How many Prius owners paid cash vs loan for their car?

<div class='quotetop'>QUOTE(EricGo @ Oct 15 2006, 03:24 PM) [snapback]333067[/snapback]</div>

I think you did not fully read what I said, as I agree you should never use a heloc, I said a home equity loan. The home equity loan is a fixed rate instrument rather than a home equity line of credit. I fixed home equity load can be for any fixed time period and the interest rates are fixed. They don't put you in the upside down situation you talk about and they are tax deductible.

Further a loan is a loan is a loan, and whether you collaterize it with the car or the house makes no real difference. Thus, if you must borrow money you should do it at the lowest possible after tax cost, period.

 

<div class='quotetop'>QUOTE(kirbinster @ Oct 15 2006, 04:32 PM) [snapback]333088[/snapback]</div>

Ahh, hel and not heloc. I missed that, and you are mostly right in the differences you highlighted between them, although HEL's are usually 10 year amortizations, still too long.

As for a loan being a loan, people who find they cannot afford the payment and have to sell their home rather than give back a car may dispute the similarity. Also, car loans can almost always be paid ahead of time without penalty, while a HEL usually cannot. Lastly, as I said earlier, a HEL allows one to borrow from home appreciation which is a nasty habit. It is the equivalent of a 'cash out' refinancing -- very often a tale-tell sign of finances over extended.

All that said, a HEL is something to consider depending on the circumstance, a HELOC usually something to avoid for most people.

 

<div class='quotetop'>QUOTE(EricGo @ Oct 15 2006, 12:26 PM) [snapback]333099[/snapback]</div>

Whew!.... It is SO much simpler just to save up and pay cash.

 

<div class='quotetop'>QUOTE(EricGo @ Oct 15 2006, 05:26 PM) [snapback]333099[/snapback]</div>

For someone that is not responsible with credit what you say is 100% correct. If one is responsible I still believe the home equity loan is the best way to go. Where I live you can get them for fixed terms of any amount of years you want at a fixed rate. Further, they can be paid off ahead of time with no penalty.

In my case a few years ago I took out a 10 year home equity loan to payoff a mortgage. I was able to get a better rate on the HEL than on a conventional mortgage and I converted a mortgage that had 13 years left on it to an HEL with 10 years. The kicker is that I had no closing costs or any fees what-so-ever to do this, so it was a no brainer.

 

CASH.

A few years ago, we were in a position to pay off a car loan. Since we had money automatically deducted from my paycheck to the bank accout to pay for the loan, we continued with that account. So now, we make car payments to ourselves BEFORE we purchase a car. When it's time to buy, we have the cash.

 

Paid cash. You should when you can.

 

Paid cash here too-- apparently I'm dead. At least I was when I went to finance like $400 to get the stupid recent grad discount. I was filling out the application and they're like stop, says here you're dead.

Thats funny I thought I was alive the last time I checked.

(I later wrote them and straightened it out)

 

<div class='quotetop'>QUOTE(parrot_lady @ Oct 16 2006, 12:00 PM) [snapback]333426[/snapback]</div>

We paid CASH too when we purchased ours on August 2006. I haven't had a car payment since I paid off the 5 year loan for my '88 Toyota Supra. Don't care to ever go through those years of wasted interest payments again! Loving this Prius!!!

 

Allannde, lol !

Kirbinster,I agree with your comments, and actually had a HEL exactly like yours for a couple of years, used for the same purpose: to reduce interest and duration of my mortgage, NOT to finance a lifestyle.

A point of clarification: by paying ahead, I meant that immediate future payments are deferred by the amount paid ahead of time. E.g., if I am up to date on my payments, and pay double the monthly payment this month, I can skip a month any time I want in the future. This flexibility allows people to pay the loan off faster without worrying about a cash flow crunch later on. Interest saving techniques can also be applied to a loan of this sort, that are not available to standard HEL/OC 'make a payment every month regardless' type loans.

 

<div class='quotetop'>QUOTE(EricGo @ Oct 15 2006, 02:26 PM) [snapback]333099[/snapback]</div>

I may be out of touch, but I think there are still a lot of outfits writing rule of 78s car loans.

 

I got a loan from my credit union for 5.25%. Being a graduate student... the car costs more than my yearly stipend

 

yeah... me too michgal... me too...

 

We would have paid cash for ours, but since we are small business owners we decided to go the financing route, because we got a great interest rate on a small business loan, AND it's an EXTRA tax write-off. It seems win-win, even though, yes, we are paying interest (not much, 5%), we are helping our small business credit, which is in dire need of some help right now (as are most, aren't they?). So the benefit is four-fold, we get to help the planet and drive a PRIUS (!!!), we helped our business credit, we get a business tax write-of, and we get a local tax write-off. DEFINITELY worth it for us, but not everyone is able to take that route.

 

I have paid cash since 1966, as far as the loan rate, look at the overall lowest payback. Take your time, let each financier know what the cheapest or best offer was OR compare rates on line, but then you don't know the total picture. Above all , dicker with them.:lever: Your leverage is time.

 

All Good Points

 

I paid cash.

 

I financed my Prius but with the 0% interest loan Toyota was offering at the time. I did however have enough money in the bank to cover the entire cost of the car OTD.

 

I wrote a personal check. Not cash, exactly. But near the same.

 

Holy old thread Batman!