0% financing in the near future?

[Shiny16]

Originally Posted by drmox

Paying for a new vehicle with cash can be the best option, but it's also smart to keep an eye on your opportunity cost.
If they are offering a financing rate of 0%, or even something like 1 or 2%, how much better could a smart financial mind do with $60k over the course of five years?

In today’s market probably better but it depends on how you look at it. 0 percent would be a no brainer if it still meant the same price. That was not an option on my most recent purchase. A mortgaged house can provide investment opportunities as well but I prefer to have no mortgage. The cash I use to pay for a car comes from a savings account. That money would not be invested in the market. It’s either used for a car making my monthly obligations lower or it sits in a savings account for emergencies. I pay it back as I would the bank. I have other accounts I use to exercise my “smart financial mind”. This one is for peace of mind.

[Shiny16]

Originally Posted by Daquenzer

I think dealers get some kind of kick back when financing is involved. You would think there would be some requirement to disclose it, and maybe it is somewhere deep in the fine print. But when I bought my last pickup I paid cash. I bought it just when the pandemic was starting and got an incredible deal. Probably won’t see that kind of a deal ever again. I did notice that RAM has a 0% financing offer on some 1/2 tons.

I’m sure they do. This dealer insisted on financing through a local bank instead of Chrysler. I was suspicious about that but ultimately didn’t care as long as the price was good and there were no early payoff penalties.

[ITSNO60]

In todays new car market with multiple ways for buyers to get competitive pricing there is little opportunity for dealers to get rich on the markup alone, the financing and extended warranties are big profit makers. Never say you are paying cash until you have worked out your best deal or it will cost you.

[Daquenzer]

Originally Posted by drmox

Paying for a new vehicle with cash can be the best option, but it's also smart to keep an eye on your opportunity cost.
If they are offering a financing rate of 0%, or even something like 1 or 2%, how much better could a smart financial mind do with $60k over the course of five years?

One could go the opportunity cost route ad nausea. For example 0% for 24 mos. on your credit card balances. 0% financing on car loans. 0% financing on appliances. 0% financing on furniture. etc. etc.

Why do you think they offer those deals? People get stuck with a bunch of 0% financing and then when they can’t meet the terms they end up paying big time.

I just don’t believe there is any such thing as free money. Like Amazon “free” shipping is often a joke. I was going to buy a tool attachment on Amazon and it was $41. Bought the same thing at my local hardware store for $28. But hey, Amazon said “free shipping.” Whenever someone says they are going to give you something “free” stop and think real carefully. First law of economics, “There is no such thing as a free lunch.”

[Daquenzer]

Originally Posted by ITSNO60

In todays new car market with multiple ways for buyers to get competitive pricing there is little opportunity for dealers to get rich on the markup alone, the financing and extended warranties are big profit makers. Never say you are paying cash until you have worked out your best deal or it will cost you.

The same can be said about negotiating when you are going to trade a car. Never negotiate the price of a vehicle and tell them you are going to trade.

[propchef]

Originally Posted by Daquenzer

The same can be said about negotiating when you are going to trade a car. Never negotiate the price of a vehicle and tell them you are going to trade.

Why not? You'll have to dicker on the trade anyway.

Car dealers are constrained by their manufacture overlords when it comes to discounts and lease rates, and these can be found online. There is little to negotiate with the sales price anymore except when a dealer is asking MORE than MSRP, a situation that is becoming more common with tow vehicles.

As mentioned, dealers make the bulk of their money on the back end: meeting sales goals, extended warranties, and other shenanigans that go on in the finance office.

[Shiny16]

Originally Posted by ITSNO60

In todays new car market with multiple ways for buyers to get competitive pricing there is little opportunity for dealers to get rich on the markup alone, the financing and extended warranties are big profit makers. Never say you are paying cash until you have worked out your best deal or it will cost you.

This! Saying you have x amount of cash in your pocket to spend has always been a bad way to start a negotiation.

[Wazbro]

WOW, nearly one and a half years between OP and first reply. And a lot happened in that time.

[Shiny16]

Additionally there are many avenues to buy a factory warranty after the fact at big discounts. I purchased the same Mopar warranty my dealer wanted $3200 for from an online dealer for $1200.
I’m not a big fan of extended warranties on most things but the Mopar ones are hard to fault if bought at the right price.
Just as in the case of not mentioning cash I wouldn’t decline a warranty until a purchase price is met. Like mentioned previously these are probably two of the biggest money makers for a dealer.

[Gotta_Travel]

Originally Posted by Shiny16

I took the financing because I got a better price then paying cash. Paid in full the next day. Problem solved. The dealer got what ever they get from the bank and I got the price that they wouldn’t give me if I paid cash.
Now it’s true 0% because I just pay myself back.

That’s the way to do it! [emoji1360]

[uncle_bob]

Originally Posted by Shiny16

Additionally there are many avenues to buy a factory warranty after the fact at big discounts. I purchased the same Mopar warranty my dealer wanted $3200 for from an online dealer for $1200.
I’m not a big fan of extended warranties on most things but the Mopar ones are hard to fault if bought at the right price.
Just as in the case of not mentioning cash I wouldn’t decline a warranty until a purchase price is met. Like mentioned previously these are probably two of the biggest money makers for a dealer.

Hi

Factory warranties are a different beast from third party add on warranties. At the right price and the right usage profile on the vehicle they can indeed make sense.

Bob

[Shiny16]

Originally Posted by uncle_bob

Hi

Factory warranties are a different beast from third party add on warranties. At the right price and the right usage profile on the vehicle they can indeed make sense.

Bob

Yep. I mostly wanted to point out that they are negotiable and don’t have to be purchased from the dealer selling you the car. They can be had for a steep discount. At least in the case of Mopar. Something I never new until a few years ago.

[Shiny16]

For anyone interested in a Mopar factory warranty e-mail this guy for a quote. The prices I got from him takes the gamble out of warranty and makes it a no brainer if you plan to keep your car for more then 3 years.
Clay@robbinsmotors.com