Quote:
Originally Posted by jayswin
Yeah, now a days most people justify just permanently renting vehicles so they can have something newish all the time. It's a very odd line of thinking, but I totally get how people get themselves there and justify it.
Usually it's because most people have got to the point where they will always have car payments and then they take the next step of saying "Well, if I always have car payments then I might as well always have a new vehicle with those payments rather than paying something off and owning it."
Again, the reasoning doesn't make a ton of sense from a financial standpoint because obviously the idea that you should always have a car payment is flawed and usually comes more from reasoning yourself into having a nice vehicle than actual financial reasoning, but I digress.
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I can poke a million holes in this logic.
Unless you are incredibly lucky, you will always have a car payment. It just won't be a monthly instalment. Once you replace a $6000 transmission on a Dodge Caravan at their regular 120,000 km 'blow up' interval, you just made a payment. Then it's time for your regularly scheduled head gasket at 150k.... theres another payment....etc, etc.
However there is another aspect as well. If you can get a 'true 0%' agreement, where no dealer incentives have been forfeited to obtain it, you are now in a very grey area.
So you have 30k to buy your dream Taurus LX. And the dealer is offering you 0%. You could plop your 30k in a 2.5% GIC a make +/- $4000 over 5 years, still have your cash on hand that will grow for as long as you want, even after the car is long gone.
Even if you forfeited a $4000 rebate to obtain the zero percent, you haven't dumped all your cash, into a depreciating commodity, with a heavily uncertain future value. The net savings is around zero, but you still have cash growing at the end.
Just as you don't understand people that have payments, I don't understand people that empty their bank accounts on commodities that are guaranteed to depreciate at a rapid rate.
I however do love these car finance threads, not just because I do dealer finance for a living, but also because I get this hilarious vision that half of CP, has a 1983 two tone brown Chevrolet Caprice that needs ball joints parked in their driveway, with a weathered Landau roof, a door bell button for a starter button, and red packing tape substituting for the left tail light lens.... not the right, the left.