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2019 Touring (Canadian Model) with Eyesight
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Discussion Starter #1
So when I purchased my 2019 I was offered less than 1% for financing. Even though I had some cash to put down, it made sense to me to take the offer and leave my money in the bank. If I ever needed quick cash for an emergency then in reality I would be borrowing it from myself at that 1% rate.

Anyways, I was told that the financial arm of Subaru was actually Toyota Financial and did see the direct withdrawal from my checking account as such.

Now, all of a sudden it's itemized as being withdrawn by Subaru Financial.

I wonder if this is a result of the enhanced relationship with Toyota.
 

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2010 Outback 3.6R 2014 Legacy 2.5i 2003 Legacy L special edition (retired to backup)
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Chase Handles Subaru and since you put no monies down, congratulations on being upside down on your car. I hope you have gap insurance.
 

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2008 OB Limited 2.5i, Portland OR USA
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Chase Handles Subaru .....
OP is Canadian; that may not be the case there.

..... since you put no monies down, congratulations on being upside down on your car. I hope you have gap insurance.
Most new car purchases are upside down on equity. Whether this upside down situation ever results in the OP needing to roll over negative equity or pay up in the case of the vehicle being totaled is immaterial here - the OP stated it made sense to leave the cash in the bank rather than use it for a down payment, since it was <1% financing rate. This, to me anyway, would serve as "gap insurance".
 

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Anyways, I was told that the financial arm of Subaru was actually Toyota Financial and did see the direct withdrawal from my checking account as such.

Now, all of a sudden it's itemized as being withdrawn by Subaru Financial.

I wonder if this is a result of the enhanced relationship with Toyota.
Could be. The loans/leases are listed and provided by "Subaru Canada, Inc. financial services". If it's not being provided by a bank in Canada, then it's a financial division of the car manufacturer. If there was a recent change in name as a result of the relationship between toyota and subaru (or a name change for whatever reason) the name shown on the direct withdrawl would change (part of the identifying information for the financial institution).
 

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'10 3.6R Outback Limited, 2zr swapped Toyota Yaris track toy, '05 AWD Pontiac Vibe
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Chase Handles Subaru and since you put no monies down, congratulations on being upside down on your car. I hope you have gap insurance.
well that's just a dick comment

This is a moot point unless the OP has no collision coverage and the car is totalled or the car breaks down out of warranty and he cannot afford heft repair costs and has to trade it in - neither of which are the OP's current situation. If you read the OP's post he clearly stated the reason of keeping the cash in his bank account and is really not upside down on the car as it commonly means or the way you think it means. If you think the OP would be in a better situation by putting said money into the car instead of keeping it in their account then you are failing to see the forest for the trees.

As stated above virtually every new car is upside down as soon as it drives off the lot. Even if you were to put a huge amount of money down, you may not truly be "upside down" on a loan but you are in the exact same place with depreciation and therefore loss of your assets and in no different situation financially. This is one of the large reasons why I ( and likely many on this forum) will never buy a new car. It makes much more financial sense for someone else who is lured by a new car smell to take the huge depreciation hit.
 

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well that's just a dick comment

This is a moot point unless the OP has no collision coverage and the car is totalled or the car breaks down out of warranty and he cannot afford heft repair costs and has to trade it in - neither of which are the OP's current situation. If you read the OP's post he clearly stated the reason of keeping the cash in his bank account and is really not upside down on the car as it commonly means or the way you think it means. If you think the OP would be in a better situation by putting said money into the car instead of keeping it in their account then you are failing to see the forest for the trees.

As stated above virtually every new car is upside down as soon as it drives off the lot. Even if you were to put a huge amount of money down, you may not truly be "upside down" on a loan but you are in the exact same place with depreciation and therefore loss of your assets and in no different situation financially. This is one of the large reasons why I ( and likely many on this forum) will never buy a new car. It makes much more financial sense for someone else who is lured by a new car smell to take the huge depreciation hit.
it's not a dick comment, it is factual, if they total that car tomorrow, how much do you think they are going to get for it.

HINT: Not enough to pay off the loan on said car. so they will be stuck paying on a car that is no longer there.

and to add on to that, dealers are far less willing to negotiate when they do the very low apr as they have to build it (the money they lost) into the price of the car

At a MINIMUM you should have 20% and if you were really smart you would have that plus enough to cover your taxes, fees, and plates)

I took out 3 loans for cars in my life and with each one had enough money down so that I was not upside down. right now I have 3 Subaru a 2003 legacy that I paid cash for, a 2010 Outback 3.6R that I paid cash for, and a 2014 Legacy where I put $10K down and paid the remaining balance in 11 months.

(and people wonder why they be broke)
 

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2019 Touring (Canadian Model) with Eyesight
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Discussion Starter #8
WTF are you talking about? I still have the $10,000 in the bank. @YeuEmMaiMai , you come across sort of snooty. How does putting $10,000 towards a loan vs next to no interest charge and keeping my money in my account. make me a financial loser?

If anything, I'm doing quite well with 2 properties paid for. 3 cars paid for. I own another investment property I rent out. I have zero debt, yes zero debt exclusive of the car loan. I have a government pension index to the cost of living and over $100,000 in my savings account, not to mention a nice RRSP.

All this on a government wage over 34 years.

Dammit arrogant comments piss me off!
 

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WTF are you talking about? I still have the $10,000 in the bank. @YeuEmMaiMai , you come across sort of snooty. How does putting $10,000 towards a loan vs next to no interest charge and keeping my money in my account. make me a financial loser?

If anything, I'm doing quite well with 2 properties paid for. 3 cars paid for. I own another investment property I rent out. I have zero debt, yes zero debt exclusive of the car loan. I have a government pension index to the cost of living and over $100,000 in my savings account, not to mention a nice RRSP.

All this on a government wage over 34 years.

Dammit arrogant comments piss me off!
Aw cut him a break. Maybe he sells gap insurance on the side to feed his family. You are a meanie taking food out of his kids' mouths. :mad:
 

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it's not a dick comment, it is factual, if they total that car tomorrow, how much do you think they are going to get for it.

HINT: Not enough to pay off the loan on said car. so they will be stuck paying on a car that is no longer there.

and to add on to that, dealers are far less willing to negotiate when they do the very low apr as they have to build it (the money they lost) into the price of the car

At a MINIMUM you should have 20% and if you were really smart you would have that plus enough to cover your taxes, fees, and plates)

I took out 3 loans for cars in my life and with each one had enough money down so that I was not upside down. right now I have 3 Subaru a 2003 legacy that I paid cash for, a 2010 Outback 3.6R that I paid cash for, and a 2014 Legacy where I put $10K down and paid the remaining balance in 11 months.

(and people wonder why they be broke)
Why do you have 3 cars? That doesn't make much sense for someone who is lecturing someone else about their finances.

With an apr of 1% I agree with keeping cash in the bank. Few hundred in interest over the course of the loan, not bad.

Sent from my SM-G960U using Tapatalk
 

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That guy is an idiot. If I get a 0% or 1% finance rate I‘ll use manufacturers money every time and I have several times.
 

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2019 Touring (Canadian Model) with Eyesight
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Discussion Starter #12
The loans/leases are listed and provided by "Subaru Canada, Inc. financial services". If it's not being provided by a bank in Canada, then it's a financial division of the car manufacturer. If there was a recent change in name as a result of the relationship between toyota and subaru (or a name change for whatever reason) the name shown on the direct withdrawl would change (part of the identifying information for the financial institution
Yup.
 

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That guy is an idiot. If I get a 0% or 1% finance rate I‘ll use manufacturers money every time and I have several times.
I had a student loan once that was 1% interest and no matter how much I borrowed I only had to pay $25/month paying it back no matter how long it would take to pay it off. I always said it wouldn't make sense to pay it off any faster because it was beating the inflation rate. At the time I think even regular bank savings interest was something like 5%. I eventually did get bored sending a check every month for $25 though and finally just paid it off. Once I had the money to pay it off I felt a little bad because it was done through my local school district and I figured the longer I took to pay off there was that much less money in the pot for someone else who might need it.
 

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...... if they total that car tomorrow, how much do you think they are going to get for it.

HINT: Not enough to pay off the loan on said car. so they will be stuck paying on a car that is no longer there.
I'll spell this out very plainly for you, although you haven't seemed to get any of this yet from either me, Tmontague, or Wilbour. Considering just the vehicle, the loan obligation, and the money in the bank:
  • Total assets consist of money on deposit in the bank, plus the cash value of the vehicle in its present state to a willing buyer. That buyer may be an insurance company, worst case, should the vehicle get totaled. But that matters not a wit; the value they assign is the pre-collision estimated value.
  • Total liabilities consist of the present obligation left on the loan. Since the rate of inflation for the Canadian dollar is greater than 1%, it's even arguable that the present value of the future cash flow needed to make monthly payments is less than this number, but let's ignore that for now (even though it favors Wilbour)
  • Net worth is assets minus liabilities
All three of us are making the same point here: Net worth is a constant, regardless of whether the down payment is large enough to cover all conceivable gap situations. It's also that same constant even if Wilbour pays 100% cash or 0% cash.

And yes, I know that there are always carrying costs for the loan, the dealer might alter the pricing offered based on whether or not the buyer agrees to a loan, or any number of other second order factors that could come into play. But until you understand the three simple bullet points I made above, along with the conclusion at the end of it, there's no use making this discussion more complex - everything else is just a minor distraction.

BTW - just guessing here - you're probably one of those types who has your Canadian Federal and Provincial tax withholding set high enough such that you never owe any taxes when you file a return, because that causes you to have to "pay real money" when you file? (And sorry if I'm using the wrong terms here; these are the terms we use in the US.)
 

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ok you guys do what you want, I could not care less.... but any person with an ounce of common sense will tell you not to buy a depreciating asset with little to nothing down

and I understand those bullet point just fine, hence wring a check for just about every car I have bought had and my house. I do not like carrying debt and for obvious reasons that are somehow not clear to a lot of people.

Oh and carrying a car note = you pay more for auto insurance vs no note.

and I live stateside, not in the land of maple syrup... regardless the same principles apply, stay out of debt. and since I am not totally burdened by things like car payments and house payments, I get to do nice things like pump up the 401K.
 

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Discussion Starter #16
one of those types who has your Canadian Federal and Provincial tax witholding set high enough such that you never owe any taxes when you file a return
Oh this bothers me to no end! I hear it all the time and I shake my head. I for example have a pension and am taxed at the source. I also work part time and am taxed at that source. Problem is neither accounting office knows about the other income. Therefore I will owe taxes at the end of the year. Do I ask one or both employers to withhold more tax?

NO!

I take that amount and put it into my savings account, or, heaven for bid, pay off a credit card debt that's at 19% or so (which I haven't carried a debt with in over 15 years btw). All you have to do is ask your bank to open another savings account and you drop the cash in there each payday. How much you ask? Simple, the CRA (Canadian Revenue Agency) has a website that you drop your values into and it calculates how much you should owe them. Subtract what's posted on your pay-stub and that's the amount you should put aside in this extra account that you do not touch. My American friends may have something similar.

Honestly, It's grade 8 math here folks. I know math may not be everyone's strengths but you should know someone who can set this up for you.

Anyways, back to the original post, Yes, my loan is now held by Subaru Financial and not Toyota Financial. Just a change in service name.
 

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.... any person with an ounce of common sense will tell you not to buy a depreciating asset with little to nothing down
We disagree, but I'm not going to bother any more making an argument - you seem attached enough to this point that it would be a waste of time to do so.

....and I live stateside, not in the land of maple syrup.
On this point I stand corrected; apologies. I saw a preponderence of Canadian flags in this thread, and didn't look close enough at yours to notice you were stateside.
 

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ok you guys do what you want, I could not care less.... but any person with an ounce of common sense will tell you not to buy a depreciating asset with little to nothing down
If you are going to bring common sense into the discussion then you should realize that common sense will tell you that gap insurance in this case would be a 100% waste of money since it isn't needed. This would be a case of self-insuring since there is more than enough money set aside already to cover the loan, hopefully earning more interest than the loan rate.
 

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Like I said above, "common sense" amongst wealthy people who have built up equity comes from being able to see the forest for the trees.

More simply stated, spending money to make money or taking on debt to build equity. Yes almost all cars are depreciating assets but the OP seems more than aware enough as shown by his other investments to navigate this is a financially smart way. He never stated he bought the car to build his wealth.

He is not upside down on the car as he has the liquid assets to cover the vehicle in emergency situations. One is almost always better to keep the cash in their hands then to drop it on a payment to a bank or lender.

End of the day, the op never asked for financial advice and this is where the thread got side tracked. I'm confident he is more then capable of navigating car loans
 

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US Treasury yields today are 1.35% @ 3 years and 1.37% @ 5 years. A four year, 0.9% loan is just free money and putting down a penny more than you need to in order to get those terms is just foolish.
 
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