Average S550 monthly payment?

[shogun32]

Lots of bs to cover the fact that you didn’t have the liquidity to pay cash

so? paying cash is stupid. As long as the cost to borrow modulo inflation is less than the depreciation rate, it makes perfect sense to borrow.

What you're missing is that the cost to borrow has NEVER in recorded human history been this artificially low. In a sane world we'd be paying at least 7% and more like 12% for car financing in an environment of <2% inflation. We're running >8% inflation and it's going to get much worse. So on a rational basis car loans should be written for 15% and higher.

You want to see a CRASH in MSRP and used car prices? Just normalize borrowing costs to their historic norms. You're seeing a CRASH in real-estate finally starting to take shape. It's going to be brutal. 50% haircuts will be the lucky ones.

What you paid back every month is only worth 0.7% less IF your income increased by the same value, otherwise no difference

the entity eating the inflation is FORD Finance. They loaned me October 2022 dollars. What I pay them back are 2023/2024/25... dollars and they are materially worth less than what they gave me. Even though it's still the same visage of ol' Benji printed on the paper.

If I invest 2022 dollars and it returns less than the 8+% inflation rate in 2023, 2024 etc. then I've still lost money even if the dollar bills stack up the same. I just lost value slower.

Sponsored

 

[luc]

so? paying cash is stupid. As long as the cost to borrow modulo inflation is less than the depreciation rate, it makes perfect sense to borrow.


the entity eating the inflation is FORD Finance. They loaned me October 2022 dollars. What I pay them back are 2023/2024/25... dollars and they are materially worth less than what they gave me. Even though it's still the same visage of ol' Benji printed on the paper.

If I invest 2022 dollars and it returns less than the 8+% inflation rate in 2023, 2024 etc. then I've still lost money even if the dollar bills stack up the same. I just lost value slower.

You completely miss the concept:
If you’re still making the same money that you did when getting the loan, paying it back cost you exactly the same , not less because of the inflation
Your example would only be right if your company/boss was giving you a .7% monthly raise to cover inflation
This discussion is really stupid, since most people don’t have the liquidity to pay cash for a car, they don’t have a choice between paying cash or investing this money if they get a loan

 

[shogun32]

You completely miss the concept:

nope. sorry it's you. Yes the dollar bills in my pocket are losing value just sitting there. But I churn my paycheck on a short time-period. Ford Finance, however, has a loan written against 2022 dollars on their books. Yes, at a casual glance the ledger seems to be net-zero but when Ford has their 35 grand back and the pittance of interest in their bank account at the end of the 5yr term, it's going to buy a WHOLE SH*T TON LESS stuff than it would have back in Oct 2022. They will have lost money (if you prefer, purchase power) big time.

But at least they moved a unit of product. Where Ford makes up for the money they are losing writing my loan, is the characters signing double-digit interest rates. But these too are not as attractive as they might otherwise be at 8+ annual inflation.

Anyone want to bet Ford Credit just like their GM counterpart (Ally) needs a bailout when they have to face the music with loan loss reserves and WILDLY elevated deficiency rates?

 

[shogun32]

 

[stars_fan]

No bank/credit union is offering 2.89% currently. You'd be awfully lucky to lock anything in below 4.5% (Dealer financing specials excluded)

You're not making a nickel. You just blew $56,000 no matter how you look at it.

Dave R is not a knothead. He's 100% correct in every point he makes. Nobody HAS to pay for his course. The people that do, just can't think for themselves and usually have ZERO financial knowledge. That's up to them.

Last week was 2.89 this week it's 3.19
https://www.swacu.org/manage/helpful-tools/rates.html

Again you will never build wealth listening to Dave.

And you need to learn how the world actually works. Vast majority of people who lease of take a loan do it because they have to. Not because they are trying to maximize returns.

And putting more money down to lower the payments helps people not get into a bad situation.

The post wasn't directed as those taking loans. It was directed at those paying cash for a depreciating asset.

I think I have an idea how the world works. I'm 41 and only work a corporate job because I want to. I could retire today and live off of the money I've invested over the last 20 years.

 

[stars_fan]

Lots of bs to cover the fact that you didn’t have the liquidity to pay cash
What you paid back every month is only worth 0.7% less IF your income increased by the same value, otherwise no difference
Also your clm stock lost 40% since the beginning of the year, so the money that you invested instead of paying cash costed you inflation+40% or you lost about 48% on your investment. Smart move

Most stocks have lost that much this year or more. Investing always has its risks.

I should have stated if I was going to pay cash for a car today then I would look at that fund. It's also important to research and make moves when necessary. 2020-2021 I would have said something like JEPI, NUSI, QYLD or RYLD.

 

[White Stallion 11]

You can't lose with 0%. Just enjoy the car, take care of it, and keep it a good long time.

Absolutely. No matter which way you cut it, should you have the cash flow to support making car payments for 60 or 72 months at 0% interest, this is the only way to go as it is financially to your advantage over the long haul if you leave lump sum down payment invested.

Having said that, however, not everyone is comfortable with having debt, so, in my mind, it is a matter of personal preference and it is irrelevant as to what one's monthly car payments are--it's one's peace of mine that counts.

RJ

 

[Cav427]

so? paying cash is stupid. As long as the cost to borrow modulo inflation is less than the depreciation rate, it makes perfect sense to borrow.

What you're missing is that the cost to borrow has NEVER in recorded human history been this artificially low. In a sane world we'd be paying at least 7% and more like 12% for car financing in an environment of <2% inflation. We're running >8% inflation and it's going to get much worse. So on a rational basis car loans should be written for 15% and higher.

You want to see a CRASH in MSRP and used car prices? Just normalize borrowing costs to their historic norms. You're seeing a CRASH in real-estate finally starting to take shape. It's going to be brutal. 50% haircuts will be the lucky ones.


the entity eating the inflation is FORD Finance. They loaned me October 2022 dollars. What I pay them back are 2023/2024/25... dollars and they are materially worth less than what they gave me. Even though it's still the same visage of ol' Benji printed on the paper.

If I invest 2022 dollars and it returns less than the 8+% inflation rate in 2023, 2024 etc. then I've still lost money even if the dollar bills stack up the same. I just lost value slower.

shogun32 is 100% correct operating under the assumptions:

1) that your loan interest rate is less than inflation (using the CPI around 8.5%, using M2 11% or so),

2) You have the money set aside and invested,

3) You feel secure in the fact that you will be employed or have sufficient money to pay off your loan should the need arise.

With all that said though things start become less correct depending upon other financial factors that change that mix. For many who buy Mustangs it is about emotion. After all buying a performance car is about how it makes you feel, not about practicality (unless you are an amateur or professional racer.) Without emotion a car becomes an appliance like a refrigerator or a Camry 4 banger. Without emotion we'd all choose the cheapest or most practical mode of transportation, even being a bus passenger.

 

[wynand32]

For many who buy Mustangs it is about emotion.

I had absolutely no practical reason to buy my Mustang. I work from home and so don't even have a commute. Unless I drive just for the sake of driving (which I do, of course), I'm just running around town on errands. We plan some longer trips where the GT aspect will get some run, but there's no doubt that I would have been more practically served by going with an economy car.

But you only live once, and I won't be on my deathbed lamenting the fact that I didn't buy a Honda Civic instead.

 

[russd32]

shogun32 is 100% correct operating under the assumptions:

1) that your loan interest rate is less than inflation (using the CPI around 8.5%, using M2 11% or so),

2) You have the money set aside and invested,

3) You feel secure in the fact that you will be employed or have sufficient money to pay off your loan should the need arise.

With all that said though things start become less correct depending upon other financial factors that change that mix. For many who buy Mustangs it is about emotion. After all buying a performance car is about how it makes you feel, not about practicality (unless you are an amateur or professional racer.) Without emotion a car becomes an appliance like a refrigerator or a Camry 4 banger. Without emotion we'd all choose the cheapest or most practical mode of transportation, even being a bus passenger.

You’re both right. Everyone will follow different philosophy and imo as long as the $$ work for you, do you playa

Personally I paid cash, simply because I operate on the philosophy of not buying toys with someone else’s money.

 

[Prodigal]

I had absolutely no practical reason to buy my Mustang. I work from home and so don't even have a commute. Unless I drive just for the sake of driving (which I do, of course), I'm just running around town on errands. We plan some longer trips where the GT aspect will get some run, but there's no doubt that I would have been more practically served by going with an economy car.

But you only live once, and I won't be on my deathbed lamenting the fact that I didn't buy a Honda Civic instead.

I’m in the same boat. The wife and I each have a company provided vehicle. Car, fuel, insurance we pay nothing for unlimited miles yet we each have our fun car, or 3. Driving something you like that makes you feel alive is well worth the added expense. No regrets.

 

[shogun32]

The wife and I each have a company provided vehicle. Car, fuel, insurance we pay nothing for unlimited miles

couldn't bribe the bean-counters to let you have a Civic Si/Sport or WRX eh?
only CUV I'm guessing?

 

[Prodigal]

couldn't bribe the bean-counters to let you have a Civic Si/Sport or WRX eh?
only CUV I'm guessing?

Full size SUV

 

[Cav427]

You’re both right. Everyone will follow different philosophy and imo as long as the $$ work for you, do you playa

Personally I paid cash, simply because I operate on the philosophy of not buying toys with someone else’s money.

Yup, paying cash is an emotional and pride issue, as well as comfort. Personally I want to squeeze every last dollar out of every purchase I can, if I can use someone else's money and my word I will. Paying cash though has a big benefit, less exposure to ID theft.

 

[Returning_User]

I was more than a little shocked to see this piece in FA and it got me wondering about comparable Mustang payments. It’s hard to see how the average family can afford this.

https://fordauthority.com/2022/10/over-one-third-of-ford-f-150-owners-have-1000-monthly-bill/

If your Mustang is financed would you mind sharing your monthly car payment?

Heck, it seems to me that $1000/month is getting into the house payment range. But maybe I just need to get up with the times…

560 per month for 36 months 0%APR, on my CS/GT. But I got a good deal on the trade...

Sponsored