewere. You can't think of your car as existing in a vacuum... It affects the rest of your finances because it takes up money you could use on other things.
Think about it this way.
Scenario 1: You pay $40k cash upfront. All of that money goes to Lexus. In 5 years you have a car and you owe no money, but you have no extra money.
Scenario 2: You take out a loan and pay off $8k per year for 5 years plus interest. You still have most of your money except the downpayment. You invest this money and it makes you $3k per year. You pay $2k per year in interest. Five years from now, you have the car, plus $15k from your investments, you have paid $10k in interest, and you are no longer in debt. You are better off than Scenario 1 because everything is the same except you have an extra $5k, whereas in Scenario 1 you made no extra money.
If you have a use for your money that you expect to have higher returns than your loan interest rate, you should take the loan, in most cases. If you have no better use for the money, you should pay cash upfront. I hope that makes sense.
Think about it this way.
Scenario 1: You pay $40k cash upfront. All of that money goes to Lexus. In 5 years you have a car and you owe no money, but you have no extra money.
Scenario 2: You take out a loan and pay off $8k per year for 5 years plus interest. You still have most of your money except the downpayment. You invest this money and it makes you $3k per year. You pay $2k per year in interest. Five years from now, you have the car, plus $15k from your investments, you have paid $10k in interest, and you are no longer in debt. You are better off than Scenario 1 because everything is the same except you have an extra $5k, whereas in Scenario 1 you made no extra money.
If you have a use for your money that you expect to have higher returns than your loan interest rate, you should take the loan, in most cases. If you have no better use for the money, you should pay cash upfront. I hope that makes sense.
#41
Lexus Champion
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by tdog09
If u plan on getting something new in 2007, why not lease?
I ask bc i'm in that boat and dont know wut to do...also i can only out down about 10K as a downpayment, so not as much as u.
I ask bc i'm in that boat and dont know wut to do...also i can only out down about 10K as a downpayment, so not as much as u.
#42
Pole Position
Join Date: Mar 2006
Location: orange county, ca
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![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by diablo1
I don't really agree with this. Right now, if you buy a car for $40k, you are giving up whatever return you could have had on that money invested elsewere. You can't think of your car as existing in a vacuum... It affects the rest of your finances because it takes up money you could use on other things.
Think about it this way.
Scenario 1: You pay $40k cash upfront. All of that money goes to Lexus. In 5 years you have a car and you owe no money, but you have no extra money.
Scenario 2: You take out a loan and pay off $8k per year for 5 years plus interest. You still have most of your money except the downpayment. You invest this money and it makes you $3k per year. You pay $2k per year in interest. Five years from now, you have the car, plus $15k from your investments, you have paid $10k in interest, and you are no longer in debt. You are better off than Scenario 1 because everything is the same except you have an extra $5k, whereas in Scenario 1 you made no extra money.
If you have a use for your money that you expect to have higher returns than your loan interest rate, you should take the loan, in most cases. If you have no better use for the money, you should pay cash upfront. I hope that makes sense.
Think about it this way.
Scenario 1: You pay $40k cash upfront. All of that money goes to Lexus. In 5 years you have a car and you owe no money, but you have no extra money.
Scenario 2: You take out a loan and pay off $8k per year for 5 years plus interest. You still have most of your money except the downpayment. You invest this money and it makes you $3k per year. You pay $2k per year in interest. Five years from now, you have the car, plus $15k from your investments, you have paid $10k in interest, and you are no longer in debt. You are better off than Scenario 1 because everything is the same except you have an extra $5k, whereas in Scenario 1 you made no extra money.
If you have a use for your money that you expect to have higher returns than your loan interest rate, you should take the loan, in most cases. If you have no better use for the money, you should pay cash upfront. I hope that makes sense.
#44
Racer
iTrader: (3)
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by diablo1
I don't really agree with this. Right now, if you buy a car for $40k, you are giving up whatever return you could have had on that money invested elsewere. You can't think of your car as existing in a vacuum... It affects the rest of your finances because it takes up money you could use on other things.
![Smilie](https://www.clublexus.com/forums/images/smilies/smile.gif)
#45
![Default](https://www.clublexus.com/forums/images/icons/icon1.gif)
Originally Posted by diablo1
I don't really agree with this. Right now, if you buy a car for $40k, you are giving up whatever return you could have had on that money invested elsewere. You can't think of your car as existing in a vacuum... It affects the rest of your finances because it takes up money you could use on other things.
Think about it this way.
Scenario 1: You pay $40k cash upfront. All of that money goes to Lexus. In 5 years you have a car and you owe no money, but you have no extra money.
Scenario 2: You take out a loan and pay off $8k per year for 5 years plus interest. You still have most of your money except the downpayment. You invest this money and it makes you $3k per year. You pay $2k per year in interest. Five years from now, you have the car, plus $15k from your investments, you have paid $10k in interest, and you are no longer in debt. You are better off than Scenario 1 because everything is the same except you have an extra $5k, whereas in Scenario 1 you made no extra money.
If you have a use for your money that you expect to have higher returns than your loan interest rate, you should take the loan, in most cases. If you have no better use for the money, you should pay cash upfront. I hope that makes sense.
Think about it this way.
Scenario 1: You pay $40k cash upfront. All of that money goes to Lexus. In 5 years you have a car and you owe no money, but you have no extra money.
Scenario 2: You take out a loan and pay off $8k per year for 5 years plus interest. You still have most of your money except the downpayment. You invest this money and it makes you $3k per year. You pay $2k per year in interest. Five years from now, you have the car, plus $15k from your investments, you have paid $10k in interest, and you are no longer in debt. You are better off than Scenario 1 because everything is the same except you have an extra $5k, whereas in Scenario 1 you made no extra money.
If you have a use for your money that you expect to have higher returns than your loan interest rate, you should take the loan, in most cases. If you have no better use for the money, you should pay cash upfront. I hope that makes sense.