What do you finance?

jorian · 11-26-2006, 11:00 AM

Looking through the classifieds lately I see a fair amount of people asking what to pay for cars because they need a bank loan to finance the purchase. Unless its a daily driver with tax write off opportunities I just don't see the wisdom in financing an extravagance like a Porsche. I was always taught to pay cash for luxury items or don't buy.

What happens to these guys who finance a 911 and need to rebuild the tranny 6 months later? VISA steps in I guess. I also see guys with 2 Pcars, a luxury sedan, a truck and a Harley in their signature line ask a part seller to "hold the item pending sufficient funds in their bank account." And this is for items under a grand!

I try to only borrow deductable debt where I can, pay off CC as soon as possible and pay cash for disposable income-type purchases. I try to pay my suppliers on my CC to collect points but then pay off the balance ASAP. I've leased work vehicles, production equipment and computer work stations and have a line of credit for my business but if I can't write it off, it pains me to borrow $. I can't imagine buying a 52" TV on credit with the first payment in starting in 6 months etc.

Maybe I'm real conservative but with consumer debt figures running over a trillion dollars what are these people thinking?

Moneyguy1 · 11-26-2006, 11:34 AM

My philosophy:

Unless it is an extreme emergency, If I cannot afford to buy it outright, I do not need it. I buy used cars, save for major purchases like a new TV etc. I buy nearly everything on Visa and pay it off 100% every month, thereby tracking my purchases.

I mentioned it before, but there was a squib on tv that 44% of Americans were still paying for purchases made for Christmas 2005.

pwd72s · 11-26-2006, 11:37 AM

Count Cindy & I among those who make one backbreaking payment when buying a car.... We did finance our now paid for home. Everybody needs to live somewhere, right? Being debt free is a wonderful feeling.

turbo6bar · 11-26-2006, 11:53 AM

jorian, if everyone was like you, the American economy would crash.

jorian · 11-26-2006, 12:10 PM

turbo6,

God bless the average consumer. I guess....

tabs · 12:21 PM

When a auto mfg offers 0% financing, your a fool not to take it. Your cash in the Bank can make 5%, while your paying it off.

I will also make a major collectable purchase using a fixed low interest rate card.(1.99% to 5%). Usually I have a 30% to 100% profit margin on what I buy and its an appreciating asset to begin with. While my cash makes 5% to 20% in my investments.
Now if I were really smart I would be selling off those leveraged high margin pieces and kiting it into 20K to 50K pieces.

OHH... Consumer Goods I pay off quickly if I use a card.

Anything I can do to use your money for free to get what I want is OK with me. Case in point is the 12 months same as cash offers...I just make sure that payment is made before the due date.

rfuerst911sc · 11-26-2006, 12:27 PM

I make a fair amount of Home Depot + Lowes purchases when they offer 6 or 12 months no interest no payment specials when you use their credit card. For example I just put down a $600.00 bamboo hardwood floor that I could have payed cash for, instead I have 1 year to pay it off. My wife and I kick in about $10.00 per paycheck and throw it in an envelope. When 1 year goes by we pay it in full and we incur no interest penalties how can you lose? In the mean time your cash is earning a little bit of interest that you would have used to buy initially.

GettinHeadStuds · 11-26-2006, 12:35 PM

Quote:

Originally posted by tabs
When a auto mfg offers 0% financing, your a fool not to take it. Your cash in the Bank can make 5%, while your paying it off.

What he said.

pwd72s · 11-26-2006, 12:36 PM

Quote:

Originally posted by tabs
When a auto mfg offers 0% financing, your a fool not to take it. Your cash in the Bank can make 5%, while your paying it off.

I will also make a major collectable purchase using a fixed low interest rate card.(1.99% to 5%). Usually I have a 30% to 100% profit margin on what I buy and its an appreciating asset to begin with. While my cash makes 5% to 20% in my investments.
Now if I were really smart I would be selling off those leveraged high margin pieces and kiting it into 20K to 50K pieces.

OHH... Consumer Goods I pay off quickly if I use a card.

Anything I can do to use your money for free to get what I want is OK with me. Case in point is the 12 months same as cash offers...I just make sure that payment is made before the due date.

Crunch the numbers Tabs...99% of the time, you're better off paying cash. The 0% financing hype usually means you are passing on a "$2,000 cash back" deal. Always crunch numbers, answering to yourself the main question..."what am I going to end up paying for this car?"

tabs · 11-26-2006, 01:30 PM

Believe me I watch the numbers...where I get delusional is in not turning over what I collect..but I just like the stuff and that is worth a buck or 2 to me.

When it comes to money I am one twisted fk...Mother uses 15W Light Bulbs in her lamps to save money on electricity. Then she only turns them on when she needs to see something, otherwise its sitting in the dark. If your cold she say put another sweater on, I say, "But Mother I allreaady have 2 on, can't we turn on the heat?" To that she says, "What do U think I am made of money?"

Mother really is something else, she won't even turn the AC on in the car when its broiling outside. As she says it, "By using the AC, it cuts down on fuel efficency."

Moneyguy1 · 11-26-2006, 01:34 PM

Automotive A/C....tebs, when they rerun it the Mythbusters did a test on A/C-windows closed and no A/C windowsa open. Of course, you may, after describing Mother, have to bring your own VHS player....

tabs · 11-26-2006, 01:35 PM

Does it come on BETA?

the · 11-26-2006, 01:37 PM

Yeah, what pwd said. The "0% financing" is never free.

widgeon13 · 11-26-2006, 01:42 PM

I now pay for everything unless it's zero percent financing and then I pay over short period of time, less than 6 - 12 months. Not sure why I do that but figure it does not cost me anything and if the market is doing well seems like a logical thing to do. Pay all credit cards at the end of the month, regardless of what I buy.

I heard some crazy statistic the other night on national news that 70% (US) of households over the last five years have spent more than they have taken in on an annual basis, that is one scary statistic if it is true.

Seahawk · 11-26-2006, 01:51 PM

I run numbers like a card shark...and I have no issues financing major, basic purchases. I am not including consumer goods like electronics.

It is all about the portfolio, and, occasionaly, what I want when I want it.

jrdavid68 · 11-26-2006, 02:04 PM

Decades ago a wise and wealthy farmer in the Midwest told my father that the way to get ahead in life is to borrow what you can afford.

turbo6bar · 11-26-2006, 02:52 PM

Quote:

Originally posted by jorian
Maybe I'm real conservative but with consumer debt figures running over a trillion dollars what are these people thinking?

Actually, consumer credit for the US hit a record $2.4 trillion in September. Additionally, US families spend 14.4% of all disposible income to servicing debt. This is a record high.

Spin the credit card round and round. When it stops, nobody knows.

alf · 11-26-2006, 03:12 PM

Quote:

Originally posted by tabs
When a auto mfg offers 0% financing, your a fool not to take it. Your cash in the Bank can make 5%, while your paying it off.

Not always true. Most of the time with 0% loans you are simply paying the interest upfront in the form of a higher selling price.

Ask if you could get the car for less without the 0% loan, take the Present Value of the cost of interest and subtract from the lower cost to see if it adds up. Your cost of money might make it work for you.

Other 0% financing is betting that people do not have the dicipline to pay it off before the big interest hits. Most don't. It is a brilliant business move.

Dantilla · 11-26-2006, 04:19 PM

Quote:

Originally posted by tabs
When a auto mfg offers 0% financing, your a fool not to take it.

I was tempted by this once, until I ran the numbers.

At zero percent financing, I would still be upside-down. Let somebody else take the depreciation hit, and buy used.

The ONLY thing I finance is real estate.

tabs · 11-26-2006, 04:29 PM

When I bought my Truck in 98 it was 1.9% financing for 3 years, I got the Truck at $200 over Dealer invoice.plus the 2K off and Servicemans Discount whatever that all meant. The total cost of interest was $600 over 3 years...after going to 4 or 5 Dealers and AAA, I got the idea of what they would do and wouldn't do.

I push the numbers on whatever I do...I am a scrounge, I check the dented can basket at the supermarket...oh wait thats Mother, that does that...I'm the BIG SPENDER in the family, the Prodigal Son...Wanton Waif...Neeerdowelll..