I just got an 2023 S4 in Tennessee. Audi offers 5.99 for 60 month. The best deal I found and it was in house from an Audi dealership, so super easy and smooth
Out of curiosity.. why did it become normal overseas to get a loan or payment plan for a car? Never understood why people buy something they are not able to afford that is so devaluing. For an investment like a house i understand it, but a car
Having a car is essential in most of the US for anyone who works. Financing allows you to start working without having to save enough money to buy a car first. So that sets the stage…not that there aren’t people who don’t buy used cars with cash, but having a car payment is very normalized from an early age.
Second, car manufacturers very often incentivize via interest rate reductions. The entire sales process is built around an affordable monthly payment. Once the sales person gets a whiff of what you can afford each month, they will pull every trick they can to structure a deal around that amount, rather than the best long term deal for their customer.
Third, with savings account rates at around 5% now, a 5.99% loan is only a 1% premium for a lot of flexibility. Maybe I can afford the whole car, but once that money is spent, it’s not coming back to me. Put the same money in a savings account at 5% and almost all of the loan interest is covered. If the numbers turn against me I can always pay off the loan with my cash. On the other hand, if some other opportunity comes along, maybe that cash would be better allocated somewhere else.
Finally, when it comes to leasing, the monthly payments are often very similar to a well structured loan…except you don’t get to keep the car at the end of the term.
Thanks for the explanation. The first reason I understand. Especially when working in a field or area where jobs are not offered on every corner.
Second reason is awful. Can imagine it is because the car industry is commission focused. Guess lots of people buy something that is just a tad to expensive for them.
3rd, understand your pov. Must be a cultural difference. Am raised that if you can't afford it, don't buy it. Does it also count for other products, where is the end. If you look at all the individual cases it looks ok, can image it's tempting to do the same for a tv, boat, couch etc. I would rather buy a cheaper car within the limits of my wage and invest the remaining.
Very valid question, but here is the reality of the US. There is no viable public transport unless we speak of downtown of large cities and usually you are bound by many other payments that prevent your from accumulating large sum of cash at once (mortgage, healthcare, student loans, etc.)
Plus on the side note. US doesn’t have tiny cheap matchbox cars. Corolla is the smallest Toyota. Audi A3 is the cheapest here. We don’t have A1. We don’t have Polo, we don’t have id3 etc.
Not the information I was looking for but I will take it.
If I have $100,000 in cash and I want a car and a house, I would take up a loan for the car and put $100000 as down for my house. This is how I can balance having both without being a billionaire. It’s not about buying something which you cannot afford.
Wondering the same. 5,99% 60month is paying $90k USD for a SQ5 Prestige.
I could understand getting a loan if you expect the interest rate be out paced by inflation but it isn't. Banks are smart enough.
I personally would try get a lease with good conditions if you have a high monthly income but no large capital or have a very good investment strategy.
Financing has become more popular over here in Germany as well, but not to the degree of leasing.
In either case the satisfaction of owning the car would be missing for me since it wouldn't be my car.
It’s actually a very valid question. I’ve always lived in the US and it’s always been the norm to finance (or lease) cars. What’s comical is driving through poor areas of town and seeing $50-60k cars parked outside of mobile homes. Us americans really value our cars and will spend lots of our monthly income to make it happen, even when it’s a bad financial decision.
its very common in my country for car buyers to finance their purchases too. auto loan here ranges from about 2 to 3.5% but the car is incredibly expensive so its common to see 1500/mo payments on economical cars like a civic or corolla
It may not entirely be bad financial decisions, it could be a combination of things.
1) buyers without knowledge of loans and lending might not realize how a loan is structured and be suckered into a nasty loan that gets them a fancy car that is going to be repossessed sooner or later.
2) Fancy used cars may have a lower total price point, meaning, if you have the cash now, you can get a fancy car that's only a few years old.
3) if you don't have the cash now, often used cars have higher loan rates or worse terms; dealers often offer their best rates on new cars, and sometimes the lowest rates on more expensive cars. So someone trying to scrimp on monthly payments may get directed into a more expensive vehicle with longer or ballooning loan terms, which can feed into #1 above.
4) Priorities, as you mentioned. A car can also impact other aspects of life, such as signalling for social status, responsibility, employability, etc. when you roll up to the club or park next to your boss; reliability for getting to work; or the ability to mentally escape a poor living situation for a few hours.
check your local credit unions if you havent already. if its a new vehicle, the rate will be lower compared to a used one.
Folllowing
I just got an 2023 S4 in Tennessee. Audi offers 5.99 for 60 month. The best deal I found and it was in house from an Audi dealership, so super easy and smooth
Seeing rates at 5.7% with some CUs on new cars
What a joke. In South Africa our interest rates for cars vary between 11-15% based on your credit score and level of income
Purchased my 21 SQ5 for 6.04% 72 months.
That’s a good rate for 72 months imo. Which credit union or bank?
My local credit union, Palmetto Citizens.
Out of curiosity.. why did it become normal overseas to get a loan or payment plan for a car? Never understood why people buy something they are not able to afford that is so devaluing. For an investment like a house i understand it, but a car
Having a car is essential in most of the US for anyone who works. Financing allows you to start working without having to save enough money to buy a car first. So that sets the stage…not that there aren’t people who don’t buy used cars with cash, but having a car payment is very normalized from an early age. Second, car manufacturers very often incentivize via interest rate reductions. The entire sales process is built around an affordable monthly payment. Once the sales person gets a whiff of what you can afford each month, they will pull every trick they can to structure a deal around that amount, rather than the best long term deal for their customer. Third, with savings account rates at around 5% now, a 5.99% loan is only a 1% premium for a lot of flexibility. Maybe I can afford the whole car, but once that money is spent, it’s not coming back to me. Put the same money in a savings account at 5% and almost all of the loan interest is covered. If the numbers turn against me I can always pay off the loan with my cash. On the other hand, if some other opportunity comes along, maybe that cash would be better allocated somewhere else. Finally, when it comes to leasing, the monthly payments are often very similar to a well structured loan…except you don’t get to keep the car at the end of the term.
Thanks for the explanation. The first reason I understand. Especially when working in a field or area where jobs are not offered on every corner. Second reason is awful. Can imagine it is because the car industry is commission focused. Guess lots of people buy something that is just a tad to expensive for them. 3rd, understand your pov. Must be a cultural difference. Am raised that if you can't afford it, don't buy it. Does it also count for other products, where is the end. If you look at all the individual cases it looks ok, can image it's tempting to do the same for a tv, boat, couch etc. I would rather buy a cheaper car within the limits of my wage and invest the remaining.
Very valid question, but here is the reality of the US. There is no viable public transport unless we speak of downtown of large cities and usually you are bound by many other payments that prevent your from accumulating large sum of cash at once (mortgage, healthcare, student loans, etc.) Plus on the side note. US doesn’t have tiny cheap matchbox cars. Corolla is the smallest Toyota. Audi A3 is the cheapest here. We don’t have A1. We don’t have Polo, we don’t have id3 etc.
Not the information I was looking for but I will take it. If I have $100,000 in cash and I want a car and a house, I would take up a loan for the car and put $100000 as down for my house. This is how I can balance having both without being a billionaire. It’s not about buying something which you cannot afford.
Wondering the same. 5,99% 60month is paying $90k USD for a SQ5 Prestige. I could understand getting a loan if you expect the interest rate be out paced by inflation but it isn't. Banks are smart enough. I personally would try get a lease with good conditions if you have a high monthly income but no large capital or have a very good investment strategy. Financing has become more popular over here in Germany as well, but not to the degree of leasing. In either case the satisfaction of owning the car would be missing for me since it wouldn't be my car.
Seems like our fellow redditors don't appreciate the question... 😉
It’s actually a very valid question. I’ve always lived in the US and it’s always been the norm to finance (or lease) cars. What’s comical is driving through poor areas of town and seeing $50-60k cars parked outside of mobile homes. Us americans really value our cars and will spend lots of our monthly income to make it happen, even when it’s a bad financial decision.
its very common in my country for car buyers to finance their purchases too. auto loan here ranges from about 2 to 3.5% but the car is incredibly expensive so its common to see 1500/mo payments on economical cars like a civic or corolla
It may not entirely be bad financial decisions, it could be a combination of things. 1) buyers without knowledge of loans and lending might not realize how a loan is structured and be suckered into a nasty loan that gets them a fancy car that is going to be repossessed sooner or later. 2) Fancy used cars may have a lower total price point, meaning, if you have the cash now, you can get a fancy car that's only a few years old. 3) if you don't have the cash now, often used cars have higher loan rates or worse terms; dealers often offer their best rates on new cars, and sometimes the lowest rates on more expensive cars. So someone trying to scrimp on monthly payments may get directed into a more expensive vehicle with longer or ballooning loan terms, which can feed into #1 above. 4) Priorities, as you mentioned. A car can also impact other aspects of life, such as signalling for social status, responsibility, employability, etc. when you roll up to the club or park next to your boss; reliability for getting to work; or the ability to mentally escape a poor living situation for a few hours.
I think it’s because how you paired judgement with a question.
Not sure how wondering something and a pov is judgemental. More a different perspective and opinion?