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The Official Vehicle Financing Thread

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DJ Q
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The Official Vehicle Financing Thread

Postby DJ Q » May 6th, 2013, 11:26 am

Guys,

My intention is to allow everyone to share their experience with regards to interest rates, downpayments and general options when it comes to financing a vehicle.

One thing that I've been noticing recently is that even though a used car may be $30,000 or even $50,000 less than the price of a new one, it's usually easier to be able to pay for the new vehicle. What I've noticed is that interest rates, downpayments and repayment periods heavily favour buying a new vehicle, especially if you do not have an old one to sell for capital.

I've also noticed that the banks are now much easier to get loans than credit unions.
Significantly cheaper too!

Any input?

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Re: The Official Vehicle Financing Thread

Postby Rooki3 » May 6th, 2013, 11:28 am

nice thread

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Re: The Official Vehicle Financing Thread

Postby devrat » May 6th, 2013, 11:45 am

Pay cash for mine!

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 6th, 2013, 11:47 am

For those who don't know, Debt Service Ratio has to do with your ability to pay back the loan.
Most places will not accept a debt service ration over 40%... maybe 45% if you have long standing business with them.

To calculate your debt service ratio, multiply your income (before deductions) by 40%.
This would give you the maximum you will be allowed to pay back on a loan.

For instance, if you make $10,000:

$10,000 * 0.4 = $4,000

The most you will be granted is a monthly repayment of $4,000.
This does not include downpayment or insurance in most cases.

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Re: The Official Vehicle Financing Thread

Postby Dizzy28 » May 6th, 2013, 11:49 am

I shudder at the thought that local banks offering up to seven years to pay for a new vehicle. A person really wants to be in debt for seven years for an asset that at the point of finally owning it outright will be of significantly lower value than what was paid?

Monthly payments looks smaller the longer the loan period but think of how much more interest is earned by the bank on a seven year loan than say 3-4 year one.

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 6th, 2013, 11:56 am

Calculating your repayment:

I've been realising that credit unions catch you with their wonderful 1% interest rate. If you don't know how this is calculated here are two sites that will help:

Annual Percentage Rate (used by banks):
http://www.bankrate.com/calculators/mor ... lator.aspx

Monthly Interset (Used by credit unions):
http://ncalculators.com/interest/monthl ... ulator.htm

What I like about that monthly interest calculator is that it shows the APR as well!

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Re: The Official Vehicle Financing Thread

Postby Rooki3 » May 6th, 2013, 11:56 am

debt service ratio isnt like 30-35%?

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 6th, 2013, 12:04 pm

Dizzy28 wrote:I shudder at the thought that local banks offering up to seven years to pay for a new vehicle. A person really wants to be in debt for seven years for an asset that at the point of finally owning it outright will be of significantly lower value than what was paid?

Monthly payments looks smaller the longer the loan period but think of how much more interest is earned by the bank on a seven year loan than say 3-4 year one.


I like your vision and I have to say it makes a lot of sense! I'd just like to add to it...

First things first, a vehicle is only an asset if it brings money in or is necessary to bring the money in. For example, transport, taxis and rental cars. If you're using it to go to work and back, it's a liability.

Secondly, there's nothing wrong, in my opinion, with paying for a vehicle for 10 years IF you ensure that the outgo spent on the vehicle is continuously replaced by additional income. It's always better to have money on hand than to have all of your cash tied up in liabilities. It's always easier to pay smaller amounts of money, and when you can, increase payments on principle. Hardly anyone charges for early repayment now, and if they do, it's usually something like 3% of the remaining balance or 3 months interest.

If you can comfortably afford to pay off in 3-4yrs, then of course that's the way to go, but I won't suggest deterring someone just because they need to stretch the loan out longer.

All this said, it is scary that we're getting to the point where a basic car is almost as much as a house.

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 6th, 2013, 12:05 pm

Rooki3 wrote:debt service ratio isnt like 30-35%?


Depends on where you go.
Some times during loan sales and special deals (Like N&M's deal on the navara) you getaway with higher ratios.

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Re: The Official Vehicle Financing Thread

Postby mitsu_chick941 » May 6th, 2013, 2:23 pm

Took 3yrs with FCB, interest is very reasonable......making two yrs in june, one more to go, on around 60k appro. 12000 interest, which i find was very good compared to other banks.

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Re: The Official Vehicle Financing Thread

Postby mitsu_chick941 » May 6th, 2013, 2:25 pm

devrat wrote:Pay cash for mine!



aight nah big shot :|

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 6th, 2013, 2:28 pm

Yep. That's 20% total interest over the three year period which works out to about 6.67% apr.

Honestly that's higher than you would have paid at GFC. Their rate is actually 5.5% apr for 48 months.

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Re: The Official Vehicle Financing Thread

Postby Rooki3 » May 6th, 2013, 2:32 pm

i jus wrk out one i had for 4yrs, got 5.97% dais republic bank 2k11

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Re: The Official Vehicle Financing Thread

Postby Mr. Red Sleeper » May 6th, 2013, 2:35 pm

dont own the car for 10 yrs....Take the 7 yr loan get rid of the car in 3-4yrs and keep your payments around the same every month...New car always...if you can pay off cash at any point go brave

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 6th, 2013, 3:05 pm

Mr. Red Sleeper wrote:dont own the car for 10 yrs....Take the 7 yr loan get rid of the car in 3-4yrs and keep your payments around the same every month...New car always...if you can pay off cash at any point go brave


Cycling cars every three years is the best way to ensure you always have a proper working vehicle.
However, it ensures that you're always in debt.

Sometimes there's a trade off

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Re: The Official Vehicle Financing Thread

Postby Mr. Red Sleeper » May 6th, 2013, 4:00 pm

In most cases....Debt is a way of life as far a vehicles go

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Re: The Official Vehicle Financing Thread

Postby Soul Collector » May 6th, 2013, 5:38 pm

Subscribed. Will be checking in to get more useful info. Nice thread OP.

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Re: The Official Vehicle Financing Thread

Postby devrat » May 7th, 2013, 10:33 am

mitsu_chick941 wrote:
devrat wrote:Pay cash for mine!



aight nah big shot :|


Bank don't finance 120y :(

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Re: The Official Vehicle Financing Thread

Postby mitsu_chick941 » May 8th, 2013, 7:30 am

true :lol:

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 8th, 2013, 8:58 am

I've been gathering some info and have been realising that a lot of places are not willing to fully finance "commercial" vehicles, i.e., the Navara, Hilux, BT-50 etc.
And in many cases you're only getting up to four years at a higher interest rate.

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Re: The Official Vehicle Financing Thread

Postby Dizzy28 » May 8th, 2013, 9:30 am

DJ Q wrote:I've been gathering some info and have been realising that a lot of places are not willing to fully finance "commercial" vehicles, i.e., the Navara, Hilux, BT-50 etc.
And in many cases you're only getting up to four years at a higher interest rate.


Seems legit. In similar vein, loans to construct/buy commercial properties carries a higher interest rate than personal loans.

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Re: The Official Vehicle Financing Thread

Postby original_lollybob » May 8th, 2013, 10:22 am

Dont forget with the DSR (debt service ratio), u need to take into account your other debts...

So using the example

10000 * .4 = $4000

minus a credit card -250
minus other loans -500
minus insurance -250

so u may only be able to actually afford $3000

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Re: The Official Vehicle Financing Thread

Postby moti » May 8th, 2013, 1:37 pm

Last vehicle I bought was the wife Tiida, paid cash.
Not taking a car loan ever, bank can't be smarter than me.

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Re: The Official Vehicle Financing Thread

Postby Seeker » May 8th, 2013, 2:15 pm

I recently paid off for mine. Very unwilling to entertain another contract but right now RBL begging

me to come back. I might try FCB.

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 15th, 2013, 9:06 am

original_lollybob wrote:Dont forget with the DSR (debt service ratio), u need to take into account your other debts...

So using the example

10000 * .4 = $4000

minus a credit card -250
minus other loans -500
minus insurance -250

so u may only be able to actually afford $3000


The places that *I* have personally been to do not take other expenses outside of another loan into account.
Credit Unions are the only ones (from MY experience) that ask you all of that.

Here's another big point I've been studying... A lot of places do not insure your loan!
If anything [God forbid] was to happen to the breadwinner in the family, that debt is passing on!

moti wrote:Last vehicle I bought was the wife Tiida, paid cash.
Not taking a car loan ever, bank can't be smarter than me.


Paying "cash" for a vehicle is not necessarily the "smarter" way to go.
Personally, assuming this was a new Tiida from N&M, I'd prefer to keep the $150,000 in the bank for medical or any other emergency and pay the bank a small portion of my income.
However, if your income dictates that affording a vehicle is "no scene" then, yes, I agree with you.

Very difficult for the average person to save up to buy a vehicle.

My eventual goal is to cycle my personal vehicle every three years.
Sell it when it still has good retail value and always have a practically new vehicle.

----------------------------------------------------------------------------------------

On another note:
Scotia does not require you to have an account with them in order to get the loan.
RBC and RBL makes it mandatory.
Scotia also has a cash back option right now so bank fees are at an all time low with them.

I fear FCB honestly. I don't like how the government has a big part to play in that bank.
Can someone share FCB's options?

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Re: The Official Vehicle Financing Thread

Postby Damien » May 15th, 2013, 10:27 am

Good info dj, I like red sleepers idea though

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Re: The Official Vehicle Financing Thread

Postby moti » May 15th, 2013, 10:36 am

DJ Q wrote:
moti wrote:Last vehicle I bought was the wife Tiida, paid cash.
Not taking a car loan ever, bank can't be smarter than me.


Paying "cash" for a vehicle is not necessarily the "smarter" way to go.
Personally, assuming this was a new Tiida from N&M, I'd prefer to keep the $150,000 in the bank for medical or any other emergency and pay the bank a small portion of my income.
However, if your income dictates that affording a vehicle is "no scene" then, yes, I agree with you.

Very difficult for the average person to save up to buy a vehicle.

My eventual goal is to cycle my personal vehicle every three years.
Sell it when it still has good retail value and always have a practically new vehicle.





F/Used bro, why pay double the price for a new vehicle that comes with less options.
Auto wipers, lights & mirrors.
Digital A/C display with touch controls.
Original mats.

And with my discount from Motorist Chag. Original parts are well within my reach :wink:

I hear you on keeping cash in bank, but for most people who have that will use it for security and it would be inaccessible for the loan period.

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Re: The Official Vehicle Financing Thread

Postby Dizzy28 » May 15th, 2013, 10:44 am

DJ Q wrote:
original_lollybob wrote:Dont forget with the DSR (debt service ratio), u need to take into account your other debts...

So using the example

10000 * .4 = $4000

minus a credit card -250
minus other loans -500
minus insurance -250

so u may only be able to actually afford $3000


The places that *I* have personally been to do not take other expenses outside of another loan into account.
Credit Unions are the only ones (from MY experience) that ask you all of that.

Here's another big point I've been studying... A lot of places do not insure your loan!
If anything [God forbid] was to happen to the breadwinner in the family, that debt is passing on!


I fear FCB honestly. I don't like how the government has a big part to play in that bank.
Can someone share FCB's options?


ANSA Merchant Bank offers loan insurance as an option. Currently I pay $21/month..anything happens to me the loan is paid out in full, car goes to my estate.

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Re: The Official Vehicle Financing Thread

Postby DJ Q » May 15th, 2013, 10:52 am

Dizzy28 wrote:
DJ Q wrote:
original_lollybob wrote:Dont forget with the DSR (debt service ratio), u need to take into account your other debts...

So using the example

10000 * .4 = $4000

minus a credit card -250
minus other loans -500
minus insurance -250

so u may only be able to actually afford $3000


The places that *I* have personally been to do not take other expenses outside of another loan into account.
Credit Unions are the only ones (from MY experience) that ask you all of that.

Here's another big point I've been studying... A lot of places do not insure your loan!
If anything [God forbid] was to happen to the breadwinner in the family, that debt is passing on!


I fear FCB honestly. I don't like how the government has a big part to play in that bank.
Can someone share FCB's options?


ANSA Merchant Bank offers loan insurance as an option. Currently I pay $21/month..anything happens to me the loan is paid out in full, car goes to my estate.


Please give more details on this.

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Re: The Official Vehicle Financing Thread

Postby Ted_v2 » May 15th, 2013, 4:09 pm

good stuff.

might be taking a loan to buy a new vehicle just now.

but i dont think i wanna get into debt so early into my life.

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