0% Financing
 

Can you guys school me on the pros/cons of 0% financing on a car?
I'm looking at a Mazda3 and they're offering 0% from 1 to 6 years.

The advertised cash discount is $1k while the finance discount is $750, so it doesn't seem like there's any major advantage to go in and pay in full, unless they have some massive cash discount that's not advertised.
I have enough in my TFSA to buy the car outright, but I'm earning around a 10% return, so it doesn't make sense to me to pull money out if the rate is 0%.

Is there any reason not to finance at 0% and take the full 6 years? I tend to keep my cars for a long time. I'd imagine I'd keep it for >10 years.

Some ppl don't like seeing monthly payments, either than that. Not really. It's "free" money.

In your situation I would just take the 0% financing.

Or, since you have cash. Buy a used car (3-5 years old) and save significantly on depreciation. But, you'll be losing out on some of your 10% return that you would get otherwise in your TFSA.

Keep your money in TFSA as that's basically free money. Finance the car at which ever term you're comfortable with. I personally would prefer to pay the vehicle off as soon as possible instead of going to a max term of 6 years but that's just me. I'd take 0% financing any day over spending my TFSA's.

when I got my Hyundai back in 2011, it was 0% financing... if you dont mind the long term, its pretty good.. my term was 7 years.. it will be done in June 2018!!!!!

get a car with the most features, after 3-4 years will you wish you want it.. I got the trim just above basic and it was alright.. should have gotta the sunroof and everything..

Just make sure you have it written in that there’s no penalty for paying off in full at any time. So if you got the 6 years but decided after 3 to just pay it, you don’t get dinged

^^ I've done that twice with mazda - unless something has changed there's no penalty for early payoff. might have been a small doc fee

There’s no small doc free for early pay out except on leasing.

0% by all means take it. Use the liquid cash else where and save it for a rainy day.

So it looks like paying out in cash would give me a $1500 discount.
$1000 rebate and $500 loyalty discount.

Financing would only yield $750 rebate. Still seems better to finance. Other than just having to deal with longer payments, there's no cons with going as the longest term available at 0%?

Not at all.


Don’t feel comfortable? Pay it out next year.

In the past, I have seen some bs 0% financing advertisment to state (in small print, no less) that there will still be a 1% admin fee or some utter bullshxt when the 0% financing deal is taken. Read the fine print carefully, and make sure it is really 0% before you commit.

When i bought my wifes car they would not negotiate the price with 0% financing but if we paid in full we would get $4,000 off. So we did that instead.

Why would you want to pay off a 0% loan early? You can literally earn 0.00001% interest and you'll still be better off. :okay:

Say you are trying to get a mortgage or loan, having payments elsewhere looks bad, although it sounds stupid, having a smaller cash contingency and no other monthly payments is preferential to most institutions.

Alright, at 0% financing for the full 6 years, would you guys even put a down payment? Yes the monthly payments would be higher, but not to a point where it would make a significant impact to me.

If your reason for doing the 0% and financing is to keep investing the other money then absolutely not, you want to put as much into financing as possible, and delay the payments as late as possible.

Take the 0%.... I always finance my new cars. Think of it this way... if it's a $30k car and you buy it outright, you'll be out $30k but you gain a car...

If you finance it and you say you're getting a 10% return in your TFSA, you can use the gains to pay for the car. You keep your $30k and you gain a car... the car is damn near free.

That's what I do in theory but in practice, it's not realistic to withdraw from my investment accounts every month for car payments so I leave the money in there and pay for it with work income.

Just make sure you really want the car... I financed a 2011 Sonata Turbo for 84 months at 0%. Made it just past 5 years before I got bored of the car and had enough of FWD. Traded it in for a Genesis 5.0 at 1.9% instead.

The bigger question is please enlighten us how you get 10% consistent return on your Tfsa

Several dividend funds pay that. PGP, PHK, PFL, PFN, RCS, NCZ, NCV, IEP.

Most of these pay monthly so if you reinvest the returns monthly and compound it, you'll actually end up with more than 10% at the end of the year. Beware, high yield = high risk but over the long term it doesn't really matter. You'll end up with a good average price if you buy regularly. My TFSA is approaching $80k, don't plan to touch it for another 15-20 years.

my TFSA is invested in the stock market, I've had 10+% years, but it's far from consistent.

Trump is really fucking me right now...

You avoid negative equity by paying in full, but time value of money favours 0% financing IF the difference is properly invested.

If truly it is only going to cost you $250 to get 0% financing then that is an easy decision. It's not actually 0% of course, but certainly close enough that it's a no brainer.

You could literally buy a 5-year GIC and earn a higher return on that money in your TFSA with a guaranteed outcome, and if you are comfortable in the market, you will do even better (statistically... actual results may vary).

There is no possible scenario where it makes sense to take cash from your TFSA assuming you can afford the monthly payment.

-Mark

you earned 10% on the tfsa before, but how do you know it will continue to rise at that rate?

This thread is not giving OP the advice he needs to hear, just the advice he wants to hear. What OP really needs to do is take that $30k and wander over to the Parq Casino, find a baccarat table with panda and start betting heavy on panda. Let all his panda dreams come true! The he will have a free Mazda and his TSFA.

I want 0% financing on the new Nissan Leaf and 370Z NISMO... but they don't give it to me :okay: :tears: