I am math challenegd.. is cash back or better APR better?

[Lex Talionis]

When looking at incentive deals, I see - for example - $1000 total cash back on an Edge OR $500 cash if do 3.9% for 36 months APR. How does one determine what the best deal is? How do you look at it and figure what will get you the best deal? I have a hard time with these math type considerations.

[bbf2530]

When looking at incentive deals, I see - for example - $1000 total cash back on an Edge OR $500 cash if do 3.9% for 36 months APR. How does one determine what the best deal is? How do you look at it and figure what will get you the best deal? I have a hard time with these math type considerations.

 

Hi Lex. :D We would need much more information to give you an answer to that question (and ignore any answer given to you without the information, as it would not be valid).

 

Essentially, we need to know the total amount you would be financing, and what the APR % Rate would be both ways.

 

Right now we have no idea how much you are financing, and only know the APR Rate one way.

 

So, to give a valid answer to that question, you would need to know several things:

 

First, how much are you financing (i.e. how much will your total loan be)? In other words, how much is your total to purchase the vehicle (everything, including tax, Title and Registration, etc, etc.), then subtract how much are you putting down, and if you are trading in a vehicle, subtract the amount that they giving you for the trade.

 

Next, you need to know what the APR % Rate would be on your loan if you take the full $1,000 (making you ineligible for the 3.9%/36 month Special APR Rate).

 

Essentially, it just becomes a math calculation once those figures are known.

 

If you go to the Fordvehicles.com site, there is a link to a "Payment Estimator". All you need to do is calculate all of those figures (for purchasing both ways), then plug in the numbers and the "Payment Estimator" will give you the answer.

 

Or if the figures still really stump you, come back and post the necessary information. Then I or another Forum member will help out. We have to know the both the loan amount and alternative Interest rate first though.

 

Let us know what you find out.

 

Good luck! :beerchug:

Edited January 3, 2008 by bbf2530

[Abrannan19]

I can tell you right now..the lower interest rate would be the best bet..you will easily save 500 bucks say..over 5 years..I am assuming you are financing that long (typical loan)and normally the interest rate if you take the cash jumps to 5.9 or better.

[bbf2530]

I can tell you right now..the lower interest rate would be the best bet..you will easily save 500 bucks say..over 5 years..I am assuming you are financing that long (typical loan)and normally the interest rate if you take the cash jumps to 5.9 or better.

 

Hi Abrannan19. :D This is a perfect example of how no one can give a valid answer, and should not try to give an answer, without knowing all of the figures and the requested information. Lex already states in his first post that he is looking to finance for 36 months, not 60. In addition, he may not save $500 if he is financing a smaller amount.

 

And please understand, Abrannan, that I am not trying to be a wise guy, but any answer without all of the numbers is merely a guess. It may be a correct guess, it may be an incorrect guess, but it is still merely a guess.

 

If he is financing a large amount for 3 years, the 3.9% probably will be the better deal. If he is financing a smaller amount, and can get a good alternative Interest rate from the Dealer, his Bank or Credit Union (if he is a member of one), he may very well be better off taking the $1,000.

 

Lex, please come back and post the requested information, or use the "Payment Estimator" on the Ford website.

 

Good luck! :beerchug:

Edited January 3, 2008 by bbf2530

[Lex Talionis]

thanks guys!

 

BBF -

 

you are correct in that my goal would be 36 months. want to pay the least amount possible to own the car. so, that is my goal and what I have done in the past. Also, in this case, it seems 3.9 is only available in the 36 month option. as for the down payment, I was kind of thinking maybe 15k. that seems a lot to me, but not sure. and what, these Limited Edges, on the high end (though I am trying HARD to swing an X Plan deal) are 33k or so?

 

it seems though, that it would be hard to get the exact numbers you mention prior to making the deal as I would assume we will bicker and hash it out - and do it then. no time to come back, plug in numbers, decide on best route, and go back? that a safe assumption? I guess I assume they will say, "okay, right here right now here is the deal" - which leaves me no time to come back and figure it out.

 

Maybe I was more looking for mental pointers to keep in mind when making a decision and looking at the 2 options. For example, at point x it is best to take cash back while at point y you are better off with taking a better rate.

Edited January 3, 2008 by Lex Talionis

[bbf2530]

thanks guys!

 

BBF -

 

you are correct in that my goal would be 36 months. want to pay the least amount possible to own the car. so, that is my goal and what I have done in the past. Also, in this case, it seems 3.9 is only available in the 36 month option. as for the down payment, I was kind of thinking maybe 15k. that seems a lot to me, but not sure. and what, these Limited Edges, on the high end (though I am trying HARD to swing an X Plan deal) are 35k or so?

 

it seems though, that it would be hard to get the exact numbers you mention prior to making the deal as I would assume we will bicker and hash it out - and do it then. no time to come back, plug in numbers, decide on best route, and go back? that a safe assumption? I guess I assume they will say, "okay, right here right now here is the deal" - which leaves me no time to come back and figure it out.

 

Maybe I was more looking for mental pointers to keep in mind when making a decision and looking at the 2 options. For example, at point x it is best to take cash back while at point y you are better off with taking a better rate.

 

Hi Lex. :D Well, there are several assumptions you are making that work against you, so work with me here, as it is hard to cover everything in writing.

 

First, have you looked at and tried the "Payment Estimator" on the Fordvehicles.com website? You can plug in different figures and print them out so that you have hard copies.

 

Next, it is very hard to give accurate "mental pointers", without figures. Without the figures, all you will get is people guessing. They may guess right, they may guess wrong. Do you really want to base your decisions on guesses made by strangers, on the Internet?

 

Think about it, how can anyone give you an accurate answer without knowing what both Interest Rates will be? You need to know what your Interest rate will be if you take the full $1,000. You need to ask the Dealer what rate they can give you if you take the $1,000? What rate can you get at your Bank? Do you belong to a Credit Union? If yes, what is their new car rate?

 

It should not be that hard to get figures before hand. At the very least, you can figure on a "Best Case Scenario" of getting an X-Plan price.

 

Also, the process should not resemble what you describe. It should not be a case of "We do it now or else". If a Dealer or Salesman attempts to pressure you in such a manner, I would go somewhere else. Trust me, they will give you the time to sleep on it, if you insist. Do not let them pressure you.

 

Also, you can simply request that they work up your loan figures both ways, while you are there. It is part of their job description :yup: : First, taking the 3.9% APR/$500, and second taking the full $1,000 and the "everyday APR Rate". They have a computer program that spits everything out in seconds, in writing. So let them use it to help you.

 

Remember, it is your money, you are in charge.

 

All of that being said, if you are only putting down $15,000 on a $35,000 price tag, that means you will be financing $20,000 for 36 months. So my guess would be that you would be better off taking the 3.9% and $500. But remember, it is just the guess of a stranger on the Internet.

 

Feel free to ask any other questions you may have.

 

Good luck! :beerchug:

Edited January 3, 2008 by bbf2530

[Abrannan19]

oh i know..mine was a guess aswell..and turns out I maybe right..i got 3.9 for 60 months. dunno why you wouldn't be able to get that..unless your beacon isnt good enough (no offense)

[bbf2530]

Hi Lex. :D Just to try to give you a general idea, I went to the "Payment Estimator".

 

Assuming an "out the door" price of $35,775 (I have to start somewhere) and a $15,000 down payment. Here are some figures:

 

If you take the 3.9% and $500 - Your monthly payment would be $598. That would give you a total out of pocket in payments of $21,528 for 36 months. Add your $15,000 Down Payment and you paid a total of $36,558.

 

If you take the full $1,000 and can get a 6.9% APR from the Dealer or elsewhere, your monthly payments would be $610, total out of pocket on the loan would be $21,960 for 36 months. Add your $15,000 DP and you paid a total of $36,960.

 

So essentially, your "mental break point" as far as APR is somewhere below 6.9%. Or, you can put more money down and save more on Interest, whether you use the 3.9% or another loan APR.

 

These are just some rough figures, but as you can see, the "payment Estimator" is a handy tool..

 

Good luck. :beerchug:

Edited January 3, 2008 by bbf2530

[bbf2530]

oh i know..mine was a guess aswell..and turns out I maybe right..i got 3.9 for 60 months. dunno why you wouldn't be able to get that..unless your beacon isnt good enough (no offense)

 

Hi Abrannan. :D The best you can currently get for 60 months through Ford Motor Credit on 60 months Special APR is 5.9%, not 3.9%.

 

Incentives vary according to type of vehicle and when you buy. If you got 3.9%, it would depend on what you purchased and when. It is not available now on the Edge.

 

EDIT - I just noticed your Signature, and now I see why you were able to get 3.9%/60 months. You purchased a 2007, the Incentives were higher. In fact, now the APR on a 2007 for 60 months is 2.9%. Lex is purchasing a 2008, the Incentives are not as good (5.9%/60 months). Hope that solves the mystery for everyone

 

Using those figures (5.9% for 60 months), your guess would not be right. That is why a guess is only a guess. And telling someone you are guessing is much different than telling someone "I can tell you right now..the lower interest rate would be the best bet".

 

Here are the current "Special APR rates": 3.9%/36 months, 4.9%/48 months, 5.9%/60 months, 7.9%/72 months.

 

Having laid out the correct information, I just want to add again that I am not trying to be a wise guy. I am only trying to help answer Lex's question with valid, accurate information. If you look at all of my posts, you will see that I am not the type who looks for arguments, I only try to give people accurate information, and try to avoid conflict and arguments as much as possible.

 

To give accurate information, an individual needs all of the relevant information.

 

Again, please just take this in the spirit of trying to answer Lex's questions accurately, and good luck! :beerchug:

Edited January 3, 2008 by bbf2530

[Lex Talionis]

thanks a ton! believe it or not, these create better mental points to recall than you may think.

 

I believe, in post #6 you said "All of that being said, if you are only putting down $15,000 on a $35,000 price tag, that means you will be financing $25,000 for 36 months" but in fact, it would be 20k financed for 36 months... not 25k.

 

anyway.... I get all the points you make. Yes, I did go check out the Payment Estimator and toyed with it a bit. No, I am not a credit union member - I did that on my last car 7.5 years ago and it helped a bit. In checking today on their website, their rates are not that great, nor are my banks - that 3.9% is as good as I have seen. As for my credit score - which Abrannan19 raised, though I am not 100% sure, I have run my credit reports recently - which law states we can do freely each year and I do just to check up - and I have no problems.. I only owe on my house. student and car loans both paid off. no revolving credit. no dings or collections I know of or they reported.... so I would assume I am pretty golden there.

 

I could always put more down. but not doing this often, buying cars that is, I do not put much thought into this topic and decided this time to do more of an effort rather than wing it like last time. so, was just not sure if there was a cut and dried response to my question like "always take the better APR over cash", etc.

 

I think the best thing is to do this, "Also, you can simply request that they work up your loan figures both ways, while you are there. It is part of their job description : First, taking the 3.9% APR/$500, and second taking the full $1,000 and the "everyday APR Rate". They have a computer program that spits everything out in seconds, in writing. So let them use it to help you" - your right, that is what they are there for. I am just not sure if there are imaginative ways they can work it up that work in their favor and the average unsavy guy like me gets caught with his pants down.

[bbf2530]

thanks a ton! believe it or not, these create better mental points to recall than you may think.

 

I believe, in post #6 you said "All of that being said, if you are only putting down $15,000 on a $35,000 price tag, that means you will be financing $25,000 for 36 months" but in fact, it would be 20k financed for 36 months... not 25k.

 

anyway.... I get all the points you make. Yes, I did go check out the Payment Estimator and toyed with it a bit. No, I am not a credit union member - I did that on my last car 7.5 years ago and it helped a bit. In checking today on their website, their rates are not that great, nor are my banks - that 3.9% is as good as I have seen. As for my credit score - which Abrannan19 raised, though I am not 100% sure, I have run my credit reports recently - which law states we can do freely each year and I do just to check up - and I have no problems.. I only owe on my house. student and car loans both paid off. no revolving credit. no dings or collections I know of or they reported.... so I would assume I am pretty golden there.

 

I could always put more down. but not doing this often, buying cars that is, I do not put much thought into this topic and decided this time to do more of an effort rather than wing it like last time. so, was just not sure if there was a cut and dried response to my question like "always take the better APR over cash", etc.

 

I think the best thing is to do this, "Also, you can simply request that they work up your loan figures both ways, while you are there. It is part of their job description : First, taking the 3.9% APR/$500, and second taking the full $1,000 and the "everyday APR Rate". They have a computer program that spits everything out in seconds, in writing. So let them use it to help you" - your right, that is what they are there for. I am just not sure if there are imaginative ways they can work it up that work in their favor and the average unsavy guy like me gets caught with his pants down.

 

Hi Lex. Yep, typo on my part on the $20,000/$25,000 figures. My figures are still correct, I just typed the wrong amount in my post. Ooooopss!!!

 

Without getting into too much of a Finance class, if you have the cash (and according to how it is currently Invested, and what type of return you are getting), I would think about putting more money down.

 

If it is sitting in a regular Savings or Checking account, earning less than 3.9%, it makes no sense to leave it there doing nothing. For example, if your money is getting 1.9% in a Savings account, you can pay yourself 2% just by making a larger Down Payment and having a smaller loan at 3.9%.

 

Of course, if the money is in a CD earning 5.9%, then make a smaller down payment, take a larger car loan at 3.9%. and you make 2% by leaving it there and making loan payments. (Insert your own figures as to what your Savings/Investments are actually earning).

 

Hope this is not too confusing.

 

As to your "pants down" question, :gang: yes, a dishonest Dealer/Salesman can always input bogus information and hope you do not notice. This is why I highly recommend that you get all of your figures down ahead of time and use the "Payment Estimator" to get it all down on hard copies that you can study before hand.

 

Also, this is why we are all here, to try and help educate and assist each other, so feel free to ask any questions you may have. :grouphug:

 

Hope this information helps.

 

Good luck! :beerchug:

Edited January 3, 2008 by bbf2530

[Lex Talionis]

I understand that aspect of money management no problem. that is simple math and understanding even for me.. it is just these APR versus cash back calls I am a little iffy on.. but I am better prepared now to make a decision.

 

The one thing you did not enter into the above equation is the simple fact of having money/cash in the bank to turn to if happens... and believe me, it does when you least expect it. I know.. because it has.

 

think about this.. using your above example of "Assuming an "out the door" price of $35,775 (I have to start somewhere) and a $15,000 down payment. Here are some figures: If you take the 3.9% and $500 - Your monthly payment would be $598. That would give you a total out of pocket in payments of $21,528 for 36 months. Add your $15,000 Down Payment and you paid a total of $36,558." now, in the end I will have paid a mere 783 more for the car versus just paying it off. To me.. have that extra 20k available cash 'just in case' is worth the $783 I paid extra to own that car over 3 years.

 

to be honest, I could walk in and pay cash money and walk out. BUT, I feel like that leaves me a little thin for comfort to just toss that much cash down. no payment mind you and of course, very few of us with cash in a bank account get even close to 3.9% in interest. ha.. not these days. so, that also holds me back from just paying cash in one big whack... just trying to be prudent and the prudent move does not seem to pay cash for the entire rig but rather, cash and some loan.

 

PLUS, I also have my VW I plan to private sell to get the max out of it and then roll that cash into the loan. But, it may take weeks to sell it. Last time I went to buy a car, the dealer offered 3500 for my olf Acura and I ended up private selling for 5500. Since my current car is paid off, I can afford to keep it and sell it for more than the dealer will give me.

Edited January 3, 2008 by Lex Talionis

[Lex Talionis]

here is something kind of interesting.... look down to AUTO section

 

http://www.fool.com/calcs/calculators.htm

 

Which is better: a new or used vehicle?

How much should depreciation cost me?

Should I lease or purchase a vehicle?

Should I finance or pay cash for a vehicle?

How much will my vehicle payments be?

Which vehicle loan is better?

What term of vehicle loan should I choose?

Should I use a home equity loan instead of an auto loan?

Which is better: a rebate or special dealer financing?

How long should I keep a vehicle?

What vehicle can I afford?

Edited January 3, 2008 by Lex Talionis

[bbf2530]

I understand that aspect of money management no problem. that is simple math and understanding even for me.. it is just these APR versus cash back calls I am a little iffy on.. but I am better prepared now to make a decision.

 

The one thing you did not enter into the above equation is the simple fact of having money/cash in the bank to turn to if happens... and believe me, it does when you least expect it. I know.. because it has.

 

think about this.. using your above example of "Assuming an "out the door" price of $35,775 (I have to start somewhere) and a $15,000 down payment. Here are some figures: If you take the 3.9% and $500 - Your monthly payment would be $598. That would give you a total out of pocket in payments of $21,528 for 36 months. Add your $15,000 Down Payment and you paid a total of $36,558." now, in the end I will have paid a mere 783 more for the car versus just paying it off. To me.. have that extra cash 'just in case' is worth the $783 I paid extra to own that car over 3 years.

 

to be honest, I could walk in and pay cash money and walk out. BUT, I feel like that leaves me a little thin for comfort to just toss that much cash down. no payment mind you and of course, very few of us with cash in a bank account get even close to 3.9% in interest. ha.. not these days. so, that also holds me back from just paying cash in one big whack... just trying to be prudent and the prudent move does not seem to pay cash for the entire rig but rather, cash and some loan.

 

Hi Lex. :D No, of course I understand that none of us want to completely drain our cash reserves and I was not advocating that.

 

That is why I prefaced my statement by saying"Without getting into too much of a Finance class...".

 

Only you can decide how much you can afford to put down, and how much cash you need readily available. I was only suggesting that you think about putting more money down, if you can swing it comfortably.

 

One of your earlier posts lead me to believe that you could afford a larger down payment, but had just sort of arbitrarily decided on $15,000.

 

You need to do what you feel is best. I'm only sort of working blindly here on the advice part (which only reinforces my statements earlier about how hard it is to give advice and answers without the proper information, right?) :read: It is just my nature to try and be as accurate as I can, if I am trying to help someone. Even when the advice is free! :yup:

 

Whatever you decide to do, I wish you the best of luck! :beerchug:

Edited January 3, 2008 by bbf2530

[bbf2530]

Hi Lex. :D I just saw your last post (#13). Looks like some very helpful charts and calculators. Similar to the "Payment Estimator", but might be easier to compare loan rates with the information you found. Good catch.

 

Good luck! :beerchug:

[Lex Talionis]

"arbitrarily decided on $15,000."

 

yup that is EXACTLY what I did... honestly. just seemed like a cash number I was ok with parting with.

 

I appreciate your efforts, caveats and honesty... I know you have good intentoins and I understand we are pulling numbers and ideas from our just to make the point.. but it still helps a guy think more in depth about it. trust me, I will not come back and say, "but some guy named bbf2530 on some internet BBB I just started posting on told me I should do this and it would be okay" :D

 

it already has me finding neat calculators on the web that answer this EAXCT question ( Which is better: a rebate or special dealer financing? ), it has me understanding a general zone on when it would be ideal to take the APR versus the cash.. it just has the juices flowing now and I have a better sense of how to approach the decision.

Edited January 3, 2008 by Lex Talionis

[bbf2530]

Hi again Lex. :D Forgot to mention just how much I agree with your earlier statement about selling your old car privately.

 

If you look at any of my earlier posts concerning the subject of Private Sales vs, Trade-ins, that is exactly what I always recommend to anyone who will listen. For some reason, it is a hard sell to some people. I myself never have a problem earning a few thousand dollars profit (even including the sales tax ramifications) over what a Dealer will offer on trade-in.

 

Glad you have thought ahead and included that in your automotive purchasing and financial plans.

 

Good luck! :beerchug:

Edited January 3, 2008 by bbf2530

[NYEdge]

I read this thread and all of you have done a great job looking at this decision from all points.

 

Lex; I agree with you that a little more of a liquid cash cushion helps you sleep at night easier.

I choose a 36 month term instead of paying all in cash, and I put the rest into an online high yield savings account that is currently at 4.9%.

Their is no minimum account balance, and I can access it anytime I want to unlike a CD account.

 

Good luck with your decision, I know you'll love your Edge.

[Lex Talionis]

Just did my order.. used an X-Plan for pricing (which I understand to be the best way to go versus just walk in negotiate).

 

Cannot comment yet on what the final incentive options I had are (APR and rebates) as those that are available today cannot be used as you can only use what is available at the time the car comes. And that can be 6-8 weeks on an order.

 

So, when it comes, we see the incentives then, I will report back and make the decision then

[07 MKX]

So, when it comes, we see the incentives then, I will report back and make the decision then

 

 

Make what decision then?

[Lex Talionis]

Make what decision then?

 

read the thread and that will be apparent.... heck, even read the title and that would be apparent

[07 MKX]

read the thread and that will be apparent.... heck, even read the title and that would be apparent

 

 

oh you must mean to actually buy it or not.

[NYEdge]

When I bought my Edge through the Z Plan, I locked in the rate at the day I signed the order, not upon delivery.

I'd check with the sales person again to see if you can lock the current rates.

[bbf2530]

Hi Lex. :D Your Dealer is correct. You cannot "lock in" the current Incentives.

 

On certain Plan purchases, you can "lock in" the price of the vehicle as protection against price increases before delivery. But that is not the same as "locking in" Incentives. Two different situations.

 

In addition, you can sometimes "lock in" the "everyday" (non Incentive) loan rate. But that does not help you, as you would be looking to "lock in" the Incentive rate (3.9%). Incentives cannot be "locked in".

 

A buyer is only eligible for the Incentives available when they actually purchase the vehicle. If you "Factory Order", you will receive the Incentives available when your vehicle comes in and you finalize the sale.

 

I would not worry about that very much, as an educated guess would say that with the state of the economy and car sales, the Incentives will likely stay the same, or increase. So this will hopefully work in your favor.

 

Goods luck! :beerchug:

Edited January 3, 2008 by bbf2530

[Lex Talionis]

oh you must mean to actually buy it or not.

 

 

no dude... it means whether to take the cash, cash + APR, or straight APR incentive... jeez