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Delinquent Car Loans Reach All-Time Highs

Discussion in 'Fred's House of Pancakes' started by bwilson4web, Feb 17, 2017.

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  1. bisco

    bisco cookie crumbler

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    whatever helps me sleep well, that is my investment strategy.:p
     
    #41 bisco, Apr 25, 2017
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  2. 2k1Toaster

    2k1Toaster Brand New Prius Batteries

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    1million shares of Lunesta!
     
    #42 2k1Toaster, Apr 25, 2017
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  3. bwilson4web

    bwilson4web BMW i3 and Model 3

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    I appreciate the logic of 'cheap loan' money versus investment income. The first time I heard it was in the 1990s:
    • 1991 - bought house 11%, VA loan, 30 year mortgage
    • 1993 - refinanced house 7.5%, 15 year mortgage
      • mortgage payment increased $12/mo.
    At the time, "Motley Fool" claimed it was better to keep the 30 years and refinance for a lower monthly payment. Then put the money in the stock market for a higher return than the cost of the refinanced house loan. But shortening the loan saved $260,000 in interest payments and we had the house free and clear many years ago.

    Once I had the mortgage paid down, I opened a home equity account at prime. So I used that affordable money to handle what needed to be done, bridge loans. Then ten years later, the home equity loan came to a close and the bank decided to increase the rate. So I snagged a 401k based loan and paid off the home equity. Once the 401k loan was paid off, no problem.

    I do like access to 'cheap', ad hoc loans and have no problem with taking them out as a 'bridge loan.'

    Going back to the "Motley Fool" article, in the early 1990s a significant part of the stock market prices were from inflation. But by owning our home, inflation was my friend.

    Bob Wilson
     
    #43 bwilson4web, Apr 27, 2017
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  4. mmmodem

    mmmodem Senior Taste Tester

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    With an 11% or 7.5% home loan, I would agree with you to pay it off as soon as possible. I disregard anything Motley Fool as their clickbait ads have prophesized such things as the end of the internet 2 years ago. They prey on investors who believe purchasing individuals stocks is the way to get rich.

    My home loan is 3.5% for 30 years. My used car loan is 2% and my Prius loan is 0%. A simple S&P 500 stock index fund will beat 3.5%. And that's not even taking into account the tax deferred status of an HSA, 401k/403B, and Roth IRA if they're not already maxed.
     
    #44 mmmodem, Apr 27, 2017
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  5. fuzzy1

    fuzzy1 Senior Member

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    Remember, that was a quarter century ago, when those were good rates.
    And you didn't get busted by the Dot.Com crash, as happened to numerous folks I worked with or otherwise knew. For those heavily invested in the tech industry, that was much worse than the later Bush-II/Housing crash.

    Many folks didn't play this well, and when things went bad, their losses snowballed and compounded, which can be much more destructive on the downside than missing its gains on the upside.

    The negative impact of losing one's home is usually stronger than the positive impact of gaining your home's value on stock market investments.
     
    #45 fuzzy1, Apr 27, 2017
    Last edited: Apr 27, 2017
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  6. fuzzy1

    fuzzy1 Senior Member

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    #46 fuzzy1, Apr 27, 2017
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