[supermachone]

rockwell is saying if you agree with what i said throughout this thread that its not a good idea

[jbenevides89]

Originally Posted by supermachone i disagree, banks dont like taking risks if you go to buy a 100,000 dollar house, and you have 2,000 dollars down for 30 years, thats a pretty lengthy and risky loan sure it will pay off in interest if the life of the loan is paid in full but banks are more than likely to make a deal on quick cash, shorter life on loans do you think banks want to wait 30 years to make their money? no

the banks make their money the first 10 years of the loan. after that the money goes to the principal to pay your part. the higher the intrest the more money they get. a 100k loan in the long run is going to add up to near 200k if you let it take its course. so now tell me whats better 5% intrest on 50K or 5% intrest on 100k over 30 years. the banks not your friend they just want money

[03SonicBoom]

Originally Posted by WickedSnake00 Still never? I already have the assets to cover the entirety of the loan and then some. I would rather not cash in or move most of them due to the penalties, plus it's nice to have a reserve.

I would still say never, but this is also just my opinion and how I work. There's a huge difference between having the assets and having the cash.

Having assets can mean that you can pay off the loan by taking money out of your 401k and eating the penalty. So if you get into a bad situation, lose your job and need to get the loan paid off (to avoid hurting your credit), how much money are you going to lose by having to liquidate those assets? How much is that going to cost you long term? So if you're having to liquidate assets to cover a loan, that makes that loan very expensive (even more so if you're young b/c of the exponential growth of those assets).

My wife's getting a new car this spring/summer. I could take out a loan and get it now. I also have assets that would cover that loan. I even have more than enough cold hard cash in an emergency savings account. But we're not getting it until spring/summer b/c I don't have the free spending cash to cover the cost of the car.

It's just my recommendation, how I do things, and it has let to lead me astray in any of my purchasing. I believe the only things someone should get a loan for is something that is an investment (aka, things that usually increase in value).

[T-Lee. 30]

Originally Posted by supermachone rockwell is saying if you agree with what i said throughout this thread that its not a good idea

is that what i was saying or was i saying read EVERYTHING thats been stated instead of 1 page out of 10 before one agrees to it no knowing whats on the other 9pages. Its good that you kinda got what I was saying though I thought it was clear to Everyone

gotta go grill some bratwurst outta here!

[supermachone]

Originally Posted by jbenevides89 the banks make their money the first 10 years of the loan. after that the money goes to the principal to pay your part. the higher the intrest the more money they get. a 100k loan in the long run is going to add up to near 200k if you let it take its course. so now tell me whats better 5% intrest on 50K or 5% intrest on 100k over 30 years. the banks not your friend they just want money

and what happens when they give you a loan you thought you could afford but cant?

so you file bankruptcy and are scott free of your debt if you decide not to liquidate it properly?

who bails out the banks? the tax payers

and if the government wouldnt promise these bail outs the banks would be more inclined to work out deals with their clients who have fallen behind on their loans

who's fault it is in the end, well obviously the people who took out the loan, there are banks who take advantage of people because they know they can get bailed out

but if they wouldnt what are the odds they would work with the people they screwed over?

[03SonicBoom]

Originally Posted by Rockwell29 to be clear this " Originally Posted by supermachone wait people agree with me? i thought i was oblivious and bad at math you I didn't read anything but the first page before posting. So if I agree w/ you, then I guess so thats what I meant by my statement to be clear I kinda thought that was clear. And show me where i said for you to "endorse a loan".

I read that wrong and thought you were saying I agreed w/ him b/c somewhere in the thread he said it was a good idea to endorse a loan.

I'm also not endorsing him. I stated that I didn't read anything. Then stated that if my statements agree w/ him, then they agree. Which would also mean that if my statements do not agree w/ him, then I don't agree. It further means that if my statements do not address what he says, then I have no agreement/disagreement on that subject.

I never said I agree with him. I basically stated the obvious. If our statements agree, then we agree. It's like simple math. If his opinion = A and my opinion = B, I'm saying that if you analyze A and B and come to the conclusion that A = B, then I guess they agree. At no point am I saying I looked at A and B and agree that they're equal because I'm not saying A = B. You would be the one making the interpretation on that.

[T-Lee. 30]

Originally Posted by 03SonicBoom I read that wrong and thought you were saying I agreed w/ him b/c somewhere in the thread he said it was a good idea to endorse a loan. I'm also not endorsing him. I stated that I didn't read anything. Then stated that if my statements agree w/ him, then they agree. Which would also mean that if my statements do not agree w/ him, then I don't agree. It further means that if my statements do not address what he says, then I have no agreement/disagreement on that subject.

Oh ok I Gotcha

[supermachone]

i happen to agree with what you said and because people disagree with what i said makes what you said wrong, i guess?

everything i said is pretty similar to your views, so take it for what that is

[jbenevides89]

if you file bankruptcy now a days you dont get off scott free. they changed that bout 6 or 8 years ago. you still have to pay the money.

again it all goes back to credit, if you extablish that you are a responsible spender and can manage your money properly aka a thick credit file of decent amounts of money i.e. car loans and such then the bank is going to give you a better rate on your intrest because you are a more secure investment than someone who has the money in the bank to just pay it all off at once. if they see you are going to pay it all off at once then they dont make any money off it. 50k here and 50k there boom the loan is done and you have not really paid anything in intrest so they make much much less money. with that comes a high intrest rate so the bank can compensate for the loss they are taking

[supermachone]

Originally Posted by jbenevides89 if you file bankruptcy now a days you dont get off scott free. they changed that bout 6 or 8 years ago. you still have to pay the money. again it all goes back to credit, if you extablish that you are a responsible spender and can manage your money properly aka a thick credit file or decent amounts of money i.e. car loans and such then the bank is going to give you a better rate on your intrest because you are a more secure investment than someone who has the money in the bank to just pay it all off at once. if they see you are going to pay it all off at once then they dont make any money off it. 50k here and 50k there boom the loan is done and you have not really paid anything in intrest so they make much much less money.

i disagree again, you can file bankruptcy and be scott free of all your debt, that hasnt changed

however if a bank goes to give you a loan, and they see you have the money in the bank, the two parties can agree on an interest rate so the bank will make money and you will build your credit

you arent going to get a loan against money you have in your savings just so you can turn around and pay it off, that would defeat the purpose of building credit

[03SonicBoom]

Originally Posted by jbenevides89 i got mine right at 5% in pretty much the same situation. i financed my wifes engagement ring to build credit and that was the only thing on my file. after i bought my house my credit DROPED like a rock. nothing negative just now i had some debt to income. when i went for my car loan no one would touch me because they all said my credit file was next to non existant and they didnt want to risk their money.

You're trying to combine the philosophy of pay cash for everything into the lifestyle of pay with credit. Yes, if you are suddenly changing from a cash only mentality to a buy on credit then you're going to have trouble.

You don't buy a house and then go out and finance a car when you're working on the pay cash mentality. That's the mentality of living on credit, which means you need credit history to prove that it's low risk.

Originally Posted by jbenevides89 again it all goes back to credit, if you extablish that you are a responsible spender and can manage your money properly aka a thick credit file of decent amounts of money i.e. car loans and such then the bank is going to give you a better rate on your intrest because you are a more secure investment than someone who has the money in the bank to just pay it all off at once. if they see you are going to pay it all off at once then they dont make any money off it. 50k here and 50k there boom the loan is done and you have not really paid anything in intrest so they make much much less money. with that comes a high intrest rate so the bank can compensate for the loss they are taking

If we're talking about a mortgage, why does the bank care about that? All they want is the loan at it's maximum amount. Why do they care how quickly you pay it off? The bank isn't the one who's keeping the loan anyways, they're selling it off right after closing and getting their money.

But furthermore, why do you care what the interest rate is if you have enough cash to get the good interest rates or avoid interest rates all together? I would hardly call my 4.25% interest rate anything but great and that was w/out any credit report.

[supermachone]

banks dont like to know you dont have money

they like to see a good percentage down, a good monthly income, and even better, the money you are borrowing actually in your savings account

do you really think banks want to loan money to people who cant pay it off?

they do all the time, they take risks

but to say they dont want to loan to somebody who has the money on hand is ludicrous

if something ever happens, that loan is covered and the bank will get their money back

[jbenevides89]

Originally Posted by 03SonicBoom You're trying to combine the philosophy of pay cash for everything into the lifestyle of pay with credit. Yes, if you are suddenly changing from a cash only mentality to a buy on credit then you're going to have trouble. You don't buy a house and then go out and finance a car when you're working on the pay cash mentality. That's the mentality of living on credit, which means you need credit history to prove that it's low risk. If we're talking about a mortgage, why does the bank care about that? All they want is the loan at it's maximum amount. Why do they care how quickly you pay it off? The bank isn't the one who's keeping the loan anyways, they're selling it off right after closing and getting their money. But furthermore, why do you care what the interest rate is if you have enough cash to get the good interest rates or avoid interest rates all together? I would hardly call my 4.25% interest rate anything but great and that was w/out any credit report.

i never said i was on the pay cash mentality. what i said was i never had a credit file established and when it came time to start buying these things it was harder after i had a debt to income ration and a very small credit file

the bank makes its money off the intrest of a loan. period. if you have a smaller loan then they dont make as much money. a 100k loan is going to make more money than a 50k loan. if you have a thicker credit file then your going to be a better choice. if your a better choice than your intrest is going to be slightly lower. im not saying your 4.25 is bad by any means. i dont think my 5 is bad. however i know people down in the 3% range. lots of variables go into the loan process.

what it comes down to and my main argument is its better to finance things responsably, build yourself some credit, and enjoy being able to have nice things without over doing it. there is nothing wrong with that.

[jbenevides89]

cash in the savings account doesnt mean anything to a bank because that is unsecured money to them. if you dont have a wet ink signature on a binding contract then they could care less because you can just as easily take that money out and blow it on strippers and cocaine as you can use it to pay of the bills you have. thats like me telling you that i want to buy your rims on a payment plan but i have the money to buy them outright. do you trust me i can afford them. no your going to keep every thing about the conversation saying i said im paying for them and this amount and this much at this time. when it goes south you have the proof to hold against me. not my bank account statment saying well he can pay me now.

[supermachone]

well your circumstances are controversial

if you have 2,000 in the bank and go make an agreement to pay 2,000 dollars over 12 months more than likely the bank will not say no

but why would you go get a loan against your money just to go blow it and be in a contracted debt with the bank?

i suppose someone might be stupid enough to do that, but the point is a bank will loan you money a lot easier if they see you have money in your account

[jbenevides89]

Originally Posted by supermachone well your circumstances are controversial if you have 2,000 in the bank and go make an agreement to pay 2,000 dollars over 12 months more than likely the bank will not say no but why would you go get a loan against your money just to go blow it and be in a contracted debt with the bank? i suppose someone might be stupid enough to do that, but the point is a bank will loan you money a lot easier if they see you have money in your account

isnt that what you were saying to do to build credit? 5k in the bank so u take a 5k loan out? just to pay it back to the bank?


also there is a difference in having money in the bank and an income. they look at your income not your money in savings. trust me i went through that. they wouldnt give me a loan for a large amount even though i had enough to pay most of it back in the account. the only people who gave me a loan were the people i already had a loan for a house with. they knew me and knew i was making good on my house payments and putting extra into it.

[supermachone]

well of course you have to have an income on top of your savings, but if you are making money plus have money in savings, they will be all for that

my previous boss resided his house, he owns his own business, it cost him 10,000 to pay for it

he could have payed cash for that shit, but because of his income and because he had the money in the bank, he decided to get a loan against it

and that doesnt mean he's going to go blow that 10 grand, he's responsible enough to keep that in savings and use it to pay off the loan to build up his credit

[jbenevides89]

i understand this and totally agree with that. i just take it a step further, i dont actually have 120 thousand dollars in the bank for a house so i take a mortgage out on it. i need a car i can depend on so i take out a small loan and pay the other half out of pocket so its not a large loan. i still have some $$ in the bank incase of emergencies. not enough to pay off all my debt off but enough to get by for a little while. im also responsible enough to have my bills all well before they are due and put money aside in savings afterwords. im using credit to have nice things that i can not buy out right at the moment but its not going to put a strain on me to finance either.

[03SonicBoom]

Originally Posted by jbenevides89 i never said i was on the pay cash mentality. what i said was i never had a credit file established and when it came time to start buying these things it was harder after i had a debt to income ration and a very small credit file

What I'm saying is that if you want a pay on credit life, there are many better ways to get good credit besides an auto loan.

Originally Posted by jbenevides89 the bank makes its money off the intrest of a loan. period. if you have a smaller loan then they dont make as much money. a 100k loan is going to make more money than a 50k loan. if you have a thicker credit file then your going to be a better choice. if your a better choice than your intrest is going to be slightly lower. im not saying your 4.25 is bad by any means. i dont think my 5 is bad. however i know people down in the 3% range. lots of variables go into the loan process.

No, the bank doesn't make it's money off the interest in a mortgage. I got my mortgage from a local bank and now that bank does NOT own that loan. Right after you close on your mortgage, the bank sells that mortgage (for a profit) to someone else (usually Freddie). If you read all the information in the closing, it's stated a few times that it's going to be sold. There are very few banks that actually hold onto a mortgage and make their money off the interest. They make their money b/c they're selling that mortgage to another company.

Also, 2 years ago no one was getting mortgage rates in the 3% range for a 30 year fixed rate mortgage (it was averaging 5% back then). Maybe someone got lucky on a 15 year mortgage or got an adjustable rate mortgage. Today, it's more than a full percentage point lower than 2 years ago. So I would say that 4.25% on a 30 year fixed.

However, my buddy who works w/ me (also only has student loans and no credit history) locked in his mortgage rate 20 days ago at 3.875%. Like I've been saying, having a long history is only one part of the equation and you can get just as good of rates w/ a good paying job and no debt.