[JK Gator]

I picked up my Unlimited Rubi yesterday and rather than hand them a check, I took Chrysler up on their 0% 36 month financing. My cash can stay invested earning 5% and I'll send them payments. I never would have known about this if I didn't read it here.
Thanks!

Now I can justify those upgrades!

[rirrgang]

Only problem with no down payment is that you'll soon be near upside down on the JK. It's not an issue if yo don't plan to sell. The 0% deal is hard to beat no matter how much or little you put down though.

[XpensiveWino]

He's upside down the second he drove it off the lot.
Its now a used vehicle. Hope you have gap insurance.

[Aaron'sjeep]

Upside down? What are you guys talking about. I'm planning on paying for mien the same way rather than take money out of my savings and retirement. Always better to use OPM aka Others People's Money.

And what is gap insurance?

[JeepMan1975]

Upside means he will owe more on the vehicle than what it's worth. As far as gap insurance is concerned:

http://personalinsure.about.com/od/policybasics/a/aa021405a_2.htm

[RAZORBILL]

It doesn't matter if you pay cash or finance, you are always going to be upside down. If you paid cash you would still have more into it than it's worth. The OP has smartly used someone elses money to purchase his Rubi.

To the OP, congrats on your Rubi and the free loan!!

Al

[JK Gator]

Exactly ursandal. If you don't want to be upside down don't buy a new vehicle! As for gap insurance, thats only necessary if you didn't have the cash to meet your obligation. Some of you need to go back to Finance101.

[Slenny]

I wish they had that deal when I bought my Jeep. I would have took that in a heart beat.

[UTAH]

Congratulations, JK Gator. I know you'll enjoy that Ruby.

Bill

[Fishbulb]

Originally Posted by Aaron'sjeep

Upside down? What are you guys talking about. I'm planning on paying for mien the same way rather than take money out of my savings and retirement. Always better to use OPM aka Others People's Money.

And what is gap insurance?

Think of it this way Aaron.

Say you drive off the lot with your new JK you just bought for $25K. You hit some black ice and spin out of control and wreck the rig. Insurance company declares it a total loss. But since the vehicle is now used they calculate the vehicle value at $21K instead of the $25 you just signed the loan for and haven't even yet made the first payment on. They give you a check for the $21K but this only allows you to pay off the loan $4K short of the payoff value.

You are still obligated and bound to pay the additional $4K even though you have no vehicle now.

No big deal if you are financially stable enough to take a hit like that but for some it may simply be financially devestating.

If you have a good gap insurance policy this remainder $4K is payed and your total loan debt is thus satisfied. You are 'free and clear' of 100% of the debt and then can pursue another vehicle purchase as if nothing had happened.

[Aaron'sjeep]

Thanks for the explanation on GAP insurance guys. I'll be talking to my State Farm rep this week to get the insurance in place so I'll make sure that I have replacement cost coverage.

[Fishbulb]

No problem.

It may even make sense for some to by gap insurance if they have sunk a substantial amount into the vehicle at the time of purchase. Even if the the total loan could be payed off the purchaser would still loose that $4K if the vehicle went DOA right off the lot.

[RAZORBILL]

I think many loans just come with gap now. I have 2 car loans, Chase & GMAC, and both come with gap written in the contract. When I have purchased it in the past it was only about $100 for the life of the loan.

AL

[jca1]

Congrats on the new Rubi.

This thread brings up a good point to consider I think, being upside down in a new vehicle. There is no such thing as not being upside down in a new vehicle no matter how you pay for it. Lets say you finance it 100%, you leave the lot upside down and will stay upside down until it's payed off and will still be upside down after that because the vehicle will never be worth what you payed for it again, plus on top of that you will have another $3000 or so extra you payed in interest on the loan, unless you get the 0% interest loan which is rare.

If you pay cash for a new vehicle which some people are able to do, you'll still be upside down. Once the vehicle is titled it will never again be worth what you just paid for it, unless you got a tremendous deal, and then still it will soon be upside down. You will never get your money back, and paying cash only makes sense if the interest rate on a proposed loan to buy the car is a lot higher than what you are earning on your cash. In that case it's cheaper to borrow from yourself and pay it back to yourself at your current interest rate. I.E. the bank wants 8% interest but you earn 4% interest on your cash, then you should use your cash and pay the payments back to yourself at 4% interest.

Then maybe if by chance you own this vehicle well into it's antique years and the values start to really go up, you could sell it and come out on top. We see this now with the old Scrambler's, Bronco's, etc. These days I think are over though, cars have gotten way to expensive to do this anymore I think, until you look at the more exotic vehicles. Either way, one should realize that buying a new car is in essence throwing away money before you buy it, or you will never be at ease over the 15-25% loss you see every year.

[banks]

Great job Gator. Except one thing -- don't forget you have to pay taxes on the interest (roughly a third). Figure about $800.

Don't you love Uncle Sam?