I have a 5 year loan on my Cobalt. I didnt put anything down. Im sure in a grand or two upside down on it.

I dont care. I plan on owning it for more than the 5 years. So what do I care if it's current value is less than what I owe? That is what gap insurance is for.

Only other debt is a 3 year loan my my Gfs car and our Mortgage. We have a positive cash flow after all investments. So really, I dont care about the length of the loan. I make more by investing the cash I would have used for a down payment than I pay on interest for the car loan.

 

Leasing is really the same as renting a car. It's the same as paying rent in an apartment or something of that sort as well. You don't end up with nothing. In the case of a car, you have reliable transportation at your disposal anytime you need to use it for X dollars a month.

 

i wouldn't say that, especially about vehicles.

you can go down to damn near any toyota, honda, GM dealer and find a vehicle under $20k that will get you around town safely, reliably, and efficiently. very few have a an absolute must have or die necessity for much more than that, especially people who have to finance for 80 months.

so its not really about the cost of living out pacing a decent wage, its about stupid people willing to jump into bigtime debt to fulfill their want and desire for a vehicle they don't actually need and cannot financially afford.

 

That's true, but if the 84 mo loan fits into a broader financial plan, it COULD be a reasonable option. I don't see it fitting for me, but if you could afford to not have the $700 every month, AND you wanted to build cash starting immediately, it could work. But if all you can afford is an 84 month loan....get a cheaper car.

 

If someone needs to take out a car loan out at 7%, to accumulate cash that is earning 5% (before taxes), they should be smacked upside the head.

 

Exactly, all most people care about is the payment. How many things can they buy with their money.

This is how I do it as well. I finance for 60 months, and then double pay or more to try and get it done sooner. But if the wife or I lose our job then we could always fall back to the lower payment. But this does take discipline not to just go out and spend the money somewhere else.

 

I think you're missing the point. If they NEED cash that bad, they shouldn't be buying an expensive car in the first place. THEY are the ones that should be smacked upside the head. IF however, you CAN afford a shorter term w/ higher payments, but choose to extend the term to free up monthly cash, you'll lose out a bit in interest over the life of the loan, but depending on the amount of cash you want to accrue, it may be worth it to some people.

 

I'm surprised there's been no Canadian or Austrailian input on this topic yet.....

You Americans don't know how good you've got it with the price of your vehicles.

For Example, I paid $50,560 for my 2007 Sierra SLE 3/4 ton Diesel, which was a hell of a good deal at that price and financed it for 0 percent over 5 years. With sales tax on top of that at 6%, my total came out to $53,689. My payments are $900 a month, and insurance another 120 bucks a month on top of that. I pay over a grand to drive that truck every month, not counting diesel, which is quite expensive right now. Let me tell you, THAT IS A GOOD DEAL! A loaded Duramax now costs in excess of 60K, and you cannot generally get 0% financing for anything more than 48 months. I would say $700-800 a month for a car payment here in Canada would easily be the norm. A grand or higher would also be the norm for high end pickups, SUVs, and sports cars.

I used to lease my vehicles which worked for me financially as they were good income tax write-offs, but with CCRA regulations changing, that is no longer true. I don't care about depreciation, because I plan to keep this truck for at least 10 yrs, maybe more. Its just the price we pay here in Canada. There's been alot of bickering by Canadians lately due to the deflation of the American dollar and the disparity in vehicle prices between Canada and the US (see my previous thread on the topic), but in the end, we have all payed this price over the last few years, and it just keeps on getting more expensive.

And for all those bickering about being upside down on a loan for 5yrs, try going through a divorce! You realize very quickly there can be many worse financial horrors that one can face in a lifetime. My current divorce price tag = $500,000 and rising

 

You should have gotten GAP insurance!

 

LOL...Yup, that and maybe some good divorce countermeasure products from such notable companies like Smith and Wesson or Ruger.