Financing Issue(s) getting financed?

[ultrarunner]

I tend to see credit as a sometime necessary evil.

It was ironic when I was young and really needed credit I could not get the time of day... either paid cash or for homes came in with a large down and seller financing which was a win/win every time.

Now that I am older credit is around every turn but unless I am doing a Real Estate deal no thank you.

I had an unusual situation at work where I would use my card and put in for reimbursement... sometimes nothing to put in for months but during a project I could rack up a lot... sure that helped my standing... running up the bill and then paying in full...

 

[LD1]

I don't play the CC game. So I was simply asking if your CC benefits are greater than 1.5%.

For me, sometimes.

Food, restraunts, grocery, gas, and autoparts I get 2%. Everything else I get 1%

But it doesn't really matter what the perks is. Be it 1/2% or 10%. If cash price is the same as charge price, I'm paying less charging. Where is the financial benefit to paying cash?

Until merchants start offering a greater cash discount (or passing the 3% fee on to consumers who charge), I will charge it all and pay one bill a month.

My Verizon bill...charge
Direct TV....charge
Internet.....charge
Electric..... charge
Groceries....charge
Literally, everything including monthly bills....charge.

There are a few that I do not charge though.
Water bill. Pay with check (online banking) because they charge a 3% fee for an online payment. So I have free internet banking. A few clicks and my bank prints and mails a check.

BMV (tags)...pay by check or cash when I have to go in person (commercial stuff). Or by checking that fertilizer online for personal autos. They charge a 3% fee to swipe.

Property taxes. Same as above.

Insurance. They offer a discount for setting up automatic withdrawal from a checking acct. Don't remember what it is but it's greater than the card reward perk.

That's it. If it don't cost more to charge, I am actually benefiting by charging. Sure, in the grand scheme we might very well be paying 2-3% more for goods. But until it changes, and I start getting a benefit for NOT using my card, I'll continue to charge away.

In a side note, I do get a nice report for taxes at the end of every year detailing all my charges. Breaking them down into about 20 categories, such as utilities, groceries, auto parts, gas, restaurants, etc. Bout 30 pages last year.

And I never have to worry about how much money is in the checking account. Because I like to keep it to a minimum, and keep most of my accessable money in a savings that has a pretty good interest instead. My paychecks go straight to savings. Then once a month I transfer just enough to pay the card + the few bills that I mentioned above.

 

[timswi]

There is nothing i buy that cost me more by paying credit, so it is all cash back to me. If stores charge more for products to cover credit costs, i dont benefit by paying cash. Gas, costco, amazon, groceries are my biggest credit card purchases.

When i bought my last car, it was actually less to finance than if i had paid cash.

I agree..If you walk into a dealer and say you're paying cash, they add their back end profit into your buy price...No secret dealers make more on the back end than the front end vehicle profit. If you have the cash, finance it and pay it off after the 3rd or 4th payment if you like the dealer...If you don't like them pay it off on the first payment then they get hit with a recourse...I don't recommend that--They gotta make a buck too and will most likey remeber this. In the end, you make out ok minus a few bucks in interest. This is how I do it.

 

[ovrszd]

For me, sometimes.

Food, restraunts, grocery, gas, and autoparts I get 2%. Everything else I get 1%

But it doesn't really matter what the perks is. Be it 1/2% or 10%. If cash price is the same as charge price, I'm paying less charging. Where is the financial benefit to paying cash?

Until merchants start offering a greater cash discount (or passing the 3% fee on to consumers who charge), I will charge it all and pay one bill a month.

My Verizon bill...charge
Direct TV....charge
Internet.....charge
Electric..... charge
Groceries....charge
Literally, everything including monthly bills....charge.

There are a few that I do not charge though.
Water bill. Pay with check (online banking) because they charge a 3% fee for an online payment. So I have free internet banking. A few clicks and my bank prints and mails a check.

BMV (tags)...pay by check or cash when I have to go in person (commercial stuff). Or by checking that fertilizer online for personal autos. They charge a 3% fee to swipe.

Property taxes. Same as above.

Insurance. They offer a discount for setting up automatic withdrawal from a checking acct. Don't remember what it is but it's greater than the card reward perk.

That's it. If it don't cost more to charge, I am actually benefiting by charging. Sure, in the grand scheme we might very well be paying 2-3% more for goods. But until it changes, and I start getting a benefit for NOT using my card, I'll continue to charge away.

In a side note, I do get a nice report for taxes at the end of every year detailing all my charges. Breaking them down into about 20 categories, such as utilities, groceries, auto parts, gas, restaurants, etc. Bout 30 pages last year.

And I never have to worry about how much money is in the checking account. Because I like to keep it to a minimum, and keep most of my accessable money in a savings that has a pretty good interest instead. My paychecks go straight to savings. Then once a month I transfer just enough to pay the card + the few bills that I mentioned above.

Good management. I understand completely. You are rightfully taking advantage of the loopholes in the scam. Kudos to you and the others that do so.

 

[ovrszd]

I agree..If you walk into a dealer and say you're paying cash, they add their back end profit into your buy price...No secret dealers make more on the back end than the front end vehicle profit. If you have the cash, finance it and pay it off after the 3rd or 4th payment if you like the dealer...If you don't like them pay it off on the first payment then they get hit with a recourse...I don't recommend that--They gotta make a buck too and will most likey remeber this. In the end, you make out ok minus a few bucks in interest. This is how I do it.

I'm lifelong friends with my dealers and salesmen. I'll take the honest route.

 

[Steppenwolfe]

I'm lifelong friends with my dealers and salesmen. I'll take the honest route.

What is more honest than agreeing to a purchase price and completing the deal??? Trust me, you are no more honest than I because you walk another path...

 

[ovrszd]

What is more honest than agreeing to a purchase price and completing the deal??? Trust me, you are no more honest than I because you walk another path...

Didn't claim to be. Just don't treat my dealers/salesmen that way.

 

[timswi]

I'm lifelong friends with my dealers and salesmen. I'll take the honest route.

Well then the honest route, in terms of the dealer, is paying 3 or 4 payments, you get the benefit of their back end income. The bank takes the income hit, not you or the dealer.

 

[buckeyefarmer]

I'm lifelong friends with my dealers and salesmen. I'll take the honest route.

You know an honest car salesman?

Last car, had a price negotiated online with the dealer. Went in, took a test drive, said I'd take it. Had a check in my pocket to pay it all. Told them I'd take it. They wrote it up for $2k more than the price they gave me.

So i questioned it, they said i didnt meet some of the rebates. I said what rebates, we agreed upon a price.

Then she says, didn't you read the fine print? We have a disclaimer.

I told her I dont do business with dishonest people, got up and walked out.

Went to a different dealer who beat the price. Negotiated online. They were the ones who said the price was higher if i paid cash, so i financed it for less.

I could have turned around and paid it off, nothing dishonest about that, but i havent. Every statement they send me has the payoff amount listed, if i choose to pay it off.

 

[PILOON]

My last car I had to fight off the salesman who tried every trick to get me to finance, to no avail.
Paid cash via bank draft which the called to verify! My take was he wanted the finance kickback.

And yes that exists, when I sold fork lifts the finance co actually asked how much we wanted back.

With credit cards if caught discounting for cash the merchant can lose his privileges and today no cc's no sales. (in the contract fine print)

I do use CC's but have a feature whereby my bank on the actual due day makes the transfer automatically so I am never late but still get the card 'perks'.

 

[smstonypoint]

With credit cards if caught discounting for cash the merchant can lose his privileges and today no cc's no sales. (in the contract fine print)

That may be true in Canada, but not in the States: As rules change, more retailers offer discounts for cash payments - The Washington Post.

Steve

 

[ovrszd]

Thanks for that clarity Steve.

I'll remain hopeful that our merchants eventually offer cash discounts. I think the less organized consumers need it.

 

[CobyRupert]

Didn't claim to be. Just don't treat my dealers/salesmen that way.

Uhmm.... Now I'm curious..

Show of hands: Do some people think it's bad form to pay off your loans early? A stab in the back to the financier?

It has NEVER occurred to me that if I owe somebody money and pay it off early that somehow this is an offense.

They've got their money and can now invest it and make what they would of earned in interest. Or they can loan it out again.
Or they can roll around in it in a big pile on their bed. Whatever...

If they invest it they should be able to make as much money as the interest. Plus now they have the benefit of being in possession of the principle / security.

Plus if you pay them off with future dollars (i.e over the life span of the loan), you're paying them off with dollars that are worth less than paying them off with today's dollars. (i.e. due to inflation). So there's a benefit to them.

Interested in what others think..

 

[silvertramp]

I kind of thought that is how it worked sometimes...Right now I have an offer on one of my credit cards. 0% interest for 12 months if the balance is paid in full by the 12 month promotional period...Also a $200 dollar cash back on a purchase of $2000 or more...

So my thinking was to purchase a hydraulic post hole digger from EA for $2500, using my credit card I'd get $200 cash back, pay off that credit card a couple days later, and now my cost for that implement was $2300...

Too good to be true?

I bet that it's legit. I was offered $300 cash back if I spent $***.**. I had some purchases to make so I got the card. Yup, they paid.

 

[smstonypoint]

Uhmm.... Now I'm curious..

Show of hands: Do some people think it's bad form to pay off your loans early? A stab in the back to the financier?

It has NEVER occurred to me that if I owe somebody money and pay it off early that somehow this is an offense.

Surely you have days when you wonder: "Are prepayment penalties predatory or do they promote efficiency"? Then you come to the same old realization: "I need the advice of an economist. An economist would be able to answer my question."

Per http://economics.umbc.edu/files/2014/09/wp_11_133.pdf, it all depends.

Steve

 

[ovrszd]

Uhmm.... Now I'm curious..

Show of hands: Do some people think it's bad form to pay off your loans early? A stab in the back to the financier?

It has NEVER occurred to me that if I owe somebody money and pay it off early that somehow this is an offense.

They've got their money and can now invest it and make what they would of earned in interest. Or they can loan it out again.
Or they can roll around in it in a big pile on their bed. Whatever...

If they invest it they should be able to make as much money as the interest. Plus now they have the benefit of being in possession of the principle / security.

Plus if you pay them off with future dollars (i.e over the life span of the loan), you're paying them off with dollars that are worth less than paying them off with today's dollars. (i.e. due to inflation). So there's a benefit to them.

Interested in what others think..

I think we changed subjects somehow. I agree with everything you said above.

If I tell my dealer/salesman one thing, which has an effect on his profit margin, then do something different, which decreases his profit margin, I consider that deceptive and dishonest.

I consider this the same as if I buy a tool from you. You sell it to me at a discounted price because I'm your friend and I've said I'm buying it to use. Then I turn around the next day and sell it at a profit. Would that be okay with you?

 

[ovrszd]

Surely you have days when you wonder: "Are prepayment penalties predatory or do they promote efficiency"? Then you come to the same old realization: "I need the advice of an economist. An economist would be able to answer my question."

Per http://economics.umbc.edu/files/2014/09/wp_11_133.pdf, it all depends.

Steve

Thanks again for good stuff Steve.

 

[Turbys_1700]

I've read this entire thread.

Everyone is different. Some folks can handle credit. Some can not. Lenders are in business to make money. More folks revolve their credit than those who don't. If it was reversed those rebates would go away. We are pretty much a cash less society now. Most transactions are derived off of credit. Craigslist purchases are the exception. To be honest with you I don't carry much cash anymore. Well a dollar or two.

Personally we don't use credit cards, only debit and cash. The cash back's that I am missing out on is not a major concern of mine. To those that can take advantage of it great.

 

[CobyRupert]

If I tell my dealer/salesman one thing, which has an effect on his profit margin, then do something different, which decreases his profit margin, I consider that deceptive and dishonest.

I consider this the same as if I buy a tool from you. You sell it to me at a discounted price because I'm your friend and I've said I'm buying it to use. Then I turn around the next day and sell it at a profit. Would that be okay with you?

You make a good point that all transactions should be open and honest. I've taken 3 loans/mortgages in my life and have always asked, to be clear and honest, if there was a penalty or prohibition for paying off early.

I guess I'm asking about what is implied or assumed?
Do most people assume early pay-off is a given/acceptable "option"? I take it you think of it more as a "loophole" the debtor snakes out of?

I've always assumed it was an "option". No harm / no foul. Right or wrong, I've assumed that this is the same option as when the seller asks "Cash or credit?" That's it's an open-ended question over the life of the loan.

Regarding mixing friendships with business, that's a whole other topic...

 

[cford36]

Uhmm.... Now I'm curious..

Show of hands: Do some people think it's bad form to pay off your loans early? A stab in the back to the financier?

It has NEVER occurred to me that if I owe somebody money and pay it off early that somehow this is an offense.

They've got their money and can now invest it and make what they would of earned in interest. Or they can loan it out again.
Or they can roll around in it in a big pile on their bed. Whatever...

If they invest it they should be able to make as much money as the interest. Plus now they have the benefit of being in possession of the principle / security.

Plus if you pay them off with future dollars (i.e over the life span of the loan), you're paying them off with dollars that are worth less than paying them off with today's dollars. (i.e. due to inflation). So there's a benefit to them.

Interested in what others think..

I believe (and I don't know all the details) if you finance thru the dealership and immediately refinance the dealership may lose any incentive they received for the financing.
In my case I received an additional rebate for financing thru the manufacturer. I knew my salesman and he asked me to make a couple of payments before refinancing because otherwise the dealership would be charged back for the incentive I received.
We don't need to hash out the pros or cons of this again, just explaining what I think they meant about being courteous to your dealer.