Teach me about interest rates and payments

After my lease I plan to do this. I'm on a 6 year plan (3 lease+3 keep) if not less if life goes well.

 

Kind of hard to verify your suspicion without knowing the details of your other loans.

Regarding the suggestions of what you should have done... While it can seem more financially beneficial to take a loan and invest what you have in savings versus paying cash and rebuilding/investing your savings, the issue is that investing while you're paying off your loan is not risk free. The stock market might crash, you might lose your job, we might have a recession, we start a thermonuclear war with someone, and you'd still have to pay off that loan (I assume we'll win that thermonuclear war). I think when considering the amount of risk and life's curveballs, it is more sound to pay cash (or get the lowest loan you can) if you have it rather than take on substantial debt with the hope you'll make it all back and then some. Investing isn't something you likely just good at, it is a learned skill.

It's easy for people to say "just invest it!" without having to actually suggest successful investments. It's also seems kind of silly to suggest someone start investing knowing that they are confused about the terms of their own car loan. If they can't get a handle on the terms of the loan they signed, how are they supposed to get a handle on successful investing in time to make this decision about a new vehicle?

 

Just bought 17 DCSB TRD Sport at 0.9% at TFS. Offered in Ohio right now.

I bought last Tacoma at 0.0% for 36 months.
Both below invoice $.

As a IT guy that works for a large bank, I would always tell you to shop around , the dealer (if good) can get you the best Rate, He is selling "Paper"
or indirect loans for many institutions at their store inc. Toyota Financial. In 40 years I've never gotten better rate directly from a bank that a dealer won't beat to keep the finance sale in house. They usually get 1.5 to 2.5 % better rate than you at same institution. (They do more loans than you) You might get really lucky and their inventory or what is referred to as dealer floor plan is financed with same bank they are lending money with. (you didn't think they bought all those cars with their money did you ?)

Let's face it this is one of 3 ways they make money and/or profit , Sale of vehicle, Finance of Vehicle, Service costs of Vehicle, and if really lucky, resale of trade vehicle as a bonus.

 

And like I said, that is a manufacturer subsidized rate. Not everyone in the US gets it. I just checked, based on your sig and the rates you described are being offered by TFS for the Tacoma and RAV4. Where I live in CT, there are no special rates for Tacoma's. As a result you pay the "real" interest rate, not a rate a subsided by the manufacturer. The real new car rate is 1-3% higher.

 

Yeah, they are always really dissapointed when you pay cash.

 

hey Bob, what dealer and CU? I am in the area as well and have BECU with 800+ credit. Did you tell them to beat it by .5% or that was their offer? Thanks!

 

Taking money out of a Roth IRA tax free? Penalty free?

This is doesn't make sense. Unless you are retired?

 

I got 2.49% for 48 months from my bank. (That includes a 0.5% promotion off their 2.99% usual rate by using their car buying service.)

 

http://www.dbcf.state.ms.us/docs/78s.pdf

Not applicable in all states. Its called RULE OF 78 and reflects how you payments are applied

 

I refinanced from 3.0% APR to 1.47% at my local CU.

OP is getting the reach-around by the finance department.

 

I hear ya on that. I have a 1.74% interest rate. Doesn't make much sense for me to pay more towards it. That's a cheap loan rate and you can use that extra money to make more by investing in the market.

 

If you've got decent investment options you can put the saved cash to work and come out ahead.

 

1.74% from my credit union, 66 months. Use my trade ins as down payment to keep my borrowed amount as low as possible.. Not going to pay extra monthly, I can put the cash to better use elsewhere and come out ahead (usually- because, life lol). Shop rates. Over 3% with a 740+ is not very good at all, unless you are just beginning to building your credit.

 

There are a hundred different ways to say it, but at times it makes more sense to finance than to pay cash. It's a cost-of-capital calculation that has to be considered in the exigent circumstances. If I had more cash than (financial) sense, I would always pay cash, because it's less hassle in the long run. But I have to weigh the cost of whose cash I'm using.

But everyone has to make their own decision based on their own calculation of the costs involved. And sometimes it's more than just a financial calculation -- there are emotional / psychological factors involved. To each his/her own.

 

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Good advice here

 

You can pull principal back out of a Roth without the penalty. You will pay a penalty plus tax on anything beyond the principal you remove. Thinking being you already paid tax on the principal. That being said I'd only do that as a last resort, because you can still only put 5,500 a year in. That'll stunt the growth.

 

Agree with JeffreyB if you're under 59 1/2 or still making contributions to your retirement funds, whether a traditional IRA, a Roth IRA, or whatever. I'm 67, 6 years retired, and no longer contributing to either my Roth or traditional IRA. And while I take most of my IRA income from my traditional IRA and allow the Roth to grow with its tax-free earnings, occasionally I'll make a Roth withdrawal for some discretionary expense if my interest is in not incurring tax on the withdrawal. Just aim to keep all withdrawals in the 4 - 5% range or under.

In this instance, I'm doing a little "profit taking" and using it to pay down a liability. Not saying it's the right way or the only way, just my way.

 

In the Houston area, I got 1.915% from Toyota finance in July 2016.
Same desire, same truck state.
It all depends on your credit history and what competing lenders are out there.
I went in with a guaranteed 1.99% from my credit union and Toyota beat it so they could get the interest payments.

 

The first line says I'm DFW, not Houston

 

Here's my old take on buying car. Its going depreciate... put nothing down and put in your home or mutual fund...Just something that will go up in value.

After a year of payments on my truck I could break even or make money depending on the dealer. So drop some on a good investment. Now on my KIA. Well, we don't discuss that.

On the loan. Hit up your credit union, or bank. Prequalify and walk in with a check in hand. USAA hit me up with 2.3% for 6 years. Wrestle those dealer bastards to the ground from KBB invoice (lowest cost). Sign the check and roll out.

Laugh at them every 5000 miles at your free service check.