Cash Or Finance

[Felt 35]

I`m thinking about buying the new Honda Jazz V AT (SRS).

640K Baht cash or on finance.

If finance then 20% downpayment(128,000 and 48 months with monthly installments at 11,862 Baht (2.80% interest)

I get 5% interest on my savings abroad.

What is smart, cash or finance?

[dave_boo]

I'd recommend going with the finance. A couple of reasons behind my thinking. Firstly, if you put it all down at once, your money isn't making you more money. If you're able to get 5% interest, you're ahead. However, that 2.80% is probably a flat rate, so you're actually going to pay ~11% on the total amount borrowed. GaryA can explain it quite a bit more eloqountly than I.

The other reason that I have for financing is that there's more motivation for the seller to provide service. While I'm sure there are some sellers that would be all to happy to take your downpayment and not provide service after that, hoping you'll simply turn the car in, I've seen more (not based on experience in Thailand!) want to keep you paying till the whole thing is paid for--since there's no telling what condition it's going to come back in.

[Felt 35]

11% on the total amount borrowed

My first thought was that it looks a bit to reasonable with 2.80% and after a lot of clicks on the calculator it was not really fitting in with the total cost.

But as you say with financing

if you put it all down at once, your money isn't making you more money

and

more motivation for the seller to provide service

if financing.

Which is a very important detail today when service (whatever product) are on the fall on a global scale.

It was easier in the old days when cash payment for a new car automatically gave you a 10-15% rebate and usually an extra package with accessories.

Thanks for your advice.

[dthomasss]

I`m thinking about buying the new Honda Jazz V AT (SRS).

640K Baht cash or on finance.

If finance then 20% downpayment(128,000 and 48 months with monthly installments at 11,862 Baht (2.80% interest)

I get 5% interest on my savings abroad.

What is smart, cash or finance?

I am going to buy the exact same model. I will go with financing because 2.8 annual is lower than what I get in my savings 3.5, plus I was only offered a 10,000 discount for paying cash. No thanks!

[paoa]

Does anyone have names of dealers that will sell autos to farangs on credit, rather than paying the full amount?

[anthonyu]

I`m thinking about buying the new Honda Jazz V AT (SRS).

640K Baht cash or on finance.

If finance then 20% downpayment(128,000 and 48 months with monthly installments at 11,862 Baht (2.80% interest)

I get 5% interest on my savings abroad.

What is smart, cash or finance?

Finance it. Pay the 128k and invest the spare 512k. If you want to be safe 4 year Thai Govt. bonds give a YTM of 5.05% right now. so over the 4 years the total of the installments comes to 569,376THB but your investment plus interest comes to 615,424THB which wipes off 46,048 from the purchase price of your car. Then again depreciation will make sure you still have a negative NPV...

[Sophon]

I`m thinking about buying the new Honda Jazz V AT (SRS).

640K Baht cash or on finance.

If finance then 20% downpayment(128,000 and 48 months with monthly installments at 11,862 Baht (2.80% interest)

I get 5% interest on my savings abroad.

What is smart, cash or finance?

Finance it. Pay the 128k and invest the spare 512k. If you want to be safe 4 year Thai Govt. bonds give a YTM of 5.05% right now. so over the 4 years the total of the installments comes to 569,376THB but your investment plus interest comes to 615,424THB which wipes off 46,048 from the purchase price of your car. Then again depreciation will make sure you still have a negative NPV...

Sounds good on the surface, but you are forgetting something in your calculations. He cannot invest the "spare" 512,000 at 5.05 % for four years, because he would have to make the payments on the car. So the 512,000 invested would slowly decline with the car payments over the four year period.

Bottom line is that 2.80% simple interest (which is what we are talking about here) is the equivalent of an interest rate of approximately 5.30% p.a. compound interest which is what most of us would be used to seeing back home. So unless you can invest the money and get a better return than 5.30% p.a. you are better off paying cash (at least from a financial standpoint). So Thai Government bonds at 5.05% or a savings account at 5% just won't cut it.

Sophon

[anthonyu]

I`m thinking about buying the new Honda Jazz V AT (SRS).

640K Baht cash or on finance.

If finance then 20% downpayment(128,000 and 48 months with monthly installments at 11,862 Baht (2.80% interest)

I get 5% interest on my savings abroad.

What is smart, cash or finance?

Finance it. Pay the 128k and invest the spare 512k. If you want to be safe 4 year Thai Govt. bonds give a YTM of 5.05% right now. so over the 4 years the total of the installments comes to 569,376THB but your investment plus interest comes to 615,424THB which wipes off 46,048 from the purchase price of your car. Then again depreciation will make sure you still have a negative NPV...

Sounds good on the surface, but you are forgetting something in your calculations. He cannot invest the "spare" 512,000 at 5.05 % for four years, because he would have to make the payments on the car. So the 512,000 invested would slowly decline with the car payments over the four year period.

Bottom line is that 2.80% simple interest (which is what we are talking about here) is the equivalent of an interest rate of approximately 5.30% p.a. compound interest which is what most of us would be used to seeing back home. So unless you can invest the money and get a better return than 5.30% p.a. you are better off paying cash (at least from a financial standpoint). So Thai Government bonds at 5.05% or a savings account at 5% just won't cut it.

Sophon

Sophon you're right that the compount interest on the financing side is roughly 5%. It doesn't help doing this from an investment standpoint. How about investing in the SETIndex instead? (Now is a good time to buy actually since its taking a hammering) Close on 17/6/2004 was 423.96 and on 19/6/2008 was 549.39 which is a little over 20% change. That would make the financing option a tad more attractive i think.

[marshbags]

Cash, enjoy the car you now own and lose the next ex amount of years of inconvenience and possible hastle.

marshbags

Going on the cost of oil, perhaps a bicycle is a better deal

[bendix]

I've bought two cars in the last 12 months. My Camry (50% down and 50% financed), and a little Yaris for the wife (paid cash).

The difference in after-sales service is pronounced. The Camry people are excellent . . proactively reminding me of services etc etc. The Yaris people? It's like we don't exist anymore.

So I'd definitely finance, based on that experience.

[snowflake]

I bought my Jazz on finance since the afterservice sales would be so much better...

I did put down 40% and did the finance over 36 months as that is the time the warranty will last... I am not sure I will do 100000Km before that time...

Great car and gorgeous to drive...

[Heng]

Cash.

You never know that the future may bring and there's no way to calculate the value (whether present or future) of owning something free and clear.

BTW, whether you finance or not, a new car dealer is paid in full (whether by the bank or by their finance arm... usually incorporated as a separate company entirely), with you slowing paying off the car with the bank or finance arm of the car company. They only get partial payment if you're dealing with some used car lot doing one on one financing.

[Riley'sLife]

Cash Only. Never fund a depreciating asset with financing, unless you are a masochist and enjoy burning your money- twice!.

More importantly, learn the difference between Simple Interest and Compound Interest when trying to compare the two.

I have always received exceptional service from Toyota Dealers throughout Thailand after having paid cash for my depreciating Toyota assets!

[marshbags]

Ditto with Isuzu.

Always treat me politely and all the staff are very helpful indeed, at all times when i visit.

When you think about it, buying or financing from an after sales point of view, they will, surely ( should ) give you the same after sales service or the cash buyer will not use them again and that,s the last thing the distributors want.

If i was not getting the service that should be expected I would first of all make a point of seeing the distributors higher management, and i,d be equally hesitant to use them again, should they not address the issue in full to my satisfaction.

marshbags

[Nowhereman60]

Like someone else ask here and no one answered. How does a farang finance a car here? I been told by a few dealers you can't. So please inlighting me.

[rixalex]

Like someone else ask here and no one answered. How does a farang finance a car here? I been told by a few dealers you can't. So please inlighting me.

Foreigners can get finance but are required to put down a bigger deposit.

[Nowhereman60]

Like someone else ask here and no one answered. How does a farang finance a car here? I been told by a few dealers you can't. So please inlighting me.

Foreigners can get finance but are required to put down a bigger deposit.

Is this with the car dealership or with GE Money or other finance company? Why do dealership tell me no.

[stingray]

Like someone else ask here and no one answered. How does a farang finance a car here? I been told by a few dealers you can't. So please inlighting me.

Foreigners can get finance but are required to put down a bigger deposit.

Is this with the car dealership or with GE Money or other finance company? Why do dealership tell me no.

I tought only if you have a work permit. But cash is anyway better! Car is right away in your name registered and if you have the blue book you can sell it anytime without the hassels to go to the finance for clearing the paperwork. I know my self if want to buy a used car. I'll never buy if somebody has no blue book or if the car still in the finance. It's to much hasslte to clear out the paperwork, and do the registration. Service is not depend on how you pay. It doesn't matter you have a compalin about service or vehicle, if you don't pay the take your car away anyway. You can't put pressure on them about the service if you pay the car in monthly rates. Cash is allways the better options. If you want move away from Thailand, you can sale it anytime, just the day before you jump int the air plane.

[kennkate]

How do you know if the car is fianianced not payed for ? if you want to buy private sale

Is the Blue Book Proof it belongs to the seller ?

[finchy]

I did a 50 50 on my Triton really because my money is in Sterling and at the time the exchange rate was 59 baht to the pound !! When the baht drops which we all know it will i shall pay the loan off.

Another point is that being a Farang they would only give me 50% finance

[finchy]

Like someone else ask here and no one answered. How does a farang finance a car here? I been told by a few dealers you can't. So please inlighting me.

Foreigners can get finance but are required to put down a bigger deposit.

Is this with the car dealership or with GE Money or other finance company? Why do dealership tell me no.

I tought only if you have a work permit. But cash is anyway better! Car is right away in your name registered and if you have the blue book you can sell it anytime without the hassels to go to the finance for clearing the paperwork. I know my self if want to buy a used car. I'll never buy if somebody has no blue book or if the car still in the finance. It's to much hasslte to clear out the paperwork, and do the registration. Service is not depend on how you pay. It doesn't matter you have a compalin about service or vehicle, if you don't pay the take your car away anyway. You can't put pressure on them about the service if you pay the car in monthly rates. Cash is allways the better options. If you want move away from Thailand, you can sale it anytime, just the day before you jump int the air plane.

I don't really see you point the finance agreement is taken out with a bank ,building society or loan company. Not the vehicle dealer they get paid in full on the car whatever, so you shouldn't recieve an better or worse treatment however you have paid for the vehicle.

[ignis]

Check different dealer, lots have different deals...

My Jazz top model I paid for in cash, the new Isuzu Gold Series bought 3 weeks ago, 4 different dealers offered differet deals, ended up with 25% deposit and 1.95% interest..... this Isuzu Dealer had printed offeres from 5% - 20% down and 2.80 - 3.38% interest.... they also had another of 30% down and 1.90% interest

20% down and 2.80% interest.. not a good deal

To me it made sence to pay the 25% down = 1.95% interest

30% down = .05% less interest made no sence

[stingray]

How do you know if the car is fianianced not payed for ? if you want to buy private sale

Is the Blue Book Proof it belongs to the seller ?

Yes blue book is proof enought, but it have to be registered in tha name of the owner.