Is Your Reefing Paid For?

[TX_REEF]

While 0% is better than any percent... If you can't afford to fully pay it off in an emergency, then it is still a bad decision, as the 0% becomes (almost always) the maximum allowable cumulative (often retro) interest by law typically with a single missed payment and/or with "fees" built to commit usury but fall outside of the fine print of usury laws.

true - I should have more clearly said "if you can afford it in cash, there's no reason not to take advantage of 0% financing and set up automatic payments"

 

[Cthulukelele]

This is just a PSA, if you need installment plans to afford your hobby, you really need to think about dialing back. Installment plans and layaways that aren't being used to maximize financial benefit (if something is cheaper via installments) are a recipe for ending up in a financial hole that's pretty impossible to dig out of. I say this as someone who's probably in the bottom 5% of earners in the hobby so I understand the appeal.

 

[BeanAnimal]

This is just a PSA, if you need installment plans to afford your hobby, you really need to think about dialing back. Installment plans and layaways that aren't being used to maximize financial benefit (if something is cheaper via installments) are a recipe for ending up in a financial hole that's pretty impossible to dig out of. I say this as someone who's probably in the bottom 5% of earners in the hobby so I understand the appeal.

Exactly - Discipline is important. Laying away or paying installments on one small need or quality of life item maybe not the best idea, but is not the real issue. The issue occurs when that one item becomes 2, then 3 and the credit card payment is 80% of the balance instead of a hundred, and the Lowes same as cash expires and you owe that interest... then you take a pay cut, cut hurt, get laid off or the uninsured driver up the street totals your car that you only have liability on.... the hole opens quickly and everything snowballs.

You can get out from under part of the debt of a car or a house possibly. But you can't sell the credit card debt, the aquarium or the other depreciated goods for anywhere near what you owe and there is nobody to reclaim or refinance that stuff, it has no value to them. You just owe and can't pay.

 

[twentyleagues]

"Hey - nice to have you here at the dealership - so what monthly payment are you looking for" - means they are going to subtly convince you to sign on to a 72 month term at slightly above your "comfort level" for a car that you can't really afford. When you tell them you are putting 20K down, they are going help you decide on keeping that 72 month "doable" payment and move up to the "better value" vehicle.

The wise person buys the USED car that they can pay cash for or pay off in a year or two, not a new car, and especially not a new car over 72 months.

Still kind of relative typically used car interest rates are much higher than new cars. I got my 2016 in 2016 on a 72m loan the interest rate was less than 1%. A used car ( I looked at many) best rate I could get was 5%. I dont have nor will I ( probably) ever have 20k to drop on a car. Saved money, headaches on a new one. Same goes today looking at getting a pick up truck I can spend 50k on a new one with 1.9% or less or spend 30k on a used one with 50k-80k miles on it and pay 3x on the interest. I have outstanding credit and my credit ratio is low. Used car interest is high and length of loan is lower too meaning more out of pocket each month. To each his own there are many ways to get what you want or need. Kudos to the people that dont live check to check some of us dont have the ability.

 

[jda]

Nothing costs more than free, and 0% anything is an example of this.

Cars are bad enough since they go down in value so quick, but hobby stuff goes down even more quickly. $10K setup could sell for $1500 if you really had to move it fast. What most people do not understand about custom tank setups is that 1). custom costs more and 2). only you wanted what you customized. It is kinda like lifted trucks 20 years ago where it took a while for people to understand that if they spend $15k lifting a truck, nobody wants it but them. You still see these clowns today posting things like "$10k invested in custom setup, sacrifice for $8k when their item is worth $2k had they just bought off of the shelf." Hobbies are not investments.

BTW - if you can get 1% or 0% for a new car, they also have a huge discount for cash. If you can buy a car, then get $5K off instead of taking the 0%. The car places can do math, so you pay more even at 0% or 1%.

 

[BeanAnimal]

Still kind of relative typically used car interest rates are much higher than new cars.

Yes -
1) the bank does not want it back, there is no resale value
2) the system is designed to push you into a NEW car for a reason.

I got my 2016 in 2016 on a 72m loan the interest rate was less than 1%. A used car ( I looked at many) best rate I could get was 5%. I dont have nor will I ( probably) ever have 20k to drop on a car. Saved money, headaches on a new one. Same goes today looking at getting a pick up truck I can spend 50k on a new one with 1.9% or less or spend 30k on a used one with 50k-80k miles on it and pay 3x on the interest.

Your calculus is rather flawed, and that is exactly how they prey on you.

The used car may have a higher interest rate, but its value (the cost) is close to its actual resale value. So you lose nothing but the interest. And in that light, should be financing AS LITTLE as possible anyway.

The NEW car has lower interest and "feels" more affordable because the "monthly" payment is less. But you take ownership of the MORE EXPENSIVE CAR at a much higher price and longer term - you now OWN the depreciation the moment you drive it off the lot + the interest.

So apples to apples.... (25K NEW CAR and 25K USED CAR) if you have good credit and can't afford the cash price of the car, you are better of DOLLAR FOR DOLLAR with the USED CAR....

Moreover, there should not be that much disparity in rates if you have good credit, if there is, you need to find a better bank!

To each his own there are many ways to get what you want or need. Kudos to the people that dont live check to check some of us dont have the ability.

Yes, to each their own, but math is immutable

 

[Reefer Matt]

I use a cash back rewards card and pay it off every month. I also use discipline to not over spend past my disposable income amount. If I want a big ticket item, I work overtime to pay for it. Trying to keep up with millionaires and influencers will quickly deplete one’s finances and standard of living. There are ways to get expensive things for less, but you may have to socialize with other hobbyists. However you finance your hobby is your business, and I hope you find happiness doing it.