Financing Risks?

[wtom]

Hi all, I can\'t find it here so it must mean something I read over in Mazda3Forums.com...

Downpayment ... there\'s a risk of losing the entire value of the downpayment if you get in an accident and total the car? Can\'t remember what exactly the meaning was.

I was thinking to downpay $5K... maybe even $10K... what are my drawbacks?

[MajesticBlueNTO]

Originally posted by wtom


Hi all, I can\'t find it here so it must mean something I read over in Mazda3Forums.com...

Downpayment ... there\'s a risk of losing the entire value of the downpayment if you get in an accident and total the car? Can\'t remember what exactly the meaning was.

I was thinking to downpay $5K... maybe even $10K... what are my drawbacks?

for the 1st 2 years, insurance will repay you the full value of the car (MSRP) if it were to get totalled in an accident. it\'s called something to the effect of the \"non-depreciation form\".

cliffs notes: you won\'t lose your downpayment per se. you will have already \"lost\" that money by using it to put down on a depreciating asset.

if you were going to put down 10k, why not put down 5k and invest the other 5k in something that will return greater than the interest rate on the car loan.

[wtom]

Originally posted by MajesticBlueN

for the 1st 2 years, insurance will repay you the full value of the car (MSRP) if it were to get totalled in an accident. it\'s called something to the effect of the \"non-depreciation form\".

cliffs notes: you won\'t lose your downpayment per se. you will have already \"lost\" that money by using it to put down on a depreciating asset.

if you were going to put down 10k, why not put down 5k and invest the other 5k in something that will return greater than the interest rate on the car loan.

Hi MasjesticBlueN, welcome to TM3! Thanks for your reply! Yes that\'s a good idea, however I haven\'t started looking into \"better\" investments such as mutual funds or stocks. I\'ve only recently started putting my money into ING savings and I\'m still uncomfortable to put any of my savings into a locked-in GIC such as the one ING offers.

So don\'t put as much as I can for downpayment if I can invest in something that returns better than 2.9%?

[MajesticBlueNTO]

Originally posted by wtom
Hi MasjesticBlueN, welcome to TM3! Thanks for your reply! Yes that\'s a good idea, however I haven\'t started looking into \"better\" investments such as mutual funds or stocks. I\'ve only recently started putting my money into ING savings and I\'m still uncomfortable to put any of my savings into a locked-in GIC such as the one ING offers.

So don\'t put as much as I can for downpayment if I can invest in something that returns better than 2.9%?

thanks for the welcome! :D

i\'m no whiz at investments, but if i could find something that returned better than 5% over the length of the loan, i\'d do that.

if not, assuming that the length of the loan is 24 months, i\'d put all of the 10k down on it and pay it off as quickly as possible. that way, you\'ll have more money in a short period of time to invest. it all depends on your age and how you want to start \"planning for the future\" - frig i sound old! :hoho

[wtom]

Originally posted by MajesticBlueN


thanks for the welcome! :D

i\'m no whiz at investments, but if i could find something that returned better than 5% over the length of the loan, i\'d do that.

if not, assuming that the length of the loan is 24 months, i\'d put all of the 10k down on it and pay it off as quickly as possible. that way, you\'ll have more money in a short period of time to invest. it all depends on your age and how you want to start \"planning for the future\" - frig i sound old! :hoho

No probs man, it\'s great having new people here who actually post! :)

Interest rates SUCK these days. So many bad things going on in society for our generation. :(

I think the same way about rather paying off the debt vs investing to get more return than the interest fees... thus my theory to put max downpayment I can and pay off the financing ASAP to give the bank the lease amount of interest dollars that they are worthy of. :)