When is it "OK" to get a car loan?

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HardHitter
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When is it "OK" to get a car loan?

Post by HardHitter » Thu Dec 29, 2016 11:50 am

So my hobby is cars. I enjoy driving them, buying them and then selling them a year or two down the line for the next toy. Before I get lectured, I know this isn't great financial sense since you'll lose money on cars, but it is what I get enjoyment out of.

My mentality has always been, if you can't pay cash with it, you can't afford it. Right now, I have a 1997 Dodge Viper which is for sale (my current toy) and in parallel, I've decided I'm going to jump to a Porsche 911 Turbo. The difference between what I could sell my Viper for and the Porsche will be around $15K. Here is the thing though, my Viper hasn't sold and I found the perfect Porsche that I want. Trying to figure out the two best options. The dollar amounts are just scenario based for this example

Emergency Funds: $70K (Around 14 month emergency fund amount)
Porsche: $50K
Viper: Ask $40K, "bottom dollar": $35K

1. Buy the Porsche in cash right now ($50K). Lower the Viper to "bottom dollar" to sell quickly ($35K)
2. Wait until the Viper sells then hope that Porsche is still available. This will likely drive me down to my "bottom dollar" price quicker ($35) rather than keeping it listed at a "hopeful" price and waiting for someone to buy it at that price ($40K)
3. Pull a small loan ($20K) and buy the Porsche right now. Once the Viper sells ($35K), pay off the loan

Few concerns I'm sure the reader will have:

1. $70K emergency fund to $30K worst case emergency fund is a huge drop. We actually did something similar when we paid off $35k of my wife's student loans earlier this year. It took us 4-5 months to get that $35K back into our emergency fund.

2. What does my future look like? In a year or two, will likely plan to have a kid, which I've already accepted it will be 50/50 that I will need to sell. If not by then, then definitely when we are ready to buy our second house.
Last edited by HardHitter on Thu Dec 29, 2016 11:56 am, edited 1 time in total.

Grt2bOutdoors
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Re: When is it "OK" to get a car loan?

Post by Grt2bOutdoors » Thu Dec 29, 2016 11:56 am

When the hobby becomes a financial burden on your family, it's time to give up the hobby.
Sell the Viper first, then evaluate whether you can afford the Porsche. Do not empty your emergency fund to purchase an item that will not provide the financial backstop needed in the event of a REAL emergency. Buying a Porsche does not meet the definition of an "emergency".

Curious - what does your wife say about all of this? ^^
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ved
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Re: When is it "OK" to get a car loan?

Post by ved » Thu Dec 29, 2016 12:10 pm

HardHitter wrote: 2. What does my future look like? In a year or two, will likely plan to have a kid, which I've already accepted it will be 50/50 that I will need to sell. If not by then, then definitely when we are ready to buy our second house.
Sell what? The baby? :shock: :shock: :D The 911 that you haven't got yet?

Jack FFR1846
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Re: When is it "OK" to get a car loan?

Post by Jack FFR1846 » Thu Dec 29, 2016 12:16 pm

This is a good, practical move. With a baby coming, the Porsche, with it's "kid sized" rear seats will be perfect at about 2 years old or so.

As a car guy, I get it. I've owned many dozens of cars and raced for many years.
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Re: When is it "OK" to get a car loan?

Post by sean.mcgrath » Thu Dec 29, 2016 12:19 pm

I 100% agree with "if you can't pay cash with it, you can't afford it." Only reason to borrow (or raid emergency) for a car is for a first job where there is absolutely no other option. Bite the bullet and wait, and work hard to sell the Viper at a good price. Anything else is a deeply slippery slope....

p.s. selling the kid sounds like a really creative idea (I wonder what I could have got for mine), but unfortunately same as the money for the car -- you don't have it yet. :wink:

cheers,
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ResearchMed
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Re: When is it "OK" to get a car loan?

Post by ResearchMed » Thu Dec 29, 2016 12:21 pm

ved wrote:
HardHitter wrote: 2. What does my future look like? In a year or two, will likely plan to have a kid, which I've already accepted it will be 50/50 that I will need to sell. If not by then, then definitely when we are ready to buy our second house.
Sell what? The baby? :shock: :shock: :D The 911 that you haven't got yet?
This was terrific Fractured English :D

Gotta be one of the favorites!

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HardHitter
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Re: When is it "OK" to get a car loan?

Post by HardHitter » Thu Dec 29, 2016 12:23 pm

You guys kill me. The kid won't nearly be as much as the car. I mean, come on, look who the kid would be a product of :oops:

Jack FFR1846: Would love to hear your feedback on the situation.

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Re: When is it "OK" to get a car loan?

Post by delamer » Thu Dec 29, 2016 12:32 pm

Assume you go ahead with buying the Porsche, including either taking out the loan or raiding the emergency fund.

Then, the next day the bottom falls out of the stock market and no one has the money to buy the Viper at $35K (or $25K, for that matter).

How would your decision impact your overall finances? Would you sleep OK?

smitcat
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Re: When is it "OK" to get a car loan?

Post by smitcat » Thu Dec 29, 2016 12:34 pm

I am a car guy as well and it almost never works out well to own two of these types of vehicles.
Time, maintenance, space, insurance become a situation where having two lends you to make worse decisions and deals then having the one.
Figure out how to let the Viper go with a decent price and pursue the next car - there will be more along if this one is not there, there always is.

And if you think these cars cost a lot wait until you have children....

orca91
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Re: When is it "OK" to get a car loan?

Post by orca91 » Thu Dec 29, 2016 1:36 pm

A car guy here also. So, you won't get a lecture from me about cars as toys not making financial sense.

But, don't take a loan out for a toy. Truth be told, I have done that in the past. Never again though. No loan. Sell the Viper and then pay cash for the Porsche. My take on it anyway.

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Re: When is it "OK" to get a car loan?

Post by leonard » Thu Dec 29, 2016 1:51 pm

Seems to be a false sense of urgency with this purchase.

This is a hobby. Wait to sell the old before buying the new. No need to complicate a hobby with managing a loan.
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DaftInvestor
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Re: When is it "OK" to get a car loan?

Post by DaftInvestor » Thu Dec 29, 2016 1:57 pm

What's the Emergency Fund for if not to buy a Porsche with? You've already got the money - just go for it! :D

Seriously though - do you need 14-months of money in the account? I'd sell the Viper and use $15K from the EF to pay up the difference and then quickly pay myself back. If the spouse won't let you raid the EF for this - I'd wait until I have the cash - I wouldn't take out a loan.

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David Jay
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Re: When is it "OK" to get a car loan?

Post by David Jay » Thu Dec 29, 2016 2:13 pm

There WILL be another 911. Sell the Viper first.
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Re: When is it "OK" to get a car loan?

Post by JupiterJones » Thu Dec 29, 2016 2:17 pm

HardHitter wrote: 1. Buy the Porsche in cash right now ($50K). Lower the Viper to "bottom dollar" to sell quickly ($35K)
2. Wait until the Viper sells then hope that Porsche is still available. This will likely drive me down to my "bottom dollar" price quicker ($35) rather than keeping it listed at a "hopeful" price and waiting for someone to buy it at that price ($40K)
3. Pull a small loan ($20K) and buy the Porsche right now. Once the Viper sells ($35K), pay off the loan
How about option #4:
  • Lower the Viper to $35K with the expectation that it will sell quickly.
  • If it does, buy the Porsche with the proceeds plus $15K.
  • If it doesn't, keep the Viper and be glad you didn't go ahead and buy the Porsche first!
Stay on target...

inbox788
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Re: When is it "OK" to get a car loan?

Post by inbox788 » Thu Dec 29, 2016 2:21 pm

I'll play devils advocate. I only see sunny skies ahead, and in 5-10 years, both the Viper and the Porsche will appreciate, so buy both!

If I had that kind of passion for cars (I don't), and I had the cash lying around (or the cash flow), I would consider the prospects a new gilded age. If you fear 2017 will be like 2007, then follow what some others have to say, but if you think it's more like 1997 or 1987, then now is a good time to "invest".

Seriously, only do this if you can really afford it, but I think the 0-2% car loans has pretty much bottomed out. Plus it's all timing, but now still seems to be to be a good time to get into collectible cars.

HardHitter
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Re: When is it "OK" to get a car loan?

Post by HardHitter » Thu Dec 29, 2016 2:26 pm

Emergency fund is there in case "sh*t hits the fan"

We paid off $35k-$40k worth of student loans this year and only debt we have now is the mortgage ($614k of equity).

My logic is this: Both my wife and I work hard and are frugal (I probably shouldn't say that as I look to buy a $50k car...) We are young with no kids so why not enjoy our time taking care of ourselves for a year or two until all our priorities change. I have the right mindset that this is just a "toy" and that when it comes down to getting serious of starting a family and buying a second home, I have no problem with selling the toy. Sure I may lose a grand or two, but that is something I'm willing to lose to enjoy life.

To those asking what my wife says, she is actually fine with it. When I told her I wanted to sell my Viper, she actually thought I was crazy because she knows that was my dream car.

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Re: When is it "OK" to get a car loan?

Post by HardHitter » Thu Dec 29, 2016 2:32 pm

inbox788 wrote:I'll play devils advocate. I only see sunny skies ahead, and in 5-10 years, both the Viper and the Porsche will appreciate, so buy both!

If I had that kind of passion for cars (I don't), and I had the cash lying around (or the cash flow), I would consider the prospects a new gilded age. If you fear 2017 will be like 2007, then follow what some others have to say, but if you think it's more like 1997 or 1987, then now is a good time to "invest".

Seriously, only do this if you can really afford it, but I think the 0-2% car loans has pretty much bottomed out. Plus it's all timing, but now still seems to be to be a good time to get into collectible cars.
Unfortunately, garage space is limited. I only have a 2 car garage and both my cars are in there. My wife has to park outside (we made a deal, I get the garage, she can have the closet...)

That's where buying a 2nd house will come in. 3 car garage minimum. But again, I am young, these toys will come again later in life.

To your point, the Viper market has actually dropped in the last couple of years and the 911 hit bottom of depreciation about a year or so ago and is slowly starting to climb up, so it MAY appreciate if I pick one up this year, but again, you never buy a car as an investment.

Funny because my Dad bought a 993 911 for around $35k and then sold it a year or two later for $32k...fast forward 3-4 years after he sold it and they are going for $60-$70k.

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Re: When is it "OK" to get a car loan?

Post by orca91 » Thu Dec 29, 2016 2:47 pm

I have kids.... and a house... and limited space... and toys (2) all at the same time. Why do you think you can't have all at the same time?

Taking the kids for cruises is making for great memories for all of us! The kids love the toys almost as much as I do. Of course, I'm more into the muscle/mid-size/fit more than two people in there kind of toys. Maybe a change in taste of toys will come later? I recall the Hellcat being brought up when you asked about what to replace the Viper with... :wink:

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Re: When is it "OK" to get a car loan?

Post by Pajamas » Thu Dec 29, 2016 2:51 pm

You're in the wrong internet forum to get approval for any of your three choices. Try an automobile forum if you want approval, or do the smart thing and listen to what your spouse says about it. 8-)

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Re: When is it "OK" to get a car loan?

Post by FlyOverState » Thu Dec 29, 2016 2:53 pm

Need more information. 996 or 997?
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Re: When is it "OK" to get a car loan?

Post by carguyny » Thu Dec 29, 2016 2:55 pm

Another car guy here - Porsches are not particularly rare, sell the Viper and pick up what you want. I have 5 Porsches (including a 991 GT3 RS, 997 GT2 RS) so I know the brand and market when I say you will find another 911 that works for you.

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Re: When is it "OK" to get a car loan?

Post by Jack FFR1846 » Thu Dec 29, 2016 3:06 pm

I haven't funded any of my toys with loans. We tried to have kids and after all of the extreme medical measures were exhausted, we adopted. In our state, adopting an infant cost the same as MSRP of an M3 (I had an E30 which captured 2 track records and an autocross championship). So you might have unforseen costs and of course, every state and every adoption is different, so you could find something different.

After some time and a second adoption, I went from running street cars on the track to a dedicated racecar, trailer, tow vehicle. All paid with cash.

That all said, I have had the old car for sale with the new car already in the garage. But I've got room and can easily fit 3 or 4 cars in my garage.

Buying a Turbo saves you from the dreaded IMS issues that water cooled 911s had. They had other issues that I'm not sure about (rear main seal, cracks in water tank). Of course, air cooled (or as I call them, oil cooled) 911's are known for being very reliable but are still not cheap to repair. Anything with the name Porsche will cost you. I don't know what Viper stuff costs but know BMW and that bargains can be had by knowing the discounting sellers. It's the labor and knowhow that's expensive. Be sure to bring any performance car to a reputable specialist in that marque for a pre-purchase inspection. You don't want to find that something major was skipped and now you're in trouble.

Do you have another car besides the Viper?
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Re: When is it "OK" to get a car loan?

Post by Tal- » Thu Dec 29, 2016 3:32 pm

I don't mean to get caught up in word-choice, but I don't think you can afford the Porche. Hear me out...

First, you should sell the Viper before buying another car. That's the obvious part. The second, and almost as obvious part is that you shouldn't take out a loan for a hobby. Easy peesy.

But third, you you shouldn't dip into an emergency fund for a hobby. You shouldn't dip into it $50k to buy the Porche outright, and you shouldn't dip into it $15K to pay the difference between the two. This is not what an emergency fund is for!

I don't fault you for having an expensive hobby as a car guy. Not in the least! But, I feel strongly that you need to fund any hobby with money outside of your core financial plan - and that includes a defined emergency fund.
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Re: When is it "OK" to get a car loan?

Post by inbox788 » Thu Dec 29, 2016 4:14 pm

HardHitter wrote:Unfortunately, garage space is limited. I only have a 2 car garage and both my cars are in there. My wife has to park outside (we made a deal, I get the garage, she can have the closet...)

That's where buying a 2nd house will come in. 3 car garage minimum. But again, I am young, these toys will come again later in life.

To your point, the Viper market has actually dropped in the last couple of years and the 911 hit bottom of depreciation about a year or so ago and is slowly starting to climb up, so it MAY appreciate if I pick one up this year, but again, you never buy a car as an investment.

Funny because my Dad bought a 993 911 for around $35k and then sold it a year or two later for $32k...fast forward 3-4 years after he sold it and they are going for $60-$70k.
Well, that was a very costly mistake. You got your car, which might depreciate or if you're lucky appreciate, but filling that closet is going to cost you much more than your car and it's guaranteed to depreciate like a rock. And maintenance expense inside that closet (turnover) are much more than maintenance on your Viper or 911.

Yup, it's not an investment per say, but more like other commodities, and the enjoyment it provides is priceless, so it's a win/win if it makes money. Macro factors that have driven up the cost of art, classic cars, wine, etc. are mainly large increases in international wealth, which I don't see slowing down in near to mid term. Add to that the recovering US market, and I see demand for these luxury goods increasing from the bottoms we saw a few years ago. As far as cars, the added supply of new cars on the market has also been limited, so there's a dip in availability and with Tesla taking a big chunk of the luxury performance market, and increasing share, it's squeezing the new sales of the classic combustion cars. There's a lot of uncertainty and unknowns, which makes bringing out new high performance vehicles very risky, and thus limits the number of projects you're seeing. Companies aren't going to take big chances and the ones going forward are only going with very limited production.

https://theviperstore.com/Information_V ... _Stats.htm

If I find the right car at the right price, I might become a car lover. As far as the Viper, I think talk of ending the production puts a floor on how much more it will go. And if it should be featured in a movie or show, it might get a resurgence in interest. Fast and Furious 10?

http://fastandfurious.wikia.com/wiki/Dodge_Viper_SRT-10

HardHitter
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Re: When is it "OK" to get a car loan?

Post by HardHitter » Thu Dec 29, 2016 5:26 pm

To answer a few questions:

- Need more information. 996 or 997?
It is a 996 Turbo. The 997 is the "better car" but it is also $20K more and is not realistic. The 996 I'm looking at already has all the bolt ons (tune, exhaust, billet aftermarket turbos, intercoolers, injectors, clutch, coolant lines pinned, etc.) and would be a buy and drive type toy. The 997, with $15-$20k more than the bolt-on 996 will only give you maybe a tuned/exhaust 997.

- Another car guy here - Porsches are not particularly rare, sell the Viper and pick up what you want. I have 5 Porsches (including a 991 GT3 RS, 997 GT2 RS) so I know the brand and market when I say you will find another 911 that works for you.
Agreed that 911 turbos are not rare, but one with the mods and condition is (black on black, 40-50k miles, full bolt - see above)

- Do you have another car besides the Viper?
Yes, not going to daily drive a Viper haha. It is a 1997 Blue/White GTS Viper. My daily driver is a 2012 Mazdaspeed3 and my wife has a 2009 Nissan.

- But third, you you shouldn't dip into an emergency fund for a hobby. You shouldn't dip into it $50k to buy the Porche outright, and you shouldn't dip into it $15K to pay the difference between the two. This is not what an emergency fund is for!
I believe the Boglehead rule of thumb is to have a minimum of 6 months of emergency fund. The $70K I am referencing as an emergency fund, but is really just cash sitting in the bank after paying our monthly expenses/retirement contributions. That $70k grows by $5-$8k every month on average.

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Re: When is it "OK" to get a car loan?

Post by whodidntante » Thu Dec 29, 2016 10:35 pm

I got a car loan today. 40 grand at 1.89% for 5 years. I got it because the alternative was realizing a cap gain and reducing my liquidity, and 1.89% is close to free if inflation is anything like what the Fed targets.

The car is great if you're wondering. :sharebeer

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Re: When is it "OK" to get a car loan?

Post by Tal- » Fri Dec 30, 2016 12:38 am

HardHitter wrote:
- But third, you you shouldn't dip into an emergency fund for a hobby. You shouldn't dip into it $50k to buy the Porche outright, and you shouldn't dip into it $15K to pay the difference between the two. This is not what an emergency fund is for!
I believe the Boglehead rule of thumb is to have a minimum of 6 months of emergency fund. The $70K I am referencing as an emergency fund, but is really just cash sitting in the bank after paying our monthly expenses/retirement contributions. That $70k grows by $5-$8k every month on average.
That's good to know, and does change my view a bit.

In that case, I think you need to start thinking about how much you really need for your emergency fund, how much is set aside for time off with a new kiddo, how much is set aside for a second house, and how much is left. Your current fund (17 months?) is certainly high, but may actually be appropriate for some situations.
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Re: When is it "OK" to get a car loan?

Post by dziuniek » Fri Dec 30, 2016 8:36 am

Good for you, enjoy!

Jealousy kicking in.

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Re: When is it "OK" to get a car loan?

Post by Frisco Kid » Fri Dec 30, 2016 9:15 am

Another car guy here owning a classic GTO and a 96 Vette. Once the Viper is sold I would have no issue borrowing the difference, I would NOT consider borrowing the entire amount. Classic car buyers are fickle, your Viper could bring less than you want. Also, set some $ aside for maintenance on the 996, anyone making those mods would typically run it hard at track days, etc. As you know, a Viper versus a 996 Porsche make power in very different ways. Enjoy the chase..................

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Re: When is it "OK" to get a car loan?

Post by sunny_socal » Fri Dec 30, 2016 10:42 am

I would definitely get the loan and get the 911 - or even take the $$ from your over-funded EF. You'll still have a decent EF left over and you can always sell the 911 if necessary.

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Re: When is it "OK" to get a car loan?

Post by mikep » Fri Dec 30, 2016 10:47 am

Its ok when the car loan rate is lower than half the rate you earn on your savings account, and your savings account is more than the loan balance.

Mine is at 1.48% and my savings is in a reward checking earning 3.09%, or 4.59% if I want to spend more money with their CC. So, it makes financial sense to stretch the loan out as long as possible. I've even thought of refinancing the car to cash out to the max to throw at my mortgage at double the rate, since no one will give me a 1.48% mortgage.

I want to call in Dave Ramsey and ask him what to do but I know what his answer will be. :)

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Re: When is it "OK" to get a car loan?

Post by topper1296 » Fri Dec 30, 2016 11:03 am

I don't really have anything to contribute to this thread other than I would like/wish to be a car guy. The bad news is that I'm 6'5 and finding a car that fits me is a pain. I sat in a Porsche once and almost had to get help getting out of it. Sports cars are NOT designed for tall guys. :|

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Re: When is it "OK" to get a car loan?

Post by whodidntante » Fri Dec 30, 2016 11:22 am

topper1296 wrote:I don't really have anything to contribute to this thread other than I would like/wish to be a car guy. The bad news is that I'm 6'5 and finding a car that fits me is a pain. I sat in a Porsche once and almost had to get help getting out of it. Sports cars are NOT designed for tall guys. :|
It's no Porsche, but a Dodge with a big engine might suit a tall guy.

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whodidntante
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Re: When is it "OK" to get a car loan?

Post by whodidntante » Fri Dec 30, 2016 11:24 am

mikep wrote:Its ok when the car loan rate is lower than half the rate you earn on your savings account, and your savings account is more than the loan balance.

Mine is at 1.48% and my savings is in a reward checking earning 3.09%, or 4.59% if I want to spend more money with their CC. So, it makes financial sense to stretch the loan out as long as possible. I've even thought of refinancing the car to cash out to the max to throw at my mortgage at double the rate, since no one will give me a 1.48% mortgage.

I want to call in Dave Ramsey and ask him what to do but I know what his answer will be. :)
You should call him for entertainment value. That's about all his advice is worth anyway.

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Re: When is it "OK" to get a car loan?

Post by smitcat » Fri Dec 30, 2016 12:41 pm

My past home loans afforded me a pretty good tax write-off that a car loan would not unless perhaps you have the car/truck in a business name.
Rates on used cars/trucks are higher than on new cars/trucks often by a large per cent.
It has been well over 12 years since I could get a car loan without it adversely affecting the negotiated price - the loans often cost you compared to buying with cash.

topper1296 - Have you tried sitting/fitting in a corvette at a showroom? I am not your height but pretty close and I have had a few of them with no issues whatsoever.

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Re: When is it "OK" to get a car loan?

Post by Leemiller » Fri Dec 30, 2016 10:17 pm

Wow. That is an expensive car to finance. I don't think working hard or being frugal (really frugal?!?) are appropriate justifications. Lots of people work hard and are frugal - it doesn't mean they "deserve" to get themselves into debt and/or overspend. It just reads like you are trying to justify a very pricey purchase. Honestly I think one of the benefits of paying for a car all at once is the cost really hits you. With payments it feels more affordable, imo it isn't.

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Re: When is it "OK" to get a car loan?

Post by HardHitter » Sat Dec 31, 2016 11:18 am

Leemiller wrote:Wow. That is an expensive car to finance. I don't think working hard or being frugal (really frugal?!?) are appropriate justifications. Lots of people work hard and are frugal - it doesn't mean they "deserve" to get themselves into debt and/or overspend. It just reads like you are trying to justify a very pricey purchase. Honestly I think one of the benefits of paying for a car all at once is the cost really hits you. With payments it feels more affordable, imo it isn't.
Let me clarify my "purpose" of pulling a loan isn't to finance the car for the full term, but to finance a portion until the Viper sells.

Why would I do this? If I find the car I want, and decide that I don't want to buy anything until the Viper sells, then it is going to really motivate me to "fire sale" the Viper (e.g. quick sale for $35k vs being patient and getting $40K+).

So say I finance half the value of the Porsche of $25k for 60 months @ 3% (no idea what auto loan interest rates are). Interest is around $2K for the loan. If I sell the Viper for $40k 6 months after opening the loan, then my total sale is $39,600 (Viper sale of $40K less cost of the loan for 6 months) a "gain" of $4,600 vs fire selling the Viper.

leonard
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Re: When is it "OK" to get a car loan?

Post by leonard » Sat Dec 31, 2016 11:42 am

HardHitter wrote:
Leemiller wrote:Wow. That is an expensive car to finance. I don't think working hard or being frugal (really frugal?!?) are appropriate justifications. Lots of people work hard and are frugal - it doesn't mean they "deserve" to get themselves into debt and/or overspend. It just reads like you are trying to justify a very pricey purchase. Honestly I think one of the benefits of paying for a car all at once is the cost really hits you. With payments it feels more affordable, imo it isn't.
Let me clarify my "purpose" of pulling a loan isn't to finance the car for the full term, but to finance a portion until the Viper sells.

Why would I do this? If I find the car I want, and decide that I don't want to buy anything until the Viper sells, then it is going to really motivate me to "fire sale" the Viper (e.g. quick sale for $35k vs being patient and getting $40K+).

So say I finance half the value of the Porsche of $25k for 60 months @ 3% (no idea what auto loan interest rates are). Interest is around $2K for the loan. If I sell the Viper for $40k 6 months after opening the loan, then my total sale is $39,600 (Viper sale of $40K less cost of the loan for 6 months) a "gain" of $4,600 vs fire selling the Viper.
This seems complicated and just a rationalization for being impatient.

I am 100% positive another Porsche exists and will come up for sale after you sell the Viper - that's as good or better than the one sending you through these gyrations.

Hobbies should be enjoyable and a stress reliever. Not source of stress.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

HardHitter
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Re: When is it "OK" to get a car loan?

Post by HardHitter » Sat Dec 31, 2016 12:59 pm

leonard wrote:
HardHitter wrote:
Leemiller wrote:Wow. That is an expensive car to finance. I don't think working hard or being frugal (really frugal?!?) are appropriate justifications. Lots of people work hard and are frugal - it doesn't mean they "deserve" to get themselves into debt and/or overspend. It just reads like you are trying to justify a very pricey purchase. Honestly I think one of the benefits of paying for a car all at once is the cost really hits you. With payments it feels more affordable, imo it isn't.
Let me clarify my "purpose" of pulling a loan isn't to finance the car for the full term, but to finance a portion until the Viper sells.

Why would I do this? If I find the car I want, and decide that I don't want to buy anything until the Viper sells, then it is going to really motivate me to "fire sale" the Viper (e.g. quick sale for $35k vs being patient and getting $40K+).

So say I finance half the value of the Porsche of $25k for 60 months @ 3% (no idea what auto loan interest rates are). Interest is around $2K for the loan. If I sell the Viper for $40k 6 months after opening the loan, then my total sale is $39,600 (Viper sale of $40K less cost of the loan for 6 months) a "gain" of $4,600 vs fire selling the Viper.
This seems complicated and just a rationalization for being impatient.

I am 100% positive another Porsche exists and will come up for sale after you sell the Viper - that's as good or better than the one sending you through these gyrations.

Hobbies should be enjoyable and a stress reliever. Not source of stress.
If it was just a standard 911 Turbo, then yes, they are all over the place, but I'm looking for a specific color with specific factory build. Then add into play the need to have specific aftermarket modifications done to it already, it really limits your options.

Regardless, I'll wait out for the Viper to sell unless there truly is a "must have" deal.

bds3
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Re: When is it "OK" to get a car loan?

Post by bds3 » Sat Dec 31, 2016 2:13 pm

topper1296 wrote:I don't really have anything to contribute to this thread other than I would like/wish to be a car guy. The bad news is that I'm 6'5 and finding a car that fits me is a pain. I sat in a Porsche once and almost had to get help getting out of it. Sports cars are NOT designed for tall guys. :|
I'm also 6'5" and used to valet back in my glory days. I've driven almost anything you can imagine and there are tons of sports cars that easily fit people like us. Porsches were a definite exception; I never found one I could fit into. But I didn't find any other make where every mode was too small for me. Jaguar had a few models that were too small but I don't know if it was a problem for the whole line. American cars (corvettes and vipers) were an especially easy fit.

Now you know you have the ability to be a car guy. Sorry.

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ClevrChico
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Re: When is it "OK" to get a car loan?

Post by ClevrChico » Sat Dec 31, 2016 3:13 pm

Do I understand it right, that you may buy the Porsche, and then sell it once kids or a new house enter the picture? I'd hate to pay a large amount of sales tax on something so short term.

I dislike the transactional costs of changing cars.

Have you looked at the new Porsche 718? You could wait until the Viper is sold, put that money and a small loan towards a NEW 718 that you could order exactly how you want when you are already. Then, keep it forever. :-)

I understand, different car completely, not as, fast, etc. Any scenario makes no financial sense, outside of selling the Viper, buying a Civic, and investing the difference.

Leemiller
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Re: When is it "OK" to get a car loan?

Post by Leemiller » Sat Dec 31, 2016 3:49 pm

HardHitter wrote:
Leemiller wrote:Wow. That is an expensive car to finance. I don't think working hard or being frugal (really frugal?!?) are appropriate justifications. Lots of people work hard and are frugal - it doesn't mean they "deserve" to get themselves into debt and/or overspend. It just reads like you are trying to justify a very pricey purchase. Honestly I think one of the benefits of paying for a car all at once is the cost really hits you. With payments it feels more affordable, imo it isn't.
Let me clarify my "purpose" of pulling a loan isn't to finance the car for the full term, but to finance a portion until the Viper sells.

Why would I do this? If I find the car I want, and decide that I don't want to buy anything until the Viper sells, then it is going to really motivate me to "fire sale" the Viper (e.g. quick sale for $35k vs being patient and getting $40K+).

So say I finance half the value of the Porsche of $25k for 60 months @ 3% (no idea what auto loan interest rates are). Interest is around $2K for the loan. If I sell the Viper for $40k 6 months after opening the loan, then my total sale is $39,600 (Viper sale of $40K less cost of the loan for 6 months) a "gain" of $4,600 vs fire selling the Viper.
It just sounds to me like you don't have the cash, liquid assets, or net worth for the purchase so you need a bridge loan to get the car. I understand your purpose, but you asked for opinions.

inbox788
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Re: When is it "OK" to get a car loan?

Post by inbox788 » Sun Jan 01, 2017 6:32 pm

HardHitter wrote:Let me clarify my "purpose" of pulling a loan isn't to finance the car for the full term, but to finance a portion until the Viper sells.

Why would I do this? If I find the car I want, and decide that I don't want to buy anything until the Viper sells, then it is going to really motivate me to "fire sale" the Viper (e.g. quick sale for $35k vs being patient and getting $40K+).

So say I finance half the value of the Porsche of $25k for 60 months @ 3% (no idea what auto loan interest rates are). Interest is around $2K for the loan. If I sell the Viper for $40k 6 months after opening the loan, then my total sale is $39,600 (Viper sale of $40K less cost of the loan for 6 months) a "gain" of $4,600 vs fire selling the Viper.
Sounds like market timing the Viper, and you know how this board feels about market timing!

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