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johngalt312

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Very low [new] car loan interest rates right now.
Inflation is here and suspect is only getting worse over the next few years.
So even if you presently have the cash to buy a car outright, why would you?
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McKenzie

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Very low [new] car loan interest rates right now.
Inflation is here and suspect is only getting worse over the next few years.
So even if you presently have the cash to buy a car outright, why would you?
I ā€˜couldā€™ have paid cash for several vehicles, but I finance. Why? Not because Iā€™m overextended (although I get that some are), but because I can ā€˜makeā€™ more investing that cash (#retirement) than I pay in interest.

I get the ā€˜pay cashā€™argument, and I agree that you should be able to. But I would advise against following through
 

pablo_max3045

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For those thinking that the prices of the cars will drop again... you're smoking crack.
They will never drop again.
New car sales are very strong even with the average price of a car in the US being well over 40k.
What have auto makers learned?
We can increase the price significantly and people still buy them. So... why in the hell would they drop the price?
 

JLUW75

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$800 a month seems to be a lot for a car. Then insurance and fuel and mods, etc. Maybe you make a lot of money though, I go by % of income so your household income is probably up around $250k/yr which is higher than mine and so we probably spend the same percentage of our income on a vehicle payment.
And I thought my $520/mon payment for my Willys was a lot of money for a Jeep! And I'm gainfully employed! lol
 

JLUW75

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For those thinking that the prices of the cars will drop again... you're smoking crack.
They will never drop again.
New car sales are very strong even with the average price of a car in the US being well over 40k.
What have auto makers learned?
We can increase the price significantly and people still buy them. So... why in the hell would they drop the price?
I don't want to inject politics into this discussion but with rising inflation, the people who are employed will not have sufficient raises to keep up so their purchasing power will diminish with time. The massive spending that will cause all of this inflation to rise will have a deflationary impact on the economy after the people's purchasing power gets diminished enough. When people can't afford to fill up their cars or keep up with rapidly rising rents and food prices, they will stop making large purchases. When the interest rate for a 60mon car loan goes from 1.9% to 8%, fewer and fewer people will be able to fork $50-$60K on a Wrangler and then MOD it all up with expensive goodies. So as people pull their belts really tight and stop all discretionary spending, cars, electronic sales will collapse and prices will fall as a result. to prevent runaway inflation from having a catastrophic impact on the economy, the federal reserve will have no choice but to raise the interest rates and that will cause deflation. Price may not fall as fast as when factories were humming at full capacity but they will fall nonetheless. So the people who think can get $50k+ for their 3 or 4 year old fully babied and modded Rubi will not be able to find any takers for it either from dealers or from private buyers unless you find someone with cash in hand. Banks will tighten lending as well. I hope I'm wrong and things won't be this bad but the Trillions that our politicians want to spend will wreak havoc with the economy!
 

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Personally I think that payments should not be the main focus when considering financial decisions.
I'd be more concerned with the interest rates and total amount paid over the course of the loan.
That's right. In California I can write off 100 percent of the payments for two years. I got a fully loaded Rubicon with almost every option with 1.49% interest and I did that because if I can sell the Jeep two years from now for $43K I will have not paid anything for the Jeep. High payments are not necessarily a bad thing., high payments with a high interest rate is. It really depends on your situation.

From reading between the lines it kind of sounds like you have a bit of buyers remorse. If that's the case I doubt there will be a better time to sell. The chip shortage is coming to an end and they will eventually solve the supply chain issues. so the resale market may stay strong for a while longer but I don't think you'd get that much more than they've apparently offered you. But if your seriously thinking about selling your shop it around a bit, dealers are desperate for inventory.

For those thinking that the prices of the cars will drop again... you're smoking crack.
They will never drop again.
New car sales are very strong even with the average price of a car in the US being well over 40k.
What have auto makers learned?
We can increase the price significantly and people still buy them. So... why in the hell would they drop the price?
I guess you don't remember the 70's. Car prices are directly inversely proportional to the interest rate. The higher the interest the lower the price. Today you can get a $50K vehicle for about $600/month. Let's assume that interest rates won't go to the 70's levels of 15-16% but they could easily push upwards of 8-10% which would make the payments of the same vehicle north of $800-$1000. So if automakers ramp manufacturing back up to pre-pandemic numbers they will be forced to lower their prices.
 

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why don't you refinance, and try and extend period of time, and get a better interest rate, if you are concerned about the monthly payment ?
 

roaniecowpony

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Why the hell would anyone want to drive a $12,000 car on purpose?
 

roaniecowpony

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Get rid of the payments. If you canā€™t pay cash donā€™t buy it yet. I love jeeps, but itā€™s a rolling brick that sucks money daily. 600+ for a jeep is insane.
It's all relative to your net worth and disposable assets.
 

roaniecowpony

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Very low [new] car loan interest rates right now.
Inflation is here and suspect is only getting worse over the next few years.
So even if you presently have the cash to buy a car outright, why would you?
Exactly!
 

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johngalt312

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I ā€˜couldā€™ have paid cash for several vehicles, but I finance. Why? Not because Iā€™m overextended (although I get that some are), but because I can ā€˜makeā€™ more investing that cash (#retirement) than I pay in interest.

I get the ā€˜pay cashā€™argument, and I agree that you should be able to. But I would advise against following through
I also suspect - not given a choice - that youā€™re amenable to paying off that fixed quantity debt covenant, with a fiat currency soon to be worth less (for said same quantity).
 

RubiSc0tt

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This is a tough one. Back at the height of the Carvana/ Vroom pandemic panic buying, I was offered $50k for my '19 JLUR. that's $2k more than sticker, and roughly $9k more than I paid in 12/2018.
HOWEVER- the catch is i wouldn't be able to get into the 4xE, Diesel, or 392 Rubi that I was interested in replacing it with for anywhere near what they were offering. I do owe money on my Rubi, but I'm paying ahead and for the marginal gain, it just wasn't worth it. I like the stupid thing. My kids love it. I like that it's orange. I like that I can drive it over stuff. So i put the 37's on it and called it a day.
My buddy, on the other hand, turned his '20 JT Rubi for $53k after paying $45k for it maybe 8 months earlier. He picked up a slightly used '17 Tesla Model S Dual Motor. He misses the Jeep sometimes, but not when he drives by the gas pump.

I like hearing people's opinions on Ramsey. One side: He filed bankruptcy! Other side: He's a genius!
.......
Back to the off topic subject at hand... Ramsey has great ideas, things I've only started living by starting in my late 30s. I wish I would have not spent my 20's dropping $500 - $1000 at the club in downtown Milwaukee while living with my parents. I'd be in a MUCH better financial position than I am today. I've recently had two people talk to me about their financial problems, not asking for advice, just complaining about things. I asked both of them if they have a written out budget and both said no. One makes $80k/yr and they are struggling to pay a $1600/mo rent. I'm not passing judgement, I filed for BK after I split with my ex-fiance and moved out of state and back in with my parents. I suggested to both to sit down with their spouse and WRITE (or use Excel like I did) out a budget and then use the Goodbudget app to track EVERY penny spent. I'm certain that if people did that, they would be shocked how much they spend on things. A lot of it is keeping up with the Jonses.
This is my main problem with Ramsey. He rolls a lot of dogma into it and expects a blind adherence to the rules without considering the situation. I started out using his methods of budgeting and tracking, but also started to see the shortfalls once I got to a point where we had a decent emergency fund built up.

This 100%, especially if you own a business. Iā€™ve wasted so much money in my short 31 years of life. Some I regret and other dollars while wasted, were loads of fun.

Focus on income growth my friends. So many people are penny pinching each month, trying to save a few hundred dollars when you could be focused on making 20K, 50K or more in income each month.

And yes, Iā€™ve had stupid consumer debt in my life at one time. Many principals of Dave Ramsey I still live by today, but there are ways to leverage debt and he is not someone whoā€™s every word spoken I treat like a god.

But for anyone who doesnā€™t have a written budget, do it now. Itā€™s at the very core of everything you do financially. Personally I love YNAB and still manually enter all my personal purchases/transactions. It is connected to my bank, but links the transactions I entered when they clear.

Why did I share all of this? Who knows haha. Hopefully it helps someone!
This is definitely the way to do it.

Man, it's awesome to find other personal finance nerds in the wild. Especially on a Jeep forum, of all places
 
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Personally I think that payments should not be the main focus when considering financial decisions.
I'd be more concerned with the interest rates and total amount paid over the course of the loan.
2.79%
 
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JSFoster75

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And I thought my $520/mon payment for my Willys was a lot of money for a Jeep! And I'm gainfully employed! lol
my actual payment is under $600, I just overpay a lot...
 

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I ā€˜couldā€™ have paid cash for several vehicles, but I finance. Why? Not because Iā€™m overextended (although I get that some are), but because I can ā€˜makeā€™ more investing that cash (#retirement) than I pay in interest.

I get the ā€˜pay cashā€™argument, and I agree that you should be able to. But I would advise against following through
Yikes.

Hereā€™s the counterpoint from an old guy. I apologize in advance for the length of this post, but our history provides critical context, and that requires some room to explain.

There are two critical pieces of this equation some forget to consider. The first is the money you earn is taxed, unless itā€™s in a Roth or other tax-shielded account. Here, in the Peopleā€™s Republic of Oregon, our state income tax combines with federal tax to net a total income tax of close to 50%. For a 3% car loan to make financial sense in Oregon, youā€™d need to have an extremely conservative/safe investment thatā€™s guaranteed to consistently yield 6% growth or more. Plenty of investments are doing better than 6% today, but Iā€˜m not aware of any that are as certain as the contract for a car loan. That obligation is like a cockroach: it will be there regardless of what happens to your job, your investments, or the economy. Today that may not seem scary, as you may think you can just sell your Jeep to get out from under the debt. Heck, I recently sold a boat for $1500 more than it cost new 16 years ago ā€” but weā€™re in a temporary economic Twilight Zoneā€¦ For most of the last fifty years, even in good economic times, my sixteen year old boat would have been worth between 20% and 30% of what I paid for it. The days of new vehicles depreciating 20% in the first year will return if and when vehicle production returns ā€” and we had better HOPE production returns, because our country canā€™t just whistle along indefinitely with government largess making up for full employment and economic productivity.

The second piece many younger folks forget is much more important, and nobody who survived the depression ever forgot it: The economy can change in a blink.

A few weeks before the stock market crash of 1929 everybody in the US was fat and happy ā€” living high on the hog, with a stock market that had been soaring for years. The vast majority of folks were either unaware or ignoring the warning signs of economic instability and risk. Our country, and most of the industrial world, went from high employment opportunity, high times, and money everywhere, to vast unemployment, foreclosed mortgages, and soup lines almost overnight. Few saw it coming ā€” even though there were plenty of indicators that preceded the crash by more than six months. Today there are some safety brakes in place to slow the rate of market sell-off, but as we saw 18 months ago, the market is perfectly capable of losing much of its value in a blink.

When I was born the United States was the largest creditor nation in the world. Our economic surplus was augmented by our service as a world bank. We enjoyed world credibility and leverage that came from that strength. Today, the US has become the largest debtor nation in the world. We owe China, Japan, and others trillions and trillions of dollars, and that debt-service acts as a sea anchor that drags on our economy and deprives us of financial margin, but we continue to spend money like drunken sailors. The latest ā€œbuild back betterā€ plan pending in the US House of Representatives would add an additional $60,000 in debt for every living American. This reckless spending and other influences are driving inflation, now already 6%, even higher.

Inflation is an economic cancer. It functions like an additional tax, because it directly reduces our buying power, but it also drives up the cost of loans for everything that buoys up the economy. Inflation and climbing interest rates eventually soften home sales, car sales, investment in industrial infrastructure, and other investment in the economy Including the stock market.

I remember the Carter presidency well, because we were trying to buy a house at the time and, although I had very good credit, we couldnā€™t find a 30 year mortgage under 16% interest. Whip out your mortgage calculator and see what that would mean for you today. (We were trying to get a $50,000 mortgage back then. A 30 year mortgage at 17% was over $700 per month! The same loan at 3% would have been just over $200 per month. For most of us, that meant no home ownership.)

Carter worked with the fed to kill that crippling inflation, but that required shutting down the federal money supply, which dramatically slowed our economy. We all felt the economic pinch back then, but we got through it. The question is, how will the government reverse inflation the next time? I donā€™t see how we could do what the Fed did in the 80s, because the US owes everybody on the planet money, and we have to keep making those debt payments. Thatā€™s even harder now, as weā€™ve managed to export much of the US economic engine that helped us pull through past challenges (like the steel industry, textiles, furniture manufacture, automobile manufacturing, etc). Weā€™ve also developed a HUGE welfare class that feels entitled to all kinds of government services for nothing. Theyā€™ve grown accustomed to lots of freebies, and they wonā€™t give them up without protest or, these days, riot.

I believe the best Americans are as good as they have ever been, but weā€™ve developed a growing group of folks who are entitled, unaware of history, and uninterested in work. At my workplace we canā€™t fill the overtime shifts people used to compete for in the 80s and 90s. We also see local fast food restaurants that are advertising $18 per hour to start and they STILL canā€˜t find employees!

if you read about the 1929 crash, and our recovery from the Carter inflation years youā€™ll see plenty of parallels to make you anxious about today. You canā€™t just leave your money in the bank, because itā€˜s worth less every month, but itā€™s scary to invest in the stock market, because none of the traditional benchmarks are predictive of recent market behaviors. Most of the market is grossly overvalued according to traditional wisdom and price-earnings calculations and, like the late 1920s, we have a large and growing proportion of our population that is oblivious to all of this as they borrow and spend assuming todayā€™s conditions will continue forever.

The only piece of this I can control is my debt-load and the little pieces of stability I can secure ā€” so if everything turns to sh@t Iā€™m not going to lose my home and vehicles immediately.

Just my .02
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