^^^^The way I avoid this is get the out the door price before anything. Also I don't do trade ins. I'm going to drive it till the wheels fall off.
Kinda of tough to tack on more money when the cost has already been nail down.
Kinda of tough to tack on more money when the cost has already been nail down.
No ..out the door is before any down payment.
@Anonymous wrote:Does the out the door price include what you are willing to pay down?
@whaddupmia07 wrote:
@Anonymous wrote:whaddupmia07,
Can you provide your monthly income after tax and your typical monthly expenses and how much you save each month? From some rough numbers, I assume you get 30K per year after taxes and probably spend 20K of that on rent/mortgage/utilities/food etc. That leaves roughly 10k for savings or about $800 per month. I'd say spend no more than $250 of that on the car plus additional $150 on insurance and gas, leaving you $400 savings. To get to a $250 monthly payment, assuming a 5 year loan and 2% interest, the loan amount would have to be $14,000 meaning you'd have to put down $9-12k depending on the car price.
Obviously we can give you better specifics if you can give your post tax income and amount saved up per month. Also how long do you want the loan to last?
Hello,
Yearly income after tax is about $32500. I pay $500/month in rent and currently utilities is covered by the future in-laws (we live in a studio apartment on their property). So lets just say about 10-15K/year on rent, food, and whatever else is needed. I should also mention my fiance (husband in just 6 short weeks) makes 20K after taxes while still attending college. So, together we net about 50K/year. My plan was to lengthen the loan to 72months if needed then making principal only payments whenever possible to lessen the length of the loan.
Sounds like a good plan! Sorry for getting your thread off topic.
i prefer zero down payment. It's all about risk. Assuming you can get a "good" APR (a personal decision, but i would say anything under 3%) i would rather pay that extra interest on the addtional amount financed (by not making a down payment) and let the GAP insurance issuer cover the loss in case of an accident early in the loan. My last car i could have paid cash, but instead financed the whole thing at 0.9%.
others would rather save that money and assume the risk. there is no right or wrong answer, but rather what you're comfortable with.
example
you buy a new car worth 40K. As soon as you drive off the lot it's worth 32K-36K. Let's say 35K to just pick a #. Let's also say you paid the sales tax out of pocket up front. And finally lets say it gets totaled or stolen 1 month later.
Scenario 1 - you made a 10K downpayment. So your outstanding loan balance is $30K. Your car insurance will cover the outstanding loan for up to the 35K at best (the market value). So you car loan of 30K is paid off (yay!) but half of your 10K just disappeared. You don't get it back. You're only getting the value ($35K) minus the loan payoff ($30K) back as a check to you. That's $5K
Scenario 2 - You didn't make a down payment. Your oustanding loan is for $40K. You car insurance covers the 35K, and the gap covers the other 5K. You didn't lose a dime.
So again, for me personally, I'd rather pay the slight extra interest of 0.9% on the extra 10K financed + the cost of GAP insurance, to not risk losing the $5K in event of a loss.
and as a slight tagent, at 0.0% or 0.9% financing, you can take that $10K and invest it and still come out ahead, even after covering the extra interest 
@Anonymous wrote:i prefer zero down payment. It's all about risk. Assuming you can get a "good" APR (a personal decision, but i would say anything under 3%) i would rather pay that extra interest on the addtional amount financed (by not making a down payment) and let the GAP insurance issuer cover the loss in case of an accident early in the loan. My last car i could have paid cash, but instead financed the whole thing at 0.9%.
others would rather save that money and assume the risk. there is no right or wrong answer, but rather what you're comfortable with.
example
you buy a new car worth 40K. As soon as you drive off the lot it's worth 32K-36K. Let's say 35K to just pick a #. Let's also say you paid the sales tax out of pocket up front. And finally lets say it gets totaled or stolen 1 month later.
Scenario 1 - you made a 10K downpayment. So your outstanding loan balance is $30K. Your car insurance will cover the outstanding loan for up to the 35K at best (the market value). So you car loan of 30K is paid off (yay!) but half of your 10K just disappeared. You don't get it back. You're only getting the value ($35K) minus the loan payoff ($30K) back as a check to you. That's $5K
Scenario 2 - You didn't make a down payment. Your oustanding loan is for $40K. You car insurance covers the 35K, and the gap covers the other 5K. You didn't lose a dime.
So again, for me personally, I'd rather pay the slight extra interest of 0.9% on the extra 10K financed + the cost of GAP insurance, to not risk losing the $5K in event of a loss.
and as a slight tagent, at 0.0% or 0.9% financing, you can take that $10K and invest it and still come out ahead, even after covering the extra interest
Yea that's what I've been trying to say. Finance everything you can if interest is low enough. Get gap and even if car is totaled u lose nothing out of pocket. Why put money down so the new vehicle your getting isn't upside down. Also ppl saying worst case is it make monthly lower and if lose job can still squeeze by. Honestly if u lost job for long period of time last thing ur going to worry about is ur car. You going to worry about housing and food!! Plenty of vehicle is offering low interest rate. Will be ridiculous not to borrow the money at such a low interest. When I was rebuilding I got a loan thru capital one for almost 14% for 19400 which was almost a year ago. Went with loan cause I needed it to build credit faster. now I can get a loan for a 95000 BMW for 4.2 for 72 months and even lower with credit unions