Gap Insurance?
Tuned
Joined: Aug 2006
Posts: 479
Likes: 1
From: Bartlett, TN
Originally Posted by KevinM
Because what you are quoting is a promotion. promotions are not available all the time. Another point on zero down and 0% interest, your payments most likely are not enough to offset depreciation, hope you don't decide to trade in the vehicle within the next 3 years on another, because you are most likely upside down.
Another reason to make the larger down payment, most likely under a promtopn you were able to choose a rebate amoiunt, plus a low finance charge. With enough down not only have you warded off depreciation and not being upside down, but the monthly payment is probably a lot less than the 0 down 0% interst. You're not truck poor!
Another reason to make the larger down payment, most likely under a promtopn you were able to choose a rebate amoiunt, plus a low finance charge. With enough down not only have you warded off depreciation and not being upside down, but the monthly payment is probably a lot less than the 0 down 0% interst. You're not truck poor!
As for the enough down.... You say I have warded off depreciation. I disagree! I have paid for the depreciation! Yes Maybe a matter of words, or is it "how you look at it". But you have not "warded off" the depreciation. Its still there you just paid it off. BUT as you did say, "Your NOT upside down". And granted If you finance less the note is less.
Granted we are not likely far apart on this issue but I still stick to my way for Me at this time. And I'm sure your way is good for you at this time. Fair enough?
Posting Guru
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Me after getting the Xplan price, and another 12K including rebates as down payment, 1.7% finance charge payments a hair over 300 a month, I am well ahead of the depreciation curve and it will only cost me $788 to finance.
Senior User
Joined: Jan 2006
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From: North Texas
Originally Posted by KevinM
Me after getting the Xplan price, and another 12K including rebates as down payment, 1.7% finance charge payments a hair over 300 a month, I am well ahead of the depreciation curve and it will only cost me $788 to finance.
So we forgot about the down payment, but did we also forget about the extra depreciation that we're paying to buy brand new? Most people don't take into account that a vehicle depreciates at 15-20% each year. That means that the actual dollar-depreciation is most likely highest during the vehicle's first year, second-highest it's second year, etc.
It's "Pay me now or pay me later" when you buy a new vehicle. If you can afford to put several thousand dollars down on a new truck, then go for it. But most Americans cannot afford a new car. Period. We live above our means with credit and the average American family owes $9,200 in credit card debt! We have that, plus car loans, plus one or two mortgages, plus the swimming pool, vacations, gym memberships, etc, etc. Is this hitting a nerve with anybody? And we still buy $40,000 depreciating assets? At the very least, for those of you who just have to have a new vehicle - and could NOT easily afford to pay it off if you totalled it, then for heaven's sake, buy the gap insurance.
^ My opinions and I'm stickin' to 'em.
Tuned
Joined: Aug 2006
Posts: 479
Likes: 1
From: Bartlett, TN
Mr. Novice,
I agree with you on most every thing you say. And dont strongly disagree with anything. What you are saying makes Excellent financial sense. When I was looking for a truck, I started looking at 1-3 year old vehicles. Then I saw an ad from a local dealer for a nicely equipped new truck at about what I was looking at having to pay for a used one. With all the rebates, 0% financing etc. I could buy a new truck for less note and about the same "out the door" price as a one year old and not much more than a 2 year old truck. I felt it better to get the extra year of warranty and better financing with the new one.
and like you....... My opinions and Im stikin' to 'em...
Good points
I agree with you on most every thing you say. And dont strongly disagree with anything. What you are saying makes Excellent financial sense. When I was looking for a truck, I started looking at 1-3 year old vehicles. Then I saw an ad from a local dealer for a nicely equipped new truck at about what I was looking at having to pay for a used one. With all the rebates, 0% financing etc. I could buy a new truck for less note and about the same "out the door" price as a one year old and not much more than a 2 year old truck. I felt it better to get the extra year of warranty and better financing with the new one.
and like you....... My opinions and Im stikin' to 'em...
Good points
Posting Guru
Joined: Jul 2004
Posts: 1,479
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Mr Novice - Wrong not talking about what the deal cost me I am refering to what finance costs over the term of the loan which is $788 to finance. Better re-read my post! The 12k - rebates would still have to be paid by everyone, because it comes off the price of the truck at the time of sale! The $788 is the actual finance charges, so my overall cost is $788 plus the balance plus cash out of hand to buy the truck and not being upside down during the process! The $788 is close to what others on this board are paying for gap insurance That's the point!
As far as living above our means speak for yourself!
As far as living above our means speak for yourself!
Last edited by KevinM; Oct 5, 2006 at 07:36 AM.
Senior User
Joined: Jan 2006
Posts: 289
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From: North Texas
^ Yeah I was thinking about that after I posted and you're right - the actual "cost to finance" was what you stated.
I'm sorry, what was the point? That you handed over a ton of cash as a down payment just so you wouldn't be upside down on a new vehicle? Or that $788 is relatively close to the $250-500 or so that people pay for gap insurance? If that's the point, then exactly how is that relevant?
Did I strike a nerve?
Originally Posted by KevinM
my overall cost is $788 plus the balance plus cash out of hand to buy the truck and not being upside down during the process! The $788 is close to what others on this board are paying for gap insurance That's the point!
Originally Posted by KevinM
As far as living above our means speak for yourself!
Posting Guru
Joined: Jul 2004
Posts: 1,479
Likes: 4
Mr Novice - no nerve struck here, because I don't have this issue! It's the way it was inferred!
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Senior User
Joined: Jan 2006
Posts: 289
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From: North Texas
Originally Posted by BigDfromTN
Mr. Novice,
I agree with you on most every thing you say. And dont strongly disagree with anything. What you are saying makes Excellent financial sense. When I was looking for a truck, I started looking at 1-3 year old vehicles. Then I saw an ad from a local dealer for a nicely equipped new truck at about what I was looking at having to pay for a used one. With all the rebates, 0% financing etc. I could buy a new truck for less note and about the same "out the door" price as a one year old and not much more than a 2 year old truck. I felt it better to get the extra year of warranty and better financing with the new one.
and like you....... My opinions and Im stikin' to 'em...
Good points
I agree with you on most every thing you say. And dont strongly disagree with anything. What you are saying makes Excellent financial sense. When I was looking for a truck, I started looking at 1-3 year old vehicles. Then I saw an ad from a local dealer for a nicely equipped new truck at about what I was looking at having to pay for a used one. With all the rebates, 0% financing etc. I could buy a new truck for less note and about the same "out the door" price as a one year old and not much more than a 2 year old truck. I felt it better to get the extra year of warranty and better financing with the new one.
and like you....... My opinions and Im stikin' to 'em...
Good points
Tuned
Joined: Aug 2006
Posts: 479
Likes: 1
From: Bartlett, TN
KEVIN M. ..............
You are forgetting one other cost of your financing. The value of the money you paid down. You are no longer able to make any Interest on that money. (A small amount, but still there.)
Mr. Novice.........
Thanks for the nice words, BUT yes I'm sure Im upside down. but I can handle the difference IF I have too. My Truck and my home are the only debt I have. My wifes 2001 Mustang Convertible is paid for as are both my childrens Mustangs. Both my children are in college and so far (knock on wood!) they have no student loans. Am I rich????? Yes in a lot of ways , BUT money is not one of them.
It works for my family and were stickin to it............
You are forgetting one other cost of your financing. The value of the money you paid down. You are no longer able to make any Interest on that money. (A small amount, but still there.)
Mr. Novice.........
Thanks for the nice words, BUT yes I'm sure Im upside down. but I can handle the difference IF I have too. My Truck and my home are the only debt I have. My wifes 2001 Mustang Convertible is paid for as are both my childrens Mustangs. Both my children are in college and so far (knock on wood!) they have no student loans. Am I rich????? Yes in a lot of ways , BUT money is not one of them.
It works for my family and were stickin to it............
Posting Guru
Joined: Jul 2004
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BigDformTN-
Doesn't matter because those making those higher payments in the long term will not net you you any further ahead! If you weigh the increase in payments vs the amount of interest to be gained it's not even worth talking about.
Doesn't matter because those making those higher payments in the long term will not net you you any further ahead! If you weigh the increase in payments vs the amount of interest to be gained it's not even worth talking about.
Senior User
Joined: Jan 2006
Posts: 289
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From: North Texas
Originally Posted by KevinM
BigDformTN-
Doesn't matter because those making those higher payments in the long term will not net you you any further ahead! If you weigh the increase in payments vs the amount of interest to be gained it's not even worth talking about.
Doesn't matter because those making those higher payments in the long term will not net you you any further ahead! If you weigh the increase in payments vs the amount of interest to be gained it's not even worth talking about.
Posting Guru
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Got to disagree, the difference in payments would be about $250 more per month. With that $250 deposited every month for 60 months yields $17,442.51 @ 6% interest in my investment. If I were to put nothing down and take for example the $12,000 in my referenced post @ the same 6% interest the yield over 5 years would be $16,186, so now who's ahead? A difference of $1,256.51 in favor of putting $12,000 down. And if you want to deduct the $788 charges for financing from the 1256.51, your still ahead!
Posting Guru
Joined: Oct 2005
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After reading all these posts, I called Ford Credit as I also lease a 2006 Explorer. Good news! Ford Credit informed me that Gap Insurance is built into all their leases automatically. Thought you all would like to know...............
Senior User
Joined: Jan 2006
Posts: 289
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From: North Texas
Originally Posted by KevinM
Got to disagree, the difference in payments would be about $250 more per month. With that $250 deposited every month for 60 months yields $17,442.51 @ 6% interest in my investment. If I were to put nothing down and take for example the $12,000 in my referenced post @ the same 6% interest the yield over 5 years would be $16,186, so now who's ahead? A difference of $1,256.51 in favor of putting $12,000 down. And if you want to deduct the $788 charges for financing from the 1256.51, your still ahead!
KevinM, that is some extremely fuzzy math you're doing. You're assuming that the buyer will give a down payment of $12k AND invest the difference in monthly payments. Well, if I went the other way and DIDN'T put the $12k down AND invested $250/month, I come out so far ahead of you it's not even funny. Let's be honest here, ok? The point that BigDfromTN and I were making is that if you had 12,000 hard-earned dollars and wanted to make the wisest decision, it wouldn't be to put a down payment a loan at 1.7% APR.
If we're truly comparing apples to apples here:
I buy a truck, don't put down $12k but instead invest that $12k at 6% annually. In 60 months, that $12k is worth $16,186.20.
The same vehicle at 1.7% financing and financing $12k more costs $209.65 more per month for a total of $12,579.08. By simply investing the $12k instead of putting it down on the truck, I'm ahead by $3,607.12
That's all we were saying.
If I went the extra mile (which is what you were assuming) and invested $250/month extra (which really has no relevance), I also have the $17,442.51 at the end of the term.
Who's ahead now?