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A mortgage is a loan backed by real estate. So someone would have to have taken out a mortgage on real estate, and used the proceeds for the car. It would be a real estate mortgage, not a car mortgage.
A lot of people use home equity loans to do similarly stupid things today.
A mortgage is a loan backed by either real or personal property. There's nothing that says it has to be real estate.
You probably ought not take a saw to the branch you're sitting on. You're the one who isn't able to figure this out. The only lender who will give you 1.8% is a lender that ties the loan to the purchase of their product. No other lender will give you that rate. Do you really not understand this?
That is the stated rate of the loan. It is NOT the true cost of financing.
The bond market is another area where this exact thing happens. Bonds sell at discounts or premiums so that the investor gets market rate, rather than the stated rate on the bond itself. If you know anything about the bond market, you'll understand this. If not, study up a bit on it. It will help you to understand how the teaser rates on cars work.
If, after negotiating your best price, if you paid cash, and you weren't a terrible negotiator, you would get a discount.
Your inability to understand that the finance rate is not tied to the purchase price of the car is truly mind-boggling.
I don't borrow money that I have to pay interest on, and as such, I'm not very current on lending rates. How did that 1.9% compare to other types of collateralized loans at that time?
In our case, Mazda finance used Capital one. The local bank was as 2.25 and Credit union was 2. Mazda finance was better deal. Even at 1.8 percent, the bank still makes money since the feds basically giving it away.
Your inability to understand that the finance rate is not tied to the purchase price of the car is truly mind-boggling.
It's ok. Like talking to a brick wall. Zero percent or in your case low interest rate is used to entice activity. Car manufacturers are making money on each and every unit they sell regardless of how good a negotiator the customer is. They want to think we are getting a good deal. And we are, but they're still making money hand over fist even at zero percent interest.
A mortgage is a loan backed by either real or personal property. There's nothing that says it has to be real estate.
One of the nice things about well developed languages is that words have meanings. In English, we have two terms, mortgage, and chattel mortgage, that while similar, are not the same, and aren't used interchangeably.
Your inability to understand that the finance rate is not tied to the purchase price of the car is truly mind-boggling.
<<Cue heavy sigh>>
I'm not sure why you are heaving such a difficult time with this, but I will try one more time.
Toyota is currently offering "0% interest" for 60 months on the purchase of a 2016 Camry. Since you believe that the finance rate is in no way tied to the purchase of the car, please answer this simple question:
What other lender will lend you $35,000 for 60 months at 0% interest, when the loan isn't tied to the sale of a product in which the lender has an interest?
I've noticed a pattern on here that I think helps explain the mindset of people who want to lease or buy a brand new car. You just want to get in the car and drive off. For that peace of mind, you'll pay an astronomical price. For me, it costs me nothing on a Saturday morning to walk out to my vehicles and do a quick onceover to make sure everything looks good. Belts are good, battery is good, no leaks, fluid levels are good, etc.... In the event that I do find something wrong, a quick trip to the part store and I can usually have the issue remedied BEFORE it really becomes an issue for a few dollars. It might cost me a few hours of my weekend on a rare occasion, but very little out of pocket in comparison to having a $600-$700/month payment.
I guess it's a habit. I do my own oil changes. That means I crawl under the vehicle to drain the oil. While I'm under there I check the condition of the oil, the condition of the suspension, look for leaks, and make sure the steering gear is tight with all the seals in place, change the filter, wipe things down and notice any problems. Then I pop the hood to add new oil. While I'm at it I check the coolant and brake fluid levels, check the hoses to make sure they aren't getting soft, check the belts, service the battery and terminals if necessary, blow out the radiator fins and add washer fluid. I change the air filter at the beginning of the rainy season and service the cooling system at the beginning of hot weather. I check the tire pressure and adjust it for seasonal needs. It takes me about an hour once every three months, but I don't hurry.
In warm, dry weather I will bring the engine up to temperature and pressure wash it. A clean engine and transmission last longer. While the engine is drying with the hood up, I use a hand held upholstery shampooer to clean up the interior, use leather conditioner on the seats, wipe down any plastics with preservative, polish the interior glass, then close the hood and wash the exterior followed by a coat of Nu-finish clear coat protectant. Run it once again to operating temp to chase the last of the water out of the engine well, and the car is ready for the road. It takes me about 4 hours every 6 months to go through this routine.
Needless to say, my cars run great and look great. They are also paid for. I can put 200k on the odometer just because I do decent maintenance. I did have to replace a fuel pump on my pickup, which is the only repair work I have done in 117,000 miles.
I'm not sure why you are heaving such a difficult time with this, but I will try one more time.
Toyota is currently offering "0% interest" for 60 months on the purchase of a 2016 Camry. Since you believe that the finance rate is in no way tied to the purchase of the car, please answer this simple question:
What other lender will lend you $35,000 for 60 months at 0% interest, when the loan isn't tied to the sale of a product in which the lender has an interest?
Let me see if I understand you. I walk into a dealership where they are offering 0% interest for 60 months for qualified buyers. I negotiate the price of the vehicle as if I were buying it flat out in cash. Once I'm done haggling and we settle on a price ($30k for example), I turn around and tell the salesman that I changed my mind and instead now want to take advantage of the 0% interest for 60 months deal and since I have tier 1 credit and will qualify for it. Are you telling me that the $30k that we settled on is no longer $30k and instead I will be paying more? If so, please tell me how?
My wife and I went furniture shopping a little over a year ago at Raymour and Flanigan. Our plan was to pay cash for a new bedroom set. We found a set we liked for a little over $2500 with tax. Sales guy tells us that they have 0% interest if we qualify so long as its paid off within 18 months. My wife and I said "what the heck" and went for it and put our cash back into our accounts. The price didn't change with the financing deal and we paid it off before the 18 months and paid absolutely no interest on the furniture. Did I somehow magically pay more for this furniture without me knowing?
Let me see if I understand you. I walk into a dealership where they are offering 0% interest for 60 months for qualified buyers. I negotiate the price of the vehicle as if I were buying it flat out in cash. Once I'm done haggling and we settle on a price ($30k for example), I turn around and tell the salesman that I changed my mind and instead now want to take advantage of the 0% interest for 60 months deal and since I have tier 1 credit and will qualify for it. Are you telling me that the $30k that we settled on is no longer $30k and instead I will be paying more? If so, please tell me how?
If you negotiated the price as if you were paying cash, and the vehicle is eligible for a manufacturer's rebate, in lieu of 0% financing (which is often the case), chances are the dealer will factor the rebate into the negotiated price. Now, if you say you want the 0% financing deal, instead of paying cash, then they'll probably have to bump the final negotiated price up by the amount of the rebate, because they can't give you both.
Quote:
Originally Posted by louie0406
My wife and I went furniture shopping a little over a year ago at Raymour and Flanigan. Our plan was to pay cash for a new bedroom set. We found a set we liked for a little over $2500 with tax. Sales guy tells us that they have 0% interest if we qualify so long as its paid off within 18 months. My wife and I said "what the heck" and went for it and put our cash back into our accounts. The price didn't change with the financing deal and we paid it off before the 18 months and paid absolutely no interest on the furniture. Did I somehow magically pay more for this furniture without me knowing?
If you were planning on paying cash for the funrinture, but you find out they are offering 0% financing, ask if they can give you a cash discount instead. Somtimes, they will, but maybe only 5% or less. In that case, you'll have to decide which offer you would prefer.
That's the point. I haven't seen 1 person advocate irresponsible debt or spending. But on the absolutist side it's, anyone who takes a loan out is stupid, or it's never justified. You can balance your life and live and retire very comfortably. Maybe these posters can't, that's there problem. There the same one's who's wife left them because they would sit around all day and pout. There children probably hate them because they couldn't have a toboggan. Me, I'll be out on my boat that I pull with my truck and retire early and comfortable. Many people die before retirement. You can live a little without being stupid. Or I can anyway.
One also has to gauge what "comfortable" is when retired. Is it living like you did while working and raising a family? Do you stay in that big house or downsize/rent and bank the sales cash from your big house? Do you take big vacations a couple of times a year or take more driving day trips since you're retired and have the time?
It all depends on what one expects from retirement. Personally I'd love to just by a nice motorhome and be a gypsy as long as possible.
Quote:
Originally Posted by dman72
If you hold on to the money while you are paying interest you are losing money unless you're holding it in something which is making higher returns than the interest rate on your debt. Not likely.
IE, if your medical and credit card debt of 50K have an average interest rate of 7%, and you hold you 200K settlement in a savings account that gets 1%, you're losing 6% of your money every year for no reason other than it seems nice to have that big number in your savings account. Your debtors own $50K of the money (and rising) every month you don't pay it off.
As long as you have a sufficient emergency fund, there is no reason to hold debt while you hold the cash to pay it off.
Except the energy/time it would take to get that cash back (very unlikely for most) is harder than just paying on the bills while you are employed. I'd be more inclined to pay down/off a mortgage given the total interest paid at the end of the loan.
Quote:
Originally Posted by louie0406
Let me see if I understand you. I walk into a dealership where they are offering 0% interest for 60 months for qualified buyers. I negotiate the price of the vehicle as if I were buying it flat out in cash. Once I'm done haggling and we settle on a price ($30k for example), I turn around and tell the salesman that I changed my mind and instead now want to take advantage of the 0% interest for 60 months deal and since I have tier 1 credit and will qualify for it. Are you telling me that the $30k that we settled on is no longer $30k and instead I will be paying more? If so, please tell me how?
My wife and I went furniture shopping a little over a year ago at Raymour and Flanigan. Our plan was to pay cash for a new bedroom set. We found a set we liked for a little over $2500 with tax. Sales guy tells us that they have 0% interest if we qualify so long as its paid off within 18 months. My wife and I said "what the heck" and went for it and put our cash back into our accounts. The price didn't change with the financing deal and we paid it off before the 18 months and paid absolutely no interest on the furniture. Did I somehow magically pay more for this furniture without me knowing?
This works well <bold> IF you pay it off on time. Obviously they're hoping and praying you don't so they can back date the interest and make $$$$$.
We take those 0% for 12-18 months but always keep the cash available to pay it off until it's paid off.
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If so, please tell me how? 
