Vehicle Financing Or Pay Cash

Discussion in 'Trucks and Trailers' started by DSLND, Jan 14, 2007.

  1. DSLND

    DSLND LawnSite Bronze Member
    Posts: 1,205

    For those who know me they know im a little ways away from getting my license. But the thing im looking at doing is when i turn 15 i would like to purchase my truck. Im looking at getting a 2000-2005 Chevy K2500 and get and E-Z Dump Insert and a 7"6 Western Plow. Now this coming season im looking at saving $5k for a truck and am hoping when i turn 15 to get the truck in the $15k ranger with all attachments. Now my question is do you just find it easier to take financing out at a monthly rate for a vehicle versus just paying in cash. The only thing i find bad about paying in cash is that it would greatly affect my bank account and with financing i could just pay a little at a time until it is paid off. Ive thought a little so far and what i'd like to do is as stated above is save $5k next year specifically for the truck and then take the remaining amount of cash needed out as a loan and then get it paid off before i get my license so it will be paid off versus just paying like $300/Month. I can see paying cash for a vehicle under $7k but anything over that i think would just be easier to take a loan out.What Do You Think? Thanks! -Mitch-
  2. everybody has got their opinions, but why not pay cash starting out at 16 years old, you got a whole lifetime to be in debt.
  3. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    If you need $15k to get the job done get a loan for $15k. You will get a lower interest rate and you can then apply the $5k to the loan and knock down the principal (amount borrowed) so that you are paying less total interest. The time to pay more on a loan is sooner than later as you are only paying off interest and gaining nothing.

    A loan will also help you build credit. In order to help with this loan get a credit card as soon as you possibly can. Your parents will have to co-sign on your loan too btw.

    With this investment make sure you have at least a $5k nest egg in the bank. Then as your business grows so does the egg as a safety net.
  4. DSLND

    DSLND LawnSite Bronze Member
    Posts: 1,205

    Thanks! If i take the loan out i will proboably take it out from my parents or my grandma. Reason being i will get the truck in February and would like it paid off by August. At That time i will pay as much as i can on a monthly basis while still building the business bank account to around $10-15k. I will not be making any major equipment purchases that year so i can focus on building the business bank account and getting the truck paid off. Thanks! -Mitch-
  5. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    Are you saying get the loan from your parents or grandma instead of the bank? Do the bank anyway........if they will co-sign. You will begin building credit. You have to keep thinking ahead for that next purchase. It took some work but I was approved for a $50,000 loan from my bank all in my name and company name. The interest sucks at 10.5% but guess what. When I go to buy another truck, a skid steer or a piece of property it will look really good to see I was approved and made every payment. Think ahead!

    Get a checking account if you don't already.

    You seem to be level headed, be smart with your money and don't let it go to your head. Yes $15,000 is a lot but in business $15,000 is as easy to spend as $1,500 to others your age.
  6. DSLND

    DSLND LawnSite Bronze Member
    Posts: 1,205

    Thats proboably what i'll end up doing. Im only 13 and am not eligible for a checking account yet but it will be nice when i am. Thanks for the building credit idea, i realized that if i start when im 16 and get good credit then i will be able to get a loan for my house when im older! Thanks! -Mitch-
  7. qualitylawnmanagement

    qualitylawnmanagement LawnSite Bronze Member
    Posts: 1,001

    I financed both of my trucks. My first truck was $8,500 paid that off in less than 8 months, and my truck I have now was $11,500 put $6,500 down payment and will be paid in full by June 1, 2007. I hardly pay for anything with cash like you said above in looks like you have no money in the bank after the purchase. But you could always put more towards the payment if you are having a good month, so like if you have $300.00 truck payment put out $900.00 that month. Even on my mowers I do the 6 months same as cash and then pay for them. But it looks like you have you goals set for you. Good Luck on your truck purchase.
  8. grandview (2006)

    grandview (2006) LawnSite Gold Member
    Posts: 3,466

    Here's another trick if your using a copon book for your payments don't put all the extra money in one payment.Ex. 300.00 per month, say you have an extra 1500.00 don't make a 1800.00 payment,make 6payments of 300.00 ea. this way your payment is not due for 6 months . If you make a 1800. payment you will still have one the next month then.
  9. Lawnworks

    Lawnworks LawnSite Fanatic
    from usa
    Posts: 5,407

    Save up and pay cash. Learn some financial discipline.
  10. great advice guys, how can anyone have the nerve to tell some 15 or 16 year old kid to go 10 -15 thousand dollars in debt, yeah real good advice.

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