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Comment by adewinter | Hacker News Reader

When I decide to buy a $25k car because that's as much as I'm willing to spend I still need to determine what my "monthly" is. It matters what my monthly is because it is _a loan_ that I need to pay back every month. If I didn't need to think about what the monthly payment was I wouldn't need to take out a loan (unless I guess you got a magical loan that could only be paid off as a lump sum?).

You're implying "worrying about" or wanting to know what the monthly payment is on a loan is a bad thing and I don't understand why.

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> You're implying "worrying about" or wanting to know what the monthly payment is on a loan is a bad thing and I don't understand why

I believe what he is actually saying is that most people _only_ care about their monthly payment.

Yes, this seems like the critical distinction.

Caring about the monthly repayment is important.

But so is caring about the interest rate and the principal.

>You're implying "worrying about" or wanting to know what the monthly payment is on a loan is a bad thing and I don't understand why.

I stopped into a car dealer to look at a vehicle a couple years ago. I liked how it drove, could pay cash, but wasn't opposed to taking out a loan if I could get a better price overall (sometimes possible with fees banks pay to used dealers for getting a loan originated).

In my experience, they brought out a sheet of paper with a range of what the monthly payment would be. I asked about interest rate, and the sales guy had no idea what interest rates the payments equated to - but he could get me an exact payment after doing a hard pull on my credit. They resisted negotiating on the total cost of the vehicle, but were very willing to extend the loan out to make the payment exactly what I wanted/could afford.

I could see it wasn't going anywhere, told them to call me if they get serious about reducing the price, and left. I found a great car on the private market a short time later.

Exact same experience here. The salesman (and his manager, lol) just couldn't grok that I don't care a shred about what monthly payment they can math their way into. I'm looking at the total price of the car. It was like we were speaking totally different languages. Even after I tried to explain it with "Let's assume I'm going to pay cash..." they kept trying to steer me into their finance department. Obviously they make more money on the financing than they do selling the car itself. I basically won't go to a dealership anymore.

I did my house shopping the same way. For some reason realtors are a lot better about negotiating the actual sale price than car dealers are. I never really had a realtor try the "So, tell me about your maximum monthly payment!" pitch on me, probably because you're expected to have your financing lined up before you shop.

If you're going in to buy something with a "max monthly I'm willing to pay" in mind, you are setting yourself up for a really bad deal.

My wife and I always pay cash for cars. The last time we bought one, they looked at us like we were very weird for...well, having the cash to pay for a car.

Then again, we basically didn't go to a dealership other than for test drives. We e-mailed every dealer within an hour and a half of us with "This is exactly the make and model we want, these are the options, this is the color (but we're open to substitutions), what's your best price?" We took the lowest bid, and if there was any funny business (there was with one), we walked.

Most dealers now have online sales departments that are setup for these low-overhead but low-price transactions (this was a rarity when I bought mine in 2009). Apparently the sales guy we bought from sells 3x more cars than the next-best sales guy at the dealership, because he knows how to price the cars to move online and then acts straight & efficient when the buyer comes in.

A family member bought a very nice, decked out, brand new truck. He could pay cash, no issue. They gave him many thousands of dollars of discounts for financing it if he promised to keep the loan for 3 payments (or their fee from the bank would get clawed back).

He held up his end of the deal, paying 18% interest on a massive truck loan for 3 months.

The sad thing is many people would do the same thing without the ability to pay it off in full. At that interest rate and a ~7-10 year loan term, you'll be upside down on the vehicle until the very end of the loan. And most people wouldn't keep the vehicle that long because something else changes in their life...or they just want a newer vehicle.

I have a friend on FB who said he did the same thing, minus the verbal agreement, and made sure the loan didn't have a pre-payment penalty. He then paid it immediately, which I assume led to a strong talking-to for the employee that authorized that sale.

You can usually get a significant discount, usually to the point where the dealer loses money on the sale of you're willing to finance. In specific the finance kickback on a new car can be $2-3k+. Just make sure the financing doesn't have a prepayment penalty.

I was able to avoid this by buying from Carmax, where they really didn’t seem to care that I wanted to pay cash. They offered financing but didn’t push after I asked about the interest rate and declined. They also took a personal check (rather than requiring a cashier’s).

The point is the total loan amount is mostly irrelevant if the term is flexible. It used to be that 6 or 7 year car loans were basically unheard of... 3 or 4 years was the norm.

Another example is most people never pay off their mortgage. Some refinance, often several times, resetting the term. Eventually they'll sell the house, pay off the mortgage as part of that transaction, and keep the change (if they're lucky.)

> When I decide to buy a $25k car because that's as much as I'm willing to spend I still need to determine what my "monthly" is.

I haven't owned a car and i'm almost 30, and have always enjoyed public transport so far.

When I'll decide to buy a car, I'll just f-ing pay it in full and be done with it.

Even if you can afford to pay it in full, if you have a cheap loan available where the interest payment is less than the after-tax interest you would otherwise accrue on it (as an investment of some sort) then overall you might come ahead on the deal by taking the loan. This may be true even if you don’t invest it per se but use it to pay off debt at a higher interest rate. Since a car loan is secured against the car itself often it will have a lower interest rate than credit cards for example.

Car loans are 0% for anyone with good credit right now. We live in a managed economy now sadly, so you are actually throwing away money by paying outright instead of taking on interest-free debt and doing almost anything else with the theoretical reserve-principle; even sticking it in a checking account is going to be a net gain.

When I'll decide to buy a car, I'll just f-ing pay it in full and be done with it.

That's what I did, and as such I agree, but just be aware that you might very well end up paying more overall that way (assuming you're buying a new car from a dealer).

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