My last truck I financed for like 5 years. Cool.

However i I didn't know I qualified for such a low rate for 7 years.

My local credit union quoted me at 3.7 for 84 months

so I ask.... is it pretty common people to finance this long?


looking at a king ranch ultimate. Monthly payment would be 738. Current payment is 609 on current truck. Not much of a difference

 

I'm financing mine for 6yrs.

 

I'm mostly against borrowing money for things.....but these days, it's pretty much free money with these interest rates.

If financing, I would just do come calculations based on expected value and how long I think I'd keep it. Then, tailor your loan terms so you're not upside down. I wouldn't hesitate to finance for 84 months if I knew I'd keep it for at least 5 years....even better if you keep it 7 years or longer.

I'm the sort that can drive something very happily for 10 years, as long as I buy exactly what I want.

 

Well being a diesel and a king ranch trim - these trucks would retain their value right?

 

Yes they will.

 

I could've went 5 yrs and been fine with the payment but once they quoted me the interest rate and 200$ a month cheaper I jumped on the 7 yr deal .. you never know what kind of curve ball life may throw

 

If you can pay off sooner then do so, it doesn't hurt to have the buffer. Keep in mind you'll be paying a good amount more in total interest if you take the whole 7 years to pay it off. It's not uncommon. The local CU here will do 10 years on vehicles of $40k or more (so a nice Fusion....).

 

No it wont. I think that's way too long to finance something. Long after the new luster has worn off, the warranty has expired, you'll still be paying on it.
I'm done borrowing for vehicles, but if I did 4 years would be the max.

 

I always do 5 years. I couldn't imagine still paying for a truck 7 years later. After 4 years I usually start getting the itch for something different. 7 years will be a chunk of change in interest versus 5 years also.

 

To answer the first question, yes statistically people are borrowing for longer terms on automobiles across the nation. In fact it's quite an epidemic in sub prime lending right now to individuals that barely pass the test, get put in a vehicle that won't last as long as the life of the loan, and the financing companies love these type of people. Sadly, these people don't understand the financial conditions and depreciation scale for the typical vehicle out there.

Now if you can actually afford to be driving around a 60-80k SD truck, and have excellent credit, then I would say in today's historically low rate environment there is no reason to not take advantage of the terms and rate provided out even to 80+ months. Auto loans are not mortgages and do not amortize as such. You can simply get loaned money for 80+ months and if hard times hit, then your set, if you could afford to do a 4 year term, then by all means pay on the 80+ month financing agreeement and apply the difference to principle (as if it were 4 year agreement) every month. It's not rocket science, simple finance. The more principle you pay off the least amount of finance interest is charged on a month to month basis, which translates to a lower amount paid in interest by year end, and a much lower principled amount.

To sum up: If you are financially stable, take advantage of the lengthy terms and low rates, they won't be around forever. If you are not, then you probably shouldn't be buying a '17 SD in the first place. My complete opinion
and I do not mean to offend anyone. I do have a finance background (quite a lengthy one)

 

at 3.7% you are looking at ~$100 a month for interest alone. I wouldn't finance that any longer than I needed to. That is $1200 extra a year you are paying in interest alone that doesn't do anything for you but give you the luxury of owning a vehicle more expensive than you probably should.

I am with oklarado, I will never finance another vehicle. I did for this truck and regret it. I will have it paid off in 18 months. If I can pay something off in 18 months than I should have just saved for 15 months and paid for it outright. Instead I am paying $1800 in interest that could have bought me $1800 more truck or saved for it sooner (the 15 months).

 

I completely understand your perspective, and I am with you. Pay it off as quickly as possible. Just because you get a 5.6.7 year loan does not mean to have to wait until maturity for payoff. Auto loans, at least legit ones, do not have time restricted pay off penalty's. There are a million ways you can do it. The one I'm explaining is one that takes advantage of low rates, in a big way, giving the borrowing much flexibility. Just a sensible thought.

 

Financing isn't all bad. Take the above example of waiting another 15 months. What if in that 15 months waiting the old vehicle took a major repair out of warranty? Then you're easily in $1800 or repairs. Or as likely with these trucks, you're able to make money with them. Whats the loss of not having a new truck over those 15 months? What jobs did you miss out on? Doesn't take much to earn that $1800 back. Time value of money, with low interest rates today, means even if you came into $70 grand paying cash isn't king, a good management plan would have you earning more than 3.7%, so why not take the loan and keep the investment opportunity? While there is wisdom in not using finance to let you feel you can afford more than you can, not taking advantage of it, is economically foolish as well.

 

Nice addition, I was not even going to get into management of finance and investment opportunities. At least someone agrees with me. Good post!

 

I will chime in with another perspective on financing. I probably hate vehicle payments as much anyone one this board.
But.......(don't we love that word!!) while I *could* have paid cash for my 2016 F350 King Ranch dually, I negotiated an interest rate between 2.5% and 3%. I don't remember exactly. Now then, I do have money working for me, some at 4% and other at 6%; so to me, it made sense to use THEIR money and keep my money working for me! Yes, if the rates were not in my favor it would be a different story.