Average Down Payment

GuyGene · August 18, 2015

Wow, some o' y'all boys wrote short stories! That's good though when we're talking about keeping our lucres. Right now, I'm eating the pizza I just invested in. Writing on the iPad I invested in 3 years ago. The truck I invested in is in parking lot outside. Y'all get the idea. The only thing we invest in is stocks, 401k, rental property, etc., we DO NOT invest in consumables, like the house we live in, trucks we drive, computers, etc. A truck is a consumable. For me, something I must have for work. Plus, I just like trucks, and at 6'2", 225 pounds, dagnabbit, I canno' fit so good in these ridiculous cyars nowadays. I canno' afford to pay cash, and wouldn't if I could. I usually pay as little down as I can and get the lowest interest I can at one of my 4 credit unions and one bank I use. Last truck loan I got at 1.99%, on a used '02, which I still drive.

Here's the way it is boys: we ain't in NYC nor Tokyo (where I lived many years). We're in USA, where just try to take a train anywhere daily. Point is, our trucks are a NECESSITY for many of us. At least a vehicle is a necessity. My vehicle is gonna be a truck. To pay a lot down, or not pay a lot down - that is the question. I pay a little is my answer.

Robert.jean1 · August 18, 2015

So your saying you pay a little and then have pizza. Got it

Wow, some o' y'all boys wrote short stories! That's good though when we're talking about keeping our lucres. Right now, I'm eating the pizza I just invested in. Writing on the iPad I invested in 3 years ago. The truck I invested in is in parking lot outside. Y'all get the idea. The only thing we invest in is stocks, 401k, rental property, etc., we DO NOT invest in consumables, like the house we live in, trucks we drive, computers, etc. A truck is a consumable. For me, something I must have for work. Plus, I just like trucks, and at 6'2", 225 pounds, dagnabbit, I canno' fit so good in these ridiculous cyars nowadays. I canno' afford to pay cash, and wouldn't if I could. I usually pay as little down as I can and get the lowest interest I can at one of my 4 credit unions and one bank I use. Last truck loan I got at 1.99%, on a used '02, which I still drive.

Here's the way it is boys: we ain't in NYC nor Tokyo (where I lived many years). We're in USA, where just try to take a train anywhere daily. Point is, our trucks are a NECESSITY for many of us. At least a vehicle is a necessity. My vehicle is gonna be a truck. To pay a lot down, or not pay a lot down - that is the question. I pay a little is my answer.

sprayed99 · August 18, 2015

I feel the need to chime in even though it's none of my business what anyone does with their hard-earned money. This assessment is spot on, regardless of your preference to put forth a large, small, or no down payment. The simple fact is that, from strictly a dollars and cents perspective, in the end, you will end up with more cash on hand if you have a 0% loan (or any rate lower than what you can otherwise invest) and put down $0. Even if you only tuck that down payment into a low-interest bearing savings account at 0.5%, you will come out ahead. Yes, your payments will be higher, but in the end you will pay less than the guy who put $20k down. If you choose NOT to invest the would-be down payment, you're on even ground at worst. This is assuming of course that you don't blow that $20k on something else and cannot afford the payment as a result.

The only relevant amount is the amount of the DP, in this case $20k. My making a DP on a 0% interest loan, you are essentially putting that money into a no-interest, 5-year (assuming that's the term of your loan), non-liquid savings account. After 5 years is up, your truck is paid for, and you are happy. With no down payment, tucking that money into an interest-bearing savings account and using that money towards your monthly payments will result in a paid-for truck in 5 years, AND you will have a very small amount of money in your savings account. It might only be an extra $5 if the savings interest rate is low, but you will still be ahead. Both people pay the exact same amount to the dealer/finance company. EXACTLY the same amount. But the girl who held onto her DP is ahead after 5 years. This is a plain old fact.

Of course personal preference comes into play, but it doesn't change the math. Heck, I made the financially inferior move of paying off my low-interest student loan early instead of putting it toward my higher interest mortgage. But my preference was to eliminate the student loan entirely. In the long run, that COST me money. But that cost was worth it to me to eliminate the loan. Just like the COST of the DP on a truck is worth it to someone for the lower monthly payment and the security.

And to pay for a vehicle outright when 0% is available is just plain stupid from strictly a dollars and cents perspective. But it's not stupid if you have other reasons to do so. Again, if you took that $50k, invested it, and used that money to make your monthly payments, you will have money left after it's paid off. Then again, investing takes work and discipline, so maybe it's not worth it to some people.

Loan rates are super low and since savings interest rates are in direct correlation to loan interest rates your money isn't doing anything in any type of "savings" account.. it doesn't matter if it is a normal savings, a CD, money market...blah blah blah.

So at this point you can either dump the cash on a truck that will depreciate or stick it in a savings account that will make 1.25% MAX. In either situation you are losing money. Look at the inflation rates. Cash only makes money when it earns more than the avg annual inflation rate.

Now that being said... If you choose to invest the cash into an investment vehicle that can make more than inflation you will be taking a larger risk of a total loss...think stock market, oil and gas, reits, or even DPPs.

Bottom line is do whatever you feel like. It is your hard earned money and spend it however you feel you want...just don't be a dirt bag and make sure you pay your bills... (not directed at anyone just the truth about many so called Americans)

To point out your example

50K at 1.25% APY is only 625.00 a year!

Syclone3MT · August 18, 2015

WOW, this whole topic escalated quickly. Do what you gotta do. Whats the point of arguing other peoples finances. Life is good when you drive a CHEVY.....thats all that matters.

RobZ71LM7 · August 18, 2015

I put down 150%. I like to use it like a savings account and they pay me each month.

Dadof2 · August 18, 2015

I don't mean to step on toes or upset anybody, but some of these posts about not putting money down and investing it are funny to me. Sure you can crunch the numbers and show how one can be money ahead, by not putting money down on a 0% loan, and Investing it (assuming the investment does well). But that little bit of money is not going to get you anywhere sooner.

My investments are investments. I see my truck as an appliance. If I need or want a vehicle, refrigerator, washing machine, etc., I go buy it.

I wish the best for everybody. I just don't plan to borrow money against a truck to invest.

Imcrazy · August 18, 2015

I feel the need to chime in even though it's none of my business what anyone does with their hard-earned money. This assessment is spot on, regardless of your preference to put forth a large, small, or no down payment. The simple fact is that, from strictly a dollars and cents perspective, in the end, you will end up with more cash on hand if you have a 0% loan (or any rate lower than what you can otherwise invest) and put down $0. Even if you only tuck that down payment into a low-interest bearing savings account at 0.5%, you will come out ahead. Yes, your payments will be higher, but in the end you will pay less than the guy who put $20k down. If you choose NOT to invest the would-be down payment, you're on even ground at worst. This is assuming of course that you don't blow that $20k on something else and cannot afford the payment as a result.

The only relevant amount is the amount of the DP, in this case $20k. My making a DP on a 0% interest loan, you are essentially putting that money into a no-interest, 5-year (assuming that's the term of your loan), non-liquid savings account. After 5 years is up, your truck is paid for, and you are happy. With no down payment, tucking that money into an interest-bearing savings account and using that money towards your monthly payments will result in a paid-for truck in 5 years, AND you will have a very small amount of money in your savings account. It might only be an extra $5 if the savings interest rate is low, but you will still be ahead. Both people pay the exact same amount to the dealer/finance company. EXACTLY the same amount. But the girl who held onto her DP is ahead after 5 years. This is a plain old fact.

Of course personal preference comes into play, but it doesn't change the math. Heck, I made the financially inferior move of paying off my low-interest student loan early instead of putting it toward my higher interest mortgage. But my preference was to eliminate the student loan entirely. In the long run, that COST me money. But that cost was worth it to me to eliminate the loan. Just like the COST of the DP on a truck is worth it to someone for the lower monthly payment and the security.

And to pay for a vehicle outright when 0% is available is just plain stupid from strictly a dollars and cents perspective. But it's not stupid if you have other reasons to do so. Again, if you took that $50k, invested it, and used that money to make your monthly payments, you will have money left after it's paid off. Then again, investing takes work and discipline, so maybe it's not worth it to some people.

You hit the nail RIGHT on the head there dude.

Cosmic Charlie · August 18, 2015

WOW, this whole topic escalated quickly. Do what you gotta do. Whats the point of arguing other peoples finances. Life is good when you drive a CHEVY.....thats all that matters.

Ahhhh - Sierra HD !