Financing Options - Use a Credit Union !!!!!

[captainjman]

I am a member of Alliant Credit Union - affiliated with United Airlines

Hope this helps:

I had to finance my car, and got some different quotes from different banks, all were in the 6-7% range.

Credit Union offered (and I accepted) 4.35% for 60months on a 97' NSX-T

I told them I wish they could refi my truck, because banks don't refi cars... they said no problem, refied the truck on the spot.

EVEN IF YOU HAVE THE CASH - 4.35 is just a little above inflation (at the moment - it will go up with this govmt spending)... its practically free money! I could have paid for the car outright but keeping cash on hand in this economy is not such a bad idea.

Just thought you guys may find this interesting

J

 

[Dtrigg]

Two points. The current inflation rate is half of what you're quoting. In February of 2010 the inflation rate was 2.14% And second, many would argue against financing a depreciating asset, particularly over a five year period.

Congratulations on getting your car.

 

[MaxGeek]

Its never free money when you have to pay it back, but yes credit unions tend to be good places to borrow from.

 

[RJPKRP]

It's only "free money" if you can guarantee that you will earn more than 4.35% on the money you "kept in your checking account" rather than buying the car outright.

The best 5-yr CD rates I see today are around 3.2%. So you take your $42,900 and put it into a 5-yr CD @ 3.2%.

In 5 years with a CD at 3.2% with compounding annual interest you will turn your $42,900 into $50,218.

In 5 years your payback on $42,900 @ 4.35% interest will be $47,812.

So really, by putting your purchase money into a 5-yr CD at 3.2% interest and getting a 5-year loan on your car @ 4.35% interest you will come out ahead $2406.

So, you'd be ahead about $481 per year. Suppose you could apply that to insurance or maintenance.

Sorry...I like to do the math on things......guess I'm a geek that way. I used $42,900 as the money involved on the presumption that $42900 was your out the door price and that you put $0 down. Even though that is not likely....just needed numbers to do the math on.

 

[MaxGeek]

You also need to have the cash to make the monthly car payments while your $42,900 is stuck in a CD.

 

[captainjman]

my post was just a way of spreading the word about a good deal. Not really a discussion on finance in general. The average rate for a used car is nearly 7% and I found a 4.35% rate. Just thought I would share the information in case someone else was in a position to use it.

 

[RJPKRP]

You also need to have the cash to make the monthly car payments while your $42,900 is stuck in a CD.

One can go on the presumption that, especially in this environment, you should be able to make the payments if you were granted the loan.

my post was just a way of spreading the word about a good deal. Not really a discussion on finance in general. The average rate for a used car is nearly 7% and I found a 4.35% rate. Just thought I would share the information in case someone else was in a position to use it.

True, but you also said that even if someone had the money to purchase the car outright to get the loan because 4.35% was so low. I was just showing that at that rate, you could conceivably come out ahead if you took measures to grow said "outright purchase money" at a greater rate than the rate it cost you to have the loan.

If a person isn't going to try and grow their "outright purchase money" then it makes absolutely no sense to finance the car because it is going to cost, in this particular example, around $4500 (with the .25-.5% interest they are earning on their savings, providing they always have the purchase price of the vehicle in their account for total time of that 5 year loan) more to purchase the vehicle by borrowing money against it instead of cutting a check from their bank account.

Now, if they need to finance and don't have the liquidity to purchase the vehicle outright, sure, going to a credit union instead of a traditional savings and loan to save 2-3% interest is a good idea.

 

[W]

my post was just a way of spreading the word about a good deal. Not really a discussion on finance in general. The average rate for a used car is nearly 7% and I found a 4.35% rate. Just thought I would share the information in case someone else was in a position to use it.

Thanks for the info.

 

[tbromley]

my post was just a way of spreading the word about a good deal. Not really a discussion on finance in general. The average rate for a used car is nearly 7% and I found a 4.35% rate. Just thought I would share the information in case someone else was in a position to use it.

Good info for someone looking to finance - I don't care what the reason is that's a good finance deal. Thanks for sharing that. We had a discussion not that long ago about this and that is lower than anyone had found then. Nice of you to pass that on.

Financing isn't great if you can afford to pay it - but floating 42k for 75 bucks a month ain't bad. Lots of people have to finance for whatever reason. It doesn't matter what the math is if you need to finance. If all you have is around 50k in the bank - then financing to keep your cash isn't a bad idea - unless the owner wants to give you 0% financing for 60 months. That's not happnin now is it.

 

[RJPKRP]

Good info for someone looking to finance - I don't care what the reason is that's a good finance deal. Thanks for sharing that. We had a discussion not that long ago about this and that is lower than anyone had found then. Nice of you to pass that on.

Financing isn't great if you can afford to pay it - but floating 42k for 75 bucks a month ain't bad. Lots of people have to finance for whatever reason. It doesn't matter what the math is if you need to finance. If all you have is around 50k in the bank - then financing to keep your cash isn't a bad idea - unless the owner wants to give you 0% financing for 60 months. That's not happnin now is it.

I wasn't doing the math for those that NEED to finance, I was doing the math for those that can go and purchase a $42K depreciable item, like a car, outright. The original post was urging people to finance even if they were in a a position to pay cash. The math is very important in that case.

EVEN IF YOU HAVE THE CASH - 4.35 is just a little above inflation (at the moment - it will go up with this govmt spending)... its practically free money! I could have paid for the car outright but keeping cash on hand in this economy is not such a bad idea.

The math is important...I would never minimize it's importance when you are talking about financing and finances.

Also, let's not forget.....I was proving his point with the math, not rebuking it. While it isn't something I, personally, would do, I was showing that it would be possible to grow your money beyond the finance charges you pay by borrowing the money at this rate.

If someone, who is able, is willing to empty the $43K out of their account to purchase the car outright (which means the money is no longer in the account), why wouldn't they also be willing to tie that money up for the life of their low rate financing in order to grow it beyond the finance charges?

If they are worried about the money not being accessible to them while it is in the CD, then they weren't really considering buying outright in the first place, were they? (the money would just be gone then)

 

[tbromley]

I wasn't doing the math for those that NEED to finance, I was doing the math for those that can go and purchase a $42K depreciable item, like a car, outright. The original post was urging people to finance even if they were in a a position to pay cash. The math is very important in that case.



The math is important...I would never minimize it's importance when you are talking about financing and finances.

Also, let's not forget.....I was proving his point with the math, not rebuking it. While it isn't something I, personally, would do, I was showing that it would be possible to grow your money beyond the finance charges you pay by borrowing the money at this rate.

If someone, who is able, is willing to empty the $43K out of their account to purchase the car outright (which means the money is no longer in the account), why wouldn't they also be willing to tie that money up for the life of their low rate financing in order to grow it beyond the finance charges?

If they are worried about the money not being accessible to them while it is in the CD, then they weren't really considering buying outright in the first place, were they? (the money would just be gone then)

Right you are Rob, of course. Math is nice to know but when it comes down to financing and you need it - it would be hard to beat the rate Capt. is quoting. That's what I meant.

 

[tc_nsx]

4.35% is truly an excellent rate for a used car loan.

Having said that, if you're doing the math to try to arbitrage the loan with a CD, you have to figure in the fact that your investment return is taxable. That will take a chunk off the earnings.

e.g. If you are in a net 35% tax bracket for fed & state tax, you'll have to earn 6.69% over the term of the loan to come out ahead.

 

[Big_D]

Thats a good deal. A lot of times they will give you and additional .25% discount if your payment is automatically taken out of your account.

I recently financed an RV and BofA actually beat my credit union. I was shocked. The bottom line is that it pays to shop around, even for your money.

 

[nizur]

Credit unions rock. I got my used 2005 Tacoma at 4.5% over 2 years with my credit union here. It'll be paid off in less than a year!

 

[pvmike]

3.99 at PenFed:

https://www.penfed.org/productsAndRates/loans/vehicleLoans/usedAutoLoans.asp

 

[captainjman]

WOW... thats an amazing rate... thanks for the heads up

 

[bb6 -2- na1]

great info...
thx

 

[Russ]

3.99 at PenFed:

https://www.penfed.org/productsAndRates/loans/vehicleLoans/usedAutoLoans.asp

GEICO gives a discount to PENFED members. It's not a huge discount, but it's more than enough to cover the one-time National Military Family Association fee.