[damianwo]

Originally Posted by Patton250

Do what? I can join that?? :-)

Apply for auto loans, mortgages etc.

[Greer]

To Op,

Unfortunately, the Fed is not your friend right now. People getting mortgages for houses are feeling the same sticker shock as you.

[josec70]

FOMC meets next week and another 25bp bump to the FFR is expected. Rates will remain at these levels for most of 2023 before pulling back a late 23’ - early 24’, in my opinion.

We got spoiled with a decade of almost free money so current rates seem high but they are actually not, historically speaking.

OP, check TD Auto Finance as they have been aggressive with rates.

[Patton250]

Originally Posted by josec70

FOMC meets next week and another 25bp bump to the FFR is expected. Rates will remain at these levels for most of 2023 before pulling back a late 23’ - early 24’, in my opinion.

We got spoiled with a decade of almost free money so current rates seem high but they are actually not, historically speaking.

OP, check TD Auto Finance as they have been aggressive with rates.

While I disagree with you that we were lucky to have cheap money, I do appreciate the tip. My dealership is a dealer for that bank and appears. At least according to their website, so I’ll ask them tomorrow. That would be excellent. Thanks

[Patton250]

Originally Posted by armoredsaint

I paid cash, 0% interest

You would fit in perfectly at TRF.

Them your kinda people

[pbonsalb]

Credit unions, for some reason, often have the best rates, though I don’t know why. As some have pointed out, shop around because it appears that even today rates seem to vary widely from as low as 3% to as much as 6% with the higher end of the range being more common. If you read any economic news, this totally makes sense. The 3% loans may be subsidized or break even to gain business.

As for the best use of $100k cash, people have different needs and goals and there is no right answer that applies to everyone. With zero knowledge of someone else and their financial situation, I would not make a bunch of assumptions and suggest that what they are doing is wrong and that I know what is a better idea for them and their money.

[Patton250]

Originally Posted by pbonsalb

Credit unions, for some reason, often have the best rates, though I don’t know why. As some have pointed out, shop around because it appears that even today rates seem to vary widely from as low as 3% to as much as 6% with the higher end of the range being more common. If you read any economic news, this totally makes sense. The 3% loans may be subsidized or break even to gain business.

As for the best use of $100k cash, people have different needs and goals and there is no right answer that applies to everyone. With zero knowledge of someone else and their financial situation, I would not make a bunch of assumptions and suggest that what they are doing is wrong and that I know what is a better idea for them and their money.

I might just end up using the cash to pay for it. I’d rather buy right now that I need cash for. Either way, I would only need a one year loan. It’s just a shame. Thanks for the info though.

[pbonsalb]

5.5% interest should not be a surprise to anyone with knowledge and experience that goes back more than about 15 years. This is a historical mortgage rate chart, not a car loan rate chart, but it should give you an idea. https://themortgagereports.com/61853...art#historical

If you need $100k for just 12 months and have that much excess cash in the bank getting 3% then it makes sense to spend it rather than borrow at 6%. Obviously I would want to be confident that I could restore that cash in 12 months if it was cash that I liked to have accessible, and I would want to weigh the risk that there could be an emergency within those 12 months that would require the cash I just spent. That is a decision for you.

To me, spending $3300 to borrow $100k and repay over 12 months ($3300 if paid off each month; $6000 if paid at the end of the year) is no big deal. I’d rather keep my cash in case I need cash. Circumstances and needs and personalities differ, so what works for me may not be best for you.

[josec70]

Originally Posted by pbonsalb

Credit unions, for some reason, often have the best rates, though I don’t know why. As some have pointed out, shop around because it appears that even today rates seem to vary widely from as low as 3% to as much as 6% with the higher end of the range being more common. If you read any economic news, this totally makes sense. The 3% loans may be subsidized or break even to gain business.

As for the best use of $100k cash, people have different needs and goals and there is no right answer that applies to everyone. With zero knowledge of someone else and their financial situation, I would not make a bunch of assumptions and suggest that what they are doing is wrong and that I know what is a better idea for them and their money.

Credit Unions don’t pay taxes .. this is why they are more aggressive when it comes to rates.

[josec70]

Originally Posted by Patton250

While I disagree with you that we were lucky to have cheap money, I do appreciate the tip. My dealership is a dealer for that bank and appears. At least according to their website, so I’ll ask them tomorrow. That would be excellent. Thanks

Said we were “spoiled” not lucky fwiw … cheap money became the norm. Here’s the plot of FFR-DR over the last 62 years. Rates today are not that high, “historically “ speaking.

Good luck!

[Patton250]

Originally Posted by josec70

Said we were “spoiled” not lucky fwiw … cheap money became the norm. Here’s the plot of FFR-DR over the last 62 years. Rates today are not that high, “historically “ speaking.

Good luck!

Well if the very people these government types claim to champion are to succeed and live comfortably they had better get back to spoiling them. :-)

[pbonsalb]

Originally Posted by josec70

Credit Unions don’t pay taxes .. this is why they are more aggressive when it comes to rates.

Interesting. I have not really looked into the differences. We use a traditional local bank for the majority of our business and a local credit union for most of the rest. For is, the best car loan rates have been with the credit union, mortgages about equal, and the bank is better for business loans.

[micvite]

Originally Posted by Patton250

Well if the very people these government types claim to champion are to succeed and live comfortably they had better get back to spoiling them. :-)

I mean this is kind of where rates were... what 6-7 years ago? It's just going back to normal again. When I got my 2022 m5 back in April last year I got 1.99 Apr from bmw and that was because I didn't quality for the 0.9% because it was only for 6 months. Personally I wouldn't pay cash or put down that much money, there's so many better things you can do with it and if anything were to happen to the car say a year or two down the line you're losing a buttload of money if it gets totalled (vs having gap pay it off). Look at it this way if rates drop (which they will) you can just refinance it back to like a 2.5-3.5% a year down the line with a cu like penfed or dcu and call it a day. But if you pay cash? Any depreciation that happens you're literally losing so a year down the like you could be out 50k on the car in the case of a crash. Idk to me that's just not worth it.

[Patton250]

Originally Posted by micvite

I mean this is kind of where rates were... what 6-7 years ago? It's just going back to normal again. When I got my 2022 m5 back in April last year I got 1.99 Apr from bmw and that was because I didn't quality for the 0.9% because it was only for 6 months. Personally I wouldn't pay cash or put down that much money, there's so many better things you can do with it and if anything were to happen to the car say a year or two down the line you're losing a buttload of money if it gets totalled (vs having gap pay it off). Look at it this way if rates drop (which they will) you can just refinance it back to like a 2.5-3.5% a year down the line with a cu like penfed or dcu and call it a day. But if you pay cash? Any depreciation that happens you're literally losing so a year down the like you could be out 50k on the car in the case of a crash. Idk to me that's just not worth it.

I got 2.5% on a mortgage 7 years ago so…..

[micvite]

Originally Posted by Patton250

I got 2.5% on a mortgage 7 years ago so…..

Could be wrong on the time-line but shit was high at some point in the last 10 years or so, I don't remember exactly when since I wasn't buying stuff back then.

[Patton250]

Originally Posted by micvite

Could be wrong on the time-line but shit was high at some point in the last 10 years or so, I don't remember exactly when since I wasn't buying stuff back then.

My older sister bought her first house at 14% in 1980.

[pmsteinm]

Originally Posted by micvite

...Any depreciation that happens you're literally losing so a year down the like you could be out 50k on the car in the case of a crash. Idk to me that's just not worth it.

Your statement got me thinking about this. I played with some numbers and I don't see how you can come out too far ahead. Even if GAP were free, if you 100% finance at 5.5% at the end of year the loan would be around 112k and the value of the car around 100k...so it protects you to the tune of 12k, but you've paid 7k in interest.

On day 1 it makes sense, but each month it helps less and less. I guess carrying the loan for 1 year would help then just pay it off after you'd had the major depreciation hit.

[nerdogray]

That's exactly what he'll do. They don't call him Moneybags Micvite for nothing.

[micvite]

Originally Posted by pmsteinm

Your statement got me thinking about this. I played with some numbers and I don't see how you can come out too far ahead. Even if GAP were free, if you 100% finance at 5.5% at the end of year the loan would be around 112k and the value of the car around 100k...so it protects you to the tune of 12k, but you've paid 7k in interest.

On day 1 it makes sense, but each month it helps less and less. I guess carrying the loan for 1 year would help then just pay it off after you'd had the major depreciation hit.

On a 145k car shoving taxes into the loan as well at 5.49 72mo, you pay 27k interest over the life of the loan, plus gap for 2k let's call it an even 30. Gap will cover 50k as a max generally so if something were to happen even say in your third year where your balance starts at 110k and your car is now worth... 60k (especially with the new model out) you'd be covered for the 50k by paying around 15-20k in interest (assuming you don't refinance in the mean time). To me I see that as saving 30k if something were to happen, now if nothing happens which is ideal, sure you're losing out on 20k, but if you didn't have the loan with gap you'd be out 50k so it's all about risk and reward and how much risk you're willing to bear. I'm not a gambling man, so losing 30k over 6 years isn't a big deal to know that in case something happens 2-3 years in I'm not getting shafted. Perfect example here: bought my tesla last year in May used, its now worth exactly 60% of what I bought it for one year later... so I'm 45k in the red. Conveniently I have 50k worth of gap if something were to happen.

[josec70]

Originally Posted by micvite

Could be wrong on the time-line but shit was high at some point in the last 10 years or so, I don't remember exactly when since I wasn't buying stuff back then.

Very low from 2010 (Post Great Recession) to approximately 2018 where they rose prior to COVID. Fell off a cliff during COVID and now have moved up aggressively.

[josec70]

Originally Posted by pbonsalb

Interesting. I have not really looked into the differences. We use a traditional local bank for the majority of our business and a local credit union for most of the rest. For is, the best car loan rates have been with the credit union, mortgages about equal, and the bank is better for business loans.

More interesting is that they’re buying banks ….

[ResIpsaLoquitur]

Originally Posted by micvite

On a 145k car shoving taxes into the loan as well at 5.49 72mo, you pay 27k interest over the life of the loan, plus gap for 2k let's call it an even 30. Gap will cover 50k as a max generally so if something were to happen even say in your third year where your balance starts at 110k and your car is now worth... 60k (especially with the new model out) you'd be covered for the 50k by paying around 15-20k in interest (assuming you don't refinance in the mean time). To me I see that as saving 30k if something were to happen, now if nothing happens which is ideal, sure you're losing out on 20k, but if you didn't have the loan with gap you'd be out 50k so it's all about risk and reward and how much risk you're willing to bear. I'm not a gambling man, so losing 30k over 6 years isn't a big deal to know that in case something happens 2-3 years in I'm not getting shafted. Perfect example here: bought my tesla last year in May used, its now worth exactly 60% of what I bought it for one year later... so I'm 45k in the red. Conveniently I have 50k worth of gap if something were to happen.

I like the allocation of risk here.

I would have personally just leased it, but that’s for another thread and another day.

(I completely understand that purchase/finance makes sense for some people).