97 Month Auto Loan

[Nick R]

Originally Posted By: rationull
Originally Posted By: grampi
I don't understand anyone buying a new car these days...some of these vehicles cost as much as a small house...vehicle prices are out of control...$20K+ for compacts and prices only go up from there...ridiculous!


The only vehicles that cost as much as a small house in my neck of the woods are Bentleys, Ferraris, etc.



+1 even a cheap house around here is at least $175k roughly. And you are talking, tiny, old and cruddy.

 

[itguy08]

Originally Posted By: doitmyself

So, where do you guys invest this $20,000 +/- while you take out a 1.9% new car loan that is nearly risk free and makes enough more than 1.9% to make it worth the hassle?

Imagine buying a new car in 2007, parking that money somewhere, then get hit by the 2008 ball buster. For the next 4 years +/- that investment would have been flat, or worse.


Inventing smartly in solid companies. Utilities, solid manufacturing, etc. Companies that have been at it for a while and have a decent balance sheet. I started investing in early 2009 and my average gain is ~29%. My best performing stock is SiriusXM, followed by Ford. Reinvest dividends.

Had you not panicked (and invested in solid companies), by now you would be doing well. Even my 401k, started in 2001 is doing fine. Kitchen it's up about 4%.

Historically even counting the Great Depression and all the recessions along the way the stock market has outperformed savings accounts.

Build a solid foundation and think long term, not short term.

 

[Tdbo]

Originally Posted By: itguy08
Originally Posted By: doitmyself

So, where do you guys invest this $20,000 +/- while you take out a 1.9% new car loan that is nearly risk free and makes enough more than 1.9% to make it worth the hassle?

Imagine buying a new car in 2007, parking that money somewhere, then get hit by the 2008 ball buster. For the next 4 years +/- that investment would have been flat, or worse.


Inventing smartly in solid companies. Utilities, solid manufacturing, etc. Companies that have been at it for a while and have a decent balance sheet. I started investing in early 2009 and my average gain is ~29%. My best performing stock is SiriusXM, followed by Ford. Reinvest dividends.

Had you not panicked (and invested in solid companies), by now you would be doing well. Even my 401k, started in 2001 is doing fine. Kitchen it's up about 4%.

Historically even counting the Great Depression and all the recessions along the way the stock market has outperformed savings accounts.

Build a solid foundation and think long term, not short term.



+1. I am a very conservative investor, and even being conservative investor, made 11% last year in mutual funds. As the previous poster mentioned, I too reinvested all my dividends back into mutual funds.

Would I rather conserve capital and make a good return or W/D it to save .9% financing on the new Accord I bought in December? At those rater, I'll borrow the cash every time.

 

[Mr Nice]

^^^^

Yep. I'm up 15.2% this year in my 401K and about 12% in my TDameritrade account.

Low interest rates car loans (24 months) are good.

 

[MCompact]

Originally Posted By: Tdbo

+1. I am a very conservative investor, and even being conservative investor, made 11% last year in mutual funds. As the previous poster mentioned, I too reinvested all my dividends back into mutual funds.

Would I rather conserve capital and make a good return or W/D it to save .9% financing on the new Accord I bought in December? At those rater, I'll borrow the cash every time.


Me too. I have a 0.9% 24 month loan on my wife's CPO 3er. Same philosophy- I'll take BMW Financial's money every time...

 

[antiqueshell]

Originally Posted By: grampi
I don't understand anyone buying a new car these days...some of these vehicles cost as much as a small house...vehicle prices are out of control...$20K+ for compacts and prices only go up from there...ridiculous!


This.

Frankly the automobile (at least a new one) is quickly becoming out of reach for the larger mass of low and middle income earners.

Absolutely insane that a basic sub compact or compact is 20 grand. It should be more like 10k-12k on average.

 

[bdcardinal]

I was debating dumping the Volvo and the 95 for a new Mustang GT the past couple weeks, working at a dealer and being a car person is a horrible combination. We got in an awesome 2014 Mustang GT with the Track Pack and Nav in dark grey with black interior. Basically every option I wanted for a car. I was all ready to go into the GM's office and have him work up pricing until I saw it was $44,000. No thanks, too much money for a Mustang IMHO.

 

[Nick R]

Originally Posted By: antiqueshell
Originally Posted By: grampi
I don't understand anyone buying a new car these days...some of these vehicles cost as much as a small house...vehicle prices are out of control...$20K+ for compacts and prices only go up from there...ridiculous!


This.

Frankly the automobile (at least a new one) is quickly becoming out of reach for the larger mass of low and middle income earners.

Absolutely insane that a basic sub compact or compact is 20 grand. It should be more like 10k-12k on average.



Well, the problem is that means we'd have to go back to a completely decontented, unsafe, horrible true econobox. Current compacts and subcompacts are not econoboxes, they are very nice cars. Unless people are really longing for the days of the cavalier type cars again.

 

[sciphi]

Originally Posted By: grampi
I don't understand anyone buying a new car these days...some of these vehicles cost as much as a small house...vehicle prices are out of control...$20K+ for compacts and prices only go up from there...ridiculous!


You're also forgetting that today's "subcompact" is larger than a "compact" of 10 years ago, and a "compact" is the same size as a 10 year old "midsize" car. A new "midsize" car is the same size as a 10 year old "large" car. My "compact" Cruze is the same size as a 2005 Accord, and our "subcompact" Fit is larger than a 2005 Civic. Car "class" is all marketing doublespeak.

Shift your expectations, and $20k for a smaller family sedan is reasonable.

Not everybody has the time/resources to fix a broken car, and rust makes some repairs much harder and more expensive. Dropping $2500 for a new transmission on a rusty vehicle that will be junkyard fodder in a year or two can be a tough sell, especially if there are other issues with the vehicle. OTOH, $2500 is 5 months of payments at the average new car payment of $500 a month, so if one gets a year out of the vehicle and assuming nothing else goes wrong, which is hardly a reality on a rustbucket, 7 months of payments are saved.

Nick, there are true econoboxes out there. The base Accent, Spark, Versa, and Jetta are as plain as one can get. Funny how I haven't seen a single base model of those cars on the road.

 

[itguy08]

Originally Posted By: Nick R

Well, the problem is that means we'd have to go back to a completely decontented, unsafe, horrible true econobox.


I never felt unsafe in my 86 Mustang or 87 Escort. If anything I wouldn't mind doing without the airbags and some of the other "safety gear".

 

[dishdude]

Originally Posted By: itguy08
Originally Posted By: Nick R

Well, the problem is that means we'd have to go back to a completely decontented, unsafe, horrible true econobox.


I never felt unsafe in my 86 Mustang or 87 Escort. If anything I wouldn't mind doing without the airbags and some of the other "safety gear".


I sure wouldn't want to be involved in a serious collision while riding in an 80's car. Give me a modern day vehicle that is designed to protect the occupants and has airbags any day. Today's cars are a bargain considering what you get and how much longer they last.

 

[MCompact]

We drive my '02 every chance I get- my wife even prefers it to her E90...
Simplify and add lightness!!!

 

[itguy08]

Originally Posted By: dishdude

I sure wouldn't want to be involved in a serious collision while riding in an 80's car. Give me a modern day vehicle that is designed to protect the occupants and has airbags any day. Today's cars are a bargain considering what you get and how much longer they last.


IIRC airbags offer little additional protection vs a properly used and functioning seat belt. http://www.freakonomics.com/2005/07/18/which-would-you-rather-have-a-seat-belt-or-an-air-bag/

I'm not one that things have to be 100% safe...

 

[JasonTL]

Originally Posted By: itguy08
Originally Posted By: dishdude

I sure wouldn't want to be involved in a serious collision while riding in an 80's car. Give me a modern day vehicle that is designed to protect the occupants and has airbags any day. Today's cars are a bargain considering what you get and how much longer they last.


IIRC airbags offer little additional protection vs a properly used and functioning seat belt. http://www.freakonomics.com/2005/07/18/which-would-you-rather-have-a-seat-belt-or-an-air-bag/

I'm not one that things have to be 100% safe...

I'd much rather be in my 88 Burb if I was in a collision. I'd also feel safer having my kids ride in my 88 Burb vs my friend's 2011 Acadia(or 2013 Escape).
New plastic, or old steel. Good steel doesn't go bad with age, newer plastics have been cut in quality due to the economy. I'll take my tried and true steel.
Not to mention airbags only save you if they don't kill you. A seat belt won't kill you.

As for the 97 Month auto-loan, I can't imagine ever getting one that long. Like has been said, the car's value would be lower than what you paid by the time you paid it off.

 

[rationull]

Originally Posted By: JasonTL

New plastic, or old steel. Good steel doesn't go bad with age, newer plastics have been cut in quality due to the economy. I'll take my tried and true steel.


Really? Is the frame/crash structure made of plastic in the newer cars? The only advantage an '88 Burb has is mass.

 

[JasonTL]

Originally Posted By: rationull
Really? Is the frame/crash structure made of plastic in the newer cars? The only advantage an '88 Burb has is mass.

I doubt the frame is made entirely of plastic, but they do seem to be switching more parts over to plastic.
More mass will distribute and reduce impact force better.
Eh, personally I would still prefer to be in a vehicle I know is solid and has good steel if I were to be in a crash.
Of course I would also hope I'd never be in a crash that severe.

 

[rationull]

Originally Posted By: JasonTL
Originally Posted By: rationull
Really? Is the frame/crash structure made of plastic in the newer cars? The only advantage an '88 Burb has is mass.

I doubt the frame is made entirely of plastic, but they do seem to be switching more parts over to plastic.
More mass will distribute and reduce impact force better.
Eh, personally I would still prefer to be in a vehicle I know is solid and has good steel if I were to be in a crash.
Of course I would also hope I'd never be in a crash that severe.


My point is that the impact absorbing parts are still made of metal (steel and aluminum). How the force is distributed is determined by where the impact occurs and how the frame is designed. More mass is an advantage in terms of momentum change of course.

 

[KrisZ]

Originally Posted By: JasonTL

As for the 97 Month auto-loan, I can't imagine ever getting one that long. Like has been said, the car's value would be lower than what you paid by the time you paid it off.


That's usually true for most car loans with 0 down payment or minimal down payment, but with shorter loans the period where the car is worth less than the note is also much shorter. Lots of bad things can happen during those very long loan periods. These people don't realize that if the car is written off, they will be paying for a car they no longer have, but they still need a car. They will go out buy another shiny new one on the longest loan period they can and roll in the old note. That is how people end up driving 30k used econoboxes.

This is just another method of squeezing more money out of cash poor suckers that think they deserve a new car and to make them feel they can afford it. Gotta have it now mentality always wins with those kinds of people and the concept is saving money is foreign to them.

 

[GenSan]

Rich or Drive Rich?

 

[dishdude]

Originally Posted By: rationull
Originally Posted By: JasonTL

New plastic, or old steel. Good steel doesn't go bad with age, newer plastics have been cut in quality due to the economy. I'll take my tried and true steel.


Really? Is the frame/crash structure made of plastic in the newer cars? The only advantage an '88 Burb has is mass.


Steel technology has improved considerably in the last couple decades, along with the engineering of safety into vehicles. Manufacturers are using high strength steel that is lighter and stronger to protect the occupants, and all kinds of technology that didn't exist 30-40 years ago. Even without airbags and nanny gadgets, the passenger compartments of modern vehicles are built much stronger and are much better at preventing injury from collapsing and preventing intrusion into the cabin during an accident.