Author Topic: 84 Month car loans!!!!  (Read 13620 times)

mxt0133

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84 Month car loans!!!!
« on: June 01, 2015, 09:56:21 PM »
http://www.usatoday.com/story/money/cars/2015/06/01/new-car-loans-term-length/28303991/

Along with the new average length of a car loan, now 67 months, leases have hit a new high being 31.5% of all new-vehicle transactions.  Seems like consumer confidence is sky high along with the auto and banking industry enabling these transactions. 

I promised my self not to time the markets but this is yet another leading indicator of market and behavioral economic highs.  Makes me want to start being a little bit more conservative with my asset allocation.  The true test will be when the markets do start tanking will I have the fortitude to not over correct and just keep buying.

arizona56FW

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Re: 84 Month car loans!!!!
« Reply #1 on: June 01, 2015, 11:25:16 PM »
... No, I don't think it has anything to do with the mythical "consumer confidence" that people talk about so much. The problem is that people have less and less money to live on... and are trying harder and harder to stay at the same standards of living they are used to or that they aspire to... and there are many more bad loan deals out there taking advantage of these circumstances.

I had a 7 year car loan. I made my last payment on it last month, but I paid it off 3 years early. It was such an awful experience that I vowed to never again have a loan. On anything. So I started to educate myself about finances and found this forum... hooray. I am still recovering from the experience.

When I took the loan out, I had bad credit. I was restricted to get a car that was less than 4 years old and less than 60k miles on it, and to qualify for a car in that condition they had to offer me the longest payment plan possible because my income is so low. Did I take the cheapest car possible? Of course not.. I thought it would be better to get something slightly newer, in slightly better condition. I didn't have the money to buy anything with cash, and I didn't have the money to put anything down on the car. They offered me, what I thought was a better deal to buy newer. I didn't understand the true cost to own... But once I realized what I was going to have to pay in interest on that deal, I moved home and put all of my income into paying off the car. Which I did... but in the meantime, before I got smart and moved home, I ended up further into cc debt trying to pay bills that I could no longer afford because of my car payment. I'm still trying to recover from my massive slide into financial oblivion caused by my ridiculous decision, which I thought was a smart decision at the time..

It surprises me how often people assume I understood what I was doing. I did not. There was no "informed consent" or consumer education prior to me signing the biggest financial transaction of my life. I had no idea how much interest I would have to pay over the life of the loan and no one ever told me while I was at the dealership.. I had to calculate that on my own after I realized what it was. I don't think loans like these should be allowed. But when you don't have a car and you need one to get to work and someone offers you what you think is a deal.. you take it. Nothing more to it than that. It angers me, now that I know so much more, and I get pretty paranoid when I wonder what else I may not know that I don't know... but all I can do is live and learn... and never do that again.

ncornilsen

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Re: 84 Month car loans!!!!
« Reply #2 on: June 01, 2015, 11:51:04 PM »
I took a 7 year, 1.95% loan on my vehicle. Leaves me more to invest.

mxt0133

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Re: 84 Month car loans!!!!
« Reply #3 on: June 02, 2015, 02:41:45 AM »
... No, I don't think it has anything to do with the mythical "consumer confidence" that people talk about so much. The problem is that people have less and less money to live on... and are trying harder and harder to stay at the same standards of living they are used to or that they aspire to... and there are many more bad loan deals out there taking advantage of these circumstances.

Interesting perspective, but for those with less money to live on what standard of living are they aspiring for?  Is it the people that have some discretionary spending that are spending causing the consumerist tide to rise making even those with less money to try an keep up?

It surprises me how often people assume I understood what I was doing. I did not. There was no "informed consent" or consumer education prior to me signing the biggest financial transaction of my life. I had no idea how much interest I would have to pay over the life of the loan and no one ever told me while I was at the dealership.. I had to calculate that on my own after I realized what it was. I don't think loans like these should be allowed. But when you don't have a car and you need one to get to work and someone offers you what you think is a deal.. you take it. Nothing more to it than that. It angers me, now that I know so much more, and I get pretty paranoid when I wonder what else I may not know that I don't know... but all I can do is live and learn... and never do that again.

Unfortunately when the financial incentive is to sell/move the product instead of ensuring that the note stays good, well then education is not really their primary concern.  I completely agree that most people are not equipped to analyze the terms of a simple car loan.  I think everyone at some point in their life should go through a financial workshop on how loans work especially student loans.

Insanity

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Re: 84 Month car loans!!!!
« Reply #4 on: June 02, 2015, 05:19:18 AM »

I took a 7 year, 1.95% loan on my vehicle. Leaves me more to invest.

I used to think that way about it.  But you are still financing a depreciating asset that will put you out more than the asset will most likely ever be valued.

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Re: 84 Month car loans!!!!
« Reply #5 on: June 02, 2015, 05:52:29 AM »
When I order my GTR next month I am going to have to do an 84 month term to afford the monthly payment too.


forummm

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Re: 84 Month car loans!!!!
« Reply #6 on: June 02, 2015, 06:32:22 AM »
Car loans have increased because interest rates are so low. A lease is just another form of car loan, so it makes sense it would increase too. I got a 72 month loan at 0% and would gladly have taken a longer loan at 0% if they'd have given it to me.

RunHappy

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Re: 84 Month car loans!!!!
« Reply #7 on: June 02, 2015, 06:52:30 AM »
I've had this conversation recently with a couple of friends who are now getting 7 year loans on cars.  When I suggested they look at cheaper cars, they look they gave was the same as if I called their baby ugly. 

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Re: 84 Month car loans!!!!
« Reply #8 on: June 02, 2015, 07:49:28 AM »

I took a 7 year, 1.95% loan on my vehicle. Leaves me more to invest.

I used to think that way about it.  But you are still financing a depreciating asset that will put you out more than the asset will most likely ever be valued.
Loans are bad for people who spend the money they would otherwise save to pay cash if loans didn't exist.

Loans are good if you're the type to save/invest that extra cash.

Personally, I'd choose to simply not buy a car.

RunHappy

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Re: 84 Month car loans!!!!
« Reply #9 on: June 02, 2015, 07:58:06 AM »

I took a 7 year, 1.95% loan on my vehicle. Leaves me more to invest.

I used to think that way about it.  But you are still financing a depreciating asset that will put you out more than the asset will most likely ever be valued.
Loans are bad for people who spend the money they would otherwise save to pay cash if loans didn't exist.

Loans are good if you're the type to save/invest that extra cash.

Personally, I'd choose to simply not buy a car.

My goal is to become the type of person who no longer needs bank financing.  Basically I want to opt-out.

ncornilsen

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Re: 84 Month car loans!!!!
« Reply #10 on: June 02, 2015, 08:25:02 AM »

I took a 7 year, 1.95% loan on my vehicle. Leaves me more to invest.

I used to think that way about it.  But you are still financing a depreciating asset that will put you out more than the asset will most likely ever be valued.
Loans are bad for people who spend the money they would otherwise save to pay cash if loans didn't exist.

Loans are good if you're the type to save/invest that extra cash.

Personally, I'd choose to simply not buy a car.

My goal is to become the type of person who no longer needs bank financing.  Basically I want to opt-out.


Your goal is to "opt out" of using a wrench, a box cutter. Responsible use of Leverage is a tool. I have use for it in my toolbox. Even among those who don't "Need" to use bank financing, most do, because it makes the most sense.

I need that truck. I'm not going to defend it here, but I do. Analysis of renting what I need, insurance, depreciation costs, etc made buying it the best choice. Given that, it is FAR more financially optimal to pay $1900 in total interest over the life of the loan so that I may invest that priniciple in the meantime. If I were to get the market average return of ~7%, I'd nearly double the purchase in that time. As for the truck being a depreciating asset? of course. I bought it to be used. But even factoring in the cost of interest, the utility I'll get out of the truck will be far more than what I pay.  Now, if I had used it to buy more truck than I could otherwise afford, it would NOT be responsible use of leverage.

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Re: 84 Month car loans!!!!
« Reply #11 on: June 02, 2015, 09:02:27 AM »
Car loans have increased because interest rates are so low. A lease is just another form of car loan, so it makes sense it would increase too. I got a 72 month loan at 0% and would gladly have taken a longer loan at 0% if they'd have given it to me.

I paid cash for my new car (and my husband's we paid cash too), but man- I would have done this for sure.
« Last Edit: June 02, 2015, 11:23:21 AM by iowajes »

forummm

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Re: 84 Month car loans!!!!
« Reply #12 on: June 02, 2015, 09:15:29 AM »

I took a 7 year, 1.95% loan on my vehicle. Leaves me more to invest.

I used to think that way about it.  But you are still financing a depreciating asset that will put you out more than the asset will most likely ever be valued.
Loans are bad for people who spend the money they would otherwise save to pay cash if loans didn't exist.

Loans are good if you're the type to save/invest that extra cash.

Personally, I'd choose to simply not buy a car.

Yes, great loan terms cause a lot of people to buy too much. For me, I did an analysis and determined it was the best financial decision for me. Partly due to the tax credits and not ever buying gas again.

http://forum.mrmoneymustache.com/share-your-badassity/nissan-leaf-almost-paying-me-to-drive-it/

Bob W

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Re: 84 Month car loans!!!!
« Reply #13 on: June 02, 2015, 09:23:25 AM »
I'm buying a 5K 2004 Camry with 160K miles.   

I wish I could get a 84 month 3% loan!   

My payments would be about $65 -- I could keep my money invested at an average of 10% --- the gas savings from my 17 MPG beast would be enough to cover the payment and increased insurance.

So yeah,  a long low interest loan is not a bad thing if used appropriately.    Unfortunately banks will not loan for that duration on high mileage used cars.   So now I must decide between paying cash to keep liability only or a 36 month 4% 80% loan. 

Insanity

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Re: 84 Month car loans!!!!
« Reply #14 on: June 02, 2015, 09:37:49 AM »
Your goal is to "opt out" of using a wrench, a box cutter. Responsible use of Leverage is a tool. I have use for it in my toolbox. Even among those who don't "Need" to use bank financing, most do, because it makes the most sense.

I need that truck. I'm not going to defend it here, but I do. Analysis of renting what I need, insurance, depreciation costs, etc made buying it the best choice. Given that, it is FAR more financially optimal to pay $1900 in total interest over the life of the loan so that I may invest that priniciple in the meantime. If I were to get the market average return of ~7%, I'd nearly double the purchase in that time. As for the truck being a depreciating asset? of course. I bought it to be used. But even factoring in the cost of interest, the utility I'll get out of the truck will be far more than what I pay.  Now, if I had used it to buy more truck than I could otherwise afford, it would NOT be responsible use of leverage.

I didn't mean to insinuate otherwise.  I'm just not a fan of it any more.  A personal choice, and you are right as long as you are doing it responsibly it is fine.

mathlete

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Re: 84 Month car loans!!!!
« Reply #15 on: June 02, 2015, 10:40:12 AM »
I agree that leveraging debt can be very useful, but there comes a point at which enough is enough I think.

Most of us probably don't trade heavily on margin or leverage a 40 year mortgage into more stock market investing or borrow against our home equity to invest.

You could leverage any credit opportunity with an interest rate less than your expected returns into more investing, but most people draw the line somewhere.

Jack

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Re: 84 Month car loans!!!!
« Reply #16 on: June 02, 2015, 11:54:00 AM »
I'm buying a 5K 2004 Camry with 160K miles.   

I wish I could get a 84 month 3% loan!

+1

I'll take a low-interest loan any day of the week. For me, the primary drawback of car loans is that you have to buy a car that's much more expensive in the first place in order to qualify for them.

The only car I'd considering doing that for would be an electric car, like a Leaf, because of the tax credits and low operating costs (see the "almost paying me to drive it" thread).

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Re: 84 Month car loans!!!!
« Reply #17 on: June 02, 2015, 01:14:04 PM »
... No, I don't think it has anything to do with the mythical "consumer confidence" that people talk about so much. The problem is that people have less and less money to live on... and are trying harder and harder to stay at the same standards of living they are used to or that they aspire to... and there are many more bad loan deals out there taking advantage of these circumstances.

I had a 7 year car loan. I made my last payment on it last month, but I paid it off 3 years early. It was such an awful experience that I vowed to never again have a loan. On anything. So I started to educate myself about finances and found this forum... hooray. I am still recovering from the experience.

When I took the loan out, I had bad credit. I was restricted to get a car that was less than 4 years old and less than 60k miles on it, and to qualify for a car in that condition they had to offer me the longest payment plan possible because my income is so low. Did I take the cheapest car possible? Of course not.. I thought it would be better to get something slightly newer, in slightly better condition. I didn't have the money to buy anything with cash, and I didn't have the money to put anything down on the car. They offered me, what I thought was a better deal to buy newer. I didn't understand the true cost to own... But once I realized what I was going to have to pay in interest on that deal, I moved home and put all of my income into paying off the car. Which I did... but in the meantime, before I got smart and moved home, I ended up further into cc debt trying to pay bills that I could no longer afford because of my car payment. I'm still trying to recover from my massive slide into financial oblivion caused by my ridiculous decision, which I thought was a smart decision at the time..

It surprises me how often people assume I understood what I was doing. I did not. There was no "informed consent" or consumer education prior to me signing the biggest financial transaction of my life. I had no idea how much interest I would have to pay over the life of the loan and no one ever told me while I was at the dealership.. I had to calculate that on my own after I realized what it was. I don't think loans like these should be allowed. But when you don't have a car and you need one to get to work and someone offers you what you think is a deal.. you take it. Nothing more to it than that. It angers me, now that I know so much more, and I get pretty paranoid when I wonder what else I may not know that I don't know... but all I can do is live and learn... and never do that again.

I think there should be a standard requiring at least a high school diploma to buy a car on finance or at least some basic maths knowledge. Last time I bought a car, it actually clearly stated the total amount of interest that will be paid. So If you cant read then I understand. Then you are told your monthly payment. Times that by the length of the loan and pow you have the total amount to be paid. Take off the value of the car and bob's your uncle. Honestly do I feel sorry for you? Not at all.

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Re: 84 Month car loans!!!!
« Reply #18 on: June 02, 2015, 01:20:52 PM »
For me, the primary drawback of car loans is that you have to buy a car that's much more expensive in the first place in order to qualify for them.


Set your budget, then go car shopping. Pick the one you want, negotiate the price; then negotiate financing.
I don't understand the people who say taking a loan makes people spend more.

Unless you are just comparing new to used.  I buy new regardless. (I also haven't bothered with a loan, but the way I plan to pay has no bearing on how much I spend.)
« Last Edit: June 03, 2015, 07:04:25 AM by iowajes »

arizona56FW

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Re: 84 Month car loans!!!!
« Reply #19 on: June 02, 2015, 07:20:10 PM »
... No, I don't think it has anything to do with the mythical "consumer confidence" that people talk about so much. The problem is that people have less and less money to live on... and are trying harder and harder to stay at the same standards of living they are used to or that they aspire to... and there are many more bad loan deals out there taking advantage of these circumstances.

Interesting perspective, but for those with less money to live on what standard of living are they aspiring for?  Is it the people that have some discretionary spending that are spending causing the consumerist tide to rise making even those with less money to try an keep up?

It surprises me how often people assume I understood what I was doing. I did not. There was no "informed consent" or consumer education prior to me signing the biggest financial transaction of my life. I had no idea how much interest I would have to pay over the life of the loan and no one ever told me while I was at the dealership.. I had to calculate that on my own after I realized what it was. I don't think loans like these should be allowed. But when you don't have a car and you need one to get to work and someone offers you what you think is a deal.. you take it. Nothing more to it than that. It angers me, now that I know so much more, and I get pretty paranoid when I wonder what else I may not know that I don't know... but all I can do is live and learn... and never do that again.

Unfortunately when the financial incentive is to sell/move the product instead of ensuring that the note stays good, well then education is not really their primary concern.  I completely agree that most people are not equipped to analyze the terms of a simple car loan.  I think everyone at some point in their life should go through a financial workshop on how loans work especially student loans.

I meant if you have to take a loan for something, anything, that is aspiring to it.. because you don't really have the money. And yeah, the way things are... everyone "has to go into debt" (Obviously here we know better) so it seems like it pushes people with little to no money down when others are willing or able to take loans out on everything. The way things are set up now, it's super easy to fall into debt traps. It takes some smarts to avoid or get out of that cycle. The people enthusiastic about 7 year car loans like it would be a good thing because they could use it to their advantage... they are not the people those loans were created for. Those loans are created to harvest interest off of people who have to finance things. And if you can't pay, they just repo and resell and keep the profit going. Yuck. No thanks.

Paul der Krake

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Re: 84 Month car loans!!!!
« Reply #20 on: June 02, 2015, 07:47:56 PM »
Don't car loans that advertise a 0% or other extremely low interest have a monthly finance fee or other BS charges that in effect bumps the APR by a significant amount?

scottish

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Re: 84 Month car loans!!!!
« Reply #21 on: June 02, 2015, 08:14:55 PM »
I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

bloomability

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Re: 84 Month car loans!!!!
« Reply #22 on: June 03, 2015, 06:38:42 AM »
Car dealerships focus on selling the monthly payment and not the total price plus interest (which is disclosed when you're signing the contract). This gets people in a bind because a. they don't know how much they can afford b. they talked down the monthly payment (by extending the loan) c. cars are becoming more and more an emotional purchase.

If you do finance a car, turn the F&I manager into a paper pusher and not money maker.

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Re: 84 Month car loans!!!!
« Reply #23 on: June 03, 2015, 07:03:41 AM »
I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

RunHappy

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Re: 84 Month car loans!!!!
« Reply #24 on: June 03, 2015, 07:06:29 AM »
I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

The dealer I bought my car from (late last year) said 25%-30% of their used car sales were cash transactions.  They said they loved it because it meant less paperwork.

forummm

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Re: 84 Month car loans!!!!
« Reply #25 on: June 03, 2015, 07:15:27 AM »
Don't car loans that advertise a 0% or other extremely low interest have a monthly finance fee or other BS charges that in effect bumps the APR by a significant amount?

Not in my case. I got an insanely good deal on the car price, and pay 1/72 of that every month. Plus great tax credits and never buying gas (my electricity is also super cheap overnight).

Jack

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Re: 84 Month car loans!!!!
« Reply #26 on: June 03, 2015, 09:12:37 AM »
For me, the primary drawback of car loans is that you have to buy a car that's much more expensive in the first place in order to qualify for them.


Set your budget, then go car shopping. Pick the one you want, negotiate the price; then negotiate financing.
I don't understand the people who say taking a loan makes people spend more.

Unless you are just comparing new to used.  I buy new regardless. (I also haven't bothered with a loan, but the way I plan to pay has no bearing on how much I spend.)
(emphasis added)

Exactly: I buy cars with (usually) 100K+ miles in the $3-5K range. In order to buy a car new enough to qualify for a low-interest loan, I'd have to quadruple my budget.

I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

The dealer I bought my car from (late last year) said 25%-30% of their used car sales were cash transactions.  They said they loved it because it meant less paperwork.

It depends on the type of car dealer you're dealing with. Places that advertise "buy here, pay here" or who target people with bad credit use high-interest financing (and repossessing the car when the buyer fails to keep up with the payments) to make their money not by selling cars, but by "selling" the same car over and over again.

If you show up at that kind of place and try to pay cash, they won't like it.

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Re: 84 Month car loans!!!!
« Reply #27 on: June 03, 2015, 09:49:22 AM »
I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

The dealer I bought my car from (late last year) said 25%-30% of their used car sales were cash transactions.  They said they loved it because it meant less paperwork.

Ah, I was thinking of new cars.  Need to broaden my horizons.

Bob W

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Re: 84 Month car loans!!!!
« Reply #28 on: June 03, 2015, 10:00:05 AM »
I'm buying a 5K 2004 Camry with 160K miles.   

I wish I could get a 84 month 3% loan!

+1

I'll take a low-interest loan any day of the week. For me, the primary drawback of car loans is that you have to buy a car that's much more expensive in the first place in order to qualify for them.

The only car I'd considering doing that for would be an electric car, like a Leaf, because of the tax credits and low operating costs (see the "almost paying me to drive it" thread).
Yeah, that is a great thread.   Too bad our state offers nothing like they do in Georgia. 

thd7t

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Re: 84 Month car loans!!!!
« Reply #29 on: June 03, 2015, 10:02:40 AM »
I'm buying a 5K 2004 Camry with 160K miles.   

I wish I could get a 84 month 3% loan!

+1

I'll take a low-interest loan any day of the week. For me, the primary drawback of car loans is that you have to buy a car that's much more expensive in the first place in order to qualify for them.

The only car I'd considering doing that for would be an electric car, like a Leaf, because of the tax credits and low operating costs (see the "almost paying me to drive it" thread).
Yeah, that is a great thread.   Too bad our state offers nothing like they do in Georgia.
After reading that thread, I looked at other states' credits for electric cars.  The winner was West Virginia with $10k and electricity discounts!  Coal country loves electric cars!

Bob W

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Re: 84 Month car loans!!!!
« Reply #30 on: June 03, 2015, 10:03:51 AM »
I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

The dealer I bought my car from (late last year) said 25%-30% of their used car sales were cash transactions.  They said they loved it because it meant less paperwork.

He was blowing you smoke --- Dealers typically have a mark up on loans that is substantial.   They can also sell extended warranties,  tire protection packages,  road hazard plans etc.  on the back end much easier on monthly payments.   Some small unsophisticated dealers may like cash on used cars but not the bright ones.   

Bob W

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Re: 84 Month car loans!!!!
« Reply #31 on: June 03, 2015, 10:06:57 AM »
I should also mention that I used to be the F and I (backend deal closer) for an RV sales place.   We made more money on the loans and additional sales products than we made on the RVs. 

And get this ----  It was typical to have 240 month loans at $300 per month on RVs.   I damn near cried myself to sleep knowing that A.  the people would use the RV less than 5 days per year by the 3rd year ($700 per night to camp)  and B.  the RV would be worth practically nothing in 10 years. 

Paul der Krake

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Re: 84 Month car loans!!!!
« Reply #32 on: June 03, 2015, 10:34:18 AM »
I should also mention that I used to be the F and I (backend deal closer) for an RV sales place.   We made more money on the loans and additional sales products than we made on the RVs. 

And get this ----  It was typical to have 240 month loans at $300 per month on RVs.   I damn near cried myself to sleep knowing that A.  the people would use the RV less than 5 days per year by the 3rd year ($700 per night to camp)  and B.  the RV would be worth practically nothing in 10 years.
Holy cow that's brutal. I'm guessing loans like these are presented and sold as a quasi-mortgage to be approved by the government?

RunHappy

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Re: 84 Month car loans!!!!
« Reply #33 on: June 03, 2015, 10:47:19 AM »
I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

The dealer I bought my car from (late last year) said 25%-30% of their used car sales were cash transactions.  They said they loved it because it meant less paperwork.

He was blowing you smoke --- Dealers typically have a mark up on loans that is substantial.   They can also sell extended warranties,  tire protection packages,  road hazard plans etc.  on the back end much easier on monthly payments.   Some small unsophisticated dealers may like cash on used cars but not the bright ones.   

Maybe but I was out of there in about an hour.

Chris22

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Re: 84 Month car loans!!!!
« Reply #34 on: June 03, 2015, 01:28:35 PM »
I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

The dealer I bought my car from (late last year) said 25%-30% of their used car sales were cash transactions.  They said they loved it because it meant less paperwork.

He was blowing you smoke --- Dealers typically have a mark up on loans that is substantial.   They can also sell extended warranties,  tire protection packages,  road hazard plans etc.  on the back end much easier on monthly payments.   Some small unsophisticated dealers may like cash on used cars but not the bright ones.   

Maybe but I was out of there in about an hour.

Used car sales are different.  But with new cars, if you negotiate a good price on a new car, and then in the F&I office say you want to pay cash, they will try to reneg on the deal, say it was contingent on financing, etc. 

When car loans are 2%+, I understand.  I don't really get the incentive to provide 0% financing versus taking cash, but whatever.

Hunny156

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Re: 84 Month car loans!!!!
« Reply #35 on: June 03, 2015, 02:10:12 PM »
For me, the primary drawback of car loans is that you have to buy a car that's much more expensive in the first place in order to qualify for them.


Set your budget, then go car shopping. Pick the one you want, negotiate the price; then negotiate financing.
I don't understand the people who say taking a loan makes people spend more.

Unless you are just comparing new to used.  I buy new regardless. (I also haven't bothered with a loan, but the way I plan to pay has no bearing on how much I spend.)
(emphasis added)

Exactly: I buy cars with (usually) 100K+ miles in the $3-5K range. In order to buy a car new enough to qualify for a low-interest loan, I'd have to quadruple my budget.

I had a Nissan dealer offer me the choice of a 0% loan or an $8000 discount on a new Frontier a while back.    You can often get a discount on a cash deal, sometimes a big one.

Was this recent?  I haven't found dealerships in the past 5 years who were happy about me paying cash.  It used to be something they were pretty happy about- but now I think they just want to sell the financing...

The dealer I bought my car from (late last year) said 25%-30% of their used car sales were cash transactions.  They said they loved it because it meant less paperwork.

It depends on the type of car dealer you're dealing with. Places that advertise "buy here, pay here" or who target people with bad credit use high-interest financing (and repossessing the car when the buyer fails to keep up with the payments) to make their money not by selling cars, but by "selling" the same car over and over again.

If you show up at that kind of place and try to pay cash, they won't like it.

We needed a "new to us" car a few years back, and since we were also relatively new to TX, we decided to drive down the interstate and find some larger car lots to start our search.  First place we found was DriveTime.  Had no idea that it's basically a place for people with bad credit.  Sales guy wanted to start the process at the finance counter, but I told him we were looking to pay cash.  He was really nice about it, and explained how they sell cars, and that the value of the car was inflated to cover the risk.  He then proceeded to recommend a few other car lots.

We were appreciative that he didn't try to waste our time, and promised to send people his way if we knew of someone who needed his services.

zephyr911

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Re: 84 Month car loans!!!!
« Reply #36 on: June 03, 2015, 03:24:41 PM »
Don't car loans that advertise a 0% or other extremely low interest have a monthly finance fee or other BS charges that in effect bumps the APR by a significant amount?
You are right in thinking there is a catch, but it's generally not in terms of fees (AFAIK). Rather, you get the 0% loan but you usually lose all the other credits/rebates/discounts being offered to other buyers, which can add up to thousands on the sale price.

Indexer

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Re: 84 Month car loans!!!!
« Reply #37 on: June 03, 2015, 07:50:12 PM »
It surprises me how often people assume I understood what I was doing. I did not. There was no "informed consent" or consumer education prior to me signing the biggest financial transaction of my life. I had no idea how much interest I would have to pay over the life of the loan and no one ever told me while I was at the dealership.. I had to calculate that on my own after I realized what it was. I don't think loans like these should be allowed. But when you don't have a car and you need one to get to work and someone offers you what you think is a deal.. you take it. Nothing more to it than that. It angers me, now that I know so much more, and I get pretty paranoid when I wonder what else I may not know that I don't know... but all I can do is live and learn... and never do that again.

The disclosures are there(legally should be there).  They have to tell you the term, the APY, the payment, and I believe the total cost of all those payments.  The problem is that the finance guys normally try to rush you through the forms. 

The reason they are probably going with longer terms is that cars are more reliable now. You don't want to issue a 84 month loan on a car that might only last 100k miles which might only be 60 months if a heavy driver.  Now with more reliable cars... why not?   

forummm

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Re: 84 Month car loans!!!!
« Reply #38 on: June 03, 2015, 09:21:32 PM »
Don't car loans that advertise a 0% or other extremely low interest have a monthly finance fee or other BS charges that in effect bumps the APR by a significant amount?
You are right in thinking there is a catch, but it's generally not in terms of fees (AFAIK). Rather, you get the 0% loan but you usually lose all the other credits/rebates/discounts being offered to other buyers, which can add up to thousands on the sale price.

It depends. Sometimes that's true. In my case I got both the $3500 rebate and the 0% for 72 months. And $12,500 in tax credits too.

Paul der Krake

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Re: 84 Month car loans!!!!
« Reply #39 on: June 04, 2015, 05:21:30 AM »
Don't car loans that advertise a 0% or other extremely low interest have a monthly finance fee or other BS charges that in effect bumps the APR by a significant amount?
You are right in thinking there is a catch, but it's generally not in terms of fees (AFAIK). Rather, you get the 0% loan but you usually lose all the other credits/rebates/discounts being offered to other buyers, which can add up to thousands on the sale price.

It depends. Sometimes that's true. In my case I got both the $3500 rebate and the 0% for 72 months. And $12,500 in tax credits too.
Yep, you got a killer deal on that leaf, but I suspect it had a lot to do with the dealership's willingness to sell it to make room for other more popular cars. I doubt you would have gotten the same terms (excluding the green federal rebates) on say, an altima.

forummm

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Re: 84 Month car loans!!!!
« Reply #40 on: June 04, 2015, 08:27:27 AM »
Don't car loans that advertise a 0% or other extremely low interest have a monthly finance fee or other BS charges that in effect bumps the APR by a significant amount?
You are right in thinking there is a catch, but it's generally not in terms of fees (AFAIK). Rather, you get the 0% loan but you usually lose all the other credits/rebates/discounts being offered to other buyers, which can add up to thousands on the sale price.

It depends. Sometimes that's true. In my case I got both the $3500 rebate and the 0% for 72 months. And $12,500 in tax credits too.
Yep, you got a killer deal on that leaf, but I suspect it had a lot to do with the dealership's willingness to sell it to make room for other more popular cars. I doubt you would have gotten the same terms (excluding the green federal rebates) on say, an altima.

Leafs sell like hotcakes here. They are very popular. I'm often in traffic with 2 of them around me. Some dealers sell a couple hundred per weekend. I think they are Nissan's best selling car in Atlanta.

Jack

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Re: 84 Month car loans!!!!
« Reply #41 on: June 04, 2015, 09:31:24 AM »
Leafs sell like hotcakes here. They are very popular. I'm often in traffic with 2 of them around me. Some dealers sell a couple hundred per weekend. I think they are Nissan's best selling car in Atlanta.

I can corroborate this. In some parts of town, they're more common than Priuses.

Paul der Krake

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Re: 84 Month car loans!!!!
« Reply #42 on: June 04, 2015, 10:48:59 AM »
I stand corrected then. A good reminder to always challenge assumptions!

MrsPete

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Re: 84 Month car loans!!!!
« Reply #43 on: June 04, 2015, 10:49:03 AM »
... No, I don't think it has anything to do with the mythical "consumer confidence" that people talk about so much. The problem is that people have less and less money to live on... and are trying harder and harder to stay at the same standards of living they are used to or that they aspire to... and there are many more bad loan deals out there taking advantage of these circumstances.
Yes, I agree with that. 

To expand, I'd say that too many people don't tend to consider a vehicle purchase as a portion of their financial lives; rather, when they're shopping for a car, they're looking simply for what they want and as much as they can afford.  They don't stop to think that every dollars spent on a car is a dollar that can't be spent on housing, groceries, or savings.  And then once the decision is made, that person is locked into the choice for quite some time. 

What percentage of his salary do you think the average person spends on transportation?  25% maybe?  I'm guessing, but I bet I'm in the right ballpark.  Yet if you ask that person -- while he's not car shopping-- whether transportation is worth one dollar out of every four he brings home, he'd probably say NO, it's not that big a priority. 
Interesting perspective, but for those with less money to live on what standard of living are they aspiring for?  Is it the people that have some discretionary spending that are spending causing the consumerist tide to rise making even those with less money to try an keep up?
To some extent, yes, people who can afford (or who can mortgage) nice cars are creating the desire in the "have nots" to push themselves financially and get into a car that probably isn't a great choice. 


MrsPete

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Re: 84 Month car loans!!!!
« Reply #44 on: June 04, 2015, 10:57:31 AM »
Set your budget, then go car shopping. Pick the one you want, negotiate the price; then negotiate financing.
I don't understand the people who say taking a loan makes people spend more.
Oh, I understand it.  I don't agree with it, but I understand it: 

If you're paying cash, you're considering the total price of the car.  You're actually turning over those dollars TODAY.  That makes the average person consider, do I really want the LX or EX or whatever initials might be offered ... or would I rather save 4K and get the standard model?  Are those leather seats really worth 1K?  (Totally making up those numbers because I have no idea what "extras" really cost.)

On the other hand, the average person who's financing looks at per-month cost.  So those leather seats are only something like $20 extra per month.  Totally worth it!  And the upgraded model is only a little more each month -- yes, please! 

It's the same concept as credit cards: People tend to spend more when they're not paying TODAY.  Yeah, I know, those of us who frequent boards like this probably don't think this way, but we're in the minority. 

TheAnonOne

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Re: 84 Month car loans!!!!
« Reply #45 on: June 04, 2015, 12:57:57 PM »
If you can get a low % rate, there are often deals tied to these.

For instance, I was at a ford dealer the other day getting some work done and noticed a sticker on a new Ford Fusion. It had a $500 EXTRA discount if you did the financing through them and the "Rates are as low as 1.99%!" <- no idea on what they really are, as I didn't apply

If you were already buying that car and could save another $500 total by getting the financing. Not the worst deal ever.


jinga nation

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Re: 84 Month car loans!!!!
« Reply #46 on: June 08, 2015, 02:47:02 PM »
Co-worker bought a (presumed CPO) 2013 Jaguar at 1.9% for 72 months. Wonder if that Jag will be functioning in 2021? It's a Jaaaaag (Jeremy Clarkson aka Jezza).

music lover

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Re: 84 Month car loans!!!!
« Reply #47 on: June 08, 2015, 05:18:13 PM »
Several years ago my brother had the option to buy a new vehicle (clearing out last year's models) at a very reduced price outright, or over 72 months with 0% financing. The price was the same regardless of which option he chose.

Bob W

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Re: 84 Month car loans!!!!
« Reply #48 on: June 08, 2015, 08:02:45 PM »
Was doing a little math on this and realized that the average driver would only have put 84K on the car in 84 months.   For a nice Toyota or Honda or even Fords that is a low mileage amount. 

All other things being equal and if one has 25K they wish to piss away on a car then financing for 84 at 3% isn't a bad deal. 

Of course the $1,900 in taxes is what I generally pay for a used car outright. 

Reynold

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Re: 84 Month car loans!!!!
« Reply #49 on: June 09, 2015, 12:55:38 PM »
For instance, I was at a ford dealer the other day getting some work done and noticed a sticker on a new Ford Fusion. It had a $500 EXTRA discount if you did the financing through them and the "Rates are as low as 1.99%!" <- no idea on what they really are, as I didn't apply

If you were already buying that car and could save another $500 total by getting the financing. Not the worst deal ever.

We did that buying a Honda CRV last year, after asking a lot of questions about various alternatives, it turned out that we could get another $500 off the price if we financed at 1.5% or something like that, and we could prepay with no penalty (important to check this!).  Thus we bought it on payments, and paid it off with the cash we had planned to use for the car 2 months later.  It would have been sooner, but we couldn't pay it off until they processed the loan, which took a month, then another month to turn it off.  There was one other unexpected expense, the state DMV charged something like $60 to reissue the car title without the bank's name on it when we paid the loan off, but otherwise we came out ahead, though it was some extra work for the ~$360 we saved. 

Note that we also have excellent credit, so didn't have to worry about qualifying or higher rates, but I suspect that a lot of people here have excellent credit, at least now that they have been reading MMM for awhile. :)