Author Topic: the new car hamster wheel  (Read 16437 times)

Jill the Pill

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the new car hamster wheel
« on: March 06, 2013, 09:31:42 AM »
We just had lunch with the recently retired inlaws yesterday.  They had a brand new car, replacing one of their recent cars (bought new a few years ago) that only had 23K miles on it.  When I asked why they replaced it, they said that their other car is paid off, and since they don't like to have more than one car payment at a time, it was simply time to start a new one. 

         >X<   

(bangs head against wall) 

martynthewolf

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Re: the new car hamster wheel
« Reply #1 on: March 06, 2013, 09:45:16 AM »
My girlfriend has just refinanced he car payment so that its not over half the interest rate, she was paying a flat 12% on the previous loan but now has it down at 5.5% which is better but still not ideal.

Now she got this car finance habit before we met and she's never really had the funds to afford it, to begin with the car payment would leave her with just enough money for petrol and nothing else. I found out that this could have all been stopped if instead of the father in law bargaining on the finance not being given in the first place, someone had just sat down and explained the issues with the whole idea.

Needless to say since I've been with her, we've spoken about it and I explained why it was such a bad idea, she now realises how stupid it is hence all the effort to refinance, get a cheaper car and something more efficient to run.

TBH the gfs parents are useless with money anyhow, I've had a few remarks recently from them about how I should be able to afford things because I'm saving so much money. For example of the finance theme, the FIL was saying how over many years of financing cars he got his payment down to 70 a month, he thought this was awesome. He wasn't impressed when I started asking why he thought it was a good idea to constantly pay for something you'll never own (as he kept switching cars and refinancing).

I was getting annoyed with his inability to see how retarded the whole set up was and just told him "it's a mugs game". They're always buying ridiculous things, that they can't afford and thinking nothing of it.

Paul der Krake

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Re: the new car hamster wheel
« Reply #2 on: March 06, 2013, 10:04:00 AM »
Wow, 12% on a car is insane. Was this from a major high street bank?

Forcus

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Re: the new car hamster wheel
« Reply #3 on: March 06, 2013, 10:46:30 AM »
Wow, 12% on a car is insane. Was this from a major high street bank?

I'm not surprised. I was offered something like that (actually, I think it was 12.9%), way back when I was 18 or so, at the Ford dealer and it was Ford Credit. I had very little credit history and I couldn't even get a personal loan for a hundred bucks at the bank so I was thrilled to have a loan and a new car (it was an Escort ZX2... talk about thrill being relative). Thankfully I thought twice about it and talked to my dad. Still bought a new car (boo) but at a much more reasonable rate with a cosign. The funny part is I've gone through all kinds of cars since then, and I still own the same car (not the same same car... same year and model).

The ads I hear on radio for xxx monthly payments are funny because they always mention negative equity will be applied. Must be so widespread that they have to put that disclaimer in.

Jamesqf

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Re: the new car hamster wheel
« Reply #4 on: March 06, 2013, 12:02:46 PM »
The ads I hear on radio for xxx monthly payments are funny because they always mention negative equity will be applied. Must be so widespread that they have to put that disclaimer in.

Now that's a new one on me.  (One of the benefits of not listening to radio, I guess.)  So you can buy that shiny new oversized pickup for $40K and make payments of $X per month for 5 years, after which you owe $50K?

Paul der Krake

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Re: the new car hamster wheel
« Reply #5 on: March 06, 2013, 12:28:29 PM »
The radio ads are the worst. There's this country music station I occasionally listen to in the car and they definitely go after the lowest hanging fruit. All the automotive ads are about treating oneself to a newer more powerful engine or having enough space to take a lady friend out on a date. There is usually a guy with a southern drawl talking about hard work and how they understand that sometimes life gets in the way of your credit score. Sigh.

Spork

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Re: the new car hamster wheel
« Reply #6 on: March 06, 2013, 12:31:04 PM »
The ads I hear on radio for xxx monthly payments are funny because they always mention negative equity will be applied. Must be so widespread that they have to put that disclaimer in.

Now that's a new one on me.  (One of the benefits of not listening to radio, I guess.)  So you can buy that shiny new oversized pickup for $40K and make payments of $X per month for 5 years, after which you owe $50K?

I think the negative equity happens over time...

You buy a new oversized truck for $40k, make payments of $X per month for 5 years, after which you owe $25k on a truck that's worth $15k.  You then buy a newer, shinier, more oversized truck for $40k, roll the $10k negative equity in it and >>BINGO<< you have a new $40k truck for which you owe $50k.

Repeat every 5 years for maximum effectiveness.

(Numbers totally made up for illustration.  I didn't do any math.)

Khao

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Re: the new car hamster wheel
« Reply #7 on: March 06, 2013, 01:03:29 PM »
I think the negative equity happens over time...

You buy a new oversized truck for $40k, make payments of $X per month for 5 years, after which you owe $25k on a truck that's worth $15k.  You then buy a newer, shinier, more oversized truck for $40k, roll the $10k negative equity in it and >>BINGO<< you have a new $40k truck for which you owe $50k.

Repeat every 5 years for maximum effectiveness.

(Numbers totally made up for illustration.  I didn't do any math.)

That definitely sounds like something that should be illegal...

Forcus

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Re: the new car hamster wheel
« Reply #8 on: March 06, 2013, 02:44:11 PM »
I think the negative equity happens over time...

You buy a new oversized truck for $40k, make payments of $X per month for 5 years, after which you owe $25k on a truck that's worth $15k.  You then buy a newer, shinier, more oversized truck for $40k, roll the $10k negative equity in it and >>BINGO<< you have a new $40k truck for which you owe $50k.

Repeat every 5 years for maximum effectiveness.

(Numbers totally made up for illustration.  I didn't do any math.)

That definitely sounds like something that should be illegal...

Well it's an after effect of financing for ever-longer periods of time. I wasn't alive then but from what I can tell is that before the 60's, financing was generally limited to 24 months, and a large down payment was standard. Now I've seen them to 84 months on new cars with no down payment. So if you are only really paying off $50 / mo in principal, you'll only reach positive equity maybe 5 or 6 years down the road. Of course if you lobbied to, say, limit financing terms to a max of 48 months, you would have people crawling out of the woodwork to say you are denying the middle class and poor the ability to live the American dream, be happy, and own a new car. And so it goes.

Jack

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Re: the new car hamster wheel
« Reply #9 on: March 06, 2013, 04:52:05 PM »
I think you're overly optimistic. Let me adjust your numbers:

I think the negative equity happens over time...

You buy a new oversized truck for $40k, make payments of $600 per month for 1 year, after which you owe $36k on a truck that's worth $26k.  You then buy a newer, shinier, more oversized truck for $42k [extra $2k due to hedonic adaption], roll the $10k negative equity in it and >>BINGO<< you have a new $40k [after you subtract $2 grand because you drove it off the lot] truck for which you owe $52k.

Repeat every 1 year for maximum effectiveness.

the fixer

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Re: the new car hamster wheel
« Reply #10 on: March 06, 2013, 05:14:32 PM »
A car loan by itself is pretty shady from the lender's perspective because the collateral is depreciating so fast relative to the principal paydown. Rolling negative equity into it makes the situation even worse. So if the borrower defaults, the lender is left with something that's worth only 1/2 - 2/3 of the loan balance. And that's before you account for lost interest due to missed payments from the last few months before default, and it assumes this deadbeat borrower actually took good care of the vehicle.

It would make sense in the name of financial reform to require lenders to secure collateral that is projected to at least track the loan principal in value over time, i.e. if you make the scheduled payments, your vehicle in good condition should never be worth less than the loan balance. That would happen by reducing the term on the loan, or by varying the payment amounts so the payment can drop in a few years after the vehicle depreciation is less severe.

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Re: the new car hamster wheel
« Reply #11 on: March 06, 2013, 09:19:33 PM »
A car loan by itself is pretty shady from the lender's perspective...

Though I've sometimes thought that cars exist only to give dealers something to make loans on.  I know the one time (quite a few years ago now) that I actually bought a used car from a dealer ('cause I just couldn't find anything decent from a private party), I had a heck of a time getting the salesman to understand that I didn't want to finance it.

Paul der Krake

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Re: the new car hamster wheel
« Reply #12 on: March 06, 2013, 09:24:27 PM »
A car loan by itself is pretty shady from the lender's perspective...

Though I've sometimes thought that cars exist only to give dealers something to make loans on.  I know the one time (quite a few years ago now) that I actually bought a used car from a dealer ('cause I just couldn't find anything decent from a private party), I had a heck of a time getting the salesman to understand that I didn't want to finance it.
Wondering if this could be somehow leveraged... Like leading him on and letting him think he will screw you on the financing if he lowers the price tag juuuust a little more and more, and finally take him by surprise and pay cash.

SwordGuy

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Re: the new car hamster wheel
« Reply #13 on: March 06, 2013, 10:00:47 PM »
The ads I hear on radio for xxx monthly payments are funny because they always mention negative equity will be applied. Must be so widespread that they have to put that disclaimer in.

Now that's a new one on me.  (One of the benefits of not listening to radio, I guess.)  So you can buy that shiny new oversized pickup for $40K and make payments of $X per month for 5 years, after which you owe $50K?

I think the negative equity happens over time...

You buy a new oversized truck for $40k, make payments of $X per month for 5 years, after which you owe $25k on a truck that's worth $15k.  You then buy a newer, shinier, more oversized truck for $40k, roll the $10k negative equity in it and >>BINGO<< you have a new $40k truck for which you owe $50k.

Repeat every 5 years for maximum effectiveness.

(Numbers totally made up for illustration.  I didn't do any math.)

Had to buy a replacement used car back in 2009 when another driver totaled our perfectly fine, fully-paid off car.  :(  This was back when it looked like the economy was going to collapse and the banks had tightened credit rules big time.

The car dealer mentioned that they couldn't do that anymore because the banks wouldn't let them and that quite a few customer-wannabees were mad as as heck about it.

We both shook our heads at how dumb those folks are.

Another story.  A colleague's wife works at a car dealership in the military town where we live.   She had a couple come in to buy a $60,000 car.  For proof of income for the financing, she produced a small welfare check stub and he produced an unemployment check stub.   Their credit application to buy the car was denied.

The couple was shocked and really mad.  They said some choice words to her and then made the comment, "Well, I bet you would finance it for those worthless soldiers!"   She chased them out of the dealership with some choice words of her own.   Her boss gave her the rest of the day off (with pay) because she was pretty worked up about it.



martynthewolf

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Re: the new car hamster wheel
« Reply #14 on: March 07, 2013, 01:27:05 AM »
Wow, 12% on a car is insane. Was this from a major high street bank?

Yeah if IRC it was Natwest.

Self-employed-swami

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Re: the new car hamster wheel
« Reply #15 on: March 07, 2013, 03:06:27 AM »
A car loan by itself is pretty shady from the lender's perspective...

Though I've sometimes thought that cars exist only to give dealers something to make loans on.  I know the one time (quite a few years ago now) that I actually bought a used car from a dealer ('cause I just couldn't find anything decent from a private party), I had a heck of a time getting the salesman to understand that I didn't want to finance it.

I've been vehicle shopping lately, so I've been to a few dealerships to get an idea about what is available. The one sales guy just wouldn't let up on the financing deals, about how I would be throwing money away, by paying cash!

I won't be buying new, but I wanted an idea what some of my options are, before I go l looking at used models.

Spork

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Re: the new car hamster wheel
« Reply #16 on: March 07, 2013, 07:35:19 AM »
:)

See... you did math.  Me: lazy.

I think you're overly optimistic. Let me adjust your numbers:

I think the negative equity happens over time...

You buy a new oversized truck for $40k, make payments of $600 per month for 1 year, after which you owe $36k on a truck that's worth $26k.  You then buy a newer, shinier, more oversized truck for $42k [extra $2k due to hedonic adaption], roll the $10k negative equity in it and >>BINGO<< you have a new $40k [after you subtract $2 grand because you drove it off the lot] truck for which you owe $52k.

Repeat every 1 year for maximum effectiveness.

sheepstache

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Re: the new car hamster wheel
« Reply #17 on: March 07, 2013, 08:15:48 AM »
The radio ads are the worst. There's this country music station I occasionally listen to in the car and they definitely go after the lowest hanging fruit. All the automotive ads are about treating oneself to a newer more powerful engine or having enough space to take a lady friend out on a date. There is usually a guy with a southern drawl talking about hard work and how they understand that sometimes life gets in the way of your credit score. Sigh.

If I could be dictator-for-a-day I would most certainly ban the use of the word "deserve" in advertisements.  I'm not religious but I do feel there is some higher order involved with what I am worth or what I deserve as a person, something rather more ethically profound than a shampoo commercial.

Jack

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Re: the new car hamster wheel
« Reply #18 on: March 07, 2013, 08:28:58 AM »
:)

See... you did math.  Me: lazy.

I still guessed at the new truck value and 1-year-old resale value.

And trust me, I'm much lazier than most people on this forum!

BlueMR2

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Re: the new car hamster wheel
« Reply #19 on: March 07, 2013, 09:59:19 AM »
they said that their other car is paid off, and since they don't like to have more than one car payment at a time, it was simply time to start a new one. 

I hear that so often it's not even funny anymore...  People that are so proud of only having 1 car payment instead of 2 (or 3).  Yet they can't extend that to the concept of having NO car payment!  "Time to get a new car since they're all paid off".  ARRRRGH!!!

Jamesqf

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Re: the new car hamster wheel
« Reply #20 on: March 07, 2013, 12:12:05 PM »
Though I've sometimes thought that cars exist only to give dealers something to make loans on.  I know the one time (quite a few years ago now) that I actually bought a used car from a dealer ('cause I just couldn't find anything decent from a private party), I had a heck of a time getting the salesman to understand that I didn't want to finance it.
Wondering if this could be somehow leveraged... Like leading him on and letting him think he will screw you on the financing if he lowers the price tag juuuust a little more and more, and finally take him by surprise and pay cash.

Oh, I did a bit of that.  Then when I finally got around to getting him to accept the idea of a cash payment, I pulled out the (cash-back reward) credit card for a further 1% :-)

Forcus

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Re: the new car hamster wheel
« Reply #21 on: March 07, 2013, 12:25:54 PM »
they said that their other car is paid off, and since they don't like to have more than one car payment at a time, it was simply time to start a new one. 

I hear that so often it's not even funny anymore...  People that are so proud of only having 1 car payment instead of 2 (or 3).  Yet they can't extend that to the concept of having NO car payment!  "Time to get a new car since they're all paid off".  ARRRRGH!!!

I think it is so ingrained in people that having a monthly car payment is just like rent, utilities, etc., that just as having no living space or electricity is not an option, so is not having a car payment.

capital

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Re: the new car hamster wheel
« Reply #22 on: March 07, 2013, 01:11:13 PM »
A car loan by itself is pretty shady from the lender's perspective...

Though I've sometimes thought that cars exist only to give dealers something to make loans on.  I know the one time (quite a few years ago now) that I actually bought a used car from a dealer ('cause I just couldn't find anything decent from a private party), I had a heck of a time getting the salesman to understand that I didn't want to finance it.

I've been vehicle shopping lately, so I've been to a few dealerships to get an idea about what is available. The one sales guy just wouldn't let up on the financing deals, about how I would be throwing money away, by paying cash!

I won't be buying new, but I wanted an idea what some of my options are, before I go l looking at used models.
If you have a high credit score, you can sometimes get 0% financing on new cars, which would put you pretty soundly in the money if you invest that cash instead, or even put it in a few CDs. And there's been very low depreciation on a lot of compact, fuel-efficient cars lately, though who knows what'll happen to oil prices (and, likely, the value of fuel-efficient cars) in the next 5 years or so

Self-employed-swami

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Re: the new car hamster wheel
« Reply #23 on: March 07, 2013, 01:32:32 PM »
If you have a high credit score, you can sometimes get 0% financing on new cars, which would put you pretty soundly in the money if you invest that cash instead, or even put it in a few CDs. And there's been very low depreciation on a lot of compact, fuel-efficient cars lately, though who knows what'll happen to oil prices (and, likely, the value of fuel-efficient cars) in the next 5 years or so

I need a 4x4 truck for work, so I am already looking at a $15,000+ purchase, 4-5 years old.  I'm not about to outlay $45,000+, just because I can get 0% financing on a new one.  There are no 0% unsecured vehicle loans in Canada, for used cars.

Jamesqf

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Re: the new car hamster wheel
« Reply #24 on: March 07, 2013, 02:06:52 PM »
I need a 4x4 truck for work, so I am already looking at a $15,000+ purchase, 4-5 years old.

Why?  You can find mid-80s to early-90s Toyata 4x4s for under $3K, and they'll run forever.  At least my '88 is still going strong.

As for the idea that it's better to make payments at 0% interest on a new vehicle than buy a much cheaper used one...  Well, think about that a minute :-)

GoStumpy

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Re: the new car hamster wheel
« Reply #25 on: March 07, 2013, 02:36:08 PM »
As well as an early 2000 Chevrolet Silverado 4x4 with under 100k can be had for under $10k?

Jack

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Re: the new car hamster wheel
« Reply #26 on: March 07, 2013, 02:36:24 PM »
If you have a high credit score, you can sometimes get 0% financing on new cars, which would put you pretty soundly in the money if you invest that cash instead, or even put it in a few CDs.

The way most new-car promotions work is that they advertise 0% financing or $X amount of "cash back." You can pick one or the other, but you don't get both. In that case, you're most likely better off taking the "cash back" and paying cash for the car.

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Re: the new car hamster wheel
« Reply #27 on: March 07, 2013, 03:44:01 PM »
As well as an early 2000 Chevrolet Silverado 4x4 with under 100k can be had for under $10k?

...and I have a POS 1981 Chevy Truck that I bought with a large pizza (with everything).   It's not a 4x4.  It's ugly.  But, who can argue with the price?

Self-employed-swami

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Re: the new car hamster wheel
« Reply #28 on: March 07, 2013, 07:31:51 PM »
I drive a lot, and I just wrote off a 2006 Toyota Tundra last month, so I'm looking to replace that.  Because of the amount of time I spend driving for work, I need something reliable, and comfortable.  I also get a crazy high vehicle allowance from my clients, so I can justify paying a little more for a vehicle, than a mid 90's model.

Also, because I rolled my last truck, and I was able to walk away, I want side curtain airbags again, which aren't in older trucks than about a 2006.

Self-employed-swami

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Re: the new car hamster wheel
« Reply #29 on: March 07, 2013, 07:35:40 PM »
I am also in Canada, so vehicles are a little more expensive here, even used, than in the US.

My insurance is likely to pay out about $11-13,000 for my write-off, so I'm going to top that up a bit, and get something 2008ish. (I drive like 40,000km+/year some years, and I quite literally live in my truck half the year).

Jamesqf

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Re: the new car hamster wheel
« Reply #30 on: March 07, 2013, 08:24:07 PM »
Because of the amount of time I spend driving for work, I need something reliable, and comfortable.  I also get a crazy high vehicle allowance from my clients, so I can justify paying a little more for a vehicle, than a mid 90's model.

Don't quite understand the reasoning there.  Figure my '88 Toyota has been running just fine for a quarter century now - what could be more reliable than that?  Comfortable you don't get in trucks, unless your standards of comfort are much different than mine.  As for paying more just because you can afford it...

Self-employed-swami

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Re: the new car hamster wheel
« Reply #31 on: March 08, 2013, 01:35:35 AM »

Don't quite understand the reasoning there.  Figure my '88 Toyota has been running just fine for a quarter century now - what could be more reliable than that?  Comfortable you don't get in trucks, unless your standards of comfort are much different than mine.  As for paying more just because you can afford it...

From a pure money-savings stand-point, I completely agree.  That being said, I walked away from a roll-over accident just shy of 3 weeks ago because of the side-curtain airbags (my 2006 Tundra was american, so it has them, whereas the canadian ones didn't have them in until 2007).  If they were available in an older model, I would consider it.  Or if I was just looking for something to haul construction materials around/make dump runs.

I have taken driver's training, mentally active driving, and winter hazard driving in recent years for work; In addition, I had 4 ice tires on as well, with less than 20,000km into their 100,000km life.  There wasn't much I could have done to avoid rolling, seeing as I was going less than 60km/hr, beyond not being on the road at all, which was a requirement of my job at that moment.

I found my 2006 Tundra to be quite comfortable to drive for long distances as well.  I need to be able to haul 8 large rubbermaid totes of work gear, through the snow, summer mud, and down the highway, which eliminates most lower-cost SUVs as well, unfortunately.

I know this sounds like a lot of excuses/whiny-pants complaining to some, but to me, it's a perfect compromise between the new $50,000-$80,000 trucks most of my competitors drive (bought on credit), and a 1988.  It is a 100% write-off for my business, for tax purposes.  My Dad is also a mechanic, and will do all the maintenance for parts-cost only (and baked goods). And of course I can pay cash, without batting an eyelash.  (I could pay cash for a brand new 2013 Tundra Limited if I really wanted to, but I don't).
« Last Edit: March 08, 2013, 01:38:41 AM by Self-employed-swami »

CALL 911

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Re: the new car hamster wheel
« Reply #32 on: March 09, 2013, 10:10:58 PM »
A car loan by itself is pretty shady from the lender's perspective...

Though I've sometimes thought that cars exist only to give dealers something to make loans on.  I know the one time (quite a few years ago now) that I actually bought a used car from a dealer ('cause I just couldn't find anything decent from a private party), I had a heck of a time getting the salesman to understand that I didn't want to finance it.

This. Some used dealers (JD Byrider, any buy here-pay here place) are not selling cars at all. They are strictly financing operations that found cars to be the most convenient thing to finance. They won't talk to you about purchase price at all, and only even display it since it's legally required. They'll talk about payments all day though. They will sell you a car if pressed, but you can't possibly get any type of deal from them - they really only want to finance something.

ivyhedge

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Re: the new car hamster wheel
« Reply #33 on: March 11, 2013, 11:07:53 AM »
Quote
I think it is so ingrained in people that having a monthly car payment is just like rent, utilities, etc., that just as having no living space or electricity is not an option, so is not having a car payment.

Not even utilities. Having two cars, and two payments, is as "normal", and "expected", as buying milk. Ouch.

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Re: the new car hamster wheel
« Reply #34 on: January 20, 2015, 03:29:55 AM »
From strictly a cash flow perspective, there are pretty good deals out there, particularly if you are interested in newer cars with all the bells and whistles for safety and connectivity.  The last few years have seen a proliferation of technology into cars which is just not available on old beaters.  I saw the other day Kia now offers the same radar-based cruise control recently only available on Merdeces S-class (as Distronic).  Korean cars in particular have all the toys you could want for phone connectivity, nav, music, etc.  at low prices.

There is an argument to be made for purchasing (or leasing) any of the following new cars, which range from $129-199 per month, with zero down: Corolla, Sonata, Jetta, Civic, Optima.  Drive for 2-3 years with zero maintenance cost.  Cheap to run, no investment money tied up in them, and trade for a new one when ready.

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Re: the new car hamster wheel
« Reply #35 on: January 20, 2015, 07:11:25 AM »
I had a heck of a time getting the salesman to understand that I didn't want to finance it.

When I bought my most recent car, they had me do all the paperwork and then sent me to the back to the guy who collects payment. He said "oh, the salesguy didn't get your credit score. Hold on just a second."  My husband handed him a check for the full purchase price.  He looks at it, hands me the paper for the credit score while I just give him a weird look, and then he says "Oh, I guess we don't really need your credit score. Let me find out if we can skip that."  (Skipping it was eventually cleared)

He honestly didn't know the process for what to do if someone paid for the car upfront.   I didn't realize it was that rare.

Jack

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Re: the new car hamster wheel
« Reply #36 on: January 20, 2015, 07:31:14 AM »
The last few years have seen a proliferation of technology into cars which is just not available on old beaters.  I saw the other day Kia now offers the same radar-based cruise control recently only available on Merdeces S-class (as Distronic).  Korean cars in particular have all the toys you could want for phone connectivity, nav, music, etc.  at low prices.

Also known as "shit that's going to be obsolete in a year or two, that you can't remove because the damn radio controls the door locks or some bullshit like that, that stores telemetry data that will be used against you (for marketing, as an excuse to deny a future insurance/warranty claim, etc.) and that some loser car thief can break into remotely with a $50 gizmo bought off the Internet."

I refuse to by any new car specifically because they're all infected with this shit!

(Also note that I'm not a luddite -- in fact, I'm a software developer. I avoid Internet-connected cars not because I know too little to trust them, but because I know too much to trust them!)

BlueMR2

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Re: the new car hamster wheel
« Reply #37 on: January 20, 2015, 09:56:22 AM »
(Also note that I'm not a luddite -- in fact, I'm a software developer. I avoid Internet-connected cars not because I know too little to trust them, but because I know too much to trust them!)

I'm with you.  I appreciate the "coolness factor" of the gadgets, but I would pay more to NOT have that stuff.  The long term maintenance costs as well as all the other issues that come along with it simply make it a bad deal.

Spork

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Re: the new car hamster wheel
« Reply #38 on: January 20, 2015, 10:45:11 AM »
(Also note that I'm not a luddite -- in fact, I'm a software developer. I avoid Internet-connected cars not because I know too little to trust them, but because I know too much to trust them!)

I'm with you.  I appreciate the "coolness factor" of the gadgets, but I would pay more to NOT have that stuff.  The long term maintenance costs as well as all the other issues that come along with it simply make it a bad deal.

and I am with you both, too.

I've worked in computer security too long to want this stuff.  Simpler is better.  Yes, you can break in by smashing a window.  But when you can drive through the parking lot and roll every window down with a cool black box you built: that's worse.

greenmimama

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Re: the new car hamster wheel
« Reply #39 on: January 20, 2015, 10:51:13 AM »
A car loan by itself is pretty shady from the lender's perspective...

Though I've sometimes thought that cars exist only to give dealers something to make loans on.  I know the one time (quite a few years ago now) that I actually bought a used car from a dealer ('cause I just couldn't find anything decent from a private party), I had a heck of a time getting the salesman to understand that I didn't want to finance it.

This. Some used dealers (JD Byrider, any buy here-pay here place) are not selling cars at all. They are strictly financing operations that found cars to be the most convenient thing to finance. They won't talk to you about purchase price at all, and only even display it since it's legally required. They'll talk about payments all day though. They will sell you a car if pressed, but you can't possibly get any type of deal from them - they really only want to finance something.

Yes we call those banks disguised as a car lot, same with Sears, they make a considerable amount more on their financing than all the things they sell. They are a bank disguised as a Store.

MsSindy

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Re: the new car hamster wheel
« Reply #40 on: January 20, 2015, 11:09:42 AM »
The radio ads are the worst. There's this country music station I occasionally listen to in the car and they definitely go after the lowest hanging fruit. All the automotive ads are about treating oneself to a newer more powerful engine or having enough space to take a lady friend out on a date. There is usually a guy with a southern drawl talking about hard work and how they understand that sometimes life gets in the way of your credit score. Sigh.

.....wow, how big is the average lady friend where you live that you need 'space'?  :)

Ftao93

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Re: the new car hamster wheel
« Reply #41 on: January 20, 2015, 11:39:01 AM »
This all reminds me of our current situation.

A year ago I financed a motorcycle at 5%.  I pay it off at 3x the minimum.  I hate having a payment, but it was much cheaper than having a car.  It allows me to travel to my other office in 1/3 of the time, and the $$ is billed via my company.

My wife's scooter recently crapped out.  She decided she wanted a NEW one.  She financed it.  Sure, it's cheap, and it's 2.9%, but we have cash on hand.  We could have bought a perfectly nice, functional, low mileage one for about $1k.

I advised her against it, but in the end it was her choice. 

Drives me nuts seeing $200 go out to these each month.  Oh well, still drastically cheaper than a car!

eil

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Re: the new car hamster wheel
« Reply #42 on: January 20, 2015, 12:51:24 PM »
There is an argument to be made for purchasing (or leasing) any of the following new cars, which range from $129-199 per month, with zero down: Corolla, Sonata, Jetta, Civic, Optima.  Drive for 2-3 years with zero maintenance cost.  Cheap to run, no investment money tied up in them, and trade for a new one when ready.

But there is a better argument to be made that throwing away a consistent $129-199 per month just to have the latest gadgets and new car smell all the time is worthy of a face punch or three.

Self-employed-swami

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Re: the new car hamster wheel
« Reply #43 on: January 20, 2015, 07:51:25 PM »
Because of the amount of time I spend driving for work, I need something reliable, and comfortable.  I also get a crazy high vehicle allowance from my clients, so I can justify paying a little more for a vehicle, than a mid 90's model.

Don't quite understand the reasoning there.  Figure my '88 Toyota has been running just fine for a quarter century now - what could be more reliable than that?  Comfortable you don't get in trucks, unless your standards of comfort are much different than mine.  As for paying more just because you can afford it...

This just got bumped up for me today, so I thought I'd update, if anyone cares. 

I found a 2005 Tundra TRD for $11,000 all in (Cash), and the payout from insurance was $14,807 (I think, it was a long time ago now).   It had 218,000 km on it when I bought it, and I've been ripping around the logging roads in it for almost 2 years now. Beyond the odd light bulb and faultily hose clamp, it's going strong still at 250,000km.  I'm happy with my choice and it's value, versus what I get paid to have it just sit on a location, earning me $110/day. 

JLee

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Re: the new car hamster wheel
« Reply #44 on: January 21, 2015, 08:25:27 AM »
The last few years have seen a proliferation of technology into cars which is just not available on old beaters.  I saw the other day Kia now offers the same radar-based cruise control recently only available on Merdeces S-class (as Distronic).  Korean cars in particular have all the toys you could want for phone connectivity, nav, music, etc.  at low prices.

Also known as "shit that's going to be obsolete in a year or two, that you can't remove because the damn radio controls the door locks or some bullshit like that, that stores telemetry data that will be used against you (for marketing, as an excuse to deny a future insurance/warranty claim, etc.) and that some loser car thief can break into remotely with a $50 gizmo bought off the Internet."

I refuse to by any new car specifically because they're all infected with this shit!

(Also note that I'm not a luddite -- in fact, I'm a software developer. I avoid Internet-connected cars not because I know too little to trust them, but because I know too much to trust them!)

You say that, but now try to get a new vehicle to start when the ECU thinks its been stolen. :P

Hyundai has had radar-based cruise since at least 2009, if not before. This is not remotely "new," even for Korean brands.
« Last Edit: January 21, 2015, 08:27:06 AM by JLee »

Spork

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Re: the new car hamster wheel
« Reply #45 on: January 21, 2015, 12:21:23 PM »
The last few years have seen a proliferation of technology into cars which is just not available on old beaters.  I saw the other day Kia now offers the same radar-based cruise control recently only available on Merdeces S-class (as Distronic).  Korean cars in particular have all the toys you could want for phone connectivity, nav, music, etc.  at low prices.

Also known as "shit that's going to be obsolete in a year or two, that you can't remove because the damn radio controls the door locks or some bullshit like that, that stores telemetry data that will be used against you (for marketing, as an excuse to deny a future insurance/warranty claim, etc.) and that some loser car thief can break into remotely with a $50 gizmo bought off the Internet."

I refuse to by any new car specifically because they're all infected with this shit!

(Also note that I'm not a luddite -- in fact, I'm a software developer. I avoid Internet-connected cars not because I know too little to trust them, but because I know too much to trust them!)

You say that, but now try to get a new vehicle to start when the ECU thinks its been stolen. :P

Hyundai has had radar-based cruise since at least 2009, if not before. This is not remotely "new," even for Korean brands.

I had one think it got stolen while I was driving down the road -- something the documentation explicitly explains to me cannot happen.   One new computer, please.

frugalnacho

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Re: the new car hamster wheel
« Reply #46 on: January 21, 2015, 12:51:11 PM »
I think you're overly optimistic. Let me adjust your numbers:

I think the negative equity happens over time...

You buy a new oversized truck for $40k, make payments of $600 per month for 1 year, after which you owe $36k on a truck that's worth $26k.  You then buy a newer, shinier, more oversized truck for $42k [extra $2k due to hedonic adaption], roll the $10k negative equity in it and >>BINGO<< you have a new $40k [after you subtract $2 grand because you drove it off the lot] truck for which you owe $52k.

Repeat every 1 year for maximum effectiveness.

Yea, but the new truck goes up to 11.


eyePod

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Re: the new car hamster wheel
« Reply #47 on: January 22, 2015, 07:47:56 AM »
The only way leasing/financing new cars makes sense is if you understand the financial implications and decide that the new car is worth the extra money you'll be paying. Otherwise, you're just being stupid.