84 month Financing,Crazy?
Hotshot
Joined: Jun 2003
Posts: 12,343
Likes: 4,368
From: SW VA
I financed my Ram (first new vehicle ever) for 78mo., because strangely, it was the same interest rate as the 60 & 72mo terms. I only financed $34k (had a paid-off trade).
I am trading it in on my 2018 F350 being built, and am $10k to the good on the Ram. Between that $10k, X-plan, and the $4500 in rebates/incentives/PCO, I'll drive off the lot in the black and I'll stay there through the whole 72mo term. On a $50k truck, I'll finance under $34k. I want a low payment for those "just in case" months...but normally, I'll pay a couple hundred extra each month. It's only a couple clicks online after the automatic withdrawal. I've always paid off loans early. Always.
While I can afford a $700-800/mo. payment...I don't want it, and want to use my money for other things.
I am trading it in on my 2018 F350 being built, and am $10k to the good on the Ram. Between that $10k, X-plan, and the $4500 in rebates/incentives/PCO, I'll drive off the lot in the black and I'll stay there through the whole 72mo term. On a $50k truck, I'll finance under $34k. I want a low payment for those "just in case" months...but normally, I'll pay a couple hundred extra each month. It's only a couple clicks online after the automatic withdrawal. I've always paid off loans early. Always.
While I can afford a $700-800/mo. payment...I don't want it, and want to use my money for other things.
Laughing Gas
Joined: Apr 2012
Posts: 902
Likes: 51
From: Clark, WY
Business and finance is not rocket science. You look at the overall cost of borrowing the money against the other options at the time. As others have stated, the interest rate is more important than the term (you can always pay more). A longer term usually means a higher interest rate and usually makes them a bad deal. On the other hand, if you can find the unicorn of a low rate and long term I say go for it. If you can find the speckled unicorn of a low purchase price, low rate, and long term it is a win, sign and run out the door before they can change the deal. If you do have excess cash then put it to good use elsewhere, don't pay off a cheap loan, debt is NOT a bad thing, all things in moderation in life.
Logistics Pro
Joined: Apr 2017
Posts: 3,674
Likes: 51
From: SoCal
I was going to pay cash for my 17 F250 6.7L, but when I found out my credit union would give me 72 months at 1.9% I jumped at it. With inflation that's free money. I put $30k down and invested $30k. Made an 11% return last year on the invested $30k, so yea, debt isn't a bad thing at all, ha.
Freshman User
Joined: Nov 2005
Posts: 32
Likes: 0
From: Cave Creek AZ
Great conversation, I speak on the economy as part of my job.
So think about the following information. This information is derived from FRED (Federal Reserve Economic Data) and NAR (National Association of Realtors and US Census
Average sale price of a home: 1996 = 140,000.00 / 2006 = 252,000.00 / 2016 = 300,000.00
Average/Median Income: 1996 = 49-50,000.00 Same for 2006 and 2016 +/- 5K
Average corporate profits: Its a difficult process to settle on a number however its because the numbers are so drastic 1996 400,000,000.00/ IN 2006 237,000,000,000.00, the number are staggering
Average cost of a car 1996 is 15-18,000.00 2016 is 27,000.00 The number sway because o the shear amount of models and options.
SO basically everything is going up except our incomes. How does the mortgage industry and auto industry overcome this income stagnation? Terms!
So think about the following information. This information is derived from FRED (Federal Reserve Economic Data) and NAR (National Association of Realtors and US Census
Average sale price of a home: 1996 = 140,000.00 / 2006 = 252,000.00 / 2016 = 300,000.00
Average/Median Income: 1996 = 49-50,000.00 Same for 2006 and 2016 +/- 5K
Average corporate profits: Its a difficult process to settle on a number however its because the numbers are so drastic 1996 400,000,000.00/ IN 2006 237,000,000,000.00, the number are staggering
Average cost of a car 1996 is 15-18,000.00 2016 is 27,000.00 The number sway because o the shear amount of models and options.
SO basically everything is going up except our incomes. How does the mortgage industry and auto industry overcome this income stagnation? Terms!
Junior User
Joined: Sep 2017
Posts: 51
Likes: 2
The wife and I subscribed (mostly) to the Dave Ramsey principles early in our marriage. This has served us well over the years. Basically we make a pretty good living (doctor and engineer), but we actually live well below our means. Dave would asvise against a new vehicle, but hey, you have to live a little!
Having said this we avoid debt (besides mortgage) like the plague. For my truck I went with a well-equipped XLT versus something I didn’t truly need, but really liked (KR or platty). We got a good chunk for my trade-in (paid off long ago) and financed roughly $15k.
We knuckled down for 3 months and used those monthly savings toward pay-off, supplementing the savings with extra funds from bonuses and tax returns. Avoided lots of interest and potential late fees, but mostly gave us peace of mind that we eliminated debt and now outright own an awesome truck.
If I were giving advice it would be to minimize debt and focus on wants vs true needs. Would not recommend 84 month financing.
Having said this we avoid debt (besides mortgage) like the plague. For my truck I went with a well-equipped XLT versus something I didn’t truly need, but really liked (KR or platty). We got a good chunk for my trade-in (paid off long ago) and financed roughly $15k.
We knuckled down for 3 months and used those monthly savings toward pay-off, supplementing the savings with extra funds from bonuses and tax returns. Avoided lots of interest and potential late fees, but mostly gave us peace of mind that we eliminated debt and now outright own an awesome truck.
If I were giving advice it would be to minimize debt and focus on wants vs true needs. Would not recommend 84 month financing.
Laughing Gas
Joined: Mar 2018
Posts: 1,147
Likes: 309
The wife and I subscribed (mostly) to the Dave Ramsey principles early in our marriage. This has served us well over the years. Basically we make a pretty good living (doctor and engineer), but we actually live well below our means. Dave would asvise against a new vehicle, but hey, you have to live a little!
Having said this we avoid debt (besides mortgage) like the plague. For my truck I went with a well-equipped XLT versus something I didn’t truly need, but really liked (KR or platty). We got a good chunk for my trade-in (paid off long ago) and financed roughly $15k.
We knuckled down for 3 months and used those monthly savings toward pay-off, supplementing the savings with extra funds from bonuses and tax returns. Avoided lots of interest and potential late fees, but mostly gave us peace of mind that we eliminated debt and now outright own an awesome truck.
If I were giving advice it would be to minimize debt and focus on wants vs true needs. Would not recommend 84 month financing.
Having said this we avoid debt (besides mortgage) like the plague. For my truck I went with a well-equipped XLT versus something I didn’t truly need, but really liked (KR or platty). We got a good chunk for my trade-in (paid off long ago) and financed roughly $15k.
We knuckled down for 3 months and used those monthly savings toward pay-off, supplementing the savings with extra funds from bonuses and tax returns. Avoided lots of interest and potential late fees, but mostly gave us peace of mind that we eliminated debt and now outright own an awesome truck.
If I were giving advice it would be to minimize debt and focus on wants vs true needs. Would not recommend 84 month financing.
I'd much rather see someone borrow on a TT when the kids are young than wait until they can afford to pay it in cash. Same with a tow rig. Time is precious and as someone once said, I have never seen a Brinks truck following a funeral procession.
Thread Starter
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Fleet Mechanic
Joined: May 2006
Posts: 1,376
Likes: 12
From: Illinois
I put too many miles on a truck to finance for that long. I usually get a 60 month loan and pay it off in 36 months. I usually buy a new truck between 3 and 5 years. So my current truck is usually paid off when I buy the next new truck. Giving me a big chunk of equity towards the new truck. I'm on construction jobsites daily and often asked how I afford a $70,000 new truck. I just tell them I don't have a $70,000 loan. So my payments are not that bad. When you trade in a $40,000 truck the loan is only $30,000 which gives me reasonable payments.
Hotshot
Joined: Nov 2008
Posts: 15,014
Likes: 35
From: Semper Fi tell I die!
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Post Fiend
Joined: Apr 2002
Posts: 19,311
Likes: 97
From: Waterloo, Iowa
Originally Posted by toymaster
Business and finance is not rocket science ... If you do have excess cash then put it to good use elsewhere, don't pay off a cheap loan, debt is NOT a bad thing, all things in moderation in life.
BUT, the kind of people who know this don't borrow money they don't have to buy things they don't need to impress people they don't like.
They have businesses where buying a new vehicle can be depreciated year after year. Poor people otoh, tend to stay poor because they make foolish decisions early in life that last for years, mainly because they weren't taught about the relationship between money and credit and interest rates. "Never borrow money to buy a depreciating asset".
Virtually all of the "expert" advice proffered to consumers with respect to borrowing is a little shaky, simply because they are usually paid by the institutions who want to keep that gravy train flowing. Impulse buying. Hey! You've been pre-approved. What kind of psychopath does one have to be, to act as if you're doing somebody a favor by ****ing them over financially?
Senior User
Joined: Feb 2003
Posts: 198
Likes: 1
From: Texas Gulf Coast
I always finance for a longer term, but pay it off sooner.
I financed my current truck for 60 months. I can always double or triple the payment and pay it off quicker. But financing longer gives me some breathing room just in case I have some major unexpected Medical bills, House repairs, lay-off etc.
I financed my current truck for 60 months. I can always double or triple the payment and pay it off quicker. But financing longer gives me some breathing room just in case I have some major unexpected Medical bills, House repairs, lay-off etc.
Posting Guru
Joined: Mar 2018
Posts: 1,962
Likes: 11
From: Fairbanks, AK
I was going to pay cash for my 17 F250 6.7L, but when I found out my credit union would give me 72 months at 1.9% I jumped at it. With inflation that's free money. I put $30k down and invested $30k. Made an 11% return last year on the invested $30k, so yea, debt isn't a bad thing at all, ha.
Mountain Pass
Joined: Dec 2017
Posts: 219
Likes: 1
Depends solely on the interest rate. We’ll never borrow over 2.2% because A) we have the credit scores we can be picky, and b) we get at least 1 point higher return when we invest the money we would have put on the truck into investments.
To us, it all depends on what you’re doing with the money you’re not using on the truck right then and there causing you to finance for that long.
That said, with the fed raising rates, it was stupid hard to find the 2.15 we got on our truck. Not sure how much longer our strategy will be viable, but we’re set on cars for a long while.
To us, it all depends on what you’re doing with the money you’re not using on the truck right then and there causing you to finance for that long.
That said, with the fed raising rates, it was stupid hard to find the 2.15 we got on our truck. Not sure how much longer our strategy will be viable, but we’re set on cars for a long while.