How much do they charge to finance a car? suppose the car is 40k and they want to offer you 1.9% or 0% how much will they charge to finance it? or is cheaper to just buy it? If they offer you some incentive to finance it can you just pay it off and pocket the difference?
Usually that 0% is only good for a certain amount of time before they bump up the rate. If you're trying to build you're credit I'd finance it. Make sure it's a loan and not a lease. Not a fans of leases. If you're not worried about your credit and can just buy it straight out I'd do that, no interest to pay back
I've done 0% through Chevy and 1.9% through credit union. Not much difference. 0% of the final drive out cost should be just that. 40k divided by months financed and not a penny more. Focus on final drive out cost, your in a great position if you can get 0% or buy out. Your in control.
Finance it, obviously the lower the rate the better. If you get it at 1.9%, you can easily earn that (and almost surely a lot more) by investing it, even in a Money Market or Bond Fund if you're ultra conservative. So if you want to maximize the use of your money, I would: 1) Finance it, put as little down as possible 2) Invest the remaining amount into whatever you're comfortable with. A Target Date Retirement Fund is one fund that diversify's for you, although I use a 3 Fund Portfolio. Of course, your credit, tax bracket, income, and a few other things come into play, but it's fairly simple for most people.
Although I agree that leasing is basically throwing money away, it really depends on preference. Leases are generally cheaper You can avoid additional charges that come with owning a car (repairs, oil changes, etc.) Usually leases come with full 2 or 3 year warranties (oil changes, towing, roadside assistance, etc.) You get a new car every 3 years (not only new for you, but also the newer model) One disadvantage - if you go over the mileage on the contract (usually its 12k/year, but you can easily negotiate more), it costs extra, which can add up quick. Keep in mind, you can drive 25k miles in one year, as long as when you turn the car in, it's not over 36k.
I look at cars the same way I look at houses. Would you purchase a house that you knew was going to lose half its value by year #2 or #3? If you finance a $40k car, that means by the time you are done paying it off, the car might be worth only $15K. Now apply this situation to a house. It would be known as being underwater and is one of the culprits of the housing crisis. Unless you are driving long distances, go with the lease.
Leases aren't bad. The dealer is hoping the car is worth x dollars at the end of the lease. If it isn't then it is possible for the irr (Internal Rate of the Return) of the lease to actually be negative or very small for the dealer. If the car value at the end of the lease is greater than X the dealer will make money. Think of the lease as a bet. Usually the dealer won't lose, but he might.
This sort of thinking is so silly to me. How do people who think this way buy anything? Do you know what the value of toilet paper is when you are done using it?
buy to own. forget leasing. it's only money you're throwing away, unless you have the option to buy after x amount of years in your lease. leasing anything without intent to buy is a waste.
He won't lose because the things that will drive the value of the car down below what he bet on are things he will charge you for. If you have excessive wear and tear you get charged. If you put more miles than expected, you get charge. If there was an accident, you get charged. Leasing always works out in favor of the dealer.
OP, did you have a specific plan in mind? More info might be helpful, unless you were just looking for rent vs buy opinions.
Leasing just seems to make owning a car a less of a hassle no? I know the dealership will make some money out of the lease, but if there is warranty and they cover all the usual expenses, than I honestly don't mind. Plus getting a new model after 3 years is a lot less of a hassle for leases than actually selling your old car and buying a new one. I know financially it is not the smart thing to do, but I have been so stressed out by my car this past two years. I just have not had the time to sell the car and look for a new one.
Don't have anything specific yet. I was just trying to find out if I financed a car if I would be charged some outrageous fees. It doesn't sound like it. When you you want to refinance a house you have pay a few grand.
