GT350, worth the payment?

[redleg322]

So your reasoning is based on the premise that you might die and your wife will need the money?

Ok. For me, instead of having a $700 (approximatey) a month payment, I put that in the back.

And be careful, because if you live, and you need the money from that CD before it comes to maturity you are going to lose money. That's also a fact.

Like you said, to each their own. I've got my philosophy and you've got yours.

For me, if it's a toy, I pay cash. Always. If it were my daily, then I'm ok with financing through a blood sucking bank.

The interest a CD is paying you in comparison, is peanuts. Peace of mind is priceless.

The "blood sucking" has fundamentally changed, though. Banks are giving away money to people these days at historically insane rates.

Think about those 2.8% 30 year loans on homes. That is completely stupid on the banks part. Way too much risk for almost no reward.

In retail, like cars, tv's, furniture, smart phones, you name it, you can get ZERO APR which means literally free loans on products.

I challenge you to run a business where you loan thousands of people money at 0% APR and your best outcome is breaking even on the loan you risked not being paid back on.

This is the age or ZIRP and QE. Print money, buy toxic assets, give out loans all the way to the consumer for zero points.

My point is that applying 1980's financial philosophy doesn't work today. We all have near-zero percent loans so the whole game has changed. It makes no sense to pay anything off when you have access to interest-free capital. This is why so many megacap companies with very smart people are just borrowing money and keeping their cash invested.

With 0% APR or even 1.5% (like my GT350 loan) you have complete peace of mind. Just keep your capital invested, have your car and make minimum payments. You pay almost no interest, drive an amazing car and make more money on capital opportunities elsewhere. Literally have your cake and eat it.

Just my 2c.

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[Superdog]

The "blood sucking" has fundamentally changed, though. Banks are giving away money to people these days at historically insane rates.

Think about those 2.8% 30 year loans on homes. That is completely stupid on the banks part. Way too much risk for almost no reward.

In retail, like cars, tv's, furniture, smart phones, you name it, you can get ZERO APR which means literally free loans on products.

I challenge you to run a business where you loan thousands of people money at 0% APR and your best outcome is breaking even on the loan you risked not being paid back on.

This is the age or ZIRP and QE. Print money, buy toxic assets, give out loans all the way to the consumer for zero points.

My point is that applying 1980's financial philosophy doesn't work today. We all have near-zero percent loans so the whole game has changed. It makes no sense to pay anything off when you have access to interest-free capital. This is why so many megacap companies with very smart people are just borrowing money and keeping their cash invested.

With 0% APR or even 1.5% (like my GT350 loan) you have complete peace of mind. Just keep your capital invested, have your car and make minimum payments. You pay almost no interest, drive an amazing car and make more money on capital opportunities elsewhere. Literally have your cake and eat it.

Just my 2c.

Blood sucking like what just happened with Bank of American/ML or Wells Fargo? The banks are always blood sucking. That is their job? Why do you think they are lending money so cheap right now? Do you think it is to benefit you? Or is it for their benefit?

If you are not paying attention to history, you do so at your own peril. There will always be a bubble and when people get too comfortable, it happens. It is inevitable.

Peace of mind with a $700 payment? That makes no sense to me whatsoever. But hey, you do you, I will do me.

Btw, making money off the market today? It is not like it was 20 years ago and interest is not compounding like it once was.

All those smart people? Are they the same ones that missed the tech bubble or the housing bubble? Because tons of smart people lost their asses. And it will happen again. It always does.

Look, if you feel comfortable doing your thing...that is cool. I am sure that it works for you. And I am genuine when I am saying that I hope it pays off for you.

For me, I pay less in a monthly nut than when I was 22. I have nearly everything paid off. And each and every month, I put away all of my extra cash. Or, my wife and I splurge and go a little nuts and spend a few bucks or fly off somewhere and enjoy a nice weekend at the Ritz. I can do this because my monthly nut is so small. Then, WHEN shit hits the fan, I am prepared to weather any kind of storm.

Am I leaving something on the table? Possibly, but I save a lot every month and I live more or less carefree without having to worry about little things like car payments.

But again, I do support all you guys in whichever way works best for you.

I will end with the fact that Jim Cramer is suggesting to everyone to hold onto a lot of cash because things are about this go south (Friday markets, Fed raising rates etc..).

I do hope that everyone with the mindset of using a lot of credit is prepared because ultimately it effects everyone.

I will close with :cheers:. I appreciate the good debate, and I look forward to hearing every ones "last word".

 

[ThreeFiveO]

Superdog is right. I have had my share of over extended real estate deals when the crap hits the fan. I don't care what APR any loan is based on. Debt is debt in a crisis.
Pay it off or don't buy it. The "if I can't afford it I'll just hand them back the keys" mentality drives me nuts.

 

[J_Maher_AMG]

OP the majority of people probably think I am nuts as well for buying my R. I'm 25, still living at home for the time, and currently saving to build a house. However, I work away on a rotation and am only home for a third of the year, so it didn't make sense for me to go buy a home (which I could have) at this point right now. My fiancee and I will be building, and since I can do all the groundwork including the building of the house itself (foundation, shelling, siding, windows, etc), we can build exactly how we want as we go and save a ton of money on contractors.

I have bi-weekly payments at $455, so approximately $1000 per month, including insurances on my loan in case I was injured or unable to make my payments so that it would be taken care of. However, I am a civil engineer and was very lucky in llanding a very good paying job, so even at $1000 a month for my car loan, in addition to all of my other expenses including phones, gas, insurance, groceries, etc., my monthly expense totals are similar to yours and are about ~26% of my total CLEARED income per month. Sure the monthly payments are definitely high, but I'm still able to bank and save and invest 75% of my cleared income. And this is considering only my own income, and disregarding my fiancees income as well (she's a social worker).

I looked at it in a number of ways. Sure I could say no, invest my money, and wait for "later down the road" when I am more "established". However, tomorrow is never guaranteed, and I knew that by the time I reached an age where most would consider it "OK" to splurge on a sports car, that the types of cars I was interested in would no longer be around. You will NEVER again see a NA FPC V8 in a production car, and since purchasing my R I have been 100% satisfied with my decision. There is no price that you can put on pure joy and happiness, and sports cars are my true passion.

It mostly depends on what you are willing to do to pay for your hobbies. I choose to work away from my family and fiancee for two thirds of the year to make the salary I do so that I can afford my dream car and still save and invest. As my career progresses and I move into supervisory roles my income will increase significantly, so I know that I will be well off in the future. However, being away is a sacrifice that many couldn't do, and I hope that by the time I am in my mid 30's that I will be able to pay off the house that we will be building and then move back to a local job. It all depends on what sacrifices you are willing to make or how hard you are willing to work for your passions.

 

[Superdog]

Superdog is right. I have had my share of over extended real estate deals when the crap hits the fan. I don't care what APR any loan is based on. Debt is debt in a crisis.
Pay it off or don't buy it. The "if I can't afford it I'll just hand them back the keys" mentality drives me nuts.

Drives me a little nuts too.

And I really did think that I was done commenting....but one more.

We have been in a bull market for how long? A record amount of time.

When things go bearish.......:eyebulge:

I mean c'mon.....it is exactly when everyone is super confident and feeling all warm and fuzzy that things go kaput.

And thank you for making saying it clearer. "debt is debt".

 

[***GT350***]

So your reasoning is based on the premise that you might die and your wife will need the money?

Ok. For me, instead of having a $700 (approximatey) a month payment, I put that in the back.

And be careful, because if you live, and you need the money from that CD before it comes to maturity you are going to lose money. That's also a fact.

Like you said, to each their own. I've got my philosophy and you've got yours.

For me, if it's a toy, I pay cash. Always. If it were my daily, then I'm ok with financing through a blood sucking bank.

The interest a CD is paying you in comparison, is peanuts. Peace of mind is priceless.

You read it wrong. i was simply listing the choices: #1---leave my love a car (that is paid off) that she does not want to keep if i died. #2 --- let my love to simply toss the GT350's keys back to the bank because the car loan is under ONLY my name (not hers), and go collect the CDs whenever/if she is ready after the Death Certificate is issued.

I'm at age 44, and a friend of mine passed away unexpectedly few years ago at the age of 48, and left his wife a lambo (paid off) sitting in the garage. She was not hurting for money, but she simply wanted to get rid of the car as part of her healing process.

As for the CD, that 60k was put into multiple CDs, which allows me to minimize the penalty if I only need part of that 60k.

A car-toy is no different than eating at nice restaurants or buying a 6-pack of buddwiser. These are not necessities, and people should not do any of such if/when they cannot afford it.

And yes, I agree you that debt is debt. On the other hand, I also learned that CASH is the king of kings during financial crisis, and all these toys (like cars, watches...etc) means/worth even less than toilet paper.

 

[John Montana]

The "if I can't afford it I'll just hand them back the keys" mentality drives me nuts.

This. Personally, when I make a deal I follow through on it. Watching my neighbors literally move their stuff out of their house and drive away because they overbought made me lose what little respect I had for them.

 

[FranzVonHoffer]

I've passed on two cars in my life I regretted. A 65 Corvette for $13k when I was in HS and a 1993 Porsche 911 for 35K when I first got out of college.

Both expenditures would have been tough for me at the time but I'll never get into either of those cars again. I say go for it. If you get married and have kids your next opportunity will probably be the "empty nest" era.

 

[dron_jones]

I think is comical that we are arguing about what is smarter financially when buying a large expensive gratuitous depreciating asset. If the discussion is really founded on what makes the most financial sense we should all get rid of our GT350's and buy 10 year old cars and invest the monthly payment or total cash amount.

 

[FranzVonHoffer]

I think is comical that we are arguing about what is smarter financially when buying a large expensive gratuitous depreciating asset. If the discussion is really founded on what makes the most financial sense we should all get rid of our GT350's and buy 10 year old cars and invest the monthly payment or total cash amount.

Exactly.. it's a toy you can use for transportation.

I'll also add that I paid $170 a month for a Nissan PU 10 years ago that I absolutely hated. It was the hardest payment to make every month. By contrast my $500 Mustang payment is one of the easiest. It pays me back every time I drive it.

 

[redleg322]

Blood sucking like what just happened with Bank of American/ML or Wells Fargo? The banks are always blood sucking. That is their job? Why do you think they are lending money so cheap right now? Do you think it is to benefit you? Or is it for their benefit?

If you are not paying attention to history, you do so at your own peril. There will always be a bubble and when people get too comfortable, it happens. It is inevitable.

Peace of mind with a $700 payment? That makes no sense to me whatsoever. But hey, you do you, I will do me.

Btw, making money off the market today? It is not like it was 20 years ago and interest is not compounding like it once was.

All those smart people? Are they the same ones that missed the tech bubble or the housing bubble? Because tons of smart people lost their asses. And it will happen again. It always does.

Look, if you feel comfortable doing your thing...that is cool. I am sure that it works for you. And I am genuine when I am saying that I hope it pays off for you.

For me, I pay less in a monthly nut than when I was 22. I have nearly everything paid off. And each and every month, I put away all of my extra cash. Or, my wife and I splurge and go a little nuts and spend a few bucks or fly off somewhere and enjoy a nice weekend at the Ritz. I can do this because my monthly nut is so small. Then, WHEN shit hits the fan, I am prepared to weather any kind of storm.

Am I leaving something on the table? Possibly, but I save a lot every month and I live more or less carefree without having to worry about little things like car payments.

But again, I do support all you guys in whichever way works best for you.

I will end with the fact that Jim Cramer is suggesting to everyone to hold onto a lot of cash because things are about this go south (Friday markets, Fed raising rates etc..).

I do hope that everyone with the mindset of using a lot of credit is prepared because ultimately it effects everyone.

I will close with :cheers:. I appreciate the good debate, and I look forward to hearing every ones "last word".

Drives me a little nuts too.

And I really did think that I was done commenting....but one more.

We have been in a bull market for how long? A record amount of time.

When things go bearish.......:eyebulge:

I mean c'mon.....it is exactly when everyone is super confident and feeling all warm and fuzzy that things go kaput.

And thank you for making saying it clearer. "debt is debt".

A few things:

- Yes, the smart people are taking out near-zero point loans and storing/investing cash. Corporate accounts have more cash than ever (Apple, Microsoft, Alphabet, Cisco Systems and Oracle are sitting on $504 billion, or 30%, of the $1.7 trillion in non-financial U.S. company cash and cash equivalents) That is actually smart.

- Interest is compounding now as it always has. If you're saying dividends aren't as high or yield isn't, well yeah, but inflation is also relatively low as well and treasury/bond yields are very low as well.

- Yes, people and institutions have made loads of profit off the market. The overall market has increased over 300% since March 2009. Having all that profit on the table does scare me, to be honest with you, but valuations in certain sectors are reasonable based on historical averages (Tech isn't one of them lol)

- We are not currently in the longest bull market, we're a few years off. We also currently have a generational buying opportunity in things like energy. Investing in $35/barrel oil is a very wise decision over investing your cash into a GT350, for example, and a new recession will most likely drive oil back up to $100+ per barrel.

- Jim Cramer is a good dude but he is not known to be anywhere near top tier equity analyst. He's more of a jock. Someone like Warren Buffet or many top rated firm analysts would be a better reference. Also to be clear I don't strongly disagree with the notion that we ought to be structuring our portfolio's a bit more defensively right now given political, macro economic and top-of-the-range conditions. I'm getting a bit nervous too, like I said.

I enjoy a good debate too and I'm not arguing that you're entirely wrong, just that there are several ways to financially slice this cat. Ultimately you make good points and of course I do think you're giving good advice by recommending a cash purchase. Obviously we've all chosen to indulge in a waste of an asset but find value in it anyway so its probably not that important how we got here, just that we're here now enjoying it. :cheers:

 

[firestarter2]

This. Personally, when I make a deal I follow through on it. Watching my neighbors literally move their stuff out of their house and drive away because they overbought made me lose what little respect I had for them.

While I believe in honoring your obligations the banks who lent you the money and corporations in general have no issue in walking away from their obligations whether that be debt,someones pension, or damage to the environment.

I have enough for a year of unemployment or a little longer. But if shit went so bad I didn't think that would be enough Id have no issue stopping my car payment thats one thing I learned from investing in houses.

 

[Superdog]

A few things:

- Yes, the smart people are taking out near-zero point loans and storing/investing cash. Corporate accounts have more cash than ever (Apple, Microsoft, Alphabet, Cisco Systems and Oracle are sitting on $504 billion, or 30%, of the $1.7 trillion in non-financial U.S. company cash and cash equivalents) That is actually smart.

- Interest is compounding now as it always has. If you're saying dividends aren't as high or yield isn't, well yeah, but inflation is also relatively low as well and treasury/bond yields are very low as well.

- Yes, people and institutions have made loads of profit off the market. The overall market has increased over 300% since March 2009. Having all that profit on the table does scare me, to be honest with you, but valuations in certain sectors are reasonable based on historical averages (Tech isn't one of them lol)

- We are not currently in the longest bull market, we're a few years off. We also currently have a generational buying opportunity in things like energy. Investing in $35/barrel oil is a very wise decision over investing your cash into a GT350, for example, and a new recession will most likely drive oil back up to $100+ per barrel.

- Jim Cramer is a good dude but he is not known to be anywhere near top tier equity analyst. He's more of a jock. Someone like Warren Buffet or many top rated firm analysts would be a better reference. Also to be clear I don't strongly disagree with the notion that we ought to be structuring our portfolio's a bit more defensively right now given political, macro economic and top-of-the-range conditions. I'm getting a bit nervous too, like I said.

I enjoy a good debate too and I'm not arguing that you're entirely wrong, just that there are several ways to financially slice this cat. Ultimately you make good points and of course I do think you're giving good advice by recommending a cash purchase. Obviously we've all chosen to indulge in a waste of an asset but find value in it anyway so its probably not that important how we got here, just that we're here now enjoying it. :cheers:

All good points my friend. And certainly valid in terms of your point of view.

 

[John Montana]

It isn't really about having a payment or not having a payment to me. If you can afford something, great...if not don't buy it. It is one thing to decide to finance for strategic reasons knowing full well you can pay the debt should the obligation come due. It is far different to finance something knowing that if it suddenly gets tough rather than meet your obligation you just intend to default and walk. I can't respect that latter choice. Buy within in your means regardless of pay structure.

 

[dron_jones]

It isn't really about having a payment or not having a payment to me. If you can afford something, great...if not don't buy it. It is one thing to decide to finance for strategic reasons knowing full well you can pay the debt should the obligation come due. It is far different to finance something knowing that if it suddenly gets tough rather than meet your obligation you just intend to default and walk. I can't respect that latter choice. Buy within in your means regardless of pay structure.

We keep talking about walking away from the vehicle or defaulting. Even if you get into a spot where life changes and you can't afford the vehicle any longer its not like the only option is pay it all off immediately with cash or to walk away and default on the loan. The vehicle is an asset and will have value throughout its life. Hopefully when it was bought you put enough down that the amount left outstanding is less than the depreciated market value. But even if is not, you can still turn around and sell the vehicle. Sure maybe you will end up taking a loss because you have to move it quickly, but that loss will probably be somewhere in he neighborhood of 2-5K. Doesn't feel great but its not like you are going to be out 50K. Now if financially you couldn't afford a small loss like this than you really shouldn't be considering the car, but i would sincerely hope someone considering purchasing a 60K+ car can afford a 2-5K loss or else you really need to give your head a shake

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