My dealer offered a way to buy the Type S for MSRP in June

[RRP RSX-S]

Why would you never put that much down? This isn't a low interest market anymore where before I would of agreed with you.

I understand your point. Lower interest means cash down barely affects the payment. So why bother.

In a high rate market $1000 down for example has a much bigger impact on payments.

So the value of a down payment seems much higher in a high rate market.

However, the real reason you shouldn’t put a ton down actually doesn’t change at all. And it’s that your cash should have long term growth (when properly invested) at a higher rate than a loan would be (with good credit). So keeping your cash invested and making higher payments for the car is actually more financially sound. Even though it doesn’t seem like it.

That’s also why I said if you can’t make the payments without cash down aka the bank probably wouldn’t approve you, you’re looking at a car you probably shouldn’t buy.

But there are circumstances where this theory is wrong. Maybe you have a massive cash flow and it’s not a big deal. Ultimately you do you. I’m just a guy on the internet giving unsolicited advice

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[RRP RSX-S]

Why would you want to finance more than absolutely necessary?

Acura's promotional financing offers are currently 4.9%, and Type-S cars are excluded from that, so let's say Acura's financing will be 5.9% for an ITS. What investments do you have that are guaranteeing a post-tax return of 5.9%?

A 3-month T-Bill is 5.2%. Getting a guaranteed return of 5.9% in this market is nearly impossible to pass up, especially if the if the money is just sitting in a bond fund/HYSA/CD.

You get the concept but it depends on how you look at growth. If you want a guaranteed 5.9%+ return this year. It might be tough. Not impossible at all. Just tough. However if done “correctly” that “loss” is because you are buying low. So you might not have over 5.9% this year or even during the life of the car loan. But overall you will. Plus that cash down on a car isn’t compounding. Even if it is a lower growth rate temporarily, the base is still increasing. That’s why your overall lifetime average on invested cash should settle around 13%.

Long term that $30k will do better invested vs making a payment lower. But some people don’t look or care about long term. If I wanted the car now and needed payments to be low, which required $30k down, sure. Do it. But you’re costing yourself, depending on age, about $100k at retirement.

 

[RRP RSX-S]

Not true--review the Terms & Conditions when the reservation system comes up tomorrow, it'll say the reservation isn't an agreement as to a sale price and that'll be determined by the dealer. It's been a commonality in all Acura reservations.

I remember reading that on my preorder. I was just mentioning what some others had been told by their dealers.

 

[ijm5012]

You get the concept but it depends on how you look at growth. If you want 5.9%+ return this year. It might be tough. Not impossible at all. Just tough. However if done “correctly” that “loss” is because you are buying low. Long term that $30k will do better invested vs making a payment lower. But some people don’t look or care about long term. If I wanted the car now and needed payments to be low, which required $30k down, sure. Do it. But you’re costing yourself, depending on age, about $100k at retirement.

As they say, past performance is no guarantee of future results, espeically with the market how it is today. 5 year T-Notes are at 3.40% today. SPY is up 3.2% over the past 6 months. The banking sector isn't looking at the moment (IYF is down 11.78% over the past 6 months). Inflation is still at 4.9%, so I wouldn't expect rates to be cut at all in the short term.

Also, nobody in their right mind is saying to take money that would've otherwise been put towards retirement, and instead use that to buy a depreciating asset. My 401k gets maxed out each year, as does by backdoor Roth IRA. Any money that goes towards car payments/downpayments is a separate line item in my budget, as it should be for everyone.

By minimizing downpayment, all you're doing is increasing your financial leverage. That's all fine and dandy, so long as your cashflow isn't a concern. It just boils down to one's personal risk tolerance.

Let's say you're OTD for $55k (which is getting the car at MSRP, then $3k in TTL), put 10% down, and you finance the remaining 44k at 5.9% for 60 months. You're looking at $849/mo. for 5 years. If you shorten that payment period to 48 months, the duration of the bumper-to-bumper warranty, you're now at $1,031/mo.

If you are comfortable spending that much a month for 4-5 years on a FWD 4-cylinder car, more power to you.

 

[lumper]

I read that preorders through Acura aren’t allowed to be marked up since you’re given a receipt of the total cost with the deposit.

That said, just some wisdom. If you’re worried about not being able to qualify for financing, the car is too expensive for you. Also, NEVER put that much cash down on a car. 30k?!

Well, I'm not worried about being approved, but being approved for 50k means a hefty monthly payment, that sure, I can afford, I do have 3k a month in disposable income.

I prefer to do my payments up front to myself then use them all at once.
by putting 30k down on a 52k car, I leave only 22k to finance, so payments can be 500 a month or a little more for 48 months or so, reasonable leaving me plenty of room to continue to save up for other things.

If you think it wiser to send them 500 to 1500 a month every month for years to buy the car to me its all the same thing, why does it mater if you make 35k in payments or I drop 35k on a car?

I don't pay any interest on my 35k$
anyway, to each his own, there are no rules, you do you and I'll do me.

 

[itsovr9k]

In the current market, you can invest and return 3.5-4.5% in high yield savings accounts (or 4.75-5% in short term CDs), which compound daily. Now this rate will begin to drop, but rates will remain decent in my estimation for at least the next two years.

A basic example would be; you took the $20,000 "saved" (10k down vs 30k), and placed funds in a high-yield savings account which could generate around 4K over 5 years @ 3.75% (to keep it simple). Of course once you account for taxes it changes this notably.

If you bought a $50,000 car and put down 10k versus 30k (loan Apr at 6%), You would end up spending about 3.2k additional in interest over that same 5 year period.

So yes technically once you pay taxes on the interest gained you would end up saving more money via a larger down payment.

That being said though, the Primary advantage here of course is that you now have an emergency fund should you need it. Investing the money mitigates a good proportion of the costs associated with the loan. If you place a larger down payment, and you needed cash, You would essentially have to sell your car to pull that money back out, and then go through the purchasing process again.

 

[RRP RSX-S]

As they say, past performance is no guarantee of future results, espeically with the market how it is today. 5 year T-Notes are at 3.40% today. SPY is up 3.2% over the past 6 months. The banking sector isn't looking at the moment (IYF is down 11.78% over the past 6 months). Inflation is still at 4.9%, so I wouldn't expect rates to be cut at all in the short term.

Also, nobody in their right mind is saying to take money that would've otherwise been put towards retirement, and instead use that to buy a depreciating asset. My 401k gets maxed out each year, as does by backdoor Roth IRA. Any money that goes towards car payments/downpayments is a separate line item in my budget, as it should be for everyone.

By minimizing downpayment, all you're doing is increasing your financial leverage. That's all fine and dandy, so long as your cashflow isn't a concern. It just boils down to one's personal risk tolerance.

Let's say you're OTD for $55k (which is getting the car at MSRP, then $3k in TTL), put 10% down, and you finance the remaining 44k at 5.9% for 60 months. You're looking at $849/mo. for 5 years. If you shorten that payment period to 48 months, the duration of the bumper-to-bumper warranty, you're now at $1,031/mo.

If you are comfortable spending that much a month for 4-5 years on a FWD 4-cylinder car, more power to you.

I’m looking at decades of history. The market always returns to stable weather is was high or low. If it doesn’t and the dollar completely crumbles, we’ve got bigger problems than my retirement lol.

But we agree that you should have the cash flow to be able to make the payments. From a cash POV, I don’t really have an official line for daily stuff. I also max my 401k and Roth, and I like to keep a mid 5 digit base line of cash on hand. But everything else goes into additional investments beyond 401k and Roth. So to pull that much down, I‘d either be dipping into my cash on hand and possibly dropping below my desired baseline or into investments. I’d rather let that grow and make the higher payment IF like you said, you have the cash flow. If you don’t, find a cheaper car IMO.

 

[RRP RSX-S]

Well, I'm not worried about being approved, but being approved for 50k means a hefty monthly payment, that sure, I can afford, I do have 3k a month in disposable income.

I prefer to do my payments up front to myself then use them all at once.
by putting 30k down on a 52k car, I leave only 22k to finance, so payments can be 500 a month or a little more for 48 months or so, reasonable leaving me plenty of room to continue to save up for other things.

If you think it wiser to send them 500 to 1500 a month every month for years to buy the car to me its all the same thing, why does it mater if you make 35k in payments or I drop 35k on a car?

I don't pay any interest on my 35k$
anyway, to each his own, there are no rules, you do you and I'll do me.

Certainly you do you. And if you have a good amount of disposable monthly income, great, it won’t really hurt you. But to answer your question, in the now, sure it’s sort of the same thing, spend the 35k on the car let’s say payments are 500 vs nothing down and payments are 1200. Option 1 you have an extra 700/mo to play with. Option 2 you still have 35k in the bank growing.

But think of it like this. Let’s say the above payment numbers are accurate. Go with the 1200/mo and invest the 35k. Then pay the delta, $700 out of the invested 35k. So your monthly expense from your normal account is the same as if you put the 35k down. At the end of the loan however, that extra account will have money left in it bc it’s growing faster than the cost to borrow the additional 35k.

 

[RRP RSX-S]

In the current market, you can invest and return 3.5-4.5% in high yield savings accounts (or 4.75-5% in short term CDs), which compound daily. Now this rate will begin to drop, but rates will remain decent in my estimation for at least the next two years.

A basic example would be; you took the $20,000 "saved" (10k down vs 30k), and placed funds in a high-yield savings account which could generate around 4K over 5 years @ 3.75% (to keep it simple). Of course once you account for taxes it changes this notably.

If you bought a $50,000 car and put down 10k versus 30k (loan Apr at 6%), You would end up spending about 3.2k additional in interest over that same 5 year period.

So yes technically once you pay taxes on the interest gained you would end up saving more money via a larger down payment.

That being said though, the Primary advantage here of course is that you now have an emergency fund should you need it. Investing the money mitigates a good proportion of the costs associated with the loan. If you place a larger down payment, and you needed cash, You would essentially have to sell your car to pull that money back out, and then go through the purchasing process again.

100%. Generally you break even but keeping the cash allows for the emergencies fund. That said if you do your taxes right, and invest in more than just daily CD’s, you have the emergency fund AND net more money.

 

[Ricochet48]

Should be under MSRP as it's already $4K too high imho.

Waiting for the hype to die down, will revisit in a year or so to see if these get priced to the market, otherwise it's B58 time.

 

[lumper]

Certainly you do you. And if you have a good amount of disposable monthly income, great, it won’t really hurt you. But to answer your question, in the now, sure it’s sort of the same thing, spend the 35k on the car let’s say payments are 500 vs nothing down and payments are 1200. Option 1 you have an extra 700/mo to play with. Option 2 you still have 35k in the bank growing.

But think of it like this. Let’s say the above payment numbers are accurate. Go with the 1200/mo and invest the 35k. Then pay the delta, $700 out of the invested 35k. So your monthly expense from your normal account is the same as if you put the 35k down. At the end of the loan however, that extra account will have money left in it bc it’s growing faster than the cost to borrow the additional 35k.

Again, no offense if your happy with that arrangement by all means do it, I am 53 bought plenty of cars I know what I am doing and this is what works for me,.
To each his own,

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