What's the interest rate on a piano loan?

Posted by: Mikester

What's the interest rate on a piano loan? - 03/14/05 11:41 AM

My current rate is 9.75%. But, if I want to loan $$ for my piano upgrade (to a 7' grand) I am being quoted at 10.9%. My loans are done through the dealer's affiliated bank (which is Great Western Bank). Is that pretty standard? Also what is the standard length of loan?

Loaning $44k for 10 years would result in payments for me at roughly $600 monthly. Is this pretty much the going rate? Thanks!
Posted by: Palindrome

Re: What's the interest rate on a piano loan? - 03/14/05 11:48 AM

Think about a home equity loan if this option is available. Right now that's costing me 4.75%.
Posted by: Mikester

Re: What's the interest rate on a piano loan? - 03/14/05 12:01 PM

Holy moly! I just did a quick "loan calculator" calculation and the difference between a 10.9% rate and 4.75% rate came to $140 dollars monthly! Oh my ... I'm having second thoughts about financing such a sum of money since I can't qualify for a home equity loan (I don't own a home \:\( )
Posted by: jon-nyc

Re: What's the interest rate on a piano loan? - 03/14/05 12:21 PM

So Mikester - you going for the rebuilt B????
Posted by: Mikester

Re: What's the interest rate on a piano loan? - 03/14/05 12:43 PM

I'm still planning on making a trip to the East Coast piano dealers. But the high rates are a little bit worrisome. I might not get a piano after all. \:\(
Posted by: gryphon

Re: What's the interest rate on a piano loan? - 03/14/05 12:47 PM

That's probably a decent rate for a "piano" loan through a dealer. But home equities are 5%-6%. I have a line of credit at 5.5%, and as Pal stated his is under 5%.
Posted by: BruceD

Re: What's the interest rate on a piano loan? - 03/14/05 12:48 PM

Mikester :

http://www.piano4u.com/piano_financing.htm

Some dealerships will arrange financing through Allegro Acceptance, which is a company that finances musical instrument purchases.

I'll let you know later on today what their rate is; it may be lower than what you were quoted.

Regards,
Posted by: Rich Galassini

Re: What's the interest rate on a piano loan? - 03/14/05 12:53 PM

Mikester,

Many customers of mine are going fr a home equity loan. It is cheaper, can be longer term, and has tax advantages. As Bruce mentioned, Allegro is good, but they can't beat home equity rates.

My 2 cents,
Posted by: Linda in PA

Re: What's the interest rate on a piano loan? - 03/14/05 01:12 PM

As Mikester noted, he doesn't own a home.

Creative credit card financing may be another option. Rates are fairly low on credit cards right now (especially for transaction-level promotional rates good for the life of the purchase) and credit card purchases are considered to be unsecured loans - no collateral needed! Mikester - I sent you a PM with info on this.

Hope you find a financial solution with which you are comfortable and that you have the opportunity to visit this area. There are many good dealers in the Mid-Atlantic/East Coast region.

Good luck . . . Linda
Posted by: BruceD

Re: What's the interest rate on a piano loan? - 03/14/05 01:51 PM

Mikester :

OK, you can forget Allegro Acceptance. I just checked and was surprised to find that their APR was 13.99%. Surely you can do better than that.

The only reason I had any dealings with them is because they offer a 90-days-same-as-cash option which I was able to take advantage of.

Regards,
Posted by: Axtremus

Re: What's the interest rate on a piano loan? - 03/14/05 01:52 PM

Don't Panic![/b]

You will likely not take out a loan of $40k. You're going to subtract the downpayment, subtract whatever trade-in value you got for your current piano, and use the rest as your principal amount to calculate your payment.

There are various very creative financing options out there that I have seen. A few examples:

1. Manufacturer financed 0% interest for one year. (You have to pay off everything in one year, or roll it over to some other debt facilities, such as those credit card balance transfer offers.)

2. Dealer financed 2% APR for first year, then 10% APR thereafter. (The trick is to pay off as much as you can in the first year, then roll over to something else.)

3. Straight financing -- that would be your 10% (+/- 2%) example. Still, after subtracting downpayment and current piano trade in, your actual loan amount shouldn't be that bad. With a bit of budgeting/spending discipline, paying the whole thing off in a few short years should be possible.

Lastly, think very carefully if indeed you can only be satisfied by spending $40k + trade. Not making judgment one way or the other, but after sampling a boat load of different pianos, may be there is a more economical yet unquestionably sufficient alternative that would present itself to you.

Good luck. \:\)
Posted by: Steve Cohen

Re: What's the interest rate on a piano loan? - 03/14/05 03:30 PM

Ax, which piano manufacturer offers 0% financing? And what dealership offers 2% fro the 1st year...?
Posted by: mamma2my3sons

Re: What's the interest rate on a piano loan? - 03/14/05 04:07 PM

Yowser, that sounds high to me. However the rate is probably competitive in your area.

Although I'm not a proponent of any kind of debt, you may want to consider just putting it on a credit card. I know one of my credit cards only has a rate of 4%. Although 44K on a credit card may not fly.
Posted by: Jeffrey

Re: What's the interest rate on a piano loan? - 03/14/05 05:00 PM

Mike - Why not stay with the piano you have? In general, debt should not be used to purchase a depreciating asset.
Posted by: hgiles

Re: What's the interest rate on a piano loan? - 03/15/05 06:56 AM

 Quote:
Originally posted by Jeffrey:
Mike - Why not stay with the piano you have? In general, debt should not be used to purchase a depreciating asset. [/b]
C'mon how many people do you expect to purchase an automobile with cash? Pianos too?

I'd be reduced to driving and playing a bucket if I had to do this.
Posted by: apple*

Re: What's the interest rate on a piano loan? - 03/15/05 07:23 AM

 Quote:
Originally posted by hgiles:
 Quote:
Originally posted by Jeffrey:
Mike - Why not stay with the piano you have? In general, debt should not be used to purchase a depreciating asset. [/b]
C'mon how many people do you expect to purchase an automobile with cash? Pianos too?

I'd be reduced to driving and playing a bucket if I had to do this. [/b]
actually - if you want a really good piano sometime in the future, the less you pay an institution in finance charges the more you will have available later to actually buy one, if you think in terms of total dollars.

apple - who's first piano cost 50 dollars, her second - $300, her third $1750, her fourth - $5000 and her fifth - quite a bit more.
Posted by: Stevester

Re: What's the interest rate on a piano loan? - 03/15/05 07:55 AM

I am in Jeffrey and apple's court on this one. Save your lunch money and find a good cash deal. They are out there I assure you.
Posted by: hgiles

Re: What's the interest rate on a piano loan? - 03/15/05 08:04 AM

Are you guys telling me that most people here touting their new Estonias, Steinways, Masons, etc. are buying them with cash?

I am a poor soul :-(
Posted by: Mikester

Re: What's the interest rate on a piano loan? - 03/15/05 08:11 AM

I mean I would love to save up and pay for a $40k+ piano with cash, but unfortunately I don't think that's going to happen in the next couple of years. Especially now that I'm saving up to put money down on a home in the next year or two. Even then ... I mean, do people actually have $40k+ in liquid cash available? Well, I guess it's possible. If I save up for 7-9 years I figure I can probably have that sum of cash available, or immediately available by selling stock. I'm just a young gun! \:\)

Ahhh, I think I'll just wait to be able to pay straight up for a nice piano.
Posted by: mamma2my3sons

Re: What's the interest rate on a piano loan? - 03/15/05 08:16 AM

hgiles said:

"C'mon how many people do you expect to purchase an automobile with cash? Pianos too?

I'd be reduced to driving and playing a bucket if I had to do this. "[/b]

Actually there are a few of us out here that pay cash for everything including vehicles (if we charge it, we pay it in full at the end of the month)

We owe for our house but that is a short loan. We really don't earn a whole lot either yet we have all the "toys" (even a lot in a lake/recreational community that we paid very little for as a foreclosure).

Of course the downside to refusing to "rent" a lifesyle (ie. live making payments on everything) is that we have to wait for things & what we have is rarely top of the line or even bought new for that matter!

Just about anyone can buy[/b] lots of things, but few seem to ever actually own[/b] them.

Just my own personal observations/philosophy. As in everything else, your own personal financial milage may vary. I also understand piano is a very personal purchase & sometimes one "needs" the best! \:\)
Now back to your regularly scheduled program!
Posted by: Mikester

Re: What's the interest rate on a piano loan? - 03/15/05 08:32 AM

I completely agree. I think, for many of the people who are relatively new to the working world(aka. recently graduated), a lot of things are about "having" them without actually "owning" them. I fell into the trap of leasing a car. And I think this new shiny piano thing is another one of those things that it's good to wait for, in my case.

One thing that I think though, (and you may feel free to disagree with me) is that coming out of college and not being settled, renting may not be that bad compared to owning.
Posted by: BruceD

Re: What's the interest rate on a piano loan? - 03/15/05 08:55 AM

 Quote:
Originally posted by hgiles:
Are you guys telling me that most people here touting their new Estonias, Steinways, Masons, etc. are buying them with cash?

I am a poor soul :-( [/b]
Well, not to get too personal, but, since you asked: yes and no, in my case.

I paid cash for my Yamaha U1 in 1999, (but it was only around $5000.00 at the time). Then, I used it as a trade-in on my Estonia 168 in 2000. The balance due on the Estonia 168 was financed through my bank.

In the meantime, I saved diligently so that when I was ready to trade in my 168 for the Estonia 190, I was able to pay the balance due in 90-days-same-as-cash. So, yes, I can say I paid cash for my new Estonia 190. It made quite a little dent in the budget, momentarily, but I own the 190 outright which is a wonderful feeling - all the more so because I am not a wealthy man, but I do try to live frugally and within my means.

Regards,
Posted by: AndrewG

Re: What's the interest rate on a piano loan? - 03/15/05 10:08 AM

 Quote:
Originally posted by hgiles:
Are you guys telling me that most people here touting their new Estonias, Steinways, Masons, etc. are buying them with cash?

I am a poor soul :-( [/b]
I don't know about others. I have purchased a total of 3 grand pianos, all paid by cash. I saved hard for them. My first, an excellent Premier baby grand for $1700. My second, a rebuilt 1924 SS M for $9500 and my third a brand new Petrof III for slightly more. All paid by cash.
Posted by: gryphon

Re: What's the interest rate on a piano loan? - 03/15/05 11:08 AM

I bought my car with a loan because I got it at 0% interest right after 9/11 (and you can still get those loans). I paid cash for all three of my pianos, including the Estonia. And I'm not rich, despite what the Democrats think.
Posted by: jon-nyc

Re: What's the interest rate on a piano loan? - 03/15/05 11:16 AM

Gryph, if it makes you feel any better, I'm a democrat, and I don't think you're rich.

;\)
Posted by: Chris W1

Re: What's the interest rate on a piano loan? - 03/15/05 12:24 PM

Jeez, the stuff you miss around here \:\( .

Congratulations Bruce D. on the 190! I assume this was announced this some time ago?

When the threads first started on the Estonia, with David Burton and others who don't seem to be around anymore, I remember your input on the 168 vs the 190. Many happy returns to you.

I think most forumites buying mid-tier and higher pianos are doing it while carrying a mortgage. Since the home equity loan interest is deductable, your usual 5% loan is more like 4% or less after taxes. I can say I bought our piano with cash, wire funds actually , but I can't pretend that my mortgage wouldn't be around 30k less if I didn't.

My mantra has frequently been "You can't miss what you never had". Partly untrue, I suppose, if you make a sport out of visiting enough high end piano stores. The pain of delaying such a purchase is usually worst the moment you decide not to buy. Since the quality margins get so thin as you get to 40k, why not consider something for 20-30?

Chris
Posted by: Karen Bretz

Re: What's the interest rate on a piano loan? - 03/15/05 12:55 PM

If you can't buy a $44K piano with cash you have no business owning it. It's neither a necessity nor an investment.
Posted by: curry

Re: What's the interest rate on a piano loan? - 03/15/05 12:57 PM

One thing to try. If you belong to a credit union, you can take a loan with very low interest rates.
Posted by: kluurs

Re: What's the interest rate on a piano loan? - 03/15/05 01:01 PM

I'm on both sides of this equation...you know yourself. It would seem that if you don't own a home, that might be a more reasonable priority. I regard homes as "piano containers" - permitting privacy and audience development.

As for cash versus credit - you have to know yourself. If you're an impulse person, you need to be careful - because there will always be more impulses. OTH if you want to do one crazy thing in your life, you could do worse than overbuy a piano.

FWIW, I bought a piano right after my divorce - wasn't the smartest thing to do financially - but it was an important thing for me to do - a signal of what I wanted for my future.

Ken
Posted by: Mikester

Re: What's the interest rate on a piano loan? - 03/15/05 01:04 PM

 Quote:
Originally posted by Karen Bretz:
If you can't buy a $44K piano with cash you have no business owning it. It's neither a necessity nor an investment. [/b]
There is a lot of truth here. Boy, I think I'm going to hold off until I pay off my current piano in cash (which will probably be in one year or two).
Posted by: Karen Bretz

Re: What's the interest rate on a piano loan? - 03/15/05 01:56 PM

Good idea, especially if you don't own your current piano. It's easy to get caught up in immediate wants. Society primes us for it. Is having the piano worth making a monthly contribution to the profit of a finance company? By the time its paid off, you probably will have paid almost $44K in interest. Borrowing money to buy a $44K piano won't help you buy a house, either.
Posted by: Frank R

Re: What's the interest rate on a piano loan? - 03/15/05 03:41 PM

I would have liked to have paid cash but I didn't want to take anything from savings, even though that would be the best thing. I also know how bad I am at paying myself back. The plan was to pay off the piano within 2 years. So I put a reasonable amount down (trade in + 3k) and financed the rest, knowing that prices on European pianos were likely to go up in the next couple of years. Rather than saving disposable income I decided to offset the interest that I will pay against the price increase that will occur in the two years that it would take to save the money. Again, not the cheapest way to go but it would have been tough to sell my wife on taking that much out of savings, especially since I already had a piano. I'm a year into the plan and have reduced the loan by half, right on schedule. Our home is paid and I just didn't want to do an equity line although it would have been cheaper and the better choice. The good news is that in one year the price increase is more than the total interest I will end up paying.
Posted by: Palindrome

Re: What's the interest rate on a piano loan? - 03/15/05 08:20 PM

 Quote:
Originally posted by Frank R:
...Our home is paid and I just didn't want to do an equity line although it would have been cheaper and the better choice.... [/b]
Well, each of us has the best idea as to how to maintain one's sense of security. Remember, though, that the home equity loan not only carries a lower interest rate, but the interest itself may well be tax-deductible.
Posted by: Ell

Re: What's the interest rate on a piano loan? - 03/16/05 05:29 AM

luckily where I'm purchasing my piano, it's through the company interest free.
Posted by: Linda in PA

Re: What's the interest rate on a piano loan? - 03/16/05 11:25 AM

 Quote:
Originally posted by Ell:
luckily where I'm purchasing my piano, it's through the company interest free. [/b]
That's a great deal, Ell - good for you!

I also obtained interest-free financing. Placed a significant portion of the purchase on my Discover Card and got my 1% cash back on the purchase price. Then did a balance transfer to a new card that offered a 0% interest rate on the transferred amount (for the life of the balance) with no balance transfer fees.

It would have been foolish for me to have paid for the entire purchase in cash. I get the time value of having my money in my accounts and I actually earned a few hundred dollars from the transaction. \:D

Lots of card issuers are still offering 0% balance transfers to consumers with good credit histories. I got 2 or 3 such offers in the mail last week alone.
Posted by: BruceD

Re: What's the interest rate on a piano loan? - 03/16/05 11:59 AM

 Quote:
Originally posted by Chris W1:
Jeez, the stuff you miss around here \:\( .

Congratulations Bruce D. on the 190! I assume this was announced this some time ago?

When the threads first started on the Estonia, with David Burton and others who don't seem to be around anymore, I remember your input on the 168 vs the 190. Many happy returns to you.

[/b]
Thanks, Chris! I didn't really "announce" it formally; when it is shipped (safely!) and set up in my new home in Victoria, I will send up rockets and flares with pictures attached! ;\)

Cheers!