How much is your truck payment?

[Merccat]

I went on a long path of being upside down on loans starting in 2012.

I think this is also a good consideration. While with super low rates it can be better to finance more and invest the difference you also want to avoid being upside down.

There was a calculator I found somewhere (maybe carpaymentcalculator.net or something like that) which showed in a chart the depreciation along with the amortization so you could play with different down payments that kept you in the black through the life of the loan.

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[SILVERBULLET69]

Sold my (kbb blue booked value of 5300 no lien) 2004 suburban 2500 for 12 grand on ebay.
Sold my 13 300c to carvanna for 12,450, owed 6000
Bought truck for 56,300 put 15g's down got some interest and a loan for 584 a month.

 

[thevofl]

Whenever my fully loaded Platinum ever gets built </snark>, the price will be ~$84k. With ~$14,000 from trade-ins, brings it down to $70k. With $2,500 down and a rate of 2.14% will make my payment $1,000. My math OCD gravitates to nice numbers like that.

 

[EricR]

I've had friends get burned on leasing due to going over the (often very low) mileage allowed.

How do you who lease manage that?

 

[Whiskey]

Let’s take it one step further, how much does it cost to own your new truck??

 

[Jus Cruisin]

I sleep really good knowing I have no debt. ??

 

[Prospectorguy]

Told em I planned on financing then in the end just wrote a check for full amount.

 

[currybob]

Blessed to say a big fat $0.

 

[pkinneb]

Probably in the $650 range depending on what I get when I sell my 2015 Canyon, looking for $25-30K. With interest so low I am comfortable leaving my money in the brokerage account earning more interest then I'll be paying on the truck loan.

 

[NoCo150]

This is what I am struggling with. I’m a huge Dave Ramsey fan as well. And obviously financing a truck is a big no-no. But I really want this truck. I hate to touch money in my brokerage account that is earning 10%+ when I can take out a loan at 1.9%. I will put a significant portion down though.

I like Ramsey too, but how does it make any sense to take 50k out of an account that is making 10% interest to pay for a loan that cost you 1.9%… I am not a genius or anything but that seems it will cost you 8% annually to not have the loan. I have wanted to call into Dave’s show and ask this question many times. I am retired and have a mortgage at 2% why would I take savings out to pay the mortgage off when it is making 10% conservatively. Obviously I haven’t ask Dave that question but I don't see the rational.

 

[AustinT95]

Told em I planned on financing then in the end just wrote a check for full amount.

How does that work out? My wife and I plan on doing the same thing. My dealer is offering $1500 off through financing, but my wife and I want to pay it off and not have a car payment.

 

[F-150 Prius]

If the rates are good, financing should always be considered. It's cheap money.

I financed at 1.89% for 72 months through a local credit union. At $60,000 financed, the total cost of the loan will be $3,500 if paid for the entire term. In the current market, there's no scenario where I can't break even or do better by investing a potential down payment for 6 years.

Additionally, when financing, you have the capital available if needed in an emergency, and not tied up in a depreciating asset.

This is pretty much spot on advice.
The numbers might be a little different, but the important concept is to look at the full loan duration and total cost of the money eventually fully repaid (not some vague notion of trading for a high residual value in an unknowable future car market.)
Also, this advice only works so long as the risk-free rate is near zero. If the car loan was 5% and the bank was paying 4% to have your money (risk free) in your "savings" then the car loan becomes a dubious proposition and smacks of instant gratification and consumerism (buying "more" car than you can afford, potentially underestimating the operating costs to maintain a new $60K truck, insurance, taxes.)

https://www.saving.org/car-loans/60000

 

[F-150 Prius]

I am planning on putting 17k down and getting a 72 @ 1.75 loan from my credit union for a payment of about $550/month. I will likely pay off a lot sooner but I like the option of making a lower payment if something were to come up.

Leasing (eternal car payment) not even a consideration for me as I keep cars long after paying them off.

Good points made on balancing the low rates with potential returns, a lot of people fail to consider the opportunity cost of taking that money out of reasonably safe investments, but I also hate debt. In the end I split the difference.

A car lease is a business tax handling (first year depreciation, etc.) and the expectation is to use the capital elsewhere and manage the business cashflow to minimize tax and costs before replacing the vehicle sooner as a matter of reliability (warranty coverage period.)
The only use for a retail buyer to buy a lease product is if they unsure of the duration of owning the vehicle and live in a high sales tax state (e.g. California 9%+) so the cost to turn over the vehicle is burdened by the tax. Lease interest rates can be higher. Insurers can charge higher premiums on leased vehicles (it's a statistic that people tend to have higher insurance claim dollar amounts on leased vehicles.) Ask your tax preparer to set up an LLC to buy the vehicle and lease it compared to a simple finance purchase. The total cost of ownership becomes the deciding factor. "Owning" any given vehicle is not a stronger financial position unless you intend to keep on vehicle far beyond the end of the lease (which isn't a sound business decision necessarily, just a lifestyle preference.)
Various "self help" sites offering advice on personal finance and budgets give various parameters for how much can be borrowed, how much can be afforded. I'd read through those sites and get a feel for how to plan a budget.
Finally, be wary of subsidized products (Ford 0.9% or 0% loans) … the cost of that money has to come from somewhere and the only party putting money into the deal is the buyer, so that's where it all balances out … waiting to buy a truck during a holiday weekend sale or end of quarter or end of year is an order of magnitude larger dollar amount than the difference between a 1% or a 2% loan.

 

[Coolrain]

I like Ramsey too, but how does it make any sense to take 50k out of an account that is making 10% interest to pay for a loan that cost you 1.9%… I am not a genius or anything but that seems it will cost you 8% annually to not have the loan. I have wanted to call into Dave’s show and ask this question many times. I am retired and have a mortgage at 2% why would I take savings out to pay the mortgage off when it is making 10% conservatively. Obviously I haven’t ask Dave that question but I don't see the rational.

The rational is a percentage of people often don't have the discipline or unfortunately life happens and the situation is such that a car payment is far from the priority and then it takes months to years to get out of the debt and hurts retirement etc etc - dominoes fall

 

[UGADawg96]

I like Ramsey too, but how does it make any sense to take 50k out of an account that is making 10% interest to pay for a loan that cost you 1.9%… I am not a genius or anything but that seems it will cost you 8% annually to not have the loan. I have wanted to call into Dave’s show and ask this question many times. I am retired and have a mortgage at 2% why would I take savings out to pay the mortgage off when it is making 10% conservatively. Obviously I haven’t ask Dave that question but I don't see the rational.

If you're in the top x% with a paid for house(s), fully maxed out on 401k and Roth, and have extra cash in both savings and a brokerage account(s), then sure, finance all day. But most people live beyond their means, have stacks of bills, and don't have an emergency fund. And there are a LOT of people in the middle of these two examples, which makes it very gray and less black and white for sure. Everyone has different situations. ymmv.

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