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Why do people think 0% interest is “free money”

Discussion in 'Off-Topic Discussion' started by Shamrock92, Sep 13, 2021.

  1. Sep 14, 2021 at 10:15 AM
    #61
    ColoradoTJ

    ColoradoTJ So there I was.... Staff Member

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    Off to a fantastic start. Keep it up, invest in your future, retire early.
     
  2. Sep 14, 2021 at 10:26 AM
    #62
    The Californian

    The Californian Good Vibes Only

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    To make things even more confusing, most dealerships don't even care about credit scores anymore. When I bought my Tundra they just wanted proof of income, never even checked my score.

    To make things even more confusing, mortgage companies care a lot about credit scores.
     
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  3. Sep 14, 2021 at 10:29 AM
    #63
    The Californian

    The Californian Good Vibes Only

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    To make things even more confusing, I used to have like four credit cards - I paid them all off, and canceled three of them since I only really needed one for emergencies. Then my credit score dropped significantly because I had canceled my oldest credit card. So now I have an American Express that I spend about $10 on per year just to keep it open to keep an old card active.
     
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  4. Sep 14, 2021 at 10:33 AM
    #64
    AzureNightmare

    AzureNightmare ASCM#1 Douchebag formerly known as 50 Buck

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    Length of credit history is a big factor in your score. I have a card with my bank that I'll never close, purely because it is the oldest credit item I have. A bit of internet searching, or credit karma, and you can find things that affect your score and take appropriate actions.
     
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  5. Sep 14, 2021 at 10:38 AM
    #65
    AZBoatHauler

    AZBoatHauler ASCM#3 Desert Dweller

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    Wells Fargo cancelled my credit card (it was my oldest account) for non-use without any warning. It dropped my credit score about 30 points. I pulled all my accounts from them the following week. Fast forward 5 years, they keep mailing me offers for a new credit card.
    :frusty:
     
  6. Sep 14, 2021 at 10:39 AM
    #66
    AzureNightmare

    AzureNightmare ASCM#1 Douchebag formerly known as 50 Buck

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    Yeah, my credit union at least gave a heads up that 3 months of non use would result in cancellation. So I just buy fuel or lunch once a month or so.
     
  7. Sep 14, 2021 at 10:43 AM
    #67
    ersg6

    ersg6 New Member

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    Doesn't it lol. I don't fully agree with Dave Ramsey, he's for people who have absolutely no clue how to invest or handle money. His snowball strategy for debt though is an extremely good strategy that I would recommend to anyone in debt
     
  8. Sep 14, 2021 at 10:48 AM
    #68
    War Machine

    War Machine SSEM # 5 SKDM # 23

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    Not sure how people are paying a higher price with a 0% rate than they would if not taking it. Every time I’ve bought a vehicle, the price was decided before financing was discussed. I don’t even let them run my credit until we’ve settled on a price. I always get pre-approved elsewhere before I even go that far.

    It’s generally (even when a 0% rate wasn’t available) been a case of x% and we give you the rebate, or y% and you don’t get the rebate. (Even that’s negotiable. I got both the low rate and the rebate on our last Sequoia.) You just figure which is the lower total expense and go with that.

    Maybe I’m just missing the point here. The last dealership tried to talk me out of the 0% last time, which to me was a good indication that it was to their benefit for me to take the rebate.
     
  9. Sep 14, 2021 at 10:52 AM
    #69
    War Machine

    War Machine SSEM # 5 SKDM # 23

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    In our younger days we we weren’t smart with credit, and had run up a good bit of bs debt. One that was pretty bad was my Best Buy credit card. It drove my wife crazy. When we finally paid it off, she told me to never touch it again.

    For years afterward I’d go in there and buy a soda on that card on occasion just so she’d get pissed when the bill showed up. One of the few times she’d ever swear.
     
  10. Sep 14, 2021 at 11:02 AM
    #70
    AzureNightmare

    AzureNightmare ASCM#1 Douchebag formerly known as 50 Buck

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    That's classic. :rofl:


    I was dumb with it too. I ran that same card up to nearly 10K dating a girl. Obviously not thinking with the right brain on that one. Still, paid it off while paying off two vehicles. Still never beat my score down too far, and paying it all off bumped it up nicely. A few more loans on vehicles and toys at primo interest rates have happened since then because I've always made sure that I make my payments. Hell, I have 4 loans right now. Apparently I'm dumb and can't resist having a payment for long. :notsure:

    One of those loans is up for sale, two I'm keeping, and the 4th was to help a friend out of a crap situation. The only on I regret is the first one, thus it is being sold. Then I just need to keep paying the others until I get to that magical debt free point again, and then I can do debt all over again to build/buy a house. I'll just be in debt forever I guess.
     
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  11. Sep 14, 2021 at 11:13 AM
    #71
    War Machine

    War Machine SSEM # 5 SKDM # 23

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    I had both that Best Buy card and a Sears card before I even graduated high school. Still don’t know how the hell that happened. Sears was giving away free pocket knives if you filled out the app. I don’t even think I put accurate info on it. Guess it paid off for them in the long run.

    And our credit score was always good. No matter how much debt I ever had, I always paid on time. I’ve never defaulted or been late on a payment in my life. Kind of weird how stupid and responsible I was at the same time.
     
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  12. Sep 14, 2021 at 11:46 AM
    #72
    Shamrock92

    Shamrock92 [OP] New Member

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    Agreed - but I will say this.

    Vehicle ownership IS an investment in that it allows you to earn more than you would not owning one potentially (limited ability to get to jobs that are not otherwise accessible, allow you to take on higher paying jobs, do a job that requires you to carry tools, ect).

    It also SHOULD be approached as an investment - in so much as you spend money wisely - just understanding the lowest cost may not be the best choice.

    Even Tundras depreciate - just at a lower rate relative the the average. Guarantee you fail to take care of a Tundra and neglect maintenance and it will lose value.

    Nothing wrong with buying new - even f you know it will depreciate over time - as long as your prepared to absorb the loss and enjoy owning what you buy.

    Too many people look at things SOLELY from a dollar perspective - happiness is a factor too…problem is you can’t resell your happiness when times get tough and your strapped for cash - that’s why there needs to be BALANCE. Spending 40k with 25k in the bank is not a bad thing - spending 72k with just enough to cover the first payment is - no matter what you hope to earn the month following.
     
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  13. Sep 14, 2021 at 12:00 PM
    #73
    War Machine

    War Machine SSEM # 5 SKDM # 23

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    All good points. I’d say that generally people who are spending beyond their means won’t get a 0% or even a good interest rate though. Those guys tend to be the “payment” shoppers, and will just end up in those 72 - 84 month plans.

    There’s just too big a variance in everyone’s situations to have a catch-all.
     
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  14. Sep 14, 2021 at 12:22 PM
    #74
    jpod

    jpod its Finally here

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    You mean that guy who should be buying a bus pass instead of an expensive truck he can't afford?
     
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  15. Sep 14, 2021 at 12:28 PM
    #75
    RusPro21

    RusPro21 New Member

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    2021 Pro!! Nitto’s 285/70/18, Tyger Blades steps.
    These are the no no’s if you need to finance more than 3 years you cannot afford it. Do not roll a car loan into the next loan and have your payment sky rocket. That’s on stuff I read up on or here about.
     
  16. Sep 14, 2021 at 12:41 PM
    #76
    jpod

    jpod its Finally here

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    If you're rolling your loan into the next loan you bought a Ram, Ford or GM and it didn't last the 84 months... lol.
     
  17. Sep 14, 2021 at 12:52 PM
    #77
    ColoradoTJ

    ColoradoTJ So there I was.... Staff Member

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    Was she worth it? :spending:

     
  18. Sep 14, 2021 at 12:59 PM
    #78
    AzureNightmare

    AzureNightmare ASCM#1 Douchebag formerly known as 50 Buck

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    Nope! And tried to keep my car too! We're all young, dumb, and full of... bad ideas at least once, right?
     
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  19. Sep 14, 2021 at 1:01 PM
    #79
    AzureNightmare

    AzureNightmare ASCM#1 Douchebag formerly known as 50 Buck

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    False. You figure what you can pay off in 3, finance for 5 to get the lower payment, make a bigger payment anyway and pay it off early.
     
  20. Sep 14, 2021 at 1:01 PM
    #80
    ColoradoTJ

    ColoradoTJ So there I was.... Staff Member

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    That’s for damn sure!

    Kinda hoping for a good story here. “So I was dating this girl named Sandra from Canada….”
     
  21. Sep 14, 2021 at 1:06 PM
    #81
    AzureNightmare

    AzureNightmare ASCM#1 Douchebag formerly known as 50 Buck

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    Perhaps I'll elaborate once I'm not juggling work at the same time. :rofl:
     
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  22. Sep 14, 2021 at 1:55 PM
    #82
    TomC843

    TomC843 The wheel weaves as the wheel wills.

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    You mean like my branch manager? Floating payments on house(just refinanced to lower payment not pay off sooner), wife's new SUV, his 19 Z71, and some fancy boat. 3 months ago he was Crying the blues, then Corp replaced mgrs work van with a '21 CM Limited. Managers have the authority to use as personal vehicle as long as no one else drives. So he listed his '19 Z71 and made a killing getting 3k more than he paid for it. So now he no longer has a $600 payment and pocketed about 10k. So he bought a 4k Breitling watch. Because free money. I don't have a Breitling but I have two car titles and 10 years left on 15 year home loan.
     
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  23. Sep 14, 2021 at 2:06 PM
    #83
    TomC843

    TomC843 The wheel weaves as the wheel wills.

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    If I could tell my 21 year old self only one thing it would be to max out your matching 401k at every job. I ignored till my late 20s and now have a healthy 6 figures 20 years later. Matching funds is FREE money only if you match it.
     
  24. Sep 14, 2021 at 2:11 PM
    #84
    AzureNightmare

    AzureNightmare ASCM#1 Douchebag formerly known as 50 Buck

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    Man, if I could go tell myself to buy the fun car first, don't buy a diesel, put 10% minimum into the 401K, and roll it from job to job..... I'd still have done stupid stuff because I knew everything back then! :rofl:
     
  25. Sep 14, 2021 at 2:38 PM
    #85
    TomC843

    TomC843 The wheel weaves as the wheel wills.

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    Not quoting any one post and this is pre covid crazy used car prices!
    Better way(short of buying a 10 year old truck) is what I did. I bought a '16 with 8k miles in 2017. I paid $9500 less than the first guy, I financed it through my credit union at 1.9%. I paid off real early but would have been ahead if I ran in out 5 years.
     
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  26. Sep 14, 2021 at 2:45 PM
    #86
    TomC843

    TomC843 The wheel weaves as the wheel wills.

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    I said one thing. Lol. I lived and learned a lot of dumb stuff in my 20s (bad women, dope, ect) but left it in my 20s not affecting my life now, but 8 more years on the front end of my 401k would sure be nice today.
     
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  27. Sep 14, 2021 at 2:46 PM
    #87
    ohreary

    ohreary Party!

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    0% financing is totally free money. The dealership is covering the interest charges for the loan. The 50k I would have spent on the truck is just sitting in an investment account making money. I actually went with 1.9% financing for my truck. As long as my portfolio makes more than that, which it is, I’m happy. If things take a dive I’ll just pay off the loan with cash.
     
  28. Sep 14, 2021 at 3:09 PM
    #88
    Shamrock92

    Shamrock92 [OP] New Member

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    Exactly - as long as your portfolio BEATS - your money ahead (kind of - remember you still gotta pay taxes on those profits and you still got to pay monthly so either draw down the portfolio every month or come up with more money).

    But what happens when it DOESNT make a dime - it happens. Even a 10% downturn that takes a year to correct could have serious negative implications if you have to keep taking money out to cover payments - your selling low after having bought high.

    Again - there are people who can and should play this game - kinda like there are people who should be in hedge funds. Problem is too many suckers and not enough research leads people with no business into these bad ideas…too many “I did great” stories and people getting greedy.

    And to the “people who can’t afford it - won’t qualify” I disagree - lots of banks willing to float questionable loans these days…forgetting lessons of 2007.

    I disagree that if you can’t pay off in 36/48 months you shouldn’t buy…a lot depends on WHAT you are buying. Cars have a shorter life and quicker depreciation. At the same time - if you own your home (should be first priority to most - but not all) - vehicle is the next logical step to carry a note on. Some people will be perfectly happy with 12 year old cars - that’s fine, but for most - we want something newer and that likely comes with some level of a payment.

    Key is simply go in with 10-20% equity in a vehicle and maintain it. Hard to “lose” money in a vehicle - especially when finance for 48 months if you follow these steps, 60 months is easily doable on most 4x4 full size trucks.

    It’s the 84 month loans and rolling in a ton of extras that get you. Nothing like paying 3 years on a vehicle only to have 48 payments left.

    And yes - primary vehicles are one of the few things I think should be financed along with primary homes. Again, not all debt is equal - owing 60 months on a new truck isn’t always a bad thing - paying 36 months on a cell phone you replace yearly though…different story.
     
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  29. Sep 14, 2021 at 3:37 PM
    #89
    Saltyhero13

    Saltyhero13 Throbbing Member

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    You should have learned how to play guitar...
     
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  30. Sep 14, 2021 at 3:48 PM
    #90
    Saltyhero13

    Saltyhero13 Throbbing Member

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