Dealer Tried To Pull a Quick One
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Dealer financing is why I now use my home equity line of credit which has an interest rate of 1% over prime and no fees to buy cars. Just way easier. I won't tell the dealer until he works out the whole deal thinking he is getting the loan.
Originally Posted By: PT1
Dealer financing is why I now use my home equity line of credit which has an interest rate of 1% over prime and no fees to buy cars. Just way easier. I won't tell the dealer until he works out the whole deal thinking he is getting the loan.
Thats what I did. Ours is tied to prime and currently 3.49%, plus its tax deductible.
Another plus in favor of using a HELOC is more flexibility if you get laid off. If you have to sell the car and you have a traditional car loan, you have to come up with $ to sell it if you're upside down. Even if you're not upside down, you'll probably not clear much $. But if you bought it with a HELOC, you can sell the car and use all of the cash for food & housing.
BTW, how is computing the interest like that not loan fraud?
Dealer financing is why I now use my home equity line of credit which has an interest rate of 1% over prime and no fees to buy cars. Just way easier. I won't tell the dealer until he works out the whole deal thinking he is getting the loan.
Thats what I did. Ours is tied to prime and currently 3.49%, plus its tax deductible.
Another plus in favor of using a HELOC is more flexibility if you get laid off. If you have to sell the car and you have a traditional car loan, you have to come up with $ to sell it if you're upside down. Even if you're not upside down, you'll probably not clear much $. But if you bought it with a HELOC, you can sell the car and use all of the cash for food & housing.
BTW, how is computing the interest like that not loan fraud?
Originally Posted By: CivicFan
The dealers get a commission from the banks. If my memory serves me right, it was a lump sum in the neighborhood of 1% of the financed amount for a bank I worked with.
It is called Financial Reserves, basically a kick back from the bank. Many banks paid 1-3% or even more in some instances of the note. Again Sub-Prime was really where the big money was.
The dealers get a commission from the banks. If my memory serves me right, it was a lump sum in the neighborhood of 1% of the financed amount for a bank I worked with.
It is called Financial Reserves, basically a kick back from the bank. Many banks paid 1-3% or even more in some instances of the note. Again Sub-Prime was really where the big money was.
Personally, the best way to finance a car is to pay cash and make monthly payment to yourself. I can't see myself buying a new car, let alone a $20,000 car. Everyone should get a new car once but continuing buying new cars every few years is a biggest financial mistake ever. A car you like enough to buy new should be good enough for you to like it 20 years from date of purchase. If you constantly switching cars, you're not really car person and more like a show-off person.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
Oh now that's silly. For some people and some driving habits that may be fine. But if you use your car for any long commuting at all, it'll become very expensive sooner or later. I've bought plenty of used cars. None have held up as well as ones I've bought new and been able to take care of from day one. That also dovetails into the convinience of the whole thing. Not many people have the time to play "Click and Clack" every time something goes wrong.
Quote:
Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
Which is a common opinion but they consistently rank very high, usually with the two other reliable brands you mention.
Buying a new car is never a good financial decision, but there are other factors people focus on as important. Someone has to swallow the depreciation and provide us with used cars
Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
Which is a common opinion but they consistently rank very high, usually with the two other reliable brands you mention.
Buying a new car is never a good financial decision, but there are other factors people focus on as important. Someone has to swallow the depreciation and provide us with used cars
Originally Posted By: M1Accord
Personally, the best way to finance a car is to pay cash and make monthly payment to yourself. I can't see myself buying a new car, let alone a $20,000 car. Everyone should get a new car once but continuing buying new cars every few years is a biggest financial mistake ever. A car you like enough to buy new should be good enough for you to like it 20 years from date of purchase. If you constantly switching cars, you're not really car person and more like a show-off person.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
No, the best thing to do is finance a car with little or no money down, take your $7000 and invest it in an appreciating asset. If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later. I don't care what car you bought, you ain't gonna double your money in six months buying some old car with cash.
Oh, and a TRUE car person sacrifices all for their love of cars. Money is just a means to enjoy the experience of another car. If you're smart and lucky, you can make your passion finance itself, but that's secondary to the love of cars themselves.
And no car person EVER prioritized durability and reliability when it came to deciding on the next car.
Personally, the best way to finance a car is to pay cash and make monthly payment to yourself. I can't see myself buying a new car, let alone a $20,000 car. Everyone should get a new car once but continuing buying new cars every few years is a biggest financial mistake ever. A car you like enough to buy new should be good enough for you to like it 20 years from date of purchase. If you constantly switching cars, you're not really car person and more like a show-off person.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
No, the best thing to do is finance a car with little or no money down, take your $7000 and invest it in an appreciating asset. If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later. I don't care what car you bought, you ain't gonna double your money in six months buying some old car with cash.
Oh, and a TRUE car person sacrifices all for their love of cars. Money is just a means to enjoy the experience of another car. If you're smart and lucky, you can make your passion finance itself, but that's secondary to the love of cars themselves.
And no car person EVER prioritized durability and reliability when it came to deciding on the next car.
Originally Posted By: bretfraz
Originally Posted By: M1Accord
Personally, the best way to finance a car is to pay cash and make monthly payment to yourself. I can't see myself buying a new car, let alone a $20,000 car. Everyone should get a new car once but continuing buying new cars every few years is a biggest financial mistake ever. A car you like enough to buy new should be good enough for you to like it 20 years from date of purchase. If you constantly switching cars, you're not really car person and more like a show-off person.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
No, the best thing to do is finance a car with little or no money down, take your $7000 and invest it in an appreciating asset. If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later. I don't care what car you bought, you ain't gonna double your money in six months buying some old car with cash.
Oh, and a TRUE car person sacrifices all for their love of cars. Money is just a means to enjoy the experience of another car. If you're smart and lucky, you can make your passion finance itself, but that's secondary to the love of cars themselves.
And no car person EVER prioritized durability and reliability when it came to deciding on the next car.
I think your strategy is based on near 100% job security and always picking winners in the stock market...
Your scenario isn't very fun if you got laid off in late 2008 and watched your $7k turn into $4k while being another $10k being upside down on your new Mustang GT that nobody wants to pay reasonable money for...
The paid for $7k Corolla saved you $13k in that scenario.
Originally Posted By: M1Accord
Personally, the best way to finance a car is to pay cash and make monthly payment to yourself. I can't see myself buying a new car, let alone a $20,000 car. Everyone should get a new car once but continuing buying new cars every few years is a biggest financial mistake ever. A car you like enough to buy new should be good enough for you to like it 20 years from date of purchase. If you constantly switching cars, you're not really car person and more like a show-off person.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
No, the best thing to do is finance a car with little or no money down, take your $7000 and invest it in an appreciating asset. If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later. I don't care what car you bought, you ain't gonna double your money in six months buying some old car with cash.
Oh, and a TRUE car person sacrifices all for their love of cars. Money is just a means to enjoy the experience of another car. If you're smart and lucky, you can make your passion finance itself, but that's secondary to the love of cars themselves.
And no car person EVER prioritized durability and reliability when it came to deciding on the next car.
I think your strategy is based on near 100% job security and always picking winners in the stock market...
Your scenario isn't very fun if you got laid off in late 2008 and watched your $7k turn into $4k while being another $10k being upside down on your new Mustang GT that nobody wants to pay reasonable money for...
The paid for $7k Corolla saved you $13k in that scenario.
Sometimes manufacturer's offer excellent rates (eg 0% for 60 months) so it is worth using their financing.
However if not available go to your local credit union or bank and get a rate quote also. Dealers will spike the interest rate up to 3% above bank's real rate and split the difference with bank.
You avoid the financing games played by bring in your own and irritate the dealer who loses out on making more money from you.
However if not available go to your local credit union or bank and get a rate quote also. Dealers will spike the interest rate up to 3% above bank's real rate and split the difference with bank.
You avoid the financing games played by bring in your own and irritate the dealer who loses out on making more money from you.
Originally Posted By: IndyIan
Originally Posted By: bretfraz
Originally Posted By: M1Accord
Personally, the best way to finance a car is to pay cash and make monthly payment to yourself. I can't see myself buying a new car, let alone a $20,000 car. Everyone should get a new car once but continuing buying new cars every few years is a biggest financial mistake ever. A car you like enough to buy new should be good enough for you to like it 20 years from date of purchase. If you constantly switching cars, you're not really car person and more like a show-off person.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
No, the best thing to do is finance a car with little or no money down, take your $7000 and invest it in an appreciating asset. If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later. I don't care what car you bought, you ain't gonna double your money in six months buying some old car with cash.
Oh, and a TRUE car person sacrifices all for their love of cars. Money is just a means to enjoy the experience of another car. If you're smart and lucky, you can make your passion finance itself, but that's secondary to the love of cars themselves.
And no car person EVER prioritized durability and reliability when it came to deciding on the next car.
I think your strategy is based on near 100% job security and always picking winners in the stock market...
Your scenario isn't very fun if you got laid off in late 2008 and watched your $7k turn into $4k while being another $10k being upside down on your new Mustang GT that nobody wants to pay reasonable money for...
The paid for $7k Corolla saved you $13k in that scenario.
It's not a strategy, it's an example. No different than the one you provided.
Buying a new car is not the, "biggest financial mistake ever", nor is it proof that you are not a "car person". I can think of 100 bigger financial mistakes, like snorting it up your nose or wasting it at the khraps tables in Vegas.
We all know there is no such thing as 100% job security. And while it may be challenging to pick good stock performers, someone is doing it, at least with AAPL. So much for the hyperbole, right?
Originally Posted By: bretfraz
Originally Posted By: M1Accord
Personally, the best way to finance a car is to pay cash and make monthly payment to yourself. I can't see myself buying a new car, let alone a $20,000 car. Everyone should get a new car once but continuing buying new cars every few years is a biggest financial mistake ever. A car you like enough to buy new should be good enough for you to like it 20 years from date of purchase. If you constantly switching cars, you're not really car person and more like a show-off person.
A good used Honda Civic or Toyota Corolla can be had for $7,000. Personally, I am not a fan of Mazda even though they make very interesting cars but I can't trust their durability or reliability.
No, the best thing to do is finance a car with little or no money down, take your $7000 and invest it in an appreciating asset. If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later. I don't care what car you bought, you ain't gonna double your money in six months buying some old car with cash.
Oh, and a TRUE car person sacrifices all for their love of cars. Money is just a means to enjoy the experience of another car. If you're smart and lucky, you can make your passion finance itself, but that's secondary to the love of cars themselves.
And no car person EVER prioritized durability and reliability when it came to deciding on the next car.
I think your strategy is based on near 100% job security and always picking winners in the stock market...
Your scenario isn't very fun if you got laid off in late 2008 and watched your $7k turn into $4k while being another $10k being upside down on your new Mustang GT that nobody wants to pay reasonable money for...
The paid for $7k Corolla saved you $13k in that scenario.
It's not a strategy, it's an example. No different than the one you provided.
Buying a new car is not the, "biggest financial mistake ever", nor is it proof that you are not a "car person". I can think of 100 bigger financial mistakes, like snorting it up your nose or wasting it at the khraps tables in Vegas.
We all know there is no such thing as 100% job security. And while it may be challenging to pick good stock performers, someone is doing it, at least with AAPL. So much for the hyperbole, right?
Quote:
If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later.
It is always easy to play the "if' game when it comes to stock after the fact.
How is financing 20k and putting 7k in an appriciating asset any different than just putting it into the car loan? Even if the 7k makes money, they will go towords the car, at the end you still pay 20k for the car, so where exactly did you "make money"?
I guess you if you did not buy the car, but instead invested the 7k and waited untill it made you 20k and then purchased the car with cash, you wouldn't have out of paycheck expance, but how long would that take? You would still have to commute right?
If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later.
It is always easy to play the "if' game when it comes to stock after the fact.
How is financing 20k and putting 7k in an appriciating asset any different than just putting it into the car loan? Even if the 7k makes money, they will go towords the car, at the end you still pay 20k for the car, so where exactly did you "make money"?
I guess you if you did not buy the car, but instead invested the 7k and waited untill it made you 20k and then purchased the car with cash, you wouldn't have out of paycheck expance, but how long would that take? You would still have to commute right?
Originally Posted By: rjundi
Sometimes manufacturer's offer excellent rates (eg 0% for 60 months) so it is worth using their financing.
However if not available go to your local credit union or bank and get a rate quote also. Dealers will spike the interest rate up to 3% above bank's real rate and split the difference with bank.
You avoid the financing games played by bring in your own and irritate the dealer who loses out on making more money from you.
The 0% financing is fine but with nothing down you are owing more than the car is worth for probably 3.5-4 years out of the 5 you are paying for the car... In theory if you took your down payment and invested it you could come out ahead but I think most times you could get a much lower purchase price with cash as you are paying for the finance rate somehow...
When I bought my tracker new it was 0% financing for 60 or 72 months or, $6k off $23k... Paying 4.5% interest over 4 years at the bank was a better move and would have saved us $4000 without a downpayment. We did a few $k downpayment so I don't think we were upside down at all on it... Turned out it didn't matter anyways but its worth something not to worry about it.
Sometimes manufacturer's offer excellent rates (eg 0% for 60 months) so it is worth using their financing.
However if not available go to your local credit union or bank and get a rate quote also. Dealers will spike the interest rate up to 3% above bank's real rate and split the difference with bank.
You avoid the financing games played by bring in your own and irritate the dealer who loses out on making more money from you.
The 0% financing is fine but with nothing down you are owing more than the car is worth for probably 3.5-4 years out of the 5 you are paying for the car... In theory if you took your down payment and invested it you could come out ahead but I think most times you could get a much lower purchase price with cash as you are paying for the finance rate somehow...
When I bought my tracker new it was 0% financing for 60 or 72 months or, $6k off $23k... Paying 4.5% interest over 4 years at the bank was a better move and would have saved us $4000 without a downpayment. We did a few $k downpayment so I don't think we were upside down at all on it... Turned out it didn't matter anyways but its worth something not to worry about it.
If dealer took the future value of the 5000 at the interest rate and subtracted it form the future value of the loan it would have worked out fine.
Any ways purely in the interest since she would have not payed more. As she would have payed back 5000 dollars of the loan before there was a chance for the interest accrue on that $5000. Also she would be paying the loan back at a faster rate due to the higher payment amount. Which means she would actually pay less interest overall.
Having a whole 300 level math class on the subject of interest comes in handy sometime.
Any ways purely in the interest since she would have not payed more. As she would have payed back 5000 dollars of the loan before there was a chance for the interest accrue on that $5000. Also she would be paying the loan back at a faster rate due to the higher payment amount. Which means she would actually pay less interest overall.
Having a whole 300 level math class on the subject of interest comes in handy sometime.
Originally Posted By: KrisZ
Quote:
If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later.
It is always easy to play the "if' game when it comes to stock after the fact.
How is financing 20k and putting 7k in an appriciating asset any different than just putting it into the car loan? Even if the 7k makes money, they will go towords the car, at the end you still pay 20k for the car, so where exactly did you "make money"?
I guess you if you did not buy the car, but instead invested the 7k and waited untill it made you 20k and then purchased the car with cash, you wouldn't have out of paycheck expance, but how long would that take? You would still have to commute right?
The idea is called "opportunity costs". Instead of putting $7K into a depreciating asset, you put that $7K into something that will make you money, like the stock market.
Don't forget, that new car is going to depreciate rapidly in the first couple years of ownership. So all that $7K is going to do is offset that depreciation. Sure, you'll save a little money by paying less interest on a smaller loan, but a simple calculation can tell you exactly how much that will be and if its worth bothering.
Similar deal with used cars. Yeah, the depreciation curve isn't as steep, but most used cars require repairs sooner rather than later and that can drain any upfront savings.
The goal should be to drive the newest, nicest, most reliable car while spending as little as possible so your money can work for you in other investments.
Quote:
If you would have bought Apple back in January when it was $78/share, you would have $13,500 today, six short months later.
It is always easy to play the "if' game when it comes to stock after the fact.
How is financing 20k and putting 7k in an appriciating asset any different than just putting it into the car loan? Even if the 7k makes money, they will go towords the car, at the end you still pay 20k for the car, so where exactly did you "make money"?
I guess you if you did not buy the car, but instead invested the 7k and waited untill it made you 20k and then purchased the car with cash, you wouldn't have out of paycheck expance, but how long would that take? You would still have to commute right?
The idea is called "opportunity costs". Instead of putting $7K into a depreciating asset, you put that $7K into something that will make you money, like the stock market.
Don't forget, that new car is going to depreciate rapidly in the first couple years of ownership. So all that $7K is going to do is offset that depreciation. Sure, you'll save a little money by paying less interest on a smaller loan, but a simple calculation can tell you exactly how much that will be and if its worth bothering.
Similar deal with used cars. Yeah, the depreciation curve isn't as steep, but most used cars require repairs sooner rather than later and that can drain any upfront savings.
The goal should be to drive the newest, nicest, most reliable car while spending as little as possible so your money can work for you in other investments.
I really dislike shopping for new vehicles. But when I do I go armed. I've been dealing with the same Ford dealer since 1988. After 5 vehicles it's the same routine. I offer $200 over published invoice. Four of the vehicles were ordered so the dealer got to keep the all of the 3% Ford Hold Back and the 2002 Explorer was at the dealer for less than 1 month so they got to keep a good percentage of the hold back. Plus they get whatever goodies Ford is offering to the dealers. As far as financing I've found that my dealer has been able too offer less expensive financing than I could obtain myself % wise. I don't care if they made money doing so, they saved me money.
I've gotten some great "out of warranty" service that saved me thousands of $$$$. To me it works out for the best. We both get a price we are satifised with and I get the benefit of "extra out of warranty" service because the dealer was happy with the deal and went to "bat" for me with Ford.
Whimsey
I've gotten some great "out of warranty" service that saved me thousands of $$$$. To me it works out for the best. We both get a price we are satifised with and I get the benefit of "extra out of warranty" service because the dealer was happy with the deal and went to "bat" for me with Ford.
Whimsey
Everytime I've gone with someone to buy a car at the dealer we always did a ton of research before hand. The got them qualified for a loan before hand.
Once at the dealer I would tell them "They want this car for x amount out the door, yes or no?" When it's a yes or no answer for the salesma Then there's not much he can do about anything. If they say no, then go somewhere else. Eventually someone always said ok.
Once at the dealer I would tell them "They want this car for x amount out the door, yes or no?" When it's a yes or no answer for the salesma Then there's not much he can do about anything. If they say no, then go somewhere else. Eventually someone always said ok.
Originally Posted By: wapacz
If dealer took the future value of the 5000 at the interest rate and subtracted it form the future value of the loan it would have worked out fine.
Any ways purely in the interest since she would have not payed more. As she would have payed back 5000 dollars of the loan before there was a chance for the interest accrue on that $5000. Also she would be paying the loan back at a faster rate due to the higher payment amount. Which means she would actually pay less interest overall.
Having a whole 300 level math class on the subject of interest comes in handy sometime.
Money and Banking 101
PV= [FV/ (1+i)^n]
PV= present value
FV= future value
i= interest rate
n= years
If dealer took the future value of the 5000 at the interest rate and subtracted it form the future value of the loan it would have worked out fine.
Any ways purely in the interest since she would have not payed more. As she would have payed back 5000 dollars of the loan before there was a chance for the interest accrue on that $5000. Also she would be paying the loan back at a faster rate due to the higher payment amount. Which means she would actually pay less interest overall.
Having a whole 300 level math class on the subject of interest comes in handy sometime.
Money and Banking 101
PV= [FV/ (1+i)^n]
PV= present value
FV= future value
i= interest rate
n= years
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