Big down payment or minimum down payment?
 

I’m deployed right now and I’ve got my new Jeep on order and should be able to pick it up in early Fall. Since I’m deployed I don’t really have too many expenses and I’ve been saving all my money intending on making a 10K down payment with some money left over for the savings account, a few mods, and a drive up to Michigan to see my family. My question is, is it smarter to make a big down payment or save/invest the money? My enlistment is up in 2010 so I want to go for a 36 month loan just incase I can’t reenlist; I would hate to get a longer loan then loose my job and have this vehicle payment that I couldn’t afford. I also just got promoted and my raise in pay would completely cover my vehicle payment if I were to put 10K down so essentially I wouldn’t feel a difference from going from no car payment to driving a brand new one. I’ve started looking for a loan and it looks like I’m going to get about 5.0% APR if I go for a 36 month loan which puts me at about $500 if I put down 10K and about $850 if I don’t. I can afford the $850 but I would prefer not to if I don’t have to. Oh, I’m also single so the extra money each month from putting 10K down would help pad all the extra expenses accrued from taking out the ladies. So what would you do if you had the choice, 10K down or the minimum? - KY

A nice down payment is good, however if you are definitely going to invest the money and not spend it elsewhere then you can probably get a better than 5% return elsewhere. I also think it is a good idea to have some money saved just for emergency situations.

As long as the $10,000 is not your entire life savings I would put the money down. What I mean by this is make sure you have a thousand or two for an emergency stashed. Many will say keep the downpayment and make the higher payments but overall the biggest reason to make as big a downpayment as you can afford is not to drop your payments but to overall pay less for the vehicle. If the jeep you want costs $30,000 and you put $0 down you are financing the whole amount and paying intrest on it thus making the overall costs larger. If you make a $5,000 downpayment you are only financing $25,000 thus the intrest is less. If you make a $10,000 down the financed amount is $20,000 thus less intrest paid in. The lest intrest you pay overall the less your jeep will cost you. This cam be big money when you are talking the diference between a couple hundred and a couple thousand down.

I'm with the other two posters on this. (pearl-drum-man & only_in_my_jeep) If the 10K is not goingto wipe out your entire savings then the big down payment is good. :yup:

Unless the 36 months is @ 0% interest. There you could leave the $10K in even a passbook savings account and use it to make up the difference in the payment each month and will you come out ahead as long as you don't use that money for anything else. (:what?: yep I know, as clear as mud)

However, I like the idea of not owing more than my vehicle is worth just incase of an accident where the vehicle is totalled or stolen. FYI, I put $8k down on mine when I ordered.

I did zero down, but I also have 4.5% financing.

In our economy today, I would have a hard time believing you could get a better return on your $$$$, then you would be paying in interest for the vehicle. For that reason I believe it's in ones best interest to put down as much $$$$ as possible in order to cut the monthly payments. One reason we are in such a sorry state of affairs today, is because credit is so easy to obtain for those that cannot afford it in the first place.

I agree with a large down payment, but that $10k is enough to put a nice down payment on a house. A single guy making good money should have the goal to be able to buy a home once you get out of the air force. Once girls get a little bit older, the sexiest thing a man can have is his own home.

DO what you need to do now, but try to have enough for that home downpayment in three years. . . . . your entire life's financial situation basically rests on how early you are able to own your home.

I don't think in todays market you are going to do 5%. That being said the idea of 0% 3yrs. and supplementing your payment with the $10,000 over the time of the loan sounds like good advice then you always have your cash buffer in the bank. Only thing you need for this plan is good credit and self control.

It all depneds on what you can afford. If you have a good beacon score, you can probably get some great deals on financing. Since intrest rates are low, that could work to your advantage. Certainly though, if you have a pile of money just layin around, you can throw a down payment at um. Our budget doesn't allow for very large purchases at a time, but we have credit cards and manage them wisely. More than one is always paid off. If we need to make a down payment on something, what I'll do is put it on a card, and then make a balance transfer to another car that will offer zero percent for 12 months, and pay it off with no intrest. If we cannot get it done in 12 months (which is rare), I'll transfer it again to another one at zero percent. Credit cards can be great tools if you don't go nuts with them.

I've gotten a 36.6% return on my investments the last two years. :cool:

So it's possible :blush:

But at any rate, more now is always better than later. So do as much down on it as you can afford (unless, as was stated, you can get a 0% for 36 months in which case invest the 10-grand and turn around and put down more at the end of the 36 months while making standard payments in the meantime)

First off I would like to thank all of you for the responses, I would have responded sooner but I crashed my computer today at work so I had to wait for another one to free up so I could get back on. As far as having a cash buffer is concerned, well… it’s not really a concern. Right now the apartment I have back home only costs me $475 a month with utilities so I get to add a bunch of money to my savings account each month just because of that. As far as a house is concerned, I was looking into buying one right now with the market being where it is but I’m planning on going into a new career in the USAF and moving to a new place in the Summer of 09 and I don’t feel that it would be a smart move to buy a house then sell it in less than a year. Once I move to a new area then I will be looking to buy but now just isn’t the time. As far as me being self-disciplined enough to save well, that comes and goes. Most of the time I’m a tight ass with my money but on occasion I splurge and when I do I can blow a ton of money in a heart beat. As far as 5% goes I have good enough credit that I’ll be able to get right around 5% at anytime through my credit union and when I last spoke with them they said that right about the time I’m ready to sign the contract they will be having their Fall new car specials that I would qualify for. The spring special that they just had was for 3.9% so I can expect it to be somewhere near there.

I’m still not 100% on what to do but we’ll see. Most people are saying to go for the 10K down but I think I’ll have to give Citizennobody a chance to tell me his side because sometimes the right answer to a question is the one that is unknown to most.

Hey Laughingstok, care to share your 36.6% knowledge :brows:? - KY

I bought heavily in Latin America stocks back in 2005. :)

Check out "PBR" - My bread and butter but I have others..

Bought them at $17 a share. :D

http://finance.google.com

Type in PBR :clap:

That's awesome :thumbsup:! And to think that I've been so naive for so long, I always thought that Pabst Blue Ribbon (PBR) was brewed in Milwaukee not Latin America :dontknow2: - KY

:rotflmao2:

Well I basically saw oil moving, and Petrobras (the company) is a brazilian oil company that was small enough to afford and big enough to have a foot in the door.

So I took the chance.

Has paid off.

I'd love to have the knowledge to play in the stock market, know of a good place to obtain such knowledge? - KY

Not really. I just research anything I'm interested in.

Just look at what's popular and have some guts.

BUT

Never invest what you can't afford to lose! I'm no stock guru and am in no place to offer advice. If you like something and think someone else will like it, invest in the company that makes it.

That's basically it.

if you put more down your payment is going to be less. i put as much down as i could and i got about 6% finance, but i did get the jeep for a steal so i was happy .

Dude money to fall back on is not something you expect to need. In your case you have an income that is steady for the next 4 years so you know it is coming in regardless which is better than most. What you can't account for is perhaps some emergency arising that might require say a flight home for severe illness or death in the family. Of course the military usually helps out in these cases and you have medical covered as well that way. The choice is up to you but for those of us who are perhaps a little older and seen both good and bad times we always recomend hedging the bet and keeping some in savings just in case.

We did 30+% last year but this year is a different story all together. BRIC fund was nice. Brazil Russia Inda and China.