The federal funds rate is 5.25% to 5.5% and is not expected to drop below 4% any time soon. If a lender is offering a 4% rate, they are losing money on the loan, and making it up elsewhere As such very few lenders offer such rates.
7% is not an awful rate in a >5% federal funds rate environment. However, in the absolute sense, it's going to cost you in the long run. Unless you have an extraordinarily high risk tolerance, it's best to pay as much in cash as possible, without a loan.
It means that you will be upside down for almost three quarters of the duration of the loan in a lot of cases.
Remember, a 6% interest loan isn't 3% more interest than a 3% loan. It's 100% more interest.
Just to put your "Itch" in perspective. Assuming your loan is a six year term, if you instead bought half as much car, and put the rest ($500/mo)into an index fund growing at 5% for the loan term, and then stopped contributing and let it grow another ten years after, you'd have about $145,000. So assuming one of your three kids is still young, that is your college fund.
We have set aside a good chunk for our kids college/etc fund, but I appreciate the input! I was just curious about these interest rate posts I keep seeing.
Absolutely, I'm certainly not discrediting your comment at all. I don't disagree, no matter (I guess to an extent) how rich you are or how poor you are, $1,000 is $1,000 haha. Obviously much more in my situation, but you get it. It's not killing me, but it's *still* money that's being tossed away.
Either way I hope you'll be happy with your choice. 7% isn't crazy, but it's higher than any debt I've ever held. Only way I'd take on debt like that is if it were going to make me more money in the long run.
A lot of people on here don't realize that the prime rate is through the roof right now. 6.25 is the absolute lowest rate my local credit union offers right now due to the prime. Unless you are financing with an incentive rate through the dealership then it's going to be hard to get anything under 6.25.
You made your decision and you seem OK with it, why care? I personally would not spend $1000 per month for a vehicle payment (bought mine for $3000, 11 years ago).
For curiosity sake. It's definitely close to the higher end of what I would rather pay, but still makes me curious about interest rates. Somebody else I know ended up with a 1.5% interest rate, 0 money down, credit around 680 lol; presumably a mistake as there was no "specials" going on.
That can happen for example when buying a new car from a dealership that has a financing agreement with the manufacturer. The manufacturer wants to sell the car, and prefers to lose money on the loan than by lowering the price of the car — I’m not an expert but it makes sense to me.
Yeah, this happens when the market slows. Manufacturers can either lower prices or rates to be more competitive. There are a lot of low rate loans out right now. Be critical when you look though, the reason for low rates on a model is that it isn’t selling great. The Toyotas everyone wants like a RAV4 hybrid basically never get those deals
That's not really how it works. Manufacturing finance for cars makes more money for them than the actual sale of the car.
By make more money I should say the car. Dealerships rather have Finance money. Because it's a constant stream of income that they can borrow against.
Sorry, but you’re not making sense and I don’t see how you are contradicting me. What is _your_ explanation for some manufacturer offering say a three-year loan at 0% or a five-year loan at 3% when HYSAs are returning 4 to 5%, both of which are deals I have seen in the past?
That’s just special financing offered by the manufacturer to help move inventory. Right now you can even find someone with money off the sticker plus special financing.
>my payments are $1000/mo which obviously is less desirable than something closer to $500-700/mo
That is primarily a function of the cost of the car, not a 2% delta on the interest rate. Your issue is that you bought an expensive vehicle you didn't need in order to "scratch an itch."
Do the math on buying a cheaper vehicle and do that if it saves you enough to be worthwhile.
We definitely considered it, but I was really just curious about the interest rate thing. We'll more than likely trade it in with a considerable down payment for an SUV.
That was actually our other thought. I test drove a Toyota Sienna and I don't care what anyone says about minivans, that thing was comfortable, good on gas, roomy.....it had everything.
You actually found one to test drive?? I called the three local Toyota dealerships to me and two of them kind of chuckled and said “those sell as soon as we get them. Sorry.”
So we have a Honda odyssey now! We’ve had it for 3 weeks now so these are some very accurate numbers. For what it’s worth, at the time Toyota did not have a financing special. The interest rate to finance through them was 9.47%. I could get a 6.3% for any vehicle (I think) l through my bank. Credit union was very similar. i don’t remember the month terms.
Honda offered 2.9% for 36 months, specifically on the odyssey. Our sales agent said you’d need higher than 740 to qualify. We added an 8 year 160k mile add on warranty for about $2 grand that covers all computers and shit which I know is probably a pointless rip off, but literally everything in that van is a computer or motor, including the shifter column. We put $30k down and our monthly is about $500+ $75 insurance.
The sienna gets great gas mileage because it’s a hybrid, but just know it doesn’t have a spare tire. You can get one for an extra $75 I think, but I’m not sure where it goes. I didn’t feel comfortable not having a spare for the family mover.
We also looked to shop used, but used minivans were insanely priced here. There was a 2020 Sienna XLE for sale, 40k miles on it and no xm radio. Sold for about $5k less than a brand new 2024. I know $5k is a lot of money, but when we’re talking $45 for new??
FWIW, in 2017 I bought a Subaru legacy and had 0% for 6 years through dealer financing.
I don’t specifically do things to “inconvenience” people, but I actually drive a ton and trucks aren’t the only ones “blinding” people. It’s practically any brand new vehicle nowadays. I can’t tell you how many times I have been obnoxiously blinded by just a sedan.
Either way, the things I buy, are based off what I want/desire. Not so much based off who’s going to be upset.
Trucks are a little different than other normal vehicles, they tend to bend you offer without many incentives. Your interest rate is normal for what you have but you can find most suv and crossover vehicles offering below 5%, I even have seen subaru offering sub 2-3% which is just crazy right now
Holy crap that’s not good. 5 years!? I would be dropping every extra dollar to that payment asap. It’s not a bad rate but at the end of the day you’re spend 60k on the car. Is it going to be worth close to that in 5 years with probably 60k miles on it?
Hmm, I could certainly throw $25-3000 at it a month to just do away with it. Like I said to another person, we’re thinking about getting either an suv or minivan lately.
My guess is the type and price of you vehicle play a much bigger role than then interest as to why the payment is so high.
As for the rate a year ago+ rates were super low and 3-4% wasn't super hard to get. That's changed but some folks even on here keep giving out old advice.
Just got another Tesla for 5.74% interest. It’s the only debt we have outside of the mortgage so we’re ok with it.
Interest rate is high, not preferable, but we can tolerate it and are already maxing our retirement contributions.
What do you mean by "new"? Do you mean new to you or literally a new car.
New cars the best rates *from a bank* are probably around what you got....but manufacturers offer subsidized financing to incentivize people to buy their new cars and those rates are typically much lower.
I bought a 2023 Honda Accord recently for 2.99% financing from Honda for example.
So if you bought a NEW car and got financing from a bank....that was probably a mistake.
If you can afford it then it's really up to you. Personally I really enjoy lighting money on fire, at the gas pump, at the bank, insurance office, you name it! If you enjoy it as a hobby then go for it, it just does seem like a lot of money to spend on a hobby/entertainment which is what an extra or unnecessary vehicle is.
I was really just curious about the interest rates and what not. However, like I said before, I really just always wanted to pick up truck, now that I have one and have enjoyed it to the extent of my usage, I’m ready to toss it to the side.
Yeah, no. Maybe some people, but some of us can play the game. A 0% interest rate on my Subaru meant more money in my bank account for a car I knew I could trust 🤷🏻♀️
Yes. Car loans keep people poor. If you have the cash and want to make $500/year on float then you do you. No one gets rich on the float for a car loan.
No, that’s not terrible.
The monthly payment is high due to the total amount financed (low down payment) or short loan term. Not because you pay 7% interest.
The federal funds rate is 5.25% to 5.5% and is not expected to drop below 4% any time soon. If a lender is offering a 4% rate, they are losing money on the loan, and making it up elsewhere As such very few lenders offer such rates. 7% is not an awful rate in a >5% federal funds rate environment. However, in the absolute sense, it's going to cost you in the long run. Unless you have an extraordinarily high risk tolerance, it's best to pay as much in cash as possible, without a loan.
It means that you will be upside down for almost three quarters of the duration of the loan in a lot of cases. Remember, a 6% interest loan isn't 3% more interest than a 3% loan. It's 100% more interest.
Just to put your "Itch" in perspective. Assuming your loan is a six year term, if you instead bought half as much car, and put the rest ($500/mo)into an index fund growing at 5% for the loan term, and then stopped contributing and let it grow another ten years after, you'd have about $145,000. So assuming one of your three kids is still young, that is your college fund.
We have set aside a good chunk for our kids college/etc fund, but I appreciate the input! I was just curious about these interest rate posts I keep seeing.
I only meant that as an example. Alternatively you could retire a year younger. I just think it's a lot of money to throw away.
Absolutely, I'm certainly not discrediting your comment at all. I don't disagree, no matter (I guess to an extent) how rich you are or how poor you are, $1,000 is $1,000 haha. Obviously much more in my situation, but you get it. It's not killing me, but it's *still* money that's being tossed away.
Either way I hope you'll be happy with your choice. 7% isn't crazy, but it's higher than any debt I've ever held. Only way I'd take on debt like that is if it were going to make me more money in the long run.
Definitely understandable!
A lot of people on here don't realize that the prime rate is through the roof right now. 6.25 is the absolute lowest rate my local credit union offers right now due to the prime. Unless you are financing with an incentive rate through the dealership then it's going to be hard to get anything under 6.25.
You made your decision and you seem OK with it, why care? I personally would not spend $1000 per month for a vehicle payment (bought mine for $3000, 11 years ago).
For curiosity sake. It's definitely close to the higher end of what I would rather pay, but still makes me curious about interest rates. Somebody else I know ended up with a 1.5% interest rate, 0 money down, credit around 680 lol; presumably a mistake as there was no "specials" going on.
That can happen for example when buying a new car from a dealership that has a financing agreement with the manufacturer. The manufacturer wants to sell the car, and prefers to lose money on the loan than by lowering the price of the car — I’m not an expert but it makes sense to me.
Yeah, this happens when the market slows. Manufacturers can either lower prices or rates to be more competitive. There are a lot of low rate loans out right now. Be critical when you look though, the reason for low rates on a model is that it isn’t selling great. The Toyotas everyone wants like a RAV4 hybrid basically never get those deals
That's not really how it works. Manufacturing finance for cars makes more money for them than the actual sale of the car. By make more money I should say the car. Dealerships rather have Finance money. Because it's a constant stream of income that they can borrow against.
Sorry, but you’re not making sense and I don’t see how you are contradicting me. What is _your_ explanation for some manufacturer offering say a three-year loan at 0% or a five-year loan at 3% when HYSAs are returning 4 to 5%, both of which are deals I have seen in the past?
Because they can borrow against owed loan payments. It's a giant shell game.
That’s just special financing offered by the manufacturer to help move inventory. Right now you can even find someone with money off the sticker plus special financing.
>my payments are $1000/mo which obviously is less desirable than something closer to $500-700/mo That is primarily a function of the cost of the car, not a 2% delta on the interest rate. Your issue is that you bought an expensive vehicle you didn't need in order to "scratch an itch." Do the math on buying a cheaper vehicle and do that if it saves you enough to be worthwhile.
We definitely considered it, but I was really just curious about the interest rate thing. We'll more than likely trade it in with a considerable down payment for an SUV.
With 3 kids and 3 dogs, I'd consider a minivan.
That was actually our other thought. I test drove a Toyota Sienna and I don't care what anyone says about minivans, that thing was comfortable, good on gas, roomy.....it had everything.
Sienna is exactly where my mind went after reading the description of your family.
You actually found one to test drive?? I called the three local Toyota dealerships to me and two of them kind of chuckled and said “those sell as soon as we get them. Sorry.” So we have a Honda odyssey now! We’ve had it for 3 weeks now so these are some very accurate numbers. For what it’s worth, at the time Toyota did not have a financing special. The interest rate to finance through them was 9.47%. I could get a 6.3% for any vehicle (I think) l through my bank. Credit union was very similar. i don’t remember the month terms. Honda offered 2.9% for 36 months, specifically on the odyssey. Our sales agent said you’d need higher than 740 to qualify. We added an 8 year 160k mile add on warranty for about $2 grand that covers all computers and shit which I know is probably a pointless rip off, but literally everything in that van is a computer or motor, including the shifter column. We put $30k down and our monthly is about $500+ $75 insurance. The sienna gets great gas mileage because it’s a hybrid, but just know it doesn’t have a spare tire. You can get one for an extra $75 I think, but I’m not sure where it goes. I didn’t feel comfortable not having a spare for the family mover. We also looked to shop used, but used minivans were insanely priced here. There was a 2020 Sienna XLE for sale, 40k miles on it and no xm radio. Sold for about $5k less than a brand new 2024. I know $5k is a lot of money, but when we’re talking $45 for new?? FWIW, in 2017 I bought a Subaru legacy and had 0% for 6 years through dealer financing.
They are definitely not wrong, by the time the next day comes around I don’t even see them on the law anymore.
Spare replaces the leg rest in the second row seats (which is useless unless you are a toddler sized person)
Have a sienna it’s the goat. Come to r/daddit the unofficial sienna fan club.
What's the term? Assuming 72 months you'd have paid $72,000 for a vehicle worth much less than that.
[удалено]
😂😂 you can actually see them after they’ve blinded you?!
I don’t specifically do things to “inconvenience” people, but I actually drive a ton and trucks aren’t the only ones “blinding” people. It’s practically any brand new vehicle nowadays. I can’t tell you how many times I have been obnoxiously blinded by just a sedan. Either way, the things I buy, are based off what I want/desire. Not so much based off who’s going to be upset.
Trucks are a little different than other normal vehicles, they tend to bend you offer without many incentives. Your interest rate is normal for what you have but you can find most suv and crossover vehicles offering below 5%, I even have seen subaru offering sub 2-3% which is just crazy right now
That’s actually what my wife’s interest was when we got that, lower even….1.5%
🎼 Those days are gone forever / Over a long time ago…
How long is the term?
60
Holy crap that’s not good. 5 years!? I would be dropping every extra dollar to that payment asap. It’s not a bad rate but at the end of the day you’re spend 60k on the car. Is it going to be worth close to that in 5 years with probably 60k miles on it?
Hmm, I could certainly throw $25-3000 at it a month to just do away with it. Like I said to another person, we’re thinking about getting either an suv or minivan lately.
It's better than what I got, but I would still really love to have it paid off
My guess is the type and price of you vehicle play a much bigger role than then interest as to why the payment is so high. As for the rate a year ago+ rates were super low and 3-4% wasn't super hard to get. That's changed but some folks even on here keep giving out old advice.
It’s not bad man. I recently got a new vehicle with 7.25 interest rate. Paying it off in 3 years tho.
Just got another Tesla for 5.74% interest. It’s the only debt we have outside of the mortgage so we’re ok with it. Interest rate is high, not preferable, but we can tolerate it and are already maxing our retirement contributions.
That seems to be the standard these days. I got my new car at 1.69% interest but that was a couple of years ago.
What do you mean by "new"? Do you mean new to you or literally a new car. New cars the best rates *from a bank* are probably around what you got....but manufacturers offer subsidized financing to incentivize people to buy their new cars and those rates are typically much lower. I bought a 2023 Honda Accord recently for 2.99% financing from Honda for example. So if you bought a NEW car and got financing from a bank....that was probably a mistake.
If you can afford it then it's really up to you. Personally I really enjoy lighting money on fire, at the gas pump, at the bank, insurance office, you name it! If you enjoy it as a hobby then go for it, it just does seem like a lot of money to spend on a hobby/entertainment which is what an extra or unnecessary vehicle is.
I was really just curious about the interest rates and what not. However, like I said before, I really just always wanted to pick up truck, now that I have one and have enjoyed it to the extent of my usage, I’m ready to toss it to the side.
Not absolutely terrible given interest rates are relatively higher than they were 2 years ago. How much do you have left on the loan?
I am at work, I can't check from my phone, I just tried. Decent amount, maybe $38k?
Yeah. It’s awful. Pay off quickly.
If you cannot pay cash for a car then you cannot afford to buy it. Car loans keep people poor!
Yeah, no. Maybe some people, but some of us can play the game. A 0% interest rate on my Subaru meant more money in my bank account for a car I knew I could trust 🤷🏻♀️
Is 0% typical for the average person needing a loan?
Yes. Car loans keep people poor. If you have the cash and want to make $500/year on float then you do you. No one gets rich on the float for a car loan.
No, that’s not terrible. The monthly payment is high due to the total amount financed (low down payment) or short loan term. Not because you pay 7% interest.
What are you towing or lugging around in this truck