[TheHouseWon]

Maybe a 5 year annuity and even then it is doubtful.

[Rikx1M]

7% now but then again I bought new, paid down to $15,000 then refinanced for 1.49% and paid off all credit cards and student loans... Now other than my 1M payment, I cleared high interest rate cc debt, put wife through a doctorate and daughter through bachelors....and all I owe is on my damn car.... it's just not fair

[Alfisti]

Originally Posted by BayMoWe335

Ah yes, the classic market returns versus interest rate on loan argument.

Finance is a lot more than just numbers. Behavioral finance tells you that getting a $40,000 loan to buy a depreciating asset means you're doing other stupid financial transactions and you probably can't afford the car.

Making payments is not the same as being to afford it. What you described is probably 10% of the case and 90% get a big loan because they have NO FREAKING MONEY. There IS no second option to invest the $40k in the market because there is no $40k.

People get loans for cars because they can't afford them. You're talking about the exception, not the rule.

And your loan wasn't for 0.09%. It was for 0.9%, but you knew that.

The depreciation happened whether or not you financed or paid cash. That is a separate argument against buying a new car and doesn't make it better or worse if you pay cash. Again, your numbers are just theory. Very few people can actually execute the plan of "ok, I have $40k in the bank for a car....but I'll invest it and make a 10% return, so I'll finance it at 0.9% for 60 months and come out ahead. Again,

1) They don't have $40k (most likely)
2) They don't even know what a stock is or how to buy one.
3) IF they do put the money int he market, they'll sell at the bottom when the investment goes to $30k after a market dip.
4) They will spend the money on some other stupid item.
5) They will lease the car because they can't even afford the payments on the loan.
6) As David mentioned, you can't invest the $40k in the market the entire time because you have to use some of that money to make the car payment.

I fundamentally agree. Not true for EVERYONE but i fundamentally agree.

[Hawkeye]

Originally Posted by BayMoWe335

No bank pays 3% interest for a savings account. Your money is locked up somehow if it's earning 3%.

It is a CHECKING account (no lockup at all). Allowed to have 2 accounts per person. There is another credit union in town that I use that gives 2.25% up to 20k on the checking account.

You also get up to $20 in ATM fees refunded every month on top of that.

https://www.americantrust.bank/home/rates.html

[Hawkeye]

Originally Posted by Rikx1M

7% now but then again I bought new, paid down to $15,000 then refinanced for 1.49% and paid off all credit cards and student loans... Now other than my 1M payment, I cleared high interest rate cc debt, put wife through a doctorate and daughter through bachelors....and all I owe is on my damn car.... it's just not fair

Isn't school in Germany free (or close to it?) When I was living in Den Haag my buddy was living in Germany because his wife could go to college for like $300 a semester (books or something like that is all they had to pay). They weren't low income either.

[HyeWarrior]

Well I certainly feel like an irresponsible adult after reading this thread

[TheHouseWon]

Originally Posted by Hawkeye

It is a CHECKING account (no lockup at all). Allowed to have 2 accounts per person. There is another credit union in town that I use that gives 2.25% up to 20k on the checking account.

You also get up to $20 in ATM fees refunded every month on top of that.

https://www.americantrust.bank/home/rates.html

That's not gonna work

[Mr Tonka]

Originally Posted by Hawkeye

It is a CHECKING account (no lockup at all). Allowed to have 2 accounts per person. There is another credit union in town that I use that gives 2.25% up to 20k on the checking account.

You also get up to $20 in ATM fees refunded every month on top of that.

https://www.americantrust.bank/home/rates.html

Ahhh, the old complete these 3 simple tasks for extra interest trick.

You see, you first need to have $15,000 to get the full benefit and you still have other requirements to earn that interest. Probably only about 10% of the people will make 12 debit card purchases per month, signs up for e statements and access their account once every monthly cycle. What you're talking about is the exception, not the rule. Therefore your argument is stupid.

[BayMoWe335]

Originally Posted by Hawkeye

It is a CHECKING account (no lockup at all). Allowed to have 2 accounts per person. There is another credit union in town that I use that gives 2.25% up to 20k on the checking account.

You also get up to $20 in ATM fees refunded every month on top of that.

https://www.americantrust.bank/home/rates.html

My God, this is stupid.

You have to jump through a million hoops to actually get it and use a bank without physical locations. Plus, it's only up to 15,000, so it's $450/yr. Great.

[Hawkeye]

Originally Posted by Mr Tonka

Ahhh, the old complete these 3 simple tasks for extra interest trick.

You see, you first need to have $15,000 to get the full benefit and you still have other requirements to earn that interest. Probably only about 10% of the people will make 12 debit card purchases per month, signs up for e statements and access their account once every monthly cycle. What you're talking about is the exception, not the rule. Therefore your argument is stupid.

You need $15,000 to get the "full benefit" from any investment you are basing on a $15k investment. That was the entire premise of the comparing paying in cash vs. keeping the cash and taking a loan.

Just because the masses are stupid doesn't mean that you can discount the GREAT fixed rate (guaranteed) return for someone that isn't. Quit playing down me proving you wrong and just admit that keeping 30k in this checking earning 3% while having a loan for 30k at 1.74% is a good deal.

There is no exception to a rule. There is one hoop you have to jump through (12 whole transactions (24 for 2 accounts) - I get these by buying breakfast every morning walking into work) but that does not discount the benefits.

edit: I am not counting the one time paperless statements or one time setting up a small electronic deposit from my paycheck as hoops. Those were done one time a long time ago and are hardly a thought anymore.

[Hawkeye]

Originally Posted by BayMoWe335

My God, this is stupid.

You have to jump through a million hoops to actually get it and use a bank without physical locations. Plus, it's only up to 15,000, so it's $450/yr. Great.

There is a physical location on my way to work from my house. The only hoop is 12 charges on your card. These include apple (iTunes), amazon, any swipe I make, etc. That is hardly a limiting factor. Where do you know where you can make a 3% fixed return if you're so smart?

[Stubbie Blue]

If you put in $15,000 and get 3% = $450, but then you may have a $45,000 loan at 1.74% = around $750 in interest that you're paying in the beginning, so you're actually down $300.

Anyway, all of this is just ignoring the elephant in the room which is that you're losing a whopping $5,000-$15,000 in depreciation on a new car in the first year alone. People miss this because they're too busy playing games with the math.

[ASAP]

0%... straight cash

... and my car moves probably once a week at the moment

[Mr Tonka]

Originally Posted by Hawkeye

You need $15,000 to get the "full benefit" from any investment you are basing on a $15k investment. That was the entire premise of the comparing paying in cash vs. keeping the cash and taking a loan.

Just because the masses are stupid doesn't mean that you can discount the GREAT fixed rate (guaranteed) return for someone that isn't. Quit playing down me proving you wrong and just admit that keeping 30k in this checking earning 3% while having a loan for 30k at 1.74% is a good deal.

There is no exception to a rule. There is one hoop you have to jump through (12 whole transactions (24 for 2 accounts) - I get these by buying breakfast every morning walking into work) but that does not discount the benefits.

edit: I am not counting the one time paperless statements or one time setting up a small electronic deposit from my paycheck as hoops. Those were done one time a long time ago and are hardly a thought anymore.

Sorry, i was doing an impression of BayMoWe335.

[Mr Tonka]

Originally Posted by Stubbie Blue

If you put in $15,000 and get 3% = $450, but then you may have a $45,000 loan at 1.74% = around $750 in interest that you're paying in the beginning, so you're actually down $300.

Anyway, all of this is just ignoring the elephant in the room which is that you're losing a whopping $5,000-$15,000 in depreciation on a new car in the first year alone. People miss this because they're too busy playing games with the math.

Not everyone misses it. Some people concede losing some money on vehicles because it brings them joy.

[Hawkeye]

Originally Posted by Stubbie Blue

If you put in $15,000 and get 3% = $450, but then you may have a $45,000 loan at 1.74% = around $750 in interest that you're paying in the beginning, so you're actually down $300.

Anyway, all of this is just ignoring the elephant in the room which is that you're losing a whopping $5,000-$15,000 in depreciation on a new car in the first year alone. People miss this because they're too busy playing games with the math.

The difference is between having a 45k loan at 1.74% and 15k earning 3% or just having a 30k loan at 1.74% with no money earning anything.

You still end up ahead with the investment.

Edit: or in my case having 30k liquid and earning 3% and putting 20k down on the truck.

[Bloke]

5% ish. My '16 F36 was purchased through BMW with 0% APR, so I elected to go for 72 months, because why not, free money + I'd rather put my "liquid" into something else. (I also typically keep my cars for years)
My wife's car, we were part of the VW diesel scandal. We paid cash for her '15 Golf TDi SEL. which got bought back at net $2k of original purchase price! She bought a Land-rover (I know! I know!!) and put the $30k down on it, financed the rest at 0.9%.

We're probably in the best position ever of our car buying lives! LOL

[David70]

Originally Posted by Hawkeye

It is a CHECKING account (no lockup at all). Allowed to have 2 accounts per person. There is another credit union in town that I use that gives 2.25% up to 20k on the checking account.

You also get up to $20 in ATM fees refunded every month on top of that.

https://www.americantrust.bank/home/rates.html

Looks like a good deal, you just need to be keep up with all of the requirements. $15k minimum, 12 debit card purchases, check online account each month.

One thing to note is any amount above the $15k will lower the overall percentage rate down. Simple example, $30k and the rate is 1.63% of the total. Still not bad.

3.01% APY on balances up to $15,000, 0.25% APY on any portion of the balance greater than $15,000

[EstorilM]

Originally Posted by David70

Looks like a good deal, you just need to be keep up with all of the requirements. $15k minimum, 12 debit card purchases, check online account each month.

One thing to note is any amount above the $15k will lower the overall percentage rate down. Simple example, $30k and the rate is 1.63% of the total. Still not bad.

Damn. That is actually pretty damn good. Just saw that they have a high yield savings as well that has 1.5% if you meet the same requirements as the 3% checking. So you could theoretically have 30k in there at 2.25% average interest and all you have to do is go to a grocery store once a month and buy 12 packs of gum separately.

Not bad!

[zx10guy]

Originally Posted by Hawkeye

It is a CHECKING account (no lockup at all). Allowed to have 2 accounts per person. There is another credit union in town that I use that gives 2.25% up to 20k on the checking account.

You also get up to $20 in ATM fees refunded every month on top of that.

https://www.americantrust.bank/home/rates.html

No thanks. The 3% interest rate isn't worth the headache of the risk of having to maintain 12 debit card transactions a month. With all the lax security in IT systems at various businesses, it's not worth the small amount of money. Had they tied this to a credit card account which you have to do direct payments from your checking, I'd be all over it.

[Hawkeye]

Originally Posted by David70

Looks like a good deal, you just need to be keep up with all of the requirements. $15k minimum, 12 debit card purchases, check online account each month.

One thing to note is any amount above the $15k will lower the overall percentage rate down. Simple example, $30k and the rate is 1.63% of the total. Still not bad.

Yeah, but the 1.5% is less than my loan so I either invest or pay down principal instead of putting more into my savings. It is nice for people who are not comfortable investing though.

Originally Posted by zx10guy

No thanks. The 3% interest rate isn't worth the headache of the risk of having to maintain 12 debit card transactions a month. With all the lax security in IT systems at various businesses, it's not worth the small amount of money. Had they tied this to a credit card account which you have to do direct payments from your checking, I'd be all over it.

I don't understand. I have a credit/debit card, the credit transactions work towards the 12. I don't even know my pin so all of my transactions are credit transactions. It does not hit a credit account first and then pull from checking if that is what you mean though so you would be out $$ while disputing fraudulent charges. Definitely more risky since it links directly to my account but I just don't use it anywhere that keeps or stores numbers. Mainly just in person transactions.

Regardless I think I got us off topic a bit. I am currently at ~6% but have enough liquid cash to be at 0% any time I want to.

[Draper]

Originally Posted by zx10guy

No thanks. The 3% interest rate isn't worth the headache of the risk of having to maintain 12 debit card transactions a month. With all the lax security in IT systems at various businesses, it's not worth the small amount of money. Had they tied this to a credit card account which you have to do direct payments from your checking, I'd be all over it.

^ This

Who in their right might would use a debit card for regular purchases? I have multiple credit cards (personal and business), and at least two of them get compromised every year. The amount I end up caring about this is less than zero, since it only ties up someone else's money - not mine. I have a new card in my hand the next day, and life moves on.

If this happens with a debit card, you're out the cash until the bank sorts it out, assuming they actually do get it fixed in the end.