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5K views 48 replies 19 participants last post by  beachmouse 
#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Now, all of a sudden it's itemized as being withdrawn by Subaru Financial.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.
 
#3 ·
Chase Handles Subaru .....
OP is Canadian; that may not be the case there.

..... since you put no monies down, you are 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".
 
#4 ·
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Now, all of a sudden it's itemized as being withdrawn by Subaru Financial.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).
 
#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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#8 · (Edited by Moderator)
What are you talking about? I still have the $10,000 in the bank. @YeuEmMaiMai , 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.
 
#9 · (Edited by Moderator)
What are you talking about? I still have the $10,000 in the bank. @YeuEmMaiMai , 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.
Aw cut him a break. Maybe he sells gap insurance on the side to feed his family, and you are a meanie taking food out of his kids' mouths. :mad:
 
#13 ·
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.
 
#15 ·
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.
 
#17 ·
.... 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.
 
#19 ·
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
 
#21 ·
You make a fair point. What most people ignore though is the cost to get the .9% interest to begin with. There is no such thing as free money and every scenario where these low rates are offered also require manufacturer or dealer participation. Any time 0% financing is offered, always asks what the alternative offer is not to take that interest rate. You will quickly discover it is not "free".
 
#26 ·
That's how I do i. Forget the finance, forget the payment...
How much is the car?, what will you give me for my trade? (more trade = less tax) ..
How much do I have to give you, with my trade, to buy it?
Then.. and only then... do I talk finance or not.. I ask them for cash price including all fees.
otherwise.. 0% is not 0%...
They do legally have to disclose any costs of finance.
 
#30 ·
It’s baked in to the cost of acquisition. As stated, nothing is free. Whether you pay cash or finance, the cost is baked in. So, it ya opt for the 0% interest plan it make no difference.

there are many financial analysts in this thread that justify their preferred course of action with regard to new car purchases. vehicles as an asset are poor acquisition. Even if a vehicle is purchase with cash only (as I do) and no financing, it depreciates the moment ya sign the deal and take ownership. is the value under water? nope because I expect it depreciates. Underwater Is related value of the asset relative to the outstanding liability, AND why Gap insurance is important with zero down payment to hedge against the remote possibility the vehicle is totaled or stolen. For those that are risk adverse, gap makes sense.

there was a a finacial genius in another thread that tried to convince themselves and otherwise that they should finance the maximum @ 0.9% and put the cash in the bank at some outlandish interest rate. there is such thing of over analyzing the matter..... all ya gotta know is vehicles are necessary in most cases and minimizing loss through depreciation and borrowing costs.
 
#32 ·
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.
I disagree with this nugget of old timey conventional wisdom. To a degree, anyway. After negotiation, Subaru and a few others let go of brand new cars pretty cheap. For instance, if I buy 1 year old car with 15-20k miles, the actual price is quite often higher than a new one. How? You can negotiate the price down a lot more on a new car. Then add in freebee coupons for a new one and the financing deals. It seems the manufacturer benefits by putting more of its cars on the road.

Yeah, there are some things that can make it go either way, whether you are at the end of a model year cycle or beginning, financing rates on the used one, how good of a negotiator you are, etc. etc. And there's a little pendulum effect, selling more new cars deflates the price of recently used ones, which tips the scales in the "lightly used" favor. At which point everyone starts buying lightly used, which deflates their price, and tips the scales back in favor of new. Point being, manufacturers do give incentives to buy new, and the result is that it's not so simple to say that a car depreciates when you drive it off the lot.

All that said, agree with it being ok to be "upside down". You aren't, really, if you put your down payment in the bank and have the discipline to keep it there. At 1% interest, you can do better by investing it and it's quite often the smarter money decision.
 
#33 ·
I disagree with this nugget of old timey conventional wisdom. To a degree, anyway. After negotiation, Subaru and a few others let go of brand new cars pretty cheap. For instance, if I buy 1 year old car with 15-20k miles, the actual price is quite often higher than a new one. How? You can negotiate the price down a lot more on a new car. Then add in freebee coupons for a new one and the financing deals. It seems the manufacturer benefits by putting more of its cars on the road.

For virtually any car the first year sees the sharpest drop is depreciation. If anyone buys a 1 year old car with 10-20k miles for more than a new one then I would question their ability to carry out most day to day tasks...

Some prices online in the used car market are insane, even private sale ones where the owner thinks their car is worth way more than it is because it means a lot to them. Around here those cars sit idle for a long time. I am currently in the market for a 2016 Mazda CX5 and have been following prices for months and have definitely seen insane pricing amongst the rationally priced cars. I have recently been following depreciation curves and rechecked into them and they still follow the typical curve that they have for the past 10 years.

And like many markets, there are buyers who know what they are doing and ones who always tell you " psshhhh I got a steal, the dealer practically paid me to take it off the lot"...
 
#34 ·
That is the conventional wisdom. But it isn't always true. It CAN be true. But a car can actually appreciate in the 1st year too. There are a lot of variables.

Most are pretty predictable. In makes/models that hold their value well and people tend to keep a long time, these are the ones that tend to either appreciate, or at least, depreciate a lot less. But timing still matters. The price of NEW 2020's will drop precipitously when 2021's hit the dealer lots, for instance. And almost every year, on a Subaru at least, around those times you can indeed get a new 2020 cheaper than an equivalent used 2020 with low miles. Even at the same dealership. Because Subaru pays said dealership incentives to sell X number of new cars. Subaru gives customers free coupons out the wazoo and awesome finance deals to sell new cars. Subaru does this because it has an interest in making more new cars. They do not incentivize anyone to buy used cars.

Now, if you are talking used used. Like older and lots of miles and out of warranty. Yeah, the purchase price is obviously a lot cheaper. And whether it's financially better relies on a lot of luck. On average, yeah, but it's a gamble. The average maintenance/repair bill goes up as the vehicle gets older, and in a day where a minor repair can cost more than a monthly payment on a new car, it's not that unusual to lose that gamble.
 
#35 ·

Quick google. Those sticker prices on lightly used 2019's are on the order of 1-3 thousand under MSRP on new 2020's for the same trim levels, and well over the actual final negotiated prices being reported.

  • It's true you can negotiate the used price too. But usually not as much.
  • For a new one, you can collect at least $1500 in coupons from Subaru. No such luck on a used one.
  • You can get Subaru's 0.9% financing only if buying new, not if buying used.

i.e. right now you'd most likely be better buying a new 2020 than a used 2019 with <10k miles. This is not an uncommon situation.
 
#37 ·

Quick google. Those sticker prices on lightly used 2019's are on the order of 1-3 thousand under MSRP on new 2020's for the same trim levels, and well over the actual final negotiated prices being reported.

  • It's true you can negotiate the used price too. But usually not as much.
  • For a new one, you can collect at least $1500 in coupons from Subaru. No such luck on a used one.
  • You can get Subaru's 0.9% financing only if buying new, not if buying used.
i.e. right now you'd most likely be better buying a new 2020 than a used 2019 with <10k miles. This is not an uncommon situation.
yes there are definitely outliers and specific situations when new makes sense ie: your example of end of year purchase etc. I'm talking about commuter cars in general which do follow the depreciation curve if you measure year over year, not the small time frames where the outliers occur. But as you said you can often times take advantage of these things iat specific moments in time.

Buying used is not nearly as much of a gamble as most claim it to be. Following depreciation hits it almost always nets you a financial benefit if you are smart and stay with a known reliable manufacturer like Toyota. It becomes more risky for a person who knows little about cars and pays someone else to wrench the car for them (or even worse when they go the the dealership, because "hey, the dealership knows best"). That said, many have also been burned buying new cars when they start failing out of warranty and end up truly upside down on the car.

At the end of the day knowledge is power and can save you money. I have always bought used, most often bottom of the depreciation curve older cars. This works for me because I follow that specific market for a few months before buying and I do all the work on my cars myself. If I didn't know much about cars then I would buy end of year new, or only a couple years used with an extended warranty and it would be a Toyota.
 
#38 ·
Well, I agree with most of that. Point was, it doesn't depreciate significantly the moment you drive it off the lot, as per the standard conventional wisdom. It depreciates with miles and years. I followed book values on my 14, even graphed it, lol. Cause I'm a geek engineer and I love excel, lol. Now, I put 30k miles per year on it, so I may not be normal because miles, not years, dominate my depreciation. But for me I got a jump in value the moment I drove it home per kbb. Then a rather linear decrease ever since, not a curve. The depreciation per mile was about the same nomatter where I jumped on the train. Levelling out some at the end (180k on the clock), but repair bills are starting to average around a new car payment, soooo, I'm buying new, lol. Wheel bearings, rotors, etc

I always question buying used on anything under 40k miles or so, cause you have to ask why someone got rid of that car.

I ignored conventional wisdom and looked at data to try to figure out whether to get new, old, or somewhere in between. There were no clear cut winners in cost per mile. Buying "old" clearly has the highest upside, but deepest downside too. I.e. biggest gamble.

My original point wasn't to convince anyone that buying new is definitively the best. It's just not the complete bath its made out to be.
 
#39 ·
Well, I agree with most of that. Point was, it doesn't depreciate significantly the moment you drive it off the lot, as per the standard conventional wisdom. It depreciates with miles and years. I followed book values on my 14, even graphed it, lol. Cause I'm a geek engineer and I love excel, lol. Now, I put 30k miles per year on it, so I may not be normal because miles, not years, dominate my depreciation. But for me I got a jump in value the moment I drove it home per kbb. Then a rather linear decrease ever since, not a curve. The depreciation per mile was about the same nomatter where I jumped on the train. Levelling out some at the end (180k on the clock), but repair bills are starting to average around a new car payment, soooo, I'm buying new, lol. Wheel bearings, rotors, etc

I always question buying used on anything under 40k miles or so, cause you have to ask why someone got rid of that car.

I ignored conventional wisdom and looked at data to try to figure out whether to get new, old, or somewhere in between. There were no clear cut winners in cost per mile. Buying "old" clearly has the highest upside, but deepest downside too. I.e. biggest gamble.

My original point wasn't to convince anyone that buying new is definitively the best. It's just not the complete bath its made out to be.
All good info for sure
 
#41 ·
Depreciation doesn't really become a factor until you get rid of a car. And in general the longer you keep a car, new or used, the less of a factor it becomes. Buying a new car and keep it for 10 years and depreciation gets spread out so far that it is insignificant compared to the years of use of the car. Someone buying a new car and then trading it in after a couple of years most often will take the biggest hit because there is the big depreciation loss plus getting basically wholesale value for the trade in. A case like that is where leasing can actually make some sense. Doing a private sale instead of trading can help a little because you will do better than trade in price most of the time. Personally I hate selling things and I don't like the hassle of trying to sell a car so I'm usually okay with the trade in hit.
 
#43 ·
I do agree and is true that depreciation loss only really matters to those who sell their car often or when they are less than 10 years old.

But the catch is this - you could have bought the car when it was two years old (give or take) for much less than you would have paid new. Then still kept it for 10+ years and you end up paying much less overall then if you bought new.

Some people are adamant on buying new and I can respect that and in some cases it may make some sense. However, for 99% of the cars on the road buying new is never a better financial decision (unless you are running it through a business). This is even more so the case with modern cars as their 10 year repair rate is lower than it has ever been. This being a Subaru forum, the 10 year outlook isn't bearly as good as manufacturers like Toyota, butbthat is besides the point.

Like I said, there is nothing wrong with buying new but many people also have buyers remorse and are trying to convince themselves that it was a good decision after they got bent over by the salesperson. If you like buying new then enjoy it, but just be fine with that fact that there is a premium to it
 
#49 ·
Anyone know which credit bureau Subaru finance uses in the USA? Looking to replace our original owner 2007 Outback with a 2020 Outback and since we froze our credit (had some identity theft concerns around 2012) I'd like to know what needs to thaw out in order to explore the 0.9% offers rather than drawing cash out of high yield savings making 1.70%
 
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