Financing Survey

ddndoug wrote:

4x4ord wrote:

mowermech wrote:
Those who have lots of money invested in financial institutions should keep in mind the only way they will get a good ROI is if the financial institution LENDS their money to others.
If a majority of people stop borrowing, the ROI is going to drop catastrophically, because the lenders won't be collecting any interest that they then return to investors. It is pretty much a closed loop.
One should be very thankful for borrowers. THEY make the system work!

If it makes sense for me to borrow money at 3.5 % interest to put into the stock market just think of all the money the banks could make investing in stocks when they get their money for next to nothing. I wonder why they look for people to lend money to at a piddly 3.5 % when they could invest in the stock market and make the big bucks?:)

Because banks are limited to how they can invest deposits based on their regulating bodies. Most prohibit investment into equities.

Doug

Correct. Banks cannot use deposited funds to invest in high risk ventures like stock. While they can earn a good return stocks also have a propensity for loss. Also banks are constrained to a LTD (loan to deposit ratio) so that they can be liquid to cover losses. However you can bet they would if the Fed allowed it. The risk is monumental, cast your mind back a few years when they invested in subprime loans and took insurance out against pre mediated losses. They weren't liquid enough to cover the risky loans. You and I are still paying for that.

ddndoug wrote:

IDman wrote:
We have always paid cash. Never finance anything that will depreciate in value or you will be upside-down sooner or later.

While in theory I agree, but... With such low interest rate environments (we can get 5% at our credit union for up to 10 years) why not let your investments work for you and make payments. After you add the ability to write-off interest on the loan, in the 25% tax bracket your effective loan rate is 3.75%. (Last year most of my accounts had returns in the high teens and low twenties.)

To each their own, I guess. JMHO

Doug

I am glad someone else feels the way I do. At the time I bought, my investments were making 3 to 4% more than the cost of the loan. Made more sense to finance rather than sell off for the cash.

Financed for 20 years at 5%. I never figured it as a percentage of income although it is less than 2%. I used the dealer financing but then refinanced for a better rate.

4x4ord wrote:

mowermech wrote:
Those who have lots of money invested in financial institutions should keep in mind the only way they will get a good ROI is if the financial institution LENDS their money to others.
If a majority of people stop borrowing, the ROI is going to drop catastrophically, because the lenders won't be collecting any interest that they then return to investors. It is pretty much a closed loop.
One should be very thankful for borrowers. THEY make the system work!

If it makes sense for me to borrow money at 3.5 % interest to put into the stock market just think of all the money the banks could make investing in stocks when they get their money for next to nothing. I wonder why they look for people to lend money to at a piddly 3.5 % when they could invest in the stock market and make the big bucks?:)

Because banks are limited to how they can invest deposits based on their regulating bodies. Most prohibit investment into equities.

Doug

wintersun wrote:
I see this with the people that spend $60,000 or more on a diesel truck and find that they owe the bank $40,000 3 years later when they want to sell it.

Well of course, welcome to modern america. Glad to have you here.

The fact is that the use of money as a form of wealth transfer has changed and will never go back. Our modern, interconnected financial world requires the use of interest bearing capital. The ability to use money that individuals don't have to fund purchases they want underpin modern business.

It's expensive to pay salaries day in a day out. The world of finance smoothes out our economy and allows people to stay employable. People with good jobs can achieve good credit and make payments which make for stable balance sheets.

Some people fail miserably, but the repo/loss prevention/collection agency industry has all that covered. EVERY company can withstand finance loss because there's a mountain of data that tells them how much to estimate in recovery costs. Plus lots of repo men would crack your noggin to keep up with quotas.

Sorry, I am ranting. But the fact is that EVERY ONE of us needs that idiot to buy the brand new F350 or Denali with more features that a yacht. It keeps me collecting a paycheck.

Halmfamily wrote:
I think we all need to agree to disagree on this subject. Happy camping and enjoy you rig however you paid for it.

It was just a survey. Just delete all opinions as you read.

We purchased a fixer upper that we could get into cheaply. I don't want a payment...especially for our first RV.

We paid cash. With something that depreciates as rapidly as an RV it makes no sense to finance it and have the added interest expense.

If I was going to take out a loan it would be for no more than 5 years. You want to have enough of the principle paid down so when it comes time to sell the RV you can at least breakeven and not be in the hole with the loan amount still owed. I see this with the people that spend $60,000 or more on a diesel truck and find that they owe the bank $40,000 3 years later when they want to sell it.

NYCgrrl wrote:

4x4ord wrote:

mowermech wrote:
Those who have lots of money invested in financial institutions should keep in mind the only way they will get a good ROI is if the financial institution LENDS their money to others.
If a majority of people stop borrowing, the ROI is going to drop catastrophically, because the lenders won't be collecting any interest that they then return to investors. It is pretty much a closed loop.
One should be very thankful for borrowers. THEY make the system work!

If it makes sense for me to borrow money at 3.5 % interest to put into the stock market just think of all the money the banks could make investing in stocks when they get their money for next to nothing. I wonder why they look for people to lend money to at a piddly 3.5 % when they could invest in the stock market and make the big bucks?:)

There are many other ways to invest money besides the stock market.

To paraphrase Halmfamily, enjoy whatever way you've acquired or will acquire your RV. Just camp and enjoy.

Agree there is other ways to invest besides the stock market. At present my debt is huge and I have next to nothing invested in the stock market.

bid_time wrote:

Sea Dog wrote:
The people with bucks that I know
pay cash whenever possible.
Maybe that is why they have bucks!

Have you ever heard of Donald Trump? Maybe you should invest a little of your time (which won't cost you anything in interest), and find out how he got richer then everyone you know added together.

Would you happen to know how much $$$ did Mr Trump started with?
I'm guessing he was born rich..so why would you bring him up as an example is beyond me..its easy to invest when you have piles of money.. :)

I've started with zero and had to work hard all my life,so I'm very cautious about using my money..paying interest only if. I absolutely have to.
Bought some old houses fixed and sold for more,done that few times and now I'm financially free..

paid cash for my truck bought brand new so wouldnt have to worry about fixing things,,paid 23k and made the camper myself for another 5 .. To have exactly what. I wanted..

4x4ord wrote:

mowermech wrote:
Those who have lots of money invested in financial institutions should keep in mind the only way they will get a good ROI is if the financial institution LENDS their money to others.
If a majority of people stop borrowing, the ROI is going to drop catastrophically, because the lenders won't be collecting any interest that they then return to investors. It is pretty much a closed loop.
One should be very thankful for borrowers. THEY make the system work!

If it makes sense for me to borrow money at 3.5 % interest to put into the stock market just think of all the money the banks could make investing in stocks when they get their money for next to nothing. I wonder why they look for people to lend money to at a piddly 3.5 % when they could invest in the stock market and make the big bucks?:)

There are many other ways to invest money besides the stock market.

To paraphrase Halmfamily, enjoy whatever way you've acquired or will acquire your RV. Just camp and enjoy.