11/29/2010

Financing Help?

So after much deliberation and budget crunching, we decided that while we're not going to try to do it all (at the same time) - we do still need to replace my car.  So, we chose the Ford Escape as the best option for us.  If anything gets put on the back burner - it will be a new home.

I'll get into the details of exactly which vehicle it is, but right now - I need your help making a decision on the financing options we were given.

I know that the 60 and 72 month options below are accurate, but I didn't actually get a monthly payment for the 80 month term - so I did a bit of guess work b/c I actually couldn't figure out how the dealership got the monthly payment amounts that they did.


We're going to do our darnedest to negotiate a better interest rate, and to make bi-weekly payments - but given the information above - what would you do?

If anyone can help with making sure my 80 month number is accurate, that would be much appreciated

Thank you!
~ Jessie
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11 comments:

  1. I say 60 months only because the sooner you are done with the payment the better.

    Have you considered buying a 3-year used instead? (Sorry if you've gone through that option already, just curious)

    It seems to be a lot cheaper if you'd consider used rather than new? Esp after 3 years, seeing as the depreciation on what you're buying new takes a hit in the first 3 years

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  2. Hi Jessie, I did the math and your payment for 80 months would be $402.74 per month. I would lean toward the 60 month option. Have you checked out leasing a vehicle?

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  3. So, I just ran your amount financed for the 80 month option on the Credit Union loan calculator for 60 months. If you add just $100/month, making your payment $509, you could save $2200 over the term of the loan. If the loan is truly open, and you are disciplined, that could be the way to go. Remember that the earlier in the loan you make extra payments, the more interest you save. I read that all the dealer prep fees are not negotiable, but I would still try.

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  4. Thank you!

    I'm hearing that we should go with the 60 month term if we won't be diligent enough to pay extra or the 80 month term if we are diligent enough to make extra payments.

    Any other feedback?

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  5. Hi Jessie - having just finished my loan with Ford on my Ford focus (new in 2005), I would go with the 60 month. Here's the thing, it may be a little more of a payment, but with a better interest rate. If you make extra payments on your loan, you either have to call after each payment to have them adjust it correctly, or send a separate check with a letter detailing what you want done with the extra payment. I managed to make extra payments ($200) each month for the last to years and got out of the loan a year early. I also saved a pile of interest because of this. It was a bit of a pain calling them each time, but worth it in the end.

    I hope you enjoy your Escape. I love my Focus - had it for nearly 6 years, am at 180,000 and climbing, and only had to replace spark plugs, brakes and tires on her. Oil change done every 5,000 km and the maintenance packages kept up with the entire time. Brakes because i did one heck of a lot of stop and go highway driving so I was harder on them than city driving - with the speed and all.

    Best of luck with your decision!!

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  6. I bought a new car just over a year ago and went with the payment option that offered the best interest rate (luckily mine was 0%). So I would suggest going with the 60 month. The $540/month is what I currently pay too ($270 bi-weekly) and even with just my salary, is more than manageable!

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  7. I'm with the first commenter who suggested buying a used 3 yr old vehicle that is likely coming off lease. That's what we did in May of this year... we bought a 2007 Mazda 5 with 90,000 km and the remainder of the factory waranty (to 100,000 km) for just udner $10,000 - final price after taxes was $11,300. It's really worth investigating your "used" options before jumping into a 5 yr loan if you haven't already done so.

    If you are decided about buying new, I'd go with the 60 month plan - get it paid off and out of your hair as fast as possible!

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  8. I would go with 60 months as well. The lower the interest rate the better. I have a 60 month loan and am hoping to pay it off in 48 months at the most.
    I posted on your last post that I bought 2010 Escape in the summer. I'm surprised that your cost is that high. It must be a nicer model than mine. ;) There is no delivery allowance discount available now? Are you getting the Ford credit discount? Do they offer the Costco discount there?
    Whatever way you go, you will enjoy the vehicle. My 2001 Focus served me well for 9 years and nearly 250,000 kms. I hardly had any issues with it.
    Enjoy your ride!

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  9. Are you able to make extra payments on the 80 month? Because yeah, the rate is much higher but overall the total cost is almost the same as the 60.

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  10. I'm new here... YOU should buy a USED Escape. They lose value like a ROCK. I find 07-08 ESCAPES with 30K miles for under $17K.

    You will thank me later, when you don't have a $500 a month payment.

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  11. I'm going to have to agree with those suggesting a newer used car. You don't *need* a new car and to be honest, it seems like you can't really afford a new car.
    Buy used and continue to work towards your savings goals at a better rate.

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