New vehicle sales pace...unsustainable?

[jeffh81]

I mean, this is no financial advice forum, but keeping a separate emergency fund that is never touched unless truly needed could cover those things. Save up the larger down payment outside of e-fund and burden yourself less each month. Just an option.

I keep both, but like to stack whatever i can into my E fund. If i cant afford the extra 20$ or so a month i saved by putting down a large down payment i need to looking at something else

 

[GotBoost?!]

I haven't had a car payment since we bought my wife's first new car - a 1991 Mazda Protege LX. Payment was $251.80 per month back in 1991-1995. These days people want everything without earning it or being able to realistically / intelligently afford it. Those who finance car after car for terms of more than 2-3 years are pissing money away.

Nice used cars FTW.

Yup,all of my vehicles have been used and will continue to do so.

 

[GotBoost?!]

Wal Mart still has sale prices

...and you still have to drag my half-dead body inside that pathetic place!

 

[Screw-Rice]

And we're not just talking about you, me, or any other SVTPer in these instances. For the most part, we're all OK. The majority of the people who are making these poor financial decisions can't afford it when the mistake catches up with them.

This caught my attention. Very curious of replies if someone who is a member of a Honda/WRX/BRZ etc forum posted the same question and how they would reply since they're usually had by younger (physically and mentally to a degree) guys.

 

[Buckwheat 1]

This caught my attention. Very curious of replies if someone who is a member of a Honda/WRX/BRZ etc forum posted the same question and how they would reply since they're usually had by younger (physically and mentally to a degree) guys.

 

[BladeX10]

I've worked at a new car dealership for a few years and i have found there are 2 types of buyers that make up the majority when it comes to NEW cars.

1. People who have good credit and they likely have a good savings account and a good income and will put their payment on "auto pay" and never think twice about it.
2. People who dont make decent money, Dont have savings and have shit credit. These are the ones who will come in with $523 down payment and look for a $20k+ car because they dont have $3-5k in cash to buy a decent private party car. Every month they have to lift up their sofa cushions for coins to put together a car payment. These people will sign all the paper work without asking a single question because just getting "approved" is a success to them. Then you look at the term and its 15% interest on a 72 month loan and $300+ payments.

 

[LogiWorld123]

Even if vehicles are lasting longer, long-term notes don't make sense when little is put down, and the new owner is instantly upside-down the moment they drive off the lot.

Doesn't make sense to the consumer, but makes perfect sense to the bank. The secured asset isn't worthless 6, 7, 8 or even 9-10 years down the road.

One accident (auto or medical that leads to loss of the ability to work) or downturn in economy leading to a job loss puts the owner in a bad financial situation. The probability of something like that happening increases when you're paying on a vehicles for 6-7 years versus 2-4 years.

That can happen if you put a decent sized down payment on an auto too. 10k down? Your <new vehicle of choice> is now 11k less than brand new once you drive off the lot.

These long-term financing options are making people think just the way you are stating it. It'd be the same as saying that it would be wise for mortgage lenders to make 45 year notes an option to the public so people can afford more house than they can truly afford.

It seems that most consumers only care about payments. Ever listen to the modern car salesman? "What's your payment range?" cause we all know that finance whiz can take all the kick backs in the world and get you into an 84 month $179/mo loan @ 8%.

Its why I did bi monthly mortgage payment plan. It hurts less with our cash flow to make two smaller payments than one huge giant pain in the butt payment.

We saw the pop on the housing market, I feel the same will come with auto loans. If that's the case, I'll be looking for a good deal on repossessed vehicles here in a few years.

There are good deals on repo vehicles now at the auctions. Why wait until everyone gets that idea

 

[jaxbusa]

You have to watch out on higher frequency payments. I was shopping for home insurance a few years ago and the one time payment for the year was great. They had an option for monthly payments and it didn't add up. They were adding some kind of processing fee each payment that was about $30. My auto insurance is the same way. Paying every month adds about $18 to $20 each payment versus paying every 6 months.

Let's use the above post that indicated he pays on his mortgage two times a month. Not that his mortgage has an extra fee for every payment, but it could Like my auto and home insurance. Let's say the fee is $20 like my auto insurance and he has a 30 year mortgage.

12 extra mortgage payments a year for 30 years

12x30=360

So 360 more payment through the term of the loan.

360x$20 fee=$7,200

So, if the mortgage company is like my auto insurance on processing fees, you could pay 7,200 more on just fees.





Sent from my iPhone using svtperformance.com

 

[Stanley]

I always get the longest loan length possible to make the payments less just in case something happens that would change my financial situation. I can't remember the last time I paid a loan to full term. I even got six years on my 2003 Duramax with 198k miles at 1.75% for $11k.

 

[AAG]

You don't lose your down payment if you wreck the car the next day. You'll lose whatever the depreciated value is versus what you bought the car for. It's honestly an agree to disagree. However, I never thought I'd have to defend my stance of not taking out a 4+ year car loan with minimal down.

And we're not just talking about you, me, or any other SVTPer in these instances. For the most part, we're all OK. The majority of the people who are making these poor financial decisions can't afford it when the mistake catches up with them.

Well yes, I was trying to make it easier for people to understand by not making it so technical. And we all know the moment you drive off in that vehicle, you take a nice hit on depreciation. I'm not risking any of my money, I'll let the my insurance and/or the gap company do that.

Even paying cash for a car is dumb because of what I mentioned. It makes more financial sense to get a vehicle with a 0% or as close to 0% financing than dropping 30/40/50k of your hard earned money and covering your rear with gap insurance.

 

[DHG1078]

Well yes, I was trying to make it easier for people to understand by not making it so technical. And we all know the moment you drive off in that vehicle, you take a nice hit on depreciation. I'm not risking any of my money, I'll let the my insurance and/or the gap company do that.

Even paying cash for a car is dumb because of what I mentioned. It makes more financial sense to get a vehicle with a 0% or as close to 0% financing than dropping 30/40/50k of your hard earned money and covering your rear with gap insurance.

Maybe i'm not reading your post correctly, but you don't buy gap insurance if you buy a car in cash or drop a large down payment. You only buy gap insurance if your loan is more than what the car is worth (small or no down payment). Car insurance covers the vehicles value, and gap insurance covers the difference between vehicle value and the loan amount.

 

[nickf2005]

Maybe i'm not reading your post correctly, but you don't buy gap insurance if you buy a car in cash or drop a large down payment. You only buy gap insurance if your loan is more than what the car is worth (small or no down payment). Car insurance covers the vehicles value, and gap insurance covers the difference between vehicle value and the loan amount.

I'm not following the logic either.

 

[AAG]

Maybe i'm not reading your post correctly, but you don't buy gap insurance if you buy a car in cash or drop a large down payment. You only buy gap insurance if your loan is more than what the car is worth (small or no down payment). Car insurance covers the vehicles value, and gap insurance covers the difference between vehicle value and the loan amount.

Not sure where the confusion came up, but that's not what I said (meant). But yes you are right, get GAP if you don't put anything down so you won't be upside down if something were to happen to the vehicle.

And don't put a significant amount of money down (prefer zero) on a depreciating asset such as a car.

Buy a new car, zero down, get gap. Keep your money elsewhere where it's making you money.

 

[DHG1078]

Not sure where the confusion came up, but that's not what I said (meant). But yes you are right, get GAP if you don't put anything down so you won't be upside down if something were to happen to the vehicle.

And don't put a significant amount of money down (prefer zero) on a depreciating asset such as a car.

Buy a new car, zero down, get gap. Keep your money elsewhere where it's making you money.

The confusion comes from you said the two options are buy a car zero money down, or drop 50k and get gap insurance, which is wrong. It should have said zero down plus gap or drop 50k.

 

[AAG]

The confusion comes from you said the two options are buy a car zero money down, or drop 50k and get gap insurance, which is wrong. It should have said zero down plus gap or drop 50k.

Fair enough.

 

[jeffh81]

I've worked at a new car dealership for a few years and i have found there are 2 types of buyers that make up the majority when it comes to NEW cars.

1. People who have good credit and they likely have a good savings account and a good income and will put their payment on "auto pay" and never think twice about it.
2. People who dont make decent money, Dont have savings and have shit credit. These are the ones who will come in with $523 down payment and look for a $20k+ car because they dont have $3-5k in cash to buy a decent private party car. Every month they have to lift up their sofa cushions for coins to put together a car payment. These people will sign all the paper work without asking a single question because just getting "approved" is a success to them. Then you look at the term and its 15% interest on a 72 month loan and $300+ payments.

Ive been on both sides of the coin and it sucks when you lost everything and are at the mercy of the finance company.
Ex: my wife and I shared one vehicle. It was stolen and not recovered and since i was the only one working with her in nursing school. I was screwed needing a vehicle asap. My credit was shit because i made low wages by SVTP standards being a state employee. You damn right i was appreciative of someone financing me at a cut throat rate so i could continue to provide and she finish school. A year later I refinanced and got a much lower payment. Moral of story is dont pass judgment without knowing the full story

 

[tistan]

Funny, I've never seen shit credit only because of low wage.

 

[Screw-Rice]

Funny, I've never seen shit credit only because of low wage.

Yup, I've seen people with good and bad credit at all pay scales. Good credit is a result of proper finance management, not income.

 

[LogiWorld123]

You have to watch out on higher frequency payments. I was shopping for home insurance a few years ago and the one time payment for the year was great. They had an option for monthly payments and it didn't add up. They were adding some kind of processing fee each payment that was about $30. My auto insurance is the same way. Paying every month adds about $18 to $20 each payment versus paying every 6 months.

Let's use the above post that indicated he pays on his mortgage two times a month. Not that his mortgage has an extra fee for every payment, but it could Like my auto and home insurance. Let's say the fee is $20 like my auto insurance and he has a 30 year mortgage.

12 extra mortgage payments a year for 30 years

12x30=360

So 360 more payment through the term of the loan.

360x$20 fee=$7,200

So, if the mortgage company is like my auto insurance on processing fees, you could pay 7,200 more on just fees.





Sent from my iPhone using svtperformance.com

Yup, I can name two local banks here that would do that. Fortunately they put the fee up front and anyone with a calculator could figure out they were trying to rip you.

My loan does not have a processing fee. The only fee they would charge is if I paid them with a check in lieu of direct withdrawal. I direct deposit into a separate bank and bank account the necessary funds to cover their withdrawal.

Our car insurance has a $1 a month though service fee for the privilege of paying them less money per month.

 

[jeffh81]

Funny, I've never seen shit credit only because of low wage.

i had no revolving credit and paid cash for everything. When my truck totaled out it dropped my credit 30 points because that was the only revolving credit i had. When you dont carry any credit it looks bad because they have a hard time figuring out how you will pay