60 mo. or 72 mo.?

[SweetMaxima]

Just want some opinions on this to make sure I'm not missing something...

Okay, most people (including myself for many years) say financing for 72 months is not good. Car depreciates and you get upside down on the loan and get in trouble when you want your next car, etc. BUT, for me...I don't get the urge to buy a different car every 4 or 5 years like some people. My Maxima is a 1996 that I have now. I know if I get the car I really want, I'll surely have it for longer than 72 months. Besides, six years old is not old these days for a car. So it seems like in that case it wouldn't matter if you finance it for 72 months. Besides trading in a car when the loan is more than its value, is there some other situation you could get yourself into that I'm glossing over maybe?

Just would like to hear what others have to say about this.

[4themax]

SweetMaxima - I think it is great to keep a car a long time and get the true value of your purchase. I bought my '02 new and was planning to keep it until I saw the '09.... That said no matter how long you keep your new Max I don't think you should finance more than 5 years.... The more months you finance the more interest you pay over the life of the loan. (The longer you use the bank's money the more of your money they get). IF it worth paying more for the vehicle when it does get paid off than go for 6. It's a personal choice of course. I finance for 5 years and pay it off in 4 leaving a little cushion in case of emergency. Everyone's budget is different : )

[SweetMaxima]

SweetMaxima - I think it is great to keep a car a long time and get the true value of your purchase. I bought my '02 new and was planning to keep it until I saw the '09.... That said no matter how long you keep your new Max I don't think you should finance more than 5 years.... The more months you finance the more interest you pay over the life of the loan. (The longer you use the bank's money the more of your money they get). IF it worth paying more for the vehicle when it does get paid off than go for 6. It's a personal choice of course. I finance for 5 years and pay it off in 4 leaving a little cushion in case of emergency. Everyone's budget is different : )

Yea, even though it's a little more interest I was considering if I got a decent rate to finance for 6 and I could always pay more than I have to (like you do).

By the way, this was probably the wrong forum to post this in. I just noticed another topic for purchasing/tips, etc. Sorry about that.

[qstarweb]

The 72 months will make you more likely to be upside down but it can work out. I got a 72 month loan on my 2007 Maxima, and as most of you would understand, quickly became attracted to getting a 2009 after all I heard about it. The test-drive was the deciding factor, so I williing paid for the upside down and upgraded. The 2009 rules!!! Yes 72 months Nissan financing on the 2009.

Dean
2009 Maxima SV with sport package, black/black

[palmerwmd]

I think 72 months is too high because the aggregated finance charges will be so much bigger. If at all possible I would stick with 60 months..
I usually try to go for as short a term as I can possibly swing, for this reason even if its not convinient.:auto:

[07G35S]

I think qstarweb's example pretty much explains it all.... if you are someone who normally keeps cars > 5 years, a 72 month loan isn't a horrible idea, but if you decide like he did to get a new car 2 years later, you just wasted a LOT of money.

I've found 5 years to be the best route for my wife's buying habits, and leases to be best for me :D

[ZYAL8R808]

If you are concerned with being upside down or buried, then financing with a low or $0 down payment will get you buried no matter 60 or 72 months.

[janders211]

IMHO If you need a 60 or especially a 72 month loan with zero down...you can't afford the car. Thing of it this way (sort of) 4% loan X 6 years = 24% over the price of the car..that 30,000 car costs 37,000...ever year less is about a grand cheaper

[Lichtronamo]

The 72 months will make you more likely to be upside down but it can work out. I got a 72 month loan on my 2007 Maxima, and as most of you would understand, quickly became attracted to getting a 2009 after all I heard about it. The test-drive was the deciding factor, so I williing paid for the upside down and upgraded. The 2009 rules!!! Yes 72 months Nissan financing on the 2009.

Dean
2009 Maxima SV with sport package, black/black

Was your financing from Nissan?

And, what rate did you get on your loan?

Finally, did you ask what rate they'd offer for 60 months?

[SweetMaxima]

IMHO If you need a 60 or especially a 72 month loan with zero down...you can't afford the car. Thing of it this way (sort of) 4% loan X 6 years = 24% over the price of the car..that 30,000 car costs 37,000...ever year less is about a grand cheaper

Definately not financing the whole thing. I have a fairly nice amount to put down, but going with 72 will allow me to put down a little less and I will be saving/investing the rest. Based on quotes from Capital One, I calculate it would be $1,654 more for a 72 mo loan.

And I may really "like" a new car that comes out but I can surely resist the urge to actually buy one ;). Just depends on one's situation though. I will have to think about it.

[bb700092]

SweetMaxima - I think it is great to keep a car a long time and get the true value of your purchase. I bought my '02 new and was planning to keep it until I saw the '09.... That said no matter how long you keep your new Max I don't think you should finance more than 5 years.... The more months you finance the more interest you pay over the life of the loan. (The longer you use the bank's money the more of your money they get). IF it worth paying more for the vehicle when it does get paid off than go for 6. It's a personal choice of course. I finance for 5 years and pay it off in 4 leaving a little cushion in case of emergency. Everyone's budget is different : )

I beg to differ. When we get a good APR for our loan, the best option is to extend that loan for as long as possible, especially since when one has no intention of trading in the car soon. A "good APR" is defined as the APR which is less than the money one can make out of that loan amount (from bank interest, investing in stocks, etc.) minus the taxes and inflation rate (typically considered 3%-4% but might be more in this dwindling economy). Even though we pay more to the bank as interest by prolonging our loan term, we are also making more money out of it through our investments. So you will be the one who eventually makes more for yourself than a short-term loaner even though you might pay more to the bank than him.

For example, suppose Mr. X borrows $30k from the bank at 1.9% APR (typically what NMAC offers) for 3 years while Mr. Y borrows $30k at the same APR for 6 years. X's monthly payment will be $858 while Y's will be $442. In 3 years, X will pay the bank a total interest of $887 while Y will pay $1767 in 6 years, i.e. Y will pay $880 more than X.

Assume both X and Y would invest $2,000 a month if they had no car payments. Also assume they can get 9% interest on their investments. After deducting taxes and inflation, suppose their effective interest rate is 3%. In a span of 6 years, X will be able to invest $2,000-$858=$1,142 per month for the first 36 months and $2,000 per month for the next 36 months. In a span of 6 years, Y will be able to invest $2,000-$442=$1,558 per month for the 72 months. So, in the same 6 year period, X will make $122,245 while Y will make $122,739, i.e. Y will make almost $500 more than X investing the same amount over the same time even though Y paid more to the bank. This difference will increase as the effective interest rate increases.

The bottom line is we do not get richer by calculating how much money we are giving away to the bank. We get richer by calculating how much money we are making by investing the money we borrow from the bank.

[qstarweb]

Was your financing from Nissan?

And, what rate did you get on your loan?

Finally, did you ask what rate they'd offer for 60 months?
Yes I got the financing through Nissan this time. I've been working on improving my credit scores, paid off old bills, had older ones scroll off for being 7 years old, opened and maintained new accounts in good standing, etc. With lower experian score in 2007 I was financed through Chase Auto Finance at 12.54%.

This time around it was through Nissan and 10.44% after some give and take and increasing my down payment to 3700 to make it happen. I was upside down on my 2007 Maxima loan, despite the very good trade-in offer of 23000 I was still owing 29,600 on the 2007 Maxima. I didn't ask for the figures on 60 months, I prefer to go 72 and know I can overpay anytime I want to get the loan paid off sooner.

I"m just happy it worked out. The real reason for doing it and making those payments is the experience of actually driving the car. I hope everyone here who wants one will get one soon.

Dean

[seldomseen]

Just want some opinions on this to make sure I'm not missing something...

Okay, most people (including myself for many years) say financing for 72 months is not good. Car depreciates and you get upside down on the loan and get in trouble when you want your next car, etc. BUT, for me...I don't get the urge to buy a different car every 4 or 5 years like some people. My Maxima is a 1996 that I have now. I know if I get the car I really want, I'll surely have it for longer than 72 months. Besides, six years old is not old these days for a car. So it seems like in that case it wouldn't matter if you finance it for 72 months. Besides trading in a car when the loan is more than its value, is there some other situation you could get yourself into that I'm glossing over maybe?

Just would like to hear what others have to say about this.

Go with a 48 month term and put 20-25% down. Damn bro...you are going to get yourself in a mess with the way you keeping jumping into cars without having any "equity" in them. But with your credit situation I would personally just forget about buying a car this expensive but you will be throwing money away just to "look good" in a new car. Your double digit interest rates and small down payment, and long finance terms will only cause you to become upside on your car FAST, especially since you're looking at a new car.

[07G35S]

With lower experian score in 2007 I was financed through Chase Auto Finance at 12.54%.

This time around it was through Nissan and 10.44% after some give and take and increasing my down payment to 3700 to make it happen.

Holy frickin crap man... 10.44%... GEEZUS. Do you realize how much interest that adds up to over a 72 month loan?

And all this talk about investing the money, blah blah... if you're getting 9% returns on any investment right now, you're a financial genius. I've gotten zero percent returns over the past year and thats with emplyer matching 1/2 of my 12% contribution per month..

This is the wrong time to be thinking in that direction. However, whoever said it depends on the interest rate, very good. I CAN see the merit in a 72 month loan at 0-2% any higher and you're just wasting money to save 100 bucks or so a month.

[jryka]

IMHO If you need a 60 or especially a 72 month loan with zero down...you can't afford the car. Thing of it this way (sort of) 4% loan X 6 years = 24% over the price of the car..that 30,000 car costs 37,000...ever year less is about a grand cheaper


Actually, the interest in on the unpaid balance, not the whole 30,000 for the whole 6 years. Over the course of the loan the unpaid balance (which goes down with every payment) would average about 15,000. So interest cost at 4% over 6 years on 30,000 would be more like a total of 3600 interest (4% of 15000 times 6), or total cost of 33600.

[JJS]

I beg to differ. When we get a good APR for our loan, the best option is to extend that loan for as long as possible, especially since when one has no intention of trading in the car soon. A "good APR" is defined as the APR which is less than the money one can make out of that loan amount (from bank interest, investing in stocks, etc.) minus the taxes and inflation rate (typically considered 3%-4% but might be more in this dwindling economy). Even though we pay more to the bank as interest by prolonging our loan term, we are also making more money out of it through our investments. So you will be the one who eventually makes more for yourself than a short-term loaner even though you might pay more to the bank than him.

For example, suppose Mr. X borrows $30k from the bank at 1.9% APR (typically what NMAC offers) for 3 years while Mr. Y borrows $30k at the same APR for 6 years. X's monthly payment will be $858 while Y's will be $442. In 3 years, X will pay the bank a total interest of $887 while Y will pay $1767 in 6 years, i.e. Y will pay $880 more than X.

Assume both X and Y would invest $2,000 a month if they had no car payments. Also assume they can get 9% interest on their investments. After deducting taxes and inflation, suppose their effective interest rate is 3%. In a span of 6 years, X will be able to invest $2,000-$858=$1,142 per month for the first 36 months and $2,000 per month for the next 36 months. In a span of 6 years, Y will be able to invest $2,000-$442=$1,558 per month for the 72 months. So, in the same 6 year period, X will make $122,245 while Y will make $122,739, i.e. Y will make almost $500 more than X investing the same amount over the same time even though Y paid more to the bank. This difference will increase as the effective interest rate increases.

The bottom line is we do not get richer by calculating how much money we are giving away to the bank. We get richer by calculating how much money we are making by investing the money we borrow from the bank.

That all sounds well and good on paper. But the typical car buyer is making decisions to go as long as possible for one reason and one reason only - they can't really afford to go shorter term. It's more of a lifestyle and a pattern of bad economic decisions, not what makes them richer in the long term, that drives people to 72 month loans.

I'm sorry to be so blunt, but these sorts of decisions are part of a pattern that more than likely will cause regrets when you are 5 or 10 years from retirement and you realize you can't save enough money to retire when you want, or in the manner you want.

I realize there are exceptions. But if you could sit down with someone who sees a lot of credit applicatons (such as a mortgage company) you'd find out how many people over abuse credit in order to have material possession. In return they have a very negative balance sheet and virutally no way to dig out of it. And if some sort of financial disaster strikes - like losing a job, serious medical situation etc. they have no way to deal with it.

[bb700092]

And all this talk about investing the money, blah blah... if you're getting 9% returns on any investment right now, you're a financial genius. I've gotten zero percent returns over the past year and thats with emplyer matching 1/2 of my 12% contribution per month..

Congratulations!!!

[07G35S]

thanks... I can take solace in knowing I'm not in a 6 year loan at 10-12% though at least. :)

Let us in on the secret to getting 9% return on your investments in this down economy! I'm sure a lot of people are itching to know your secret.

[bb700092]

The secret is patience. Everyone knows the economy will not stay down like this forever. Now that the economy is down, it is the best time to invest. The economy might remain down for one or two more years when we continue to get 0% or even negative returns. But after that the economy will go up. So in a six year span we will end up making much more than 9% in returns if we start investing in the down economy as it is today.

I always thought this is common sense. I never thought I would have to explain this "secret" to anyone but unfortunately I am having to.

BTW, just curious to know, what interest rate are you paying for your car loan or did you pay everything up front?

[2002MaximaSE]

Holy frickin crap man... 10.44%... GEEZUS. Do you realize how much interest that adds up to over a 72 month loan?

And all this talk about investing the money, blah blah... if you're getting 9% returns on any investment right now, you're a financial genius. I've gotten zero percent returns over the past year and thats with emplyer matching 1/2 of my 12% contribution per month..

This is the wrong time to be thinking in that direction. However, whoever said it depends on the interest rate, very good. I CAN see the merit in a 72 month loan at 0-2% any higher and you're just wasting money to save 100 bucks or so a month.

Exactly, this is why a shorter term or lower interest over a longer period is better. Assuming a 6% sales tax, this car will cost almost $6000 more over the course of the loan.

You may be able to refinance this at a lower rate.

[07G35S]

The secret is patience. Everyone knows the economy will not stay down like this forever. Now that the economy is down, it is the best time to invest. The economy might remain down for one or two more years when we continue to get 0% or even negative returns. But after that the economy will go up. So in a six year span we will end up making much more than 9% in returns if we start investing in the down economy as it is today.

I always thought this is common sense. I never thought I would have to explain this "secret" to anyone but unfortunately I am having to.

BTW, just curious to know, what interest rate are you paying for your car loan or did you pay everything up front?

1. you're right its no secret that its a good time to invest while the market is down, but you can't buy low and be making 9% gains at the same time. That was my point. I'm investing more than ever right now, but not because I'm making an effort, just because my standard contribution happens to be higher now than it was because I make more money than I used to.

2. I'm leasing my Infiniti, and I have 3.9% financing on 48 months for my wife's Grand Cherokee. We can talk about how dumb it is to lease in this thread too if you want, but even in a short term lease, I STILL want another car already... there's no cure for my auto-commitment issues :p

[4themax]

I will pay 4.50% to my credit union for my auto loan..... (could be less, will find out on Monday)

[qstarweb]

1. you're right its no secret that its a good time to invest while the market is down, but you can't buy low and be making 9% gains at the same time. That was my point. I'm investing more than ever right now, but not because I'm making an effort, just because my standard contribution happens to be higher now than it was because I make more money than I used to.

2. I'm leasing my Infiniti, and I have 3.9% financing on 48 months for my wife's Grand Cherokee. We can talk about how dumb it is to lease in this thread too if you want, but even in a short term lease, I STILL want another car already... there's no cure for my auto-commitment issues :p
How long had your G35 you are leasing, and can you turn it in before end of lease or does that incur a big penalty? Any thoughts on what car next might satsify your automotive desires?

I can identify with that, and how others may react. Most I know didn't understand why I was looking to trade my 2007 Maxima for either a G35 or the new Maxima. It was clear to me when I drove the G35 last February, and the 2009 Maxima last week.

I expect the 2009 Maxima to more than satisfy automotive desires for quite some time. I"ll likely drive it until the loan is paid, then maybe look and see what Infiniti offers for the 3rd generation G sedan.

Dean

[07G35S]

I will have 2 years in November, but still one year left. I understand that at 3 months prior to termination IFS will waive final payments if you buy/lease another infiniti.

Every lease has a running buyout amount just like a financed car... usually with a monetary contract violation type penalty as well. For this reason, getting out of a lease is not a wise financial decision. So I'll probably keep it till the lease is up. I am thinking of going with a two year lease next time around though ;)

[2002MaximaSE]

There is always leasetrader.com.

However, you're in a good spot to wait.

One year from now:
1)we'll have more reliability data on the 2009 Maxima
2)the 2010 Maxima diesel will be available.

I'm waiting till 2011 or 2012 to hop on the train. My 2002 is paid for and still serves me well.

[seldomseen]

Just make a 20-30% down payment and finance it for 48mos...60mos loans are also a bad idea.