USA buyers: Anyone else concerned with rising US interest rates?

[idleuser]

I'm not a 100% cash buyer. Originally I wanted to finance the car @ 3% interest with a 50% deposit if I took delivery at the end of 2022. With sticky inflation and higher interest rates, will it effect your decision to purchase the car?

5yr/60 month loan terms

3% at 45k borrowed = $48.5k - $808/monthly
5% at 45k borrowed = $50.9k - $850/monthly
6% at 45k borrowed = $52.2k - $870/monthly
7% at 45k borrowed = $53.4k - $891/monthly
8% at 45k borrowed = $54.7k - $912/monthly

With the PCE price index reporting higher than expected in Feburary, what is the current rate of auto loan interest that will stop you from buying the Emira? There are talks that the Feds are going to shoot for 6.25-7% interest rates which translates to 7.25-10% auto loans.

 

[Dabjbr]

I’m in the same boat as you, actually wanting to put less down. I can get lower payments by extending to 72 or 84 month loan but don’t want to do that.

In turn, yes, at a certain price and interest rate, the Emira no longer makes sense. I’m going to hold off making my final decision until more cars are reviewed with hard driving and, of course, my own test drive.

 

[Captain.Kirk]

I'm not a 100% cash buyer. Originally I wanted to finance the car @ 3% interest with a 50% deposit if I took delivery at the end of 2022. With sticky inflation and higher interest rates, will it effect your decision to purchase the car?

5yr/60 month loan terms

3% at 45k borrowed = $48.5k - $808/monthly
5% at 45k borrowed = $50.9k - $850/monthly
6% at 45k borrowed = $52.2k - $870/monthly
7% at 45k borrowed = $53.4k - $891/monthly
8% at 45k borrowed = $54.7k - $912/monthly

With the PCE price index reporting higher than expected in Feburary, what is the current rate of auto loan interest that will stop you from buying the Emira? There are talks that the Feds are going to shoot for 6.25-7% interest rates which translates to 7.25-10% auto loans.

Luckily for me I’m a cash buyer and higher interest rates improve my bottom line.

However, I do feel your pain. Especially when we have to wait so long for a car and then the financial world conspiracies against many buyers that may have to make a very difficult decision to either bite the bullet on increased costs and interest rates or even cancel their dream car.

Based on Lotus’ delivery promises so far maybe your car will be far enough out that the economy will recover enough to lower interest rates.

That would be the one advantage to the Lotus version of “soon”.

 

[dgrace]

Careful what you wish for: the only reason the Fed would cut rates now is if the unemployment numbers shoot up and the economy goes into recession.

 

[Hell4Leather]

I’m in the same boat as you, actually wanting to put less down. I can get lower payments by extending to 72 or 84 month loan but don’t want to do that.

In turn, yes, at a certain price and interest rate, the Emira no longer makes sense. I’m going to hold off making my final decision until more cars are reviewed with hard driving and, of course, my own test drive.

Credit Unions give better rates. Mine is still doing 5.15% for 72 on new cars. Remember you can change your terms whenever you want. The first 45 days in the US you don’t even make payment #1. My 2 cents, preserve capital, take the best deal you can find, refinance when applicable.

 

[benjh1028]

Cash buyer but still recognize it’s a crappy situation. What seemed like such a bargain is starting to tarnish a bit given the price increase on top of interest rates doubling.

Although I would usually never advocate borrowing from a retirement plan, given that the stock market is likely going to continue to suck, it weirdly may be better to borrow from yourself. At least the interest goes back in your own account.

 

[dgrace]

When you zoom out, the current rates are in line with historical averages. It just sucks going cold turkey after getting addicted to free money the past 10 years.

 

[Hell4Leather]

When you zoom out, the current rates are in line with historical averages. It just sucks going cold turkey after getting addicted to free money the past 10 years.
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Something to keep in mind is that Lotus doesn’t depreciate like other vehicles. There are differences of opinion on the year to year, esp at the beginning, but the general consensus is that at year 10 - 12 depreciation effectively stops at ~50% Original MSRP.

 

[kitkat]

With how long I've been waiting for this car, I've practically paid it off saving for it.

 

[Hell4Leather]

With how long I've been waiting for this car, I've practically paid it off saving for it.

Right. These delays have actually started to work out. My dealer told me to expect 14 months for a non-FE. That’s gonna put me close. Another delay to 6-10months and I’m golden. That puts a 2022 deposit with a 2025 delivery. Sounds probably truer than the estimates from Lotus.

*Bonus* by the time my ride is here and people get to gawk at it, they won’t be able to order one.

 

[dgrace]

With how long I've been waiting for this car, I've practically paid it off saving for it.

Even better, you might be able to (gasp) earn interest on those savings! Feels like the last time that happened was in the 90's.

 

[idleuser]

Credit Unions give better rates. Mine is still doing 5.15% for 72 on new cars. Remember you can change your terms whenever you want. The first 45 days in the US you don’t even make payment #1. My 2 cents, preserve capital, take the best deal you can find, refinance when applicable.

It will be much higher than 5% by the time most of us collect our cars. Which is why I'm pegging it between 7-10% for anyone collecting it at the end of 2023 and early 2024. There is always the refinance option like you said!!

 

[idleuser]

Even better, you might be able to (gasp) earn interest on those savings! Feels like the last time that happened was in the 90's.

While I'm still going to buy the car with even a larger downpayment, the rise in interest just sucks. I could be earning $$$ in an actual savings account for once.

 

[VL3X]

I'm more concerned about my investments continuing to be in the red. I was hoping to at least take some S&P gains to pay off the Emira taxes, but even that's not looking good. Increasing interest rates aren't something I'm necessarily happy about, but it's not going to prevent me from getting the Emira either.

Buying a car in this price range for cash never makes sense to me, when I could put enough down to be comfortable with the monthly payments while making my cash work for me in other ways. However this doesn't really seem like a great option these days since the market sucks. Either way, cash is still king and I'd rather hold on to as much as possible instead of putting it into a depreciating asset (which the Emira FE will eventually be).

 

[Ryder]

Degrace, you are correct. Put that $$ into a MMF. No expenses and slightly over4.10% return. There are no penalties to withdraw the cash.
Kit, like you said, if you tighten your belt, you can save money so that your downpayment increases and what you borrow decreases.

 

[Cachaco131]

I'm more concerned about my investments continuing to be in the red. I was hoping to at least take some S&P gains to pay off the Emira taxes, but even that's not looking good. Increasing interest rates aren't something I'm necessarily happy about, but it's not going to prevent me from getting the Emira either.

Buying a car in this price range for cash never makes sense to me, when I could put enough down to be comfortable with the monthly payments while making my cash work for me in other ways. However this doesn't really seem like a great option these days since the market sucks. Either way, cash is still king and I'd rather hold on to as much as possible instead of putting it into a depreciating asset (which the Emira FE will eventually be).

It depends. Unless you have confidence in the market/your investments outperforming, using debt is not financially better. Also, some folks hate debt payments. I grew up in a country where mortgage rates were 15pct...so you would buy cash and only what you could afford (unlike here in the US where folks live wayyyy beyond their means and banks own pretty much everything you see people buying). I paid my student loan asap, I have zero car payments. It's like a weight off my shoulders. So there is a personal comfort with debt that can't be priced.

 

[VL3X]

It depends. Unless you have confidence in the market/your investments outperforming, using debt is not financially better. Also, some folks hate debt payments. I grew up in a country where mortgage rates were 15pct...so you would buy cash and only what you could afford (unlike here in the US where folks live wayyyy beyond their means and banks own pretty much everything you see people buying). I paid my student loan asap, I have zero car payments. It's like a weight off my shoulders. So there is a personal comfort with debt that can't be priced.

I agree completely. I personally have zero debt besides my current mortgage and paid cash for my daily driver. But I will tell you that my father worked in luxury car sales for decades and had many clients with extreme wealth. One example that comes to mind is an executive at a famous "campy" soup company. IIRC, the form his assistant submitted had something like $12m (or maybe it was $20m) written down for income. Turns out that was per month! And he still financed a new Lexus.

 

[GetawayDriving]

I'll be financing, and I won't be dissuaded by rates. Can always refinance if rates come down, and if they don't I'm not going to NOT buy exactly the car I want because of an extra 10%/month. The way it stands, my FE allocation is already looking to be 8% cheaper than any base order and I live in a state without sales tax so that helps even it out. I'll roll my previous vehicle's equity into this one but otherwise my money stays in the market (for better or worse).

 

[KAR120C]

I'll be financing, and I won't be dissuaded by rates. Can always refinance if rates come down, and if they don't I'm not going to NOT buy exactly the car I want because of an extra 10%/month. The way it stands, my FE allocation is already looking to be 8% cheaper than any base order and I live in a state without sales tax so that helps even it out. I'll roll my previous vehicle's equity into this one but otherwise my money stays in the market (for better or worse).

No sales tax? Nice!

 

[VL3X]

No sales tax? Nice!

It is nice, but they somewhat make up for it with DMV doc fees. Delaware is currently 4.25% of the selling price or NADA book value (whichever is higher). So my Emira will cost +~$4200 in DMV fees (including registraiton and title fees).