Cash vs. Financing

[Flying Ace]

Originally Posted by iconoclast

BMW makes "trucks"?

yes, just 1, the E9X M3 pickup.

[Flying Ace]

Originally Posted by lectoid

Wow, yea this thread did go off on a tangent.

Now my concern is do I finance a 45k truck and pay it off when I get the first payment bill. Or finance a better 55k truck and just have a few years of car payments.

No no, my plan was to be entirely debt free, so I don't want any payments.

how well do you manage your money? It's hard to answer a generic question.

My first point that I made is still valid, just make sure your "cost of acquiring the loan" (loan interest + finance charges) isn't more than the discount you achieved on the MSRP.

"Finance charges" is a formal term in the consumer loan industry. They will disclose to you the additional cost of getting credit (credit report fee, application fee, admin fee, dick sucking fee, getting coffee fee, etc, but you get the idea, they can dump any fee into this category). Then you add finance charges to interest paid, and that's your ACTUAL cost of acquiring the loan. Then you simply figure out how many interest payments you will actually make before doing a lump sum payoff. Also keep an eye out on the disclosure for any early loan prepayment penalties. (They're not dumb bruh, they gonna get their interest in one form or another!)

BTW, your amount financed is just under the cusp of a Reg Z covered loan, so they will disclose to you a concept called "finance charges".

Take if from me, I work in the consumer finance industry. If what I'm saying is over your head, or you can't be bothered to do the calculation or read the disclosures, then pay cash. There is no gaming the system. It is set up so the creditor makes money for every loan originated.

and for those reading this later, if the answer after all this is, I can't afford to pay cash all up front, then you can't really afford this car

[lectoid]

I'd seen the word "truck" used in here a few times in reference to the x5, so I was trying to be hip

Anyway, the 45k I have in cash is for a 2014 CPO X5. I mentioned that in my first post. That price is easily what used X5's are going for in my area.

I think like someone earlier said I'll go in and play dumb. Just get the write up of all the costs, terms, etc and "sleep on it". I bought my 328i from the same dealer and they were awesome in showing me where every number came from. There were no surprises when I sat with the finance guy who even talked me out of extending the service plan thing. Not that I was gonna go for it, but he said I wouldn't get my money's worth in oil changes, wipers and whatever.

But honestly I was dead set on leaving with that car and they probably picked up on that. I was recently divorced, payed off all my debt except the mortgage and wanted a car that I wanted.

[Roundown]

Originally Posted by Flying Ace

what's the total cost of finance though? (Interest and finance charges?). Read the disclosure and get back to us.

This is more of a cost of financing vs discount or a investment return exercise to me. You'll get a "deal" on list price, but I'm sure you give it mostly back (if not more) in interest and finance charges. Come on...they're not dumb. They think you are, but if you crunch the numbers, you'll know the correct solution.

Now if both scenarios equate to the same out of pocket cost, then it's a opportunity cost/investment returns exercise. But all the "smart" people who claim that's the main reason they finance..I'm betting actually rarely invest that money and get their estimated return. They just end up spending it on something else or let it sit in cash, eating up opportunity cost.

He's suggesting that he finance to capture discounts, then immediately pay off. Not finance for full term.

[Flying Ace]

Originally Posted by Roundown

He's suggesting that he finance to capture discounts, then immediately pay off. Not finance for full term.

Yes... I am aware. I told him to check for other costs of financing. If you read what I wrote about "financing charges", financing is more than interest you pay.