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If you finance a car, you can often get a much better rate on a new car than on a used car, which may be a factor toward getting a new car.

by rdl 13y ago

sokoloff 13y ago
Definitely true, but it's a small and not enough to make up for a 20% reduction in purchase price. I'm seeing 0.49% on new cars and 1.49% on used cars from USAA, and several other banks/CUs are all showing 1.99% or better rates. Even if you got 0% on a new car as an incentive and paid 2% on a used car loan, over a 5-6 year loan, you'd pay about 7% more with the loan vs the "free" financing on the new car. (Nevermind that a 5-6 year car loan is insanely long, IMO; buy a car you can afford for cash or on a 3-4 year note. With money at 2%, that's less important than it used to be, of course.) There are also programs where a captive (or semi-captive) credit agency will finance people who couldn't qualify for a used car loan. It frustrates me when I hear car ads touting exactly this, which I view as borderline predatory. "With my credit, I couldn't afford a car, but FooBar brand got me into a new car for only $95 a week!" I believe that such practices should be legal (because you don't generally make someone better off by legislating away their choice), but it's not helpful in the majority of cases. If it's the difference in being able to keep your job vs not, it's helpful. If it's the difference between being able to brag to your friends that you're rolling a 2014 Camry instead of a 2005 Corolla that you could actually afford, well neither they nor you are doing you any favors...
- rdl 13y ago
  I'm ok buying a Tesla on as long a note as I can get; I expect to keep it in-service for 10 years, and operating cost savings (and tax credits, etc.) will make it worth it ($100k for a car is a stretch for me right now, so 6y vs. 4y would be a win). Depreciation still makes my current car a better deal, but if my car suddenly died, I'd probably replace with a Model S (maybe after a period of time on zipcar/drivenow). Otherwise waiting on the rumored S AWD in 2015.
TylerE 13y ago
Yep, that's true and made it worth it for me (plus VW throws in the first 30k of maintaince, which saves another $2k or so)

If you finance a car, you can often get a much better rate on a new car than on a used car, which may be a factor toward getting a new car.

by rdl 13y ago

If you finance a car, you can often get a much better rate on a new car than on a used car, which may be a factor toward getting a new car.

sokoloff 13y ago

Definitely true, but it's a small and not enough to make up for a 20% reduction in purchase price. I'm seeing 0.49% on new cars and 1.49% on used cars from USAA, and several other banks/CUs are all showing 1.99% or better rates. Even if you got 0% on a new car as an incentive and paid 2% on a used car loan, over a 5-6 year loan, you'd pay about 7% more with the loan vs the "free" financing on the new car. (Nevermind that a 5-6 year car loan is insanely long, IMO; buy a car you can afford for cash or on a 3-4 year note. With money at 2%, that's less important than it used to be, of course.) There are also programs where a captive (or semi-captive) credit agency will finance people who couldn't qualify for a used car loan. It frustrates me when I hear car ads touting exactly this, which I view as borderline predatory. "With my credit, I couldn't afford a car, but FooBar brand got me into a new car for only $95 a week!" I believe that such practices should be legal (because you don't generally make someone better off by legislating away their choice), but it's not helpful in the majority of cases. If it's the difference in being able to keep your job vs not, it's helpful. If it's the difference between being able to brag to your friends that you're rolling a 2014 Camry instead of a 2005 Corolla that you could actually afford, well neither they nor you are doing you any favors...

rdl 13y ago
I'm ok buying a Tesla on as long a note as I can get; I expect to keep it in-service for 10 years, and operating cost savings (and tax credits, etc.) will make it worth it ($100k for a car is a stretch for me right now, so 6y vs. 4y would be a win). Depreciation still makes my current car a better deal, but if my car suddenly died, I'd probably replace with a Model S (maybe after a period of time on zipcar/drivenow). Otherwise waiting on the rumored S AWD in 2015.

TylerE 13y ago

Yep, that's true and made it worth it for me (plus VW throws in the first 30k of maintaince, which saves another $2k or so)