Interest free loan or pay upfront?

i would take the 1500, unless your making enough on your cash to make up the grand over 5 years.
on 25,000, you would have to do an amortization table at whatever interest you're getting or dividends and whatever. it's proxy close to a wash either way, which is why they offer it.

 

It really is not interest free. It's the interest is paid up front. I also doubt that any cash is given back. It is just an arbitrary number subtracted from the car price after a whole lot of other arbitrary numbers have been added to the car price.

Remove all the buyer manipulation wording and you pay $1000 for all the pain of having a loan outstanding for 5 years. I bet there are some additional hidden costs of having the bank own your car for 5 years instead of you owning it.

 

Everyone should keep 3-6 months of living expenses in savings.
If you can afford to fork over ~$25,000 and still have a decent amount left in savings.......then pay up front.
If not, then take the low-rate financing, knowing that it really is not ZERO as was pointed out.

 

Pay cash if you've got it. All the rest is smoke-and-mirrors on their part.

 

And that $1000 difference is the TRUE cost of the loan.

By paying cash up front, you save $1000 and give yourself more flexibility should you decide to trade before 5 years.
By taking the loan, it is costing you about $17 a month extra over the life of the loan.

Your insurance rate should not be different with a loan than without it.

 

I don't even bother to exercise my brain cells (all 2 of them) on it, work out the hows and whys. Whenever there's a tempting, buy-now-pay-later offer, it's gonna cost you.

 

A free interest loan is never free. It is going to cost you. If you can afford it, pay cash.

 

of course, if you're making 10 or 12% in the market like many are, that's $12,500. to $15,000. lost over 5 years. unless the market tanks.

 

I don't like to take on debt, but a car is a depreciating asset and I don't think it makes good financial sense (well buying a new car doesn't make good financial sense, but w/e) to fully drop $20k+ on it (unless ofc by paying upfront, dealer is willing to knock price way way down), because that stack of $20k+ will immediately devalue much more than the $1k difference in rebate.

 

It is hard to evaluate "financial sense" by mixing explicit costs (dollars payed) with implied costs (depreciation). There is a more clear cut way. At the end of ownership it is the total cost forked over for everything that should be the evaluation point. Between all options of leasing, buying, financing, etc. look at how much money has exited the pocket. It is an rare and unusual situation where buying the car outright is not the option with the smallest total lifetime cost. There are situations, but not that many.

 

Not sure but I think those 0% loans are contingent upon you not being late on a payment, so if you mess up and make a late payment your rate goes to ?% and you get squuewed.

We bought a Nissan once 0n a 3yr 0% loan....had it set up on bank draft. Paid up several months in advance just for the heck of it and had also made payments directed to principal.
So one month we noticed the payment had not been deducted from our bank account.

They informed us over the phone the reason the payment had not been deducted was when the bank draft was set up online that the terms were for 26? payments only...
Needless to say I was furious and got the payoff amount and paid off the loan the next day.

 

Do you know what credit card companies call folks who pay their balance on time, avoiding interest charges? Kid you not:

Dead beats

 

I believe that. I always pay my balance in full as soon as I receive my statement. They don't like people like me.

 

But they still make money from your transactions, due to the merchant fees. Just less than they make from the folks who roll over their balances.

 

Taking on a debt doesn't reduce the depreciation on the physical asset. It just allows the buyer to go 'underwater', owing more than the asset is worth.

 

When I negotiated purchasing my 2012 Prius Plug In Advance, I was given a out the door price. Zero percent, 60 month financing was a option if I qualified, which I did, and chose. I closely checked total cost to ensure no under handed add ons. There weren't any, other than standard documentation fee, processing fee, which are normal and were within reason. I took the total price to include taxes and tags, and divided the total by sixty months, and it matched my projected sixty month payment schedule. The 2012 Prius Plug Ins were closeout priced and there wasn't a difference between financing at 0% and paying cash. I've never claimed to be a financial wizard, but I am money savvy. I drove off with a new 2012 Prius Plug In Advance, and didn't spend a dime for the first month. Why spend today dollars that I can defer over the next sixty months for the same amount? Should I decide to sell or trade it prior to payoff, I'll pay it off at that time. With 60 month, 0% financing, it gives me an additional incentive to keep it for five years. We'll see. For most here to convey that Toyota's 60 month zero percent financing isn't actually 0%, I'm not convinced. Many people today don't have enough available cash or disposable assets for the uncertain times we live in. But low cost (zero %) financing or paying cash is a individual decision.