jeeperjkj

It might be a good habit to be in when you're financing something AND being charged interest, but when someone's giving you a FREE loan, there's no reason to even think about putting money down.

The one caveat to that is the fact that you're going to be upside down in your loan for quite a while. However, that's easy to remedy if you just make sure you've got GAP coverage included in the loan. The little bit it costs for GAP protection is worth it.

For those who say they put $ down to get their monthly payment where they want it, I wonder why not just put the money that they'd planned on putting down into a savings account, then go with the larger payment and just pull $X out of that savings account every month to go toward the payment to effectively make their monthly payment lower. Then, instead of giving the down payment money to the finance company up front, it's sitting in a savings account growing for you.

SI-Jeeper08

I know it would be better to invest that money that I put for the down payment (or even have it sitting in savings where it draws a tiny bit of interest) but I had a target of $350 per month for my payment and the 2K down helped get it there.

Plus, a down payment can make you more likely to qualify for the zero percent loan from Chrysler. I don't know how much difference that made in my case, but it surely didn't hurt.

But mainly, for some of us, it's all about the monthly payment fitting our budget. Obviously it all evens out in the long run, but I like knowing I have some breathing room with my budget.

jeeperjkj

I know what you're sayin', but if you want to have a $350/month payment, but you're getting 0% and you want to maximize your profits (or minimize your losses), then you're better off putting that money in a savings account, taking the $400/month payment, then withdrawing $50/month of the money that you would've put down and put it toward your payment.

If you NEED the down payment to qualify for 0%, then that's one thing, but otherwise, there's no reason not to do it as described above. That way, you'll still be payin' $350/month from your income (+ the $50/month pulled from savings) and your "down" payment will be drawing interest until you withdraw it!

jeeperjkj

See above post. You'd be much better off financially to not put the money down.

An interest free loan is an interest free loan. No reason NOT to take it.

TommyG

I think some of you are really missing the point as to why people want to be at a certain payment even with 0% financing. I feel safe paying $309.00/ mo. so I put enough money down so I could BE AT THAT PAYMENT!!! I have other expenses: mortgage, gas bill, water bill, electric bill, cable bill, business, insurances, children, wifes car, taxes, etc... so even if I had 0% financing, I would not commit myself to $800.00/mo. because it is NOT PRACTICAL for me. If I were single or not paying several thousands of dollars each month on bills/ monthly expenses already, then yes, maybe $800.00/ mo. would make sense. But to commit to an $800.00/ mo. loan even if it is 0% financing may make me default if my business doesnt bring money in for two months in this economy. With a $309.00/ mo. loan it gives me 5+ months to pay the same amount I would have to pay in 2 months on an $800.00/ mo. loan. Now that being said, I do pay more than my commited $309.00/mo sometimes even triple that payment to pay the loan off quicker. But like I said, if there is a time I need the extra $$$, I know I dont have a monthly payment of $800.00 for my Jeep.

Just out of curiousity, how are some of you affording $800.00? What other expenses do you have and what do you do for a living that you could commit to such large payments?

jeeperjkj

Wow, is it really that hard to see what I'm saying here.

Let's look at a $25,000 Jeep.

0% - 36 months will put you at $694.44/month

0% - 36 months, with a $300/month payment, will require a $14,200 down payment

Now, take that $14,200 and put it in the bank... let it draw a measely 0.5% interest. "Commit" yourself to paying $300/month (your magic number) from your take home salary, but add to that $394.44 from your savings account. Your down payment of $14,200 (that you put into that savings account) divided into 36 equal parts is $394.44! However, while it's sitting in that account, it's gaining interest for you!

No more risk.

A little bit more $ from the interest.

You can still pay ahead if you want, but if you're getting 0%, then there's no reason to.

TommyG

I understand what you are saying but it is obvious you are missing my point. People in general have expenses and try to minimize what they spend each month on those expenses. They don't care about 5% at $300.00/ mo. as much as they cant afford $800.00/ mo. at 0%. This is the reason alot of (not all) people lease cars. They don't mind paying window sticker at $399.00/ mo. to rent a car as much as they cant afford paying tissue/ dealer cost at $699.00/ mo. to own the car. In my case, if I wanted to I could probably afford the $800.00/ mo. but being I put out an average of close to $10,000.00/ mo. between business and personnal expenses, I feel so much safer not having to worry about an $800.00/ mo. Jeep payment. The $309.00/ mo. payment that I have been doubling and trippling on my 72 month 20 something thousand dollar loan since the loan started last February is down to about $10,000.00 now. At the rate Im going, my Jeep will be paid in full and mine this year.

Is a $800./ mo interest free loan for me? Maybe, but like I said, even though I am paying about $800.00/mo, I dont feel pressure in being FORCED to pay $800./ mo. If for some reason I cant afford it 1 or 2 months, I feel better with a lower monthly payment. Also, the bank isnt making a ton of interest on me because of how fast I am paying my loan off so in my opinion, I am doing the thing I feel most comfortable with.

Is an $800./ mo. interest free loan right for everyone? Again, my opinion but I don't think so at all. Alot of people cant afford $800.00/ mo interest free like they could afford $300.00/ mo with 5% interest. I know this is not the right way to purchase at all, but in this country, people are very "must have now" type personallities. A whole new discussion but just look at the housing market. Agian, I bought what I could afford each month on a 30 yr traditional, and avoided the go for the maximum I could borrow because eventually I will make the money back approach the brokers were pushing.

N2MWL

my payment is way too much.......but I refinanced over to my credit union thus cutting the interest rate almost in half and shortening up the length of the term..

TommyG

Amen!!! I think you nailed it right on the head for many people on this forum.

boots

Sorry Guys, Iam paying Zero, Zip, Nothing, Nada.

Was lucky enough to have the cash and a payed off Dodge Ram to trade in....