Example of how not to borrow for a car

[Anonymous]

http://online.wsj.com/articles/the-new-rules-of-borrowing-1410541812

Michelle Day, of Damascus, Md., and her husband received a $30,000 car loan with a 1.99% interest rate from the Germantown, Md.-based Mid-Atlantic Federal Credit Union in April. Ms. Day, 34, a university business development manager, says she received an email from the credit union touting its deals and was intrigued by the low rate. The couple made a down payment of around $1,000 on a Honda CR-V.

"When I saw the 1.99%, I said I totally have to give that a shot," she says. "It was a no-brainer."

So...let me get this straight. You borrow $29,000 and only put $1,000 down, meaning that your payments will range (for between three to five years) from $830 to $508 (or lower if you stretch it over 5 years, which would REALLY be stupid). But if you could really afford that $30,000 vehicle, why wouldn't you just put down a larger down payment?

I sense this woman has spending issues. Then again, she does work for a for-profit college.

[Anonymous]

Well, if you can take your 30k and put it in a cd at over 3% while you only pay 2% on the car loan, you make money. Or you put it in the market and take a gamble that the market returns better than 2%. How is that stupid?

[Anonymous]

Um how is this stupid? I'm looking for a car and can get 0%, why wouldn't I put down as little as possible?

[Anonymous]

This is pretty normal. What's the big deal?
Let me guess, you drive your cars for 15 years and then buy the next one with cash?

[Anonymous]

This is why there are so many hondas on the road...

[Anonymous]

You may have a different preference, but this is a perfectly fine way to borrow for a car. You must be really far removed from the general population. Congratulations on reaching the upper echelons!

[Anonymous]

Anonymous wrote:This is pretty normal. What's the big deal?
Let me guess, you drive your cars for 15 years and then buy the next one with cash?

Let me guess, you borrow to buy a new car every other year and have $14.78 saved for retirement.

[Anonymous]

Anonymous wrote:You may have a different preference, but this is a perfectly fine way to borrow for a car. You must be really far removed from the general population. Congratulations on reaching the upper echelons!

I didn't think the "general population" spent 30k on cars. I'm pretty sure the general pop can't afford the monthly payments on a 30k car loan. This is not a perfectly fine way to buy a car. I have a feeling you are part of the upper echelons.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is pretty normal. What's the big deal?
Let me guess, you drive your cars for 15 years and then buy the next one with cash?

Let me guess, you borrow to buy a new car every other year and have $14.78 saved for retirement.

Lol

[Anonymous]

To opine I would need to know the other interest rates offered by other banks for car loans.

[Anonymous]

Anonymous wrote:Um how is this stupid? I'm looking for a car and can get 0%, why wouldn't I put down as little as possible?

0% /= 1.99%

[Anonymous]

Anonymous wrote:Um how is this stupid? I'm looking for a car and can get 0%, why wouldn't I put down as little as possible?

How are you able to get 0%?

[Anonymous]

Anonymous wrote:

Anonymous wrote:You may have a different preference, but this is a perfectly fine way to borrow for a car. You must be really far removed from the general population. Congratulations on reaching the upper echelons!

I didn't think the "general population" spent 30k on cars. I'm pretty sure the general pop can't afford the monthly payments on a 30k car loan. This is not a perfectly fine way to buy a car. I have a feeling you are part of the upper echelons.

LMAO touche. My husband runs a department at a dealer though so my car situation is different than most. I do forget that sometimes, so point taken

[Anonymous]

I don't get it - OP, putting $1000 down and getting a 1.99% loan is a perfectly normal thing to do. I did the exact same thing. I think in this year alone, I've made more in what would have been an initial investment of the same amount in the stock market than what I will pay over the life of the loan.

[Anonymous]

I bought my BMW with $5k down and a 0.9% rate. Financed over 4 years. Is this not normal?