Vancouver's Real Estate Market

[bcrdukes]

Shut up, Hondaracer. BMW > all

[Hondaracer]

Funny how that wasn’t mentioned during the Vancity AGM last night.. lol

[Hehe]

The length of the financing is irrelevant.

What's important is the interest rate vs. cash discount and the final cost of ownership.

Say the company offers 72mth financing at 0.99% and only offer $1500 cash incentive for cash on a 40k car. And assuming you get a very conservative 2% return on investment through the 6yr period, it'd be stupid to NOT finance it at 72mth because the opportunity cost of paying it outright is greater than the potential saving in interest.

It's all numbers, don't get too caught up on things like "oh... it's long term finance, it must be bad because you pay a lot of interest". Crunch your numbers and see what make the most financial sense.

Without crunching the numbers properly, you can easily fell into the traps. It's same idea of "I can make your car payment to xxx/mth" and you don't care about how they manipulate the numbers.

[bcrdukes]

Wait, are you talking about a car, or real estate? Because how do you get a return on investment on a new car? I hope we're not talking about aircooled Porsches or BMW M cars.

[Harvey Specter]

Side note, you can get 8 year financing deals on exotics in the US.

[Hondaracer]

For the up and coming SoundCloud rapper

[Hehe]

Originally Posted by bcrdukes

Wait, are you talking about a car, or real estate? Because how do you get a return on investment on a new car? I hope we're not talking about aircooled Porsches or BMW M cars.

Nop. Just simple math. Let’s say you have 40k in cash to buy it out with 1500 discount vs finance it for 72mth at low interest rate of 0-1%.

By putting that 40k, or 38.5 after discount into an investment that guarantees 2% or higher return, the financing route works out cheaper because once you add the potential return generated by that investment (as opportunity cost) to cash buying route, the sum or your actual final cost is greater(43k or so) than 40k+finance charges (41.5)

Math is just off my head. Give or take a few hundred I think.

[Gerbs]

With low interest rates, it definitely makes sense to maximize the length of your car loan and invest the cash elsewhere for a better return.

That way you can get a better ROI on a new car by investing the cheaply financed money instead of paying all at once.

[BIC_BAWS]

Originally Posted by Harvey Specter

So a friend who's in the mortgage business told me that Vancity deferred mortgage payments on 7000+ properties. According to him, around 60% have told Vancity they can pay interest only payments next month whilst the remaining 40% can't. The amount of deferrals is a huge number considering the size of Vancity.

He also said the bigger banks have even higher deferrals and predicts lending will get even tougher in the months to come. He was also telling the amount of debt some people are carrying is insane and there's no way he can even get banks to remortgage clients because the ratios are so bad and banks are now factoring in declines in RE even though publicly they keep claiming everything is fine. He's expecting for the first time in a long that we'll start to see foreclosures in the coming months.

Interestingly, a friend in the mortgage brokering business told me this:

It actually makes no sense for banks for foreclose right now, there's a TON of mortgage deferrals, but apparently owners do have approx a year to pay back, so worst case the owners will reduce prices slightly and sell.

There is a huge influx in applications given the July 1 deadline

It's a long shot but some people in my brokerage are speculating that the gov't may end up somewhat decreasing the foreign home buyer restrictions to probe economy

[MarkyMark]

Originally Posted by Gerbs

With low interest rates, it definitely makes sense to maximize the length of your car loan and invest the cash elsewhere for a better return.

That way you can get a better ROI on a new car by investing the cheaply financed money instead of paying all at once.

I think the problem is most people buying a car on long ass terms are doing it to buy a vehicle they otherwise can't afford.

"Hey I can buy this Civic on a 48 month term, or this sick ass Audi on an 84 month term for almost the same price per month!"

And the money they "invest" by not paying cash is invested in a new set of wheels and an exhaust.

[bcrdukes]

Originally Posted by Hehe

Nop. Just simple math. Let’s say you have 40k in cash to buy it out with 1500 discount vs finance it for 72mth at low interest rate of 0-1%.

By putting that 40k, or 38.5 after discount into an investment that guarantees 2% or higher return, the financing route works out cheaper because once you add the potential return generated by that investment (as opportunity cost) to cash buying route, the sum or your actual final cost is greater(43k or so) than 40k+finance charges (41.5)

Math is just off my head. Give or take a few hundred I think.

Originally Posted by Gerbs

With low interest rates, it definitely makes sense to maximize the length of your car loan and invest the cash elsewhere for a better return.

That way you can get a better ROI on a new car by investing the cheaply financed money instead of paying all at once.

Originally Posted by MarkyMark

I think the problem is most people buying a car on long ass terms are doing it to buy a vehicle they otherwise can't afford.

"Hey I can buy this Civic on a 48 month term, or this sick ass Audi on an 84 month term for almost the same price per month!"

And the money they "invest" by not paying cash is invested in a new set of wheels and an exhaust.

I misunderstood what you meant by the return on investment. Jokes on me.

Any how, yes, it makes sense, if:

1. You don't drive the car
2. Your car is not subject to depreciation / repairs / catastrophic failure
3. You are in a position without the requirement to liquidate your cash

Some people get sucked into dragging out the lease or financing of a vehicle only to end up with negative equity. They owe more on the car than it is actually worth, so you have to be careful about that. To MarkyMark's point, as car enthusiasts (or what exists of us here on the forum) that we don't mod our cars. EvoFire has been a good boy about it.

[Gerbs]

Originally Posted by MarkyMark

I think the problem is most people buying a car on long ass terms are doing it to buy a vehicle they otherwise can't afford.

"Hey I can buy this Civic on a 48 month term, or this sick ass Audi on an 84 month term for almost the same price per month!"

And the money they "invest" by not paying cash is invested in a new set of wheels and an exhaust.

Gotta chase that clout though.

How are people going to know you're doing well for yourself if you aren't rolling in a brand new FWD Audi A3 on an 84-month term @ 12% sub-prime loan. 🤡

[!LittleDragon]

Originally Posted by bcrdukes

Some people get sucked into dragging out the lease or financing of a vehicle only to end up with negative equity. They owe more on the car than it is actually worth, so you have to be careful about that. To MarkyMark's point, as car enthusiasts (or what exists of us here on the forum) that we don't mod our cars. EvoFire has been a good boy about it.

You're always going to be underwater on car financing the first couple of years because that's when most of the depreciation happens. Eventually, what you owe will be roughly equal to what it's worth. That's usually around the 5 year mark and that's when I trade it in and start all over.

[unit]

man, do you always want a car payment for the rest of your life? i bought a new car last year and i plan to keep it for 10 years easily.

[quasi]

Originally Posted by unit

man, do you always want a car payment for the rest of your life? i bought a new car last year and i plan to keep it for 10 years easily.

I kind of agree, vehicles now a days tend to last me a while mind you I typically only put 10K on them a year and cut that by 35%-40% when I have a motorcycle as well.


My buddy up in Grand Prairie has a 2005 truck with less than 20K on it, he has a work truck that he drives most the time. lol

[!LittleDragon]

It's paid for with dividends. Haven't made a car payment with work income in 10 years. Free car, can't complain... lol

[bcrdukes]

That's a bit of a loose definition of free, but, okay.

[Gerbs]

I usually see rental income, dividend income, work income as all the same kind of income. Spending shouldn't change based off of how the income was generated.

[donk.]

needed to double check the forum title 3 times reading through these comments
still inside a new car discussion thread

[bcrdukes]

Originally Posted by Gerbs

I usually see rental income, dividend income, work income as all the same kind of income. Spending shouldn't change based off of how the income was generated.

Not disagreeing, but the general definition of free is when you do not spend money on something.

[Hehe]

Originally Posted by unit

man, do you always want a car payment for the rest of your life? i bought a new car last year and i plan to keep it for 10 years easily.

There are cases where always leasing/financing cars can make more financial sense that some people might not take into account.

Some cars, even relatively common brands can have crazy maintenance fees because their parts are just crazy expensive/labor or interval-intensive.

It's generally a good idea (when you are comparing different model of cars) to ask for the full cost breakdown according to the service schedule.

I've heard some horror stories that each maintenance (once passing 100k) are always in high 3, and often 4figures territory for basic luxury cars if one follows the stealership service schedule. Which get to a point I think it makes more sense to buy a new car that needs nothing than spending that amount every 6mth with no guarantee that it isn't going to break down at some point.

In the end, don't let the "usual idea" control your decisions when it comes to finance, be it buying a car, a house or whatever.

Crunch your numbers and see how they fit into your situations. Always add in costs like downtime and opportunity cost into the factor. Depending on one's situation... the usual idea of driving a car down to dust might not be the best financially sound advise everyone can take on.

[6793026]

I did the math: after 5 yrs of finance. I'm payment free.
Even if my payment is 700 a month, that's ~7k a yr.

after 5 yr, i do not have to pay a dime....If i keep it for 10 yrs, and i keep saving / banking the payment, there is no way i'm fixing my car in yr 6,7,8,9,10 at 7k per year.

With cars nowadays 10 yr old car are fine in technology.. i don't need to crazy features.
i only need bluetooth and GPS (but meh, apple / google can plug in now) so i decided to finance.

[Traum]

Just received the double whammy of property tax + home insurance renewal notice today.

Damn...

[bcrdukes]

I get my property tax, home/car insurance, and income tax all at the same time late March every year.

[EvoFire]

Shouldn't you have saved up/planned for property taxes/car insurance/home insurance? It's not something that's a surprise. Sure insurance goes up but everyone knew for the last 6 months that insurance is going up.

Our property taxes has gone up every year. Ditto home insurance. Car insurance has been a mixed bag because I've had a few different cars in the last few years.