payments opinion

synolimit · 01-04-2014, 08:07 PM

Quote:

Originally Posted by Chuck33079

Some people would rather pay less for the car, not have the smaller payment. There's a reason there's a rule of thumb that says if you can't pay the car off in three years you can't afford the car.

Never heard of it and I don't know anyone that can do that. I never have a car longer then a year anyways so more money to play with the better. To each their own I guess.

I pay less incase something happens. I'm an RN, my job will NEVER go away, but I can't predict the future. If my motor goes and I need 5k cash I'd rather worry about a $400 payment coming up vs a $700 payment. You can always pay more a month to pay it off early rather than be forced to pay more each month.

MMC Racing · 01-04-2014, 08:20 PM

Quote:

Originally Posted by synolimit

Never heard of it and I don't know anyone that can do that. I never have a car longer then a year anyways so more money to play with the better. To each their own I guess.

I pay less incase something happens. I'm an RN, my job will NEVER go away, but I can't predict the future. If my motor goes and I need 5k cash I'd rather worry about a $400 payment coming up vs a $700 payment. You can always pay more a month to pay it off early rather than be forced to pay more each month.

If you bank the down payment you didn't make on the car, then you have a "rainy day fund" to pay for that hypothetical engine failure. You could also still "pay" the lower payment each month by covering the difference from tapping the "rainy day fund".

There are a number of strategies and they are highly dependent on a number of factors, but the main one is the interest rate. The higher the rate, the more making a bigger down payment makes sense.

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