Americans And Car Loans

[Crowbob]

Originally Posted by Tobra

Same deal with credit cards

I have screwed over more than one car dealer who thought they were going to make their money on the ridiculous financing they thought I needed to use on a note I was going to pay off within a week or two.

So let me get this straight. You go in to the dealer, negotiate a low sale price using an in-house high interest loan as leverage then pay it off before the first payment is due?

Brilliant!

I suppose its necessary to make sure there's no early pay-off penalty. Any other tips?

[john70t]

I'm ready to put money down on a brand new 1990 Hilux today.

[Rot 911]

On the other hand, I’m 67 and no longer want to work on my main means of getting around. Not that I can’t, after all I did rebuild the engine on my 1986 911. I no longer take pleasure in it. So I buy new and enjoy not having to work on it. The dealer can work on it if it needs something fixed during the warranty period. When the warranty is up, I move onto something else new. And I pay cash.

When I want to be reminded of what it’s like to have to piddle around on some gremlin in a car, I always have my 2006 Mini Cooper S.

[Tobra]

Bob, that is exactly right. Go in acting like some half sentient mouth breather and focus on monthly payments, sales price or whatever, anything but the interest rate on the note. You want to make sure there is no penalty for paying off the note early. Frequently, there is a 30 day grace period where there is no interest charged. When you leave the dealership with the car, call and get a dollar amount to pay off the loan, allow for mailing time, so ask for a 10 day payout.

Last time I did this, they called and asked how the car was, thinking it was wrecked and paid off by the insurance company. Then they tried to "help" me, so I don't have all my money tied up in a car. Offer to knock 10% off the interest rate on the loan, a week after they made the loan. I laughed at him, "Amazing you can do that much better on the interest rate. Either you are lying now, or you were lying a week ago."

[A930Rocket]

$1,000 car payments are crazy. But then new car prices are crazy.

The last new vehicle bought was my 2014 F150. 173k on the clock now. I paid it off in two years and it will be the last vehicle I own.

We were looking at a used 2016 Tahoe to replace Ms Rockets 2010 Tahoe (bought used for cash), but you’ll remember from my break down thread, we ended up having to replace the transmission and now it’s a keeper for many more years. 250k on the clock now and she’s going to see if she can make it to 350k.

[stevej37]

My father taught me an important lesson when I was 15 years old.
He said "save up your money for your first car. When you buy it, keep saving money for your next car so that you don't have to borrow for the next"

I did that and never had to borrow for a car.

[look 171]

Everytime I walked into a dealer the question is always, " What can you afford monthly in payments". I normally reply, lets talk about the car and its cost instead of monthly payments. Its sad how many Americans all into that trap. Where did they failed in simple money management? I have never had monthly car payments. I pay cash for my first car with a 1500.00 loan from my father. After that, it was all on me to save and live within my means. Payments sucks at 200 bucks monthly but 1000? Crazy.

[jyl]

Among subprime borrowers, looks like 60-day delinquency rate is now *higher* than in the Great Recession. https://www.axios.com/2023/03/01/low-income-households-are-falling-behind-on-car-bills

Car shortage drove up used and new car prices, inflation stressed budgets, pandemic assistance and expense deferrals went away. Subprime auto loan performance is a good indicator of the financial condition of lower income households, and it isn’t indicating “good”. Fortunately the job market is still pretty hot. When it’s not . . .

[jyl]

I’ve bought two cars with loans. My first “nice” car after law school, and it turned out to be not a great car, but it was fun for a while. Then when gas prices shot up to $4+ in 2006, my wife refused to drive her Range Rover in account of it was getting <10 mpg, wanted one of them newfangled Prii. Which was a very good car, and the gas savings of going from 9 mpg to 40+ mpg actually made sense. Otherwise, I’ve always had used cars, some quite old. Sometimes people probably wondered what was wrong, but I think my old cars have been way more interesting than whatever new car I could have gotten for 3X the price at the time. My latest purchase is a 2004 W211 estate, picked up for $6,500 with 29,750 miles last year. What would a current model car of equivalent quality, comfort, and interestingness cost? 7-8 X more?

[RANDY P]

Originally Posted by look 171

Everytime I walked into a dealer the question is always, " What can you afford monthly in payments". I normally reply, lets talk about the car and its cost instead of monthly payments. Its sad how many Americans all into that trap. Where did they failed in simple money management? I have never had monthly car payments. I pay cash for my first car with a 1500.00 loan from my father. After that, it was all on me to save and live within my means. Payments sucks at 200 bucks monthly but 1000? Crazy.

When I shop I insist on a payment based on what I know I qualify for rate-wise, and on a loan amount that gives me under MSRP- usually in the form of a pre-approval from the local CU. .

rjp

[jyl]

Originally Posted by scott540

Had this talk with a girl I know.
They just bought a new grand wagoner.
I asked what happened to the Yukon, it was nice. "Well it was a 2017 and just passed 100000 miles so it was starting to need stuff".
These are the same kind of people that give me crap because we drive expensive cars.
A 2012 range rover and a 2014 cls63. Yeah, we buy them 5 or 6 years old for cash and if we have to put maybe a couple grand into them every year. Still better that 1200 a month for 7 years.

This blows me away. So the car is starting to “need stuff”, then do the stuff and save money. Modern cars can go 200K easy if well maintained. All of our cars, save the latest purchase, have well over 100K miles.

I don’t know though, maybe if you buy a Yukon, 100K is dump-it time?

[RANDY P]

Been researching this topic the last few days, and it's eye opening just how ****ing impulsive, fiscally illiterate and crazy the average Merican is when it comes to buying new cars.

I thought being a gearhead I was bad, but wow. Buying over sticker, financing over sticker, over and over again. WTF

PS if you want some good loan stories, read here: https://www.reddit.com/r/askcarsales/comments/oyuqrh/whats_the_worst_loan_you_have_ever_seen/

rjp

[Arizona_928]

Originally Posted by look 171

Everytime I walked into a dealer the question is always, " What can you afford monthly in payments". I normally reply, lets talk about the car and its cost instead of monthly payments. Its sad how many Americans all into that trap. Where did they failed in simple money management? I have never had monthly car payments. I pay cash for my first car with a 1500.00 loan from my father. After that, it was all on me to save and live within my means. Payments sucks at 200 bucks monthly but 1000? Crazy.

Since they know longer teach finance in high schools.

In high school (2011) I was taught to balance a check book. File a 1040 and the AZ version. Budget for living expenses and best of all. Career choices in regards to what income meant as adjusted, gross and basic retirement.

Now high schools do the dave ramsey finance classes and turn the future generations into blind consumers.

[GH85Carrera]

Originally Posted by Rot 911

On the other hand, I’m 67 and no longer want to work on my main means of getting around. Not that I can’t, after all I did rebuild the engine on my 1986 911. I no longer take pleasure in it. So I buy new and enjoy not having to work on it. The dealer can work on it if it needs something fixed during the warranty period. When the warranty is up, I move onto something else new. And I pay cash.

When I want to be reminded of what it’s like to have to piddle around on some gremlin in a car, I always have my 2006 Mini Cooper S.

I know many people just like you, and there is not one thing wrong with it. Some of my friends are just the point of wanting to work on cars, and they really like the gizmos of the new cars, and have more money than they will ever be able to spend.

One of the guys in our local PCA region just loves new car smell I guess. He is in a 2022 911 Turbo S right now and he has had it almost 9 months. He had a 911 GT3RS before that, and various new 911s before that. He never keeps a car a full year. We tease him that the tag agency sens him a birthday card for all the business he brings. The funny thing is those high end cars are in such demand he often makes a few bucks or breaks even by selling them to a individual. His salesman at the dealership sure jumps up and runs over to him when he walks in the door.

[MBAtarga]

Perimeter Porsche here in ATL has a customer that purchases a new 911 model (of various trim levels) every 4-6 months. He drives them for a few months and then trades them in. He's rather wealthy of course - so this is somewhat of a hobby.

[Cairo94507]

And people wonder why they have no savings, retirement funds, etc. Never buy toys on credit- you will come to resent the toy. My wife and I are both "old school" and debt free and sleep well at night owing no one anything. I try to teach that to my relatives and any one who will listen. But sadly, we have become a nation of "pride of possession" instead of "pride of ownership".

I laugh at car sales people who lead with "What payment can you afford?"

[john70t]

[GH85Carrera]

Wow, so for the next 7 years se will "get" to pay $24,276 for that POS car. No way it will last that long.

It is like the people that rent furniture or appliances. Just simple stupidity.

Back before I bought my EL Camino, I was looking at used pickups as a possibility. I saw one on a used car lot and stopped to inquire about it. He said he would not sell it outright, only sell it on his loans. He had a device to remotely kill the starter and locate it. He said he has sold that truck several times, the owner misses a payment and he repossess it.

[aschen]

Hadnt had a car payment in 20+ years but don't want to be too judgmental from a porsche owners forum


The buy here, pay here lots are preditory, but that woman probably had shockingly bad credit and no other options. In the statistical sense she is likely to quit paying and have it repoed. That is there buisness model. Repo, resell, repeat.

I have less sympathy for working middle class that can comfortably afford a 30k car but somehow thinks they need/deserve a new 70k car every few years.

A new mid grade Camry would have been considered ultra luxury not too long ago and has plenty of room for a family. Finance it for 3 years and keep it for 10 if you must.

[Arizona_928]

Originally Posted by GH85Carrera

Wow, so for the next 7 years se will "get" to pay $24,276 for that POS car. No way it will last that long.

Snip

Don't worry. They'll place the rest on her credit.