Author Topic: 72-month car loans  (Read 6709 times)

RWD

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72-month car loans
« on: October 02, 2014, 08:56:16 AM »
http://www.autoblog.com/2014/10/02/72-month-auto-loans-report/
Quote
They just want the most car for the least amount of monthly payment. They don't look at the overall price of the car.


These aren't even the longest car loans available. I saw a 10-year loan at 5.99% being advertised earlier this year.

Ftao93

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Re: 72-month car loans
« Reply #1 on: October 02, 2014, 09:04:14 AM »
Yikes!

My bike is financed 'theoretically' at 60 months, though it will be paid off in a total of 24.  It's still a stupid idea though.

MrFrugalChicago

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Re: 72-month car loans
« Reply #2 on: October 02, 2014, 10:44:59 AM »
http://www.autoblog.com/2014/10/02/72-month-auto-loans-report/
Quote
They just want the most car for the least amount of monthly payment. They don't look at the overall price of the car.


These aren't even the longest car loans available. I saw a 10-year loan at 5.99% being advertised earlier this year.

Everything needs context. If I got a new car for a price I was happy with (before talking about financing), and someone offered me a 72 month 0% interest loan - sure I would take it. It would mean I could put my greenbacks for work for ME for a few years before I had to turn them over to the car maker.

And for the new car vs used car debate - again the answer is it depends. If someone is making 200k and saving 100k of it.. buying a new 25k car every 10 years is not going to do much to his stash growth rate. If you make 40k and buy a car every 3 years, now that is a problem.

whydavid

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Re: 72-month car loans
« Reply #3 on: October 02, 2014, 11:24:00 AM »
'Pete Munson, general manager of Great Lakes Chevrolet in Ohio, told Automotive News. "They just want the most car for the least amount of monthly payment. They don't look at the overall price of the car."'

I'm going to vomit.  Exhibit A in the war against franchise laws propping up the antiquated dealer model in the name of "protecting the consumer."





MrFrugalChicago

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Re: 72-month car loans
« Reply #4 on: October 02, 2014, 11:25:24 AM »
'Pete Munson, general manager of Great Lakes Chevrolet in Ohio, told Automotive News. "They just want the most car for the least amount of monthly payment. They don't look at the overall price of the car."'

I'm going to vomit.  Exhibit A in the war against franchise laws propping up the antiquated dealer model in the name of "protecting the consumer."

You can't fix stupid. Let their poor finance decisions make YOUR car cheaper, as it raises the average price of cars sold ;)

Cheddar Stacker

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Re: 72-month car loans
« Reply #5 on: October 02, 2014, 11:45:04 AM »
I know a guy who knows a guy, so this is a bit diluted, but it's a doozy.

This was 8-10 years ago so prices were much lower, and this guy apparently financed a Lincoln Navigator over 72 months and his payments were > $1,000/month.

eostache

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Re: 72-month car loans
« Reply #6 on: October 02, 2014, 12:06:29 PM »
I know a guy who knows a guy, so this is a bit diluted, but it's a doozy.

This was 8-10 years ago so prices were much lower, and this guy apparently financed a Lincoln Navigator over 72 months and his payments were > $1,000/month.

I see (what seems to be) a lot of those fancy Lincoln SUVs around here and wonder who is affording them. This is not a particularly wealthy area. (I see them when I'm riding my bike around town, of course.)

RFAAOATB

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Re: 72-month car loans
« Reply #7 on: October 02, 2014, 12:22:28 PM »
You can't fix stupid. Let their poor finance decisions make YOUR car cheaper, as it raises the average price of cars sold ;)

I don't see how this works.  If dealers know there is a critical mass of people who are willing to take bad finance terms for a more expensive car, and thus the average price of cars sold goes up, how does that help me?  If two year old cars depreciated as fast as two year old iPhones because everyone wants the newest model more than good finance terms and I could live with a slightly used model, then it would make sense.

You may not be able to fix stupid, but bad loan regulation can help keep abusers at bay.

MrFrugalChicago

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Re: 72-month car loans
« Reply #8 on: October 02, 2014, 12:27:21 PM »

I don't see how this works.  If dealers know there is a critical mass of people who are willing to take bad finance terms for a more expensive car, and thus the average price of cars sold goes up, how does that help me?  If two year old cars depreciated as fast as two year old iPhones because everyone wants the newest model more than good finance terms and I could live with a slightly used model, then it would make sense.

You may not be able to fix stupid, but bad loan regulation can help keep abusers at bay.

At best what do you do.. save some dumb guy from getting ripped off at the car dealer? But what does he do with the savings. He isn't going to put it in a 401k. He goes to the phone store and gets ripped off there. Or a boat dealer. Or a ATV dealer. Who cares. He ends up with more crap he doesn't need. What did that help?

As for how it helps you.. the car dealer needs X dollars a month to stay open. If a few dumb people came in and spent .8X dollars, they are mostly in good shape. Then they are happy to sell some cars at $500 profit to smart people to finish closing the gap. if EVERYONE were smart, they would have to shut down or make more money per item to stay in business.

whydavid

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Re: 72-month car loans
« Reply #9 on: October 02, 2014, 12:34:43 PM »
I wonder if there is another way to leverage this.  If they think they are going to make an absolute killing on the financing, I wonder if you can get them to come way down on price...

So, the approach is: "I don't care about monthly payments or interest rates, I just want the best price possible."  Then make it clear (without being obvious) that you are willing to be totally fleeced on the finance side of it so you don't end up like your friends who got really good interest rates but WAY overpaid for the car itself.

Then, you either kill the financing once you get to that portion of your visit, or you take the financing and pay in full that month ;) 

Might not work, but if they are so used to people accepting ridiculous interest rates, maybe they'll think you are just as stupid and play along.

MrFrugalChicago

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Re: 72-month car loans
« Reply #10 on: October 02, 2014, 12:36:37 PM »
That is a good idea, I don't know enough about how their pay structure works.

If the car dealership OWNS the financing arm, it may work. If they just sell it off for a $200 fee to some credit union, they may not care enough on making the $200 to do anything to your price.

HairyUpperLip

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Re: 72-month car loans
« Reply #11 on: October 02, 2014, 02:04:05 PM »
I wonder if there is another way to leverage this.  If they think they are going to make an absolute killing on the financing, I wonder if you can get them to come way down on price...

So, the approach is: "I don't care about monthly payments or interest rates, I just want the best price possible."  Then make it clear (without being obvious) that you are willing to be totally fleeced on the finance side of it so you don't end up like your friends who got really good interest rates but WAY overpaid for the car itself.

Then, you either kill the financing once you get to that portion of your visit, or you take the financing and pay in full that month ;) 

Might not work, but if they are so used to people accepting ridiculous interest rates, maybe they'll think you are just as stupid and play along.

I forget the exact details but...

I worked with a guy that bought a used Toyota Tacoma. I forget the price but it was a fair price for a newer Tacoma at the time. Anyways, he bought it from a dealership that was doing a special where you got 2% or $6000 cashback. The cashback catch was that the loan had a very high interest rate. The guy took the cashback, applied it to the cost of the truck, and paid off the loan in one payment. He said the dealership was pretty upset when he actually took the cashback option over the lower interest rate.


coachfrigo

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Re: 72-month car loans
« Reply #12 on: March 06, 2018, 09:16:05 PM »
Kills my soul to be a car salesman. I want to save people money, not financially ruin them.

solon

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Re: 72-month car loans
« Reply #13 on: March 07, 2018, 10:20:17 AM »
Yeah, I think financing DOES make a difference.

I recently bought an older used car from a dealer. They were only going to make a couple hundred dollars on the sale, but they also made a couple hundred on the sale of the note. The guy told me they wouldn't have been able to give me that price if I was paying cash. Of course, I paid off the loan in the first month.

solon

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Re: 72-month car loans
« Reply #14 on: March 07, 2018, 10:23:30 AM »
From a consumer advocacy perspective, I really hate long-term, high-interest notes. It feels like just another way to fleece poor people. It happens everywhere, car dealers aren't the only ones. I think everything targeted at poor people is designed to keep them poor.

phones, fast food, lottery, automobiles, etc...

frugalnacho

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Re: 72-month car loans
« Reply #15 on: March 07, 2018, 02:56:35 PM »
Yeah, I think financing DOES make a difference.

I recently bought an older used car from a dealer. They were only going to make a couple hundred dollars on the sale, but they also made a couple hundred on the sale of the note. The guy told me they wouldn't have been able to give me that price if I was paying cash. Of course, I paid off the loan in the first month.

Yea they say lots of stuff, and I wouldn't trust any of it.  We totaled one of our cars a few months ago and had to buy a replacement quickly.  In the several hours I sat in various dealerships I heard so much bullshit.  The one I heard repeated the most was that "this car is hot, I have a lot of interested buyers.  If you are interested you should probably get it tonight before we close, or else it might not be here tomorrow" (this was overheard, not directed at me).  I heard it about 6 times at one dealership alone.  I felt like yelling over the cubicle at the salesman and calling him out.  If you got so much interest in the car that it's practically sold already, then go fucking sell it asshole!  I can smell your desperation for the sale from over here!

solon

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Re: 72-month car loans
« Reply #16 on: March 07, 2018, 03:57:20 PM »
Yeah, I think financing DOES make a difference.

I recently bought an older used car from a dealer. They were only going to make a couple hundred dollars on the sale, but they also made a couple hundred on the sale of the note. The guy told me they wouldn't have been able to give me that price if I was paying cash. Of course, I paid off the loan in the first month.

Yea they say lots of stuff, and I wouldn't trust any of it.  We totaled one of our cars a few months ago and had to buy a replacement quickly.  In the several hours I sat in various dealerships I heard so much bullshit.  The one I heard repeated the most was that "this car is hot, I have a lot of interested buyers.  If you are interested you should probably get it tonight before we close, or else it might not be here tomorrow" (this was overheard, not directed at me).  I heard it about 6 times at one dealership alone.  I felt like yelling over the cubicle at the salesman and calling him out.  If you got so much interest in the car that it's practically sold already, then go fucking sell it asshole!  I can smell your desperation for the sale from over here!

Yeah, I agree - lots of bullshit from car salesmen. Your experience is funny. If they made a movie about car salesmen, this would be a scene from it.

In my case I knew the value of the car from KBB, they had already come down quite a bit from the sticker price, and my final price was only $5500. I can't be certain how much profit there was for the dealer, but I think it can't have been much. Combined with the extra income from selling the note, I think I got a better deal than if I would have paid cash.

nick663

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Re: 72-month car loans
« Reply #17 on: March 07, 2018, 04:38:20 PM »
http://www.autoblog.com/2014/10/02/72-month-auto-loans-report/
Quote
They just want the most car for the least amount of monthly payment. They don't look at the overall price of the car.


These aren't even the longest car loans available. I saw a 10-year loan at 5.99% being advertised earlier this year.

Everything needs context. If I got a new car for a price I was happy with (before talking about financing), and someone offered me a 72 month 0% interest loan - sure I would take it. It would mean I could put my greenbacks for work for ME for a few years before I had to turn them over to the car maker.

And for the new car vs used car debate - again the answer is it depends. If someone is making 200k and saving 100k of it.. buying a new 25k car every 10 years is not going to do much to his stash growth rate. If you make 40k and buy a car every 3 years, now that is a problem.
Same.  I could have paid cash for my last car but 1.75% for 60 months was too hard to pass up.

solon

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Re: 72-month car loans
« Reply #18 on: March 07, 2018, 06:19:18 PM »
Yeah, I agree - lots of bullshit from car salesmen. Your experience is funny. If they made a movie about car salesmen, this would be a scene from it.

I've been thinking even more about this. Imagine an Office Space type movie, but at a car dealer. Our hero is the only honest salesman on the lot, who just wants to help his customers. All the other salesmen have sold out. The manager is a lunatic who doesn't see people, only numbers, and is probably a coke head. The amount of bullshit our hero has to deal with drives him to the edge, so he develops a fool-proof plan to rip off the dealer, before quitting and driving a garbage truck.

WhiteTrashCash

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Re: 72-month car loans
« Reply #19 on: March 07, 2018, 06:33:21 PM »
It's not really stupidity as much as it is ignorance. At one point in my life, I co-signed a used auto loan for 72 months for a girlfriend. Then she missed payments and it'll be on my credit report until 2019. I simply didn't understand how loans worked or what responsibilities it put on me to co-sign a loan. Lesson learned.

Step37

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Re: 72-month car loans
« Reply #20 on: March 10, 2018, 08:07:25 PM »
I saw something crazier than a 72-month car loan today.

I fully appreciate that Airstream trailers are unbelievably nice; BUT, if you have to get it on a 20-year loan, you may need to reconsider the purchase. And the ad isnít even written correctly. It should read $173 bi-weekly . . . So pay nearly 90k for a MSRP 58k tiny trailer without a bathroom.

JAYSLOL

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Re: 72-month car loans
« Reply #21 on: March 11, 2018, 08:13:33 AM »
I saw something crazier than a 72-month car loan today.

I fully appreciate that Airstream trailers are unbelievably nice; BUT, if you have to get it on a 20-year loan, you may need to reconsider the purchase. And the ad isnít even written correctly. It should read $173 bi-weekly . . . So pay nearly 90k for a MSRP 58k tiny trailer without a bathroom.

Wow, that's insane.  I saw an ad in the local buy and sell page someone with a 2015 fancy boat wanted someone to take over the payments on one of those 20 year loans.  I think the payment was 500 bi weekly ad there was 17 years left on the loan :O

84 months is the norm for a car loan around here, all the advertisements list the 84 month price.