Quote:
Originally Posted by albertGQ
So my wife and I are expecting our second son in February. That means its time to get rid of my Acure RSX (anyone want to buy it?) and get something more practical
We looked at the Hyundai Tuscon, Chevy Equinox, and Mazda 5. Out of those three, we both loved the Mazda 5 the best. It was also the best value. There was a Mazda 5 on liquidation so we saved a bit more cash that way.
We can get 0% financing for 72 months or 0.9% financing (with an additional $500 rebate) for 84 months. We were thinking of cashing out some investments and paying cash for it. If we did that, we could knock off $3k from the sticker price.
It works out to about $150 bi-weekly on 84 month financing. This is very affordable for us and this way, we don't have to cash out any investments.
Does anyone on CP own a Mazda 5? Anything we should know about this vehicle good or bad?
CP has always been a wealth of knowledge and I'm pretty car illiterate so any tidbits I should know is greatly appreciated
TIA!
|
Okay, unbiased finance guy post here. Just using simple "give or take a few bucks" numbers here, but if the car is in the 25-40k range, the numbers will adjust pretty much parallel to each other.
I'll give you option C:
The real world borrowing rate for a fixed closed loan over 7 years on a car right now is about 5%. Assuming the car is around 30K with all taxes, the cash price with rebate will be $27000 of which you will pay around $4900 interest on if you use a conventional lender. So net time price will be around $31900. Tell the finance manager at the dealership you are at you would like the 4.99 rate that First Calgary and ATB are offering right now. Every major dealer in the city has it available. If that fails just talk to your own bank.
If you take the Mazda deal at 0.9% You are borrowing on $30,000 and will pay around 950 in interest. So net time price is $30950.
31900 - 30950 = $950
In that scenario take the
higher interest loan imho, because you are really only talking and adjusted borrowing cost difference of only 1%. BUT.... You are starting at a much lower balance and odds are almost certain you will sell or trade the car in within 4-5 years, at which time you will likely have actually have a lower payout on the higher interest loan.
The only way I would guide a client into the 0.9 scenario, would be if you can say, without a doubt in your mind, you will take the loan to term.
Lastly.... the absolute WORST thing you can do is to cash in an appreciating asset (investment) on a depreciating commodity (car). If you saw the long term implication presented to you by a financial advisor or analyst, it would make you puke, what the lost gain on 30K today, would look like 25 years from now. In reality you are paying 4 grand in interest now to preserve what will likely be $120-150K 25 years from today.
I have had people across the desk from me in mid 6 figures that could truly pay for a 50 or 60k car on their debit card, and they will never do it. They always take a finance option simply for that fact.