RE: Car loan rates

[firefighterjake]

I'm not much of a numbers guy . . . was wondering . . . with the announced changes with the Fed will this affect car loan rates early next year? Wondering since my wife and I are exploring the idea of purchasing a new car and we're trying to figure out if it would be better to buy now or wait.

 

[mass_burner]

Now, we're at the bottom re rates and it has to reverse sometime, question is, will it be steady or come in spikes. We've never really have been in this position that the fed is in now. Best time to buy a new car is October. But I would never buy new, 3-5 years, certified used is best option. Make some extra payments up front if you can afford it.

 

[Backwoods Savage]

Don't finance it Jake. It costs more that way. Just open that wallet and pay for it now!

 

[firefighterjake]

Again . . . my question is if anyone believes or knows if the car loan rates may go up or down based on the news from the Fed . . . I am not looking for the pros- and cons- of financing vs. paying all up front, used vs. new, make A vs. make B.

 

[BrotherBart]

The Fed funds rate, what money costs banks, is going to stay near zero where it is now through 2015 or maybe 2016. So short term interest rates ain't going anywhere real soon.

Buy a blue one.

 

[firefighterjake]

Thank you BrotherBart . . . this lets me know that there is no need to do anything right away . . . so we may just keep on saving money for the downpayment as we like to give a healthy down payment on our large purchases . . . and then typically we pay more than the monthly amount and oftentimes do double payments to pay off things early when there is no pre-payment clause.

 

[JoeS]

The Fed funds rate, what money costs banks, is going to stay near zero where it is now through 2015 or maybe 2016. So short term interest rates ain't going anywhere real soon.

Buy a blue one.

Agreed, except for the color!

 

[mass_burner]

The Fed funds rate, what money costs banks, is going to stay near zero where it is now through 2015 or maybe 2016. So short term interest rates ain't going anywhere real soon.

Buy a blue one.

If we were in a normal interest rate cycle I would agree with BB. But we're not. The fed
never has borrowed so much so often as it has
done for the last 5 years. There no other place to park your money if you're an investor. But once there is, the air is going come out of this fed balance sheet bubble quickly.

If you need a new car the rate is not going to be this low for a long time. Lock in now.

The fed is in uncharted waters here, nobody can tell you what's going to happen. The fact is rates are wicked low now.

 

[JoeS]

The fed is in uncharted waters here, nobody can tell you what's going to happen. The fact is rates are wicked low now.[/quote]

And your guess is no better. Feds have said they will keep rates low for the forseeable future!

 

[mass_burner]

The fed is in uncharted waters here, nobody can tell you what's going to happen. The fact is rates are wicked low now.

And your guess is no better. Feds have said they will keep rates low for the forseeable future![/quote]

The fed is telling what they would like to do, they may not have a choice. Rate is near zero, it
can't get any lower, it can only go one way from here, why risk it? I can't tell what's going to happen, but I know what it is now.

 

[JoeS]

Here the question:

I'm not much of a numbers guy . . . was wondering . . . with the announced changes with the Fed will this affect car loan rates early next year? Wondering since my wife and I are exploring the idea of purchasing a new car and we're trying to figure out if it would be better to buy now or wait.

Nothing is gong to change early next year, agreed?

 

[mass_burner]

Probably not that soon, agreed. But my worry is how fast the change may be. By the time you react, rates available may have moved.

 

[JoeS]

Can still get 0% on some vehicles for a 5 year term!

 

[mass_burner]

But only on new,right?

 

[jebatty]

The fed action may have an affect on car loan rates, but so much non-finance forces are at work that I doubt in the short term an up or down fed action has much impact at all. Auto maker does a sale or model special and lowers rates or give rebates, and vice versa. It's a number game most people could never figure out where the deal is or isn't. One thing you can be sure of, and that is the mfr and dealer will manipulate the numbers so that they win.

 

[Backwoods Savage]

Again . . . my question is if anyone believes or knows if the car loan rates may go up or down based on the news from the Fed . . . I am not looking for the pros- and cons- of financing vs. paying all up front, used vs. new, make A vs. make B.

Sorry to upset you Jake. Was just poking some fun at you.

 

[firefighterjake]

Sorry to upset you Jake. Was just poking some fun at you.

Takes quite a bit to upset me Dennis, no worries. I just wanted to make sure this thread didn't devolve into the typical new car vs. used car post or posts about someone's opinion on the best way to finance a purchase of a big ticket item. My own opinion is that we all have our own idea on what is a good value and we all have our own ideas on what our own needs/financial situations are and we all have our own way of paying for things -- what works for one person may not work for another.

Again, it's all good Dennis.

 

[Swedishchef]

Jake: not sure about your mortgage situation. HOwever I have HELOC (home equity line of credit) that is running at 3.5%. I can lock it is at any moment if I wish and convert a portion to a repayment plan. Better than most car loan rates....

In Canada, the Feds have not changed their rates for years but the banks have increased their rates by about 75 basis points (0.75%) in the last 6-8 months (make more profit). In June I locked my mortgage renewal into a fixed 2.89% rate and now the best I can get is about 3.5% or so.

Andrew

 

[Treacherous]

But I would never buy new, 3-5 years, certified used is best option. Make some extra payments up front if you can afford it.

My formula is new and keep for 10-15 years. I'd rather not experience issues of a lease vehicle that has been beat on with questionable maintenance. A factory certification is no guarantee. I'm sure I lose some money on my formula but take comfort in knowing my vehicles complete maintenance history.

 

[firefighterjake]

Jake: not sure about your mortgage situation. HOwever I have HELOC (home equity line of credit) that is running at 3.5%. I can lock it is at any moment if I wish and convert a portion to a repayment plan. Better than most car loan rates....

In Canada, the Feds have not changed their rates for years but the banks have increased their rates by about 75 basis points (0.75%) in the last 6-8 months (make more profit). In June I locked my mortgage renewal into a fixed 2.89% rate and now the best I can get is about 3.5% or so.

Andrew

Mortgage should be paid off in 2014 or early 2015 . . . depends on whether I get antsy at the end and just pay off the remaining bit.

Rates on line have been pretty favorable . . . last time I looked they were as low as 2.99% (granted that was a few months ago) . . . many of the dealers are offering even more favorable rates.

Based on what I am reading here though I will most likely wait another month or two . . . or more to the point . . . wait a month or two for my wife to decide if and when she wants to get a new vehicle. That woman is more frugal than me . . .

 

[firefighterjake]

My formula is new and keep for 10-15 years. I'd rather not experience issues of a lease vehicle that has been beat on with questionable maintenance. A factory certification is no guarantee. I'm sure I lose some money on my formula but take comfort in knowing my vehicles complete maintenance history.

I've gone both ways . . . newer "used" (ooops, I mean "pre-owned") and brand new. Last vehicle I bought in 2010 I went brand new. For a few thousand dollars more I ended up with a better financing rate and a vehicle with a lot fewer miles. For me, at the time it made more sense since used vehicles were still pretty expensive. In the past, I've mostly gone used though . . . again, it depends for me really on what is the better deal.

The one thing we always try to do . . . and it's a personal choice . . . is to only have one vehicle payment at a time. Paid off the truck this past Summer and have been putting the money we would have spent on the truck payments into savings for use as a downpayment.

 

[Swedishchef]

The one thing we always try to do . . . and it's a personal choice . . . is to only have one vehicle payment at a time

Ditto!

 

[mass_burner]

My formula is new and keep for 10-15 years. I'd rather not experience issues of a lease vehicle that has been beat on with questionable maintenance. A factory certification is no guarantee. I'm sure I lose some money on my formula but take comfort in knowing my vehicles complete maintenance history.

If you buy a certified just-off-lease the risk is lower. Folks have an incentive not to run up the miles or they pay more. 3-year off lease Lexus rx330 in 2007, with 37000 miles, only wear and tear expenses since then. Paid off in 2009, keeps the wife happy and safe for at least 10 years hopefully more.

 

[Swedishchef]

Personally, I enjoy a demonstrator. Why? Well, it is a year old and the quickest depreciation of a vehicle is within it's first year. I save $5000, have a car with 10 000 miles on it AND I get the "new car" competitive interest rates (and not used) of 1-2%.

 

[Hogwildz]

Get a Gray one, don't have to wash it as often and the dirt really hides well on gray ;-)