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I'm shopping for a new Transit myself, and I was curious about those long term options and how many people are taking loans longer than 60 months. Here's a quote from a website: "39% of new-car buyers in the first quarter of 2021 took out loans of 61 to 72 months, according to Experian. More alarmingly, Experian’s data shows 32% of car shoppers are signing loans for between 73 and 84 months."

So 71% of new car loans are for 6&7 year loans! I can see it from a consumer's point of view. I plan on keeping this van for 20 years, and vehicles seem to last longer than they used to. Combine that with an insane used market and low wages, here we are.

I would jump all over 0% financing though, does anyone know if that's common for the Transit?
 

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Someone educate me on these 0% loans, don't you still have to pay a financing charge of $12 or $13's every month for every $1k borrowed?
 

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I understand the concerns of having a payment for THAT long, however, if I could get my hands on a 0% loan without any additional charges....then I am taking that in a heart beat. I would do this and just increase my monthly payment to mimic a more traditional loan re-payment. Definitely beats my current rate of 2.6%/ 60 months. Plus, if a situation appeared which might hurt your financial situation (like a pandemic), then being able to fall back to the lower monthly rate could be a nice safety net. Not financial advise, just my two cents.
 

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No such thing as a 0% loan! That is the same as “free money”. It’s not real just marketing.
All you have to do is think about it. Auto industry makes big bucks on finance.
I worked for Ford in finance....long time ago.
Back then interest was higher so I’m using relative numbers.
We would offer 5% interest or if you paid cash or accepted a higher rate, say 10%, we would give a (fake number) $1,000 rebate.
At the end of the loan term it all worked out the same. Lower interest rate and lose a rebate, higher interest get a rebate. Your best option was to pay cash or take a higher rate and pay it off sooner.

I’m old retired and financially secure....financed 2 cars ever.....you are stepping onto a slippery slope financing depreciating assets. Especially if it’s a toy van. Work van is a different story. That’s a tool.
 

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First, I do not know the fine print of said offer and haven't done much research beyond a simple google search. You are right, there likely is a catch somewhere and it appears that you get either the 0% rate or the cash incentives, you don't get both. Everyone's financial situations are different; do the math and pick which option is best for you. I would imagine you financed those 2 cars, earlier in your adult life. Not everyone is financially stable to the point of paying cash for cars and other high cost items at the age of 30. And some peoples "toy vans" are their daily drivers. Plus, with the current market, there is no evidence that you are buying a depreciating asset. Just this week I saw a local dealer asking 20K above MSRP for a brand new van. Who knows how long the supply and demand issue will continue, but I don't think those that are financing a brand new van right now are on a slippery slope.
 

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Assuming you have the cash saved up to pay off the entire van loan; leaving $55K invested and paying a loan down monthly will return a lot more than the $700 in interest Ford's 0.9%/36 month loan will cost.
Bruce
Exactly right! This is why I do not fear financing automobiles. Frees up money to invest and grow elsewhere.
 

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There's just something that makes me deeply uncomfortable about financing things and owing money. I feel like if you don't have the money to buy it, then you can't afford it. I've seen too many people try to borrow their way into abundance and it always seems to bite them.

I'll be paying cash for my van when it gets built next year. I know you can run some spreadsheets and say that theoretically if you can get cheap financing it's mathematically ideal to finance and invest, but that's if you have confidence in the market not completely pooping itself and losing more than half its value (Which seems to happen pretty regularly).
 

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I often wonder where the difference in fiscal approaches lies. I was raised by parents that had adverse impacts due to the depression. This is the framework I'm stuck with for my fiscal decisions. I want my money working for me, not moonlighting for others.

DIY rules the day and cash is still the king, at least in my world. YMMV!
 

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If you have the cash and credit for qualifying for zero percent financing -- then there is a way to sort of have your cake and eat it too. When we took delivery of our van (April, 2020) Ford motor credit had a financing rebate of either 1 or 2 thousand (don't remember) for a traditional (non zero interest rate) loan. We financed the bare minimum amount to qualify for that rebate -- which I think was 10k -- making sure there were no prepayment penalties of any kind while retaining the other rebates we qualified for. A zero percent loan would have eliminated ALL other rebates. We made one payment while waiting for our login credentials and info to post on Ford Motor credit's site -- then paid the remaining balance. I think the one or two k "financing" rebate cost us like $20 in interest and a few hours of my time filling out all the forms, unfreezing our credit long enough for the credit pull and finding the payoff amount on Ford Motor Credit's site. Our dealer also allowed 5k to be put on a credit card -- we used a zero annual fee cash back card so we got a free $100.
Gaming the system? Maybe. But Ford made the rules and we simply played within them. And I've seen it as a challenge and a bit of a hobby wringing costs out of our lives for decades.
Basically, if someone's fortunate enough to qualify for zero percent (which isn't really zero percent at all) -- then they're potentially fortunate enough to play these types of games. By briefly using assets (including time, credit and $$) we saved a few k more on our van -- which we put elsewhere within our investment/risk/enjoyment model. I just wish everyone was in the same position.

My long winded two cents :)
 

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I had cash ready to buy my wife's car, was told I qualify for 0% interest or $500 rebate. Some quick math determined 0% interest was a better deal. No monthly finance charges, no early payoff penalty. I used their free money to keep mine invested... made a lot more than $500.

The trap you have to watch out for is a late payment. If you're late or miss a payment, you're hit with a high interest rate and it's retroactive. Best to have it withdrawn automatically every month to avoid this.

And paying off a loan over time helps your credit, which makes it easier to qualify for 0% loans.
 

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When we took delivery of our van (April, 2020) Ford motor credit had a financing rebate of either 1 or 2 thousand (don't remember) for a traditional (non zero interest rate) loan. We financed the bare minimum amount to qualify for that rebate
Did you still get the other rebates that Ford was offering at that time? IIRC I got the "straight" $1750 + $1000 competitive vehicle one. Often any "discount" financing wipes out some rebates. I took delivery around that time (Mar?). Oddly, the dealer did not try to sell me any financing, especially since I am pretty sure they are compensated for initiating a loan. My credit score is very high. 🤷‍♀️
 

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Did you still get the other rebates that Ford was offering at that time? IIRC I got the "straight" $1750 + $1000 competitive vehicle one. Often any "discount" financing wipes out some rebates. I took delivery around that time (Mar?). Oddly, the dealer did not try to sell me any financing, especially since I am pretty sure they are compensated for initiating a loan. My credit score is very high. 🤷‍♀️
Howdy nj!!
Yes -- we retained the same Ford Motor rebates as you -- and got the separate financing rebate from Ford Motor Credit on top of that.
But I had to specifically ask or dealer what the bare minimums were to qualify for the financing rebate in the off chance I could find a scenario in the rules to stack them all in our net favor.
The only requirements were to not have 0% financing (or Ford Motor rebates would have been null) and a minimum amount financed of I believe 10k. There were no prepayments or loan fees. We did the 10k to minimize the limited remaining balance we knew we would pay interest on by having to make one payment waiting for our Motor Credit portal/user account to be created then just paid it off the second month.

It required some hoops but the couple of hours and 20ish bucks of interest resulted in a nice add'l 1k or 2k off what we paid.
 

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Said a number of times above... but I'll affirm: we evaluate the money options whenever we purchase something - vehicle or otherwise. We've taken rebates over loans or loans over rebates - solely dependent on what is best for us. This is true for our business and personal purchases.

So, yeah, we have done 60 - maybe even 72 - month zero interest when that's been the best option. I probably wouldn't go much longer than 72 because we'd be turning over the vehicle (or whatever purchase) at that point and it would be fully depreciated if it's a business purchase.

Sometimes, these things are a great bait-and-switch to get a buyer in the door with a promise of a very low monthly payment. Then once they're deep enough into the rabbit hole and don't qualify, they fall back to whatever other purchase option is available. That environment can be to my benefit.
 

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bdosborn said:
Assuming you have the cash saved up to pay off the entire van loan; leaving $55K invested and paying a loan down monthly will return a lot more than the $700 in interest Ford's 0.9%/36 month loan will cost.
Bruce
Exactly right! This is why I do not fear financing automobiles. Frees up money to invest and grow elsewhere.

The only place to get decent returns today is the equities market. We all know equities don’t move in a linear fashion. Stay in equities long enough and you’ll see nice gains with dramatic intermittent losses.
If one is not careful you could get caught in a 2008-2010 market dilemma. Suddenly you can’t sell your house or your van and your 401k is worth half. Unemployment hit 10%
Financing depreciating assets will keep you working for the man.
Yah, yah, I know. My kids don’t like hearing it either. Just a statement of facts.
Sometimes you really just can’t afford it. You can still use a tent.
Nothing wrong with humble beginnings.
Paying cash is ownership.
 

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Exactly right! This is why I do not fear financing automobiles. Frees up money to invest and grow elsewhere.

The only place to get decent returns today is the equities market. We all know equities don’t move in a linear fashion. Stay in equities long enough and you’ll see nice gains with dramatic intermittent losses.
If one is not careful you could get caught in a 2008-2010 market dilemma. Suddenly you can’t sell your house or your van and your 401k is worth half. Unemployment hit 10%
Financing depreciating assets will keep you working for the man.
Yah, yah, I know. My kids don’t like hearing it either. Just a statement of facts.
Sometimes you really just can’t afford it. You can still use a tent.
Nothing wrong with humble beginnings.
Paying cash is ownership.
I would agree that most of these are facts. One thing I will disagree with is that financing does not equal the inability to afford and own an asset.... especially if we are talking 0% interest.
 

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I had cash ready to buy my wife's car, was told I qualify for 0% interest or $500 rebate. Some quick math determined 0% interest was a better deal. No monthly finance charges, no early payoff penalty. I used their free money to keep mine invested... made a lot more than $500.

The trap you have to watch out for is a late payment. If you're late or miss a payment, you're hit with a high interest rate and it's retroactive. Best to have it withdrawn automatically every month to avoid this.

And paying off a loan over time helps your credit, which makes it easier to qualify for 0% loans.
Totally agree -- and we've done that too at various times of our lives, including a true 0% for the wife's 2005 Honda Element back in the day where we put that money to much better use.

But as we've gotten much much closer to retirement, we really don't desire any heavier mix of index funds, real estate or even bonds with the associated risks. And certainly knowing most these things have continued to appreciate (some for reasons that seem to defy logic) -- it's very easy to lament what the price of the van could have earned or may continue to earn had we carried a note and invested the same amount. For us, where we are, that's unproductive and unrealistic as we wouldn't have invested that money elsewhere, at least nowhere that would now be keeping up with inflation. So for us, 0% had 0 value but with a cost of all of the rebates.

I guess my rambling opinion is really close with everyone else's -- assets should be invested in whatever way they maximize achieving the holder's goals at the time. 16 years ago it was building wealth. We took the 0% loan on the Element and invested it. Although we're the same people, our goals are now about checking out, not watching so closely and having as few worries as possible. It's hard to find fault in anyone's investment decisions as long as they're in line with whatever their goals are.
Cheers!
 

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Yes -- we retained the same Ford Motor rebates as you -- and got the separate financing rebate from Ford Motor Credit on top of that.
Good job! Well now I'm bummed. :( I suppose the dealer was asleep on the job ... even when they would stand to profit. I suppose that figures. I was not impressed at all with the F&I guy at Matt Ford, especially when he tried to sell me a 3rd party warranty and was not transparent about that at all. 🤷‍♀️ BTW never negotiate as if you are a cash buyer, always let the dealer hold out hope that they can profit off of initiating a loan. I did not get into that since I was buying with Z-plan. I wonder of that precluded any financing incentives? :unsure:

BTW - in NJ (IIRC) prepayment penalties are illegal ... ya know blue state gov't overreach :ROFLMAO:
 
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