Author Topic: Car Loan Stupidity  (Read 6477 times)

Le Poisson

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Car Loan Stupidity
« on: June 09, 2016, 09:53:30 AM »
I just stumbled across this thread on the Chev Sonic Owners group... It makes me sad. How many thousands of dollars are folks giving away in interest to these car loan companies. I love my little car, but really, owing $20K on a $12,000 car after 5 years!?!?!

Are these people nuts???

Drifterrider

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Re: Car Loan Stupidity
« Reply #1 on: June 09, 2016, 11:43:59 AM »
I just stumbled across this thread on the Chev Sonic Owners group... It makes me sad. How many thousands of dollars are folks giving away in interest to these car loan companies. I love my little car, but really, owing $20K on a $12,000 car after 5 years!?!?!

Are these people nuts???

Nope.  They just can't math.

The Money Monk

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Re: Car Loan Stupidity
« Reply #2 on: June 11, 2016, 11:40:03 AM »
I just stumbled across this thread on the Chev Sonic Owners group... It makes me sad. How many thousands of dollars are folks giving away in interest to these car loan companies. I love my little car, but really, owing $20K on a $12,000 car after 5 years!?!?!

Are these people nuts???

At a job I had several years ago I remember a girl in her early 20's was excited about her new car, and at some point throughout the conversation she let slip what her interest rate was - FIFTEEN percent!!! 

I was not able to hide my shock and disgust

marty998

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Re: Car Loan Stupidity
« Reply #3 on: June 11, 2016, 04:41:49 PM »
But but but... it's only 15% percent! That's a small number right?

Either you're a car person or you're not... I don't know there's a middle ground.

Chance are, if you are someone who frequents a car forum, you are going to be someone who is spending more than necessary on your 4 wheel transportation.

Dicey

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Re: Car Loan Stupidity
« Reply #4 on: June 11, 2016, 05:03:46 PM »
People who can't math make me sad.

Le Poisson

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Re: Car Loan Stupidity
« Reply #5 on: June 11, 2016, 05:24:10 PM »
... OK, so who's "the Champ"????

Obviously one of us.

marty998

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Re: Car Loan Stupidity
« Reply #6 on: June 11, 2016, 05:41:00 PM »
... OK, so who's "the Champ"????

Obviously one of us.

10 years ago I would have said me (got as far as doing a bit of actuarial maths at undergrad level).

Forgotten most of it... as an accountant you only really need to go as far as a knowing how to understand a discounted cash flow model...

Forcus

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Re: Car Loan Stupidity
« Reply #7 on: June 13, 2016, 11:06:48 AM »
When I was 21 I walked in to a Ford dealership and was THIS CLOSE to signing up for 13.9% on a Escort ZX2. I full admit I was money stupid and I knew that 13.9% was very high BUT my justification was that I couldn't get a consigner and all the banks I had tried to work with to establish credit wouldn't loan me $100 (literally, I said, I will sign a note and pay full term just to get some credit).

I am willing to bet that many of these folks (1) can't get consigners because their parents have bad credit / won't do it / don't exist, (2) they never learned about money, (3) they don't have credit but know they "need" credit to be able to buy a house later on.

Not at all a justification but having been there myself I can understand where it comes from. Although on that particular thread I am baffled by the chick who bought a new car while not having a job, and the guy who is on a fixed income, drives once a week, but feels like the payment is worth it.

ketchup

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Re: Car Loan Stupidity
« Reply #8 on: June 13, 2016, 11:27:28 AM »
Chance are, if you are someone who frequents a car forum, you are going to be someone who is spending more than necessary on your 4 wheel transportation.
I'd say you're either one extreme or the other in that case.  I'm the other.  I've never spent more than a paycheck on a car (and that's not a brag on my salary).

Le Poisson

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Re: Car Loan Stupidity
« Reply #9 on: June 13, 2016, 12:46:34 PM »
Chance are, if you are someone who frequents a car forum, you are going to be someone who is spending more than necessary on your 4 wheel transportation.
I'd say you're either one extreme or the other in that case.  I'm the other.  I've never spent more than a paycheck on a car (and that's not a brag on my salary).

I'm mostly  on them to figure out how to fix stuff without breaking the bank. Often the owners forums are a great resource for common failures and saving you from going to the garage every time a trouble light comes on.

ketchup

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Re: Car Loan Stupidity
« Reply #10 on: June 13, 2016, 02:51:37 PM »
Chance are, if you are someone who frequents a car forum, you are going to be someone who is spending more than necessary on your 4 wheel transportation.
I'd say you're either one extreme or the other in that case.  I'm the other.  I've never spent more than a paycheck on a car (and that's not a brag on my salary).

I'm mostly  on them to figure out how to fix stuff without breaking the bank. Often the owners forums are a great resource for common failures and saving you from going to the garage every time a trouble light comes on.
That's what I mean too.  I've been able to spend so little on cars (and on maintaining them) because I'm willing to do exactly that.

Chris22

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Re: Car Loan Stupidity
« Reply #11 on: June 13, 2016, 03:06:14 PM »
I just stumbled across this thread on the Chev Sonic Owners group... It makes me sad. How many thousands of dollars are folks giving away in interest to these car loan companies. I love my little car, but really, owing $20K on a $12,000 car after 5 years!?!?!

Are these people nuts???

Without going through 27 pages, I missed that anecdote.  Where was it?  I saw one owed $20k after 3 months of purchase...

GetItRight

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Re: Car Loan Stupidity
« Reply #12 on: June 13, 2016, 05:33:36 PM »
Either you're a car person or you're not... I don't know there's a middle ground.

Chance are, if you are someone who frequents a car forum, you are going to be someone who is spending more than necessary on your 4 wheel transportation.

I'm a gearhead and know many others... But I don't know any who borrow money for their cars. Most do it relatively cheap and subsidize the spending with a side hustle. I certainly wouldn't call anyone who owns a 2000-something vehicle a "car person".

monte0930

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Re: Car Loan Stupidity
« Reply #13 on: June 13, 2016, 05:58:41 PM »
I'm a gearhead and know many others... But I don't know any who borrow money for their cars. Most do it relatively cheap and subsidize the spending with a side hustle. I certainly wouldn't call anyone who owns a 2000-something vehicle a "car person".

Pre-MMM days I financed a 2003 Chevy S10 and built it into a fairground cruiser/show truck. I was at least a little money smart back then and got a used one, for $10,000, and then put about another 10 grand in suspension/paint/stereo/rims, but that was all cash. I knew guys who were financing $30,000 trucks and dumping another $20-$30 grand onto credit cards to build them out.

Now, two years after I started reading MMM the truck is gone (sold to another car guy for $4500, financed of course) and I drive a paid off Nissan Sentra, much more economical than the truck.

Chris22

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Re: Car Loan Stupidity
« Reply #14 on: June 13, 2016, 06:02:19 PM »
Either you're a car person or you're not... I don't know there's a middle ground.

Chance are, if you are someone who frequents a car forum, you are going to be someone who is spending more than necessary on your 4 wheel transportation.

I'm a gearhead and know many others... But I don't know any who borrow money for their cars. Most do it relatively cheap and subsidize the spending with a side hustle. I certainly wouldn't call anyone who owns a 2000-something vehicle a "car person".

Ehh what?  I financed my 2003 S2000 at about 1.9%, and paid it off long ago. Why does it being a 2003 and once was financed make me not a car guy even though I'm obsessed with my little roadster?

MoneyCat

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Re: Car Loan Stupidity
« Reply #15 on: June 13, 2016, 08:04:07 PM »
I have a friend who bought a used Jeep Grand Cherokee at 23% interest. This is the same friend who owned replicas of all the weapons from "Game of Thrones" yet had an electric shutoff notice sitting on his coffee table when I came to visit.

NoStacheOhio

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Re: Car Loan Stupidity
« Reply #16 on: June 14, 2016, 09:07:45 AM »

Ehh what?  I financed my 2003 S2000 at about 1.9%, and paid it off long ago. Why does it being a 2003 and once was financed make me not a car guy even though I'm obsessed with my little roadster?


Something something something American V8 something something torque something something.

snogirl

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Re: Car Loan Stupidity
« Reply #17 on: June 14, 2016, 09:33:18 AM »
Yeah some people make huge mistakes in their hula hoop.

Forcus

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Re: Car Loan Stupidity
« Reply #18 on: June 14, 2016, 10:35:20 AM »
I'm a gearhead and know many others... But I don't know any who borrow money for their cars. Most do it relatively cheap and subsidize the spending with a side hustle. I certainly wouldn't call anyone who owns a 2000-something vehicle a "car person".

I think it depends on who you associate with. The strata around here:

Built not bought. Usually older stuff and have way more $ in tools and tons of knowledge, than $ in car parts. Around here some younger guys, some older guys.
Bought not built. Usually newer stuff, lots of add on stuff (light bars, simple lift kits, etc.). Probably more tilted to younger guys, and more than likely financed (including mods)
Bought / sort of built. Start with a platform that is already a high performer and make thoughtful mods to improve. From what I can tell 50/50 financed vs. cash, upper middle class, sometimes younger, sometimes older.

I'm generalizing but I'd say all of the above are car people. I definitely wouldn't say that new or newer makes someone not a car person. The performance levels of something newer that can get 30 MPG and go to the track on the weekend are incredible for the amount of money. Case in point, a base Corvette. 30 MPG and all the performance you want and can drive daily. I am not sure I could build something that could tick all those boxes for the same price ($50k).

I've fallen in to all 3 categories above. There are merits to each although obviously it is best to not be financing that stuff.

gardeningandgreen

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Re: Car Loan Stupidity
« Reply #19 on: June 14, 2016, 11:11:02 AM »
Being a personal banker I see some of the dumbest car decisions ever. I just recently had a person who wanted a loan on a 2008 car for 72 months. They also wanted to start off under water. The car was worth about $19000 but they wanted a loan for $22000 to pay off the loan on the car they currently had and then also buy the new car. I just don't understand that logic...

Making Cookies

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Re: Car Loan Stupidity
« Reply #20 on: June 15, 2016, 09:50:22 AM »
People who can't math make me sad.

And people selling the goods who make you feel like they are doing you right make me mad too.

Here let me help you into bankruptcy and steal the rug out from under you b/c you are ignorant and think I'm a great guy/gal...

Edit: typos
« Last Edit: June 15, 2016, 09:53:56 AM by Mybigtoe »

MrsPete

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Re: Car Loan Stupidity
« Reply #21 on: June 29, 2016, 05:41:06 PM »
Nope.  They just can't math.
Often coupled with poor impulse control.

And people selling the goods who make you feel like they are doing you right make me mad too.
Yes, salespeople are good at their jobs.