I wanted to get some opinions. I am purchasing a 2014 Lexus IS 150 with 67k miles. I have the option to finaince for 60 months or 72 months. The rate I got was decent, with either a 5 percent for 60 months or 8 percent for 72 months. With 60 months my payment would be 440 ish, and with 72 months it would lower it
I wanted to get some opinions. I am purchasing a 2014 Lexus IS 150 with 67k miles. I have the option to finaince for 60 months or 72 months. The rate I got was decent, with either a 5 percent for 60 months or 8 percent for 72 months. With 60 months my payment would be 440 ish, and with 72 months it would lower it by about $30 a month. My question is, would financing for 72 months be worth it? My concern is the equity of the vehicle.
72 months is not wise, especially at a terrible 8% rate.
There are two problems: 1) You'll pay a ton of interest in such a high-rate, long-term loan, which is money you'll have nothing to show for, and 2) unless you traded a valuable car or made a very large down payment, you will be upside down for nearly the entire loan term, meaning you'll have problems if you want to trade or sell anytime during that term.
Furthermore, if you don't buy gap insurance, you'll suffer a huge financial loss if your car is stolen or totaled in an accident. Another problem is that your lender will insist on you carrying full-coverage insurance for the entire 72 months, even though the car will have lost enough value that would justify only having liability.
Only 2nd and 3rd-tier lenders will go that long on a car with 67K miles on it, hence the higher interest rate.
If you're concerned about equity, then either term would be a losing proposition (the 60-month term would be less painful, admittedly). You need to see if you can afford a 48-month term, and then try to pay even more on the note monthly if you can swing it. This would be the ONLY way to avoid being upside-down for the first 2-3 years.
Sorry, but on a 60 or 72-month loan, you're going to be buried in that car for a few years.
8% is brutal. I'd go for 60 months. That's high mileage for a vehicle that age. Are you sure you want to commit for something that will not be even close what you end up paying for it? You can forget about equity, that doesn't apply in this case. You would be better off buying a cheaper new car than sinking your money into a high mileage used car. Even better would be a low mileage certified used car from a dealer.
5-8% means you are spending way more than you should be.
Last I checked, my rate was 1.99%. But I didn't ask about 10 year financing.
You wont have equity for 3-4 years probably.
Financing at 8% for 72 months would be absolute lunacy. Period. Take the 5% for 5 years.
There is NOTHING decent about an 8% APR. even 5% is marginal.
"Equity"? You're joking, right? Save that word for things that don't depreciate.
Do the math!!!! Which one is cheaper?