You Know What Really Grinds My Gears....The Sequel!

[2ArmBands]

Originally Posted by Dion

What he is talking about is taking the cash that would pay for the vehicle out right and and investing it elsewhere. At .9% you are not really paying any interest at all. Chances are excellent, if the money is invested right that his investment earning will be greater than what he had to pay in interest.

Exactly... I finance vehicles for this very reason. Cash in hand is king for my personal situation. Not only in investing scenarios but also in tax return situations etc...

Of course the key is understanding your financing and making the logical choices.

[Temporary_User]

Originally Posted by flameswin

I feel like I'm really stupidly missing something here. When dealerships offer .9% financing, you're paying .9% not earning .9%, and therefore it would be a better financial move to pay cash for the vehicle.

Seriously, I'm so confused by your post lol.

My bank gives me 1.4% in the most basic no-minimum chequing account. There are risks with investments, but they say spread out well enough and the average return you will see is 5-7%.

[pylon]

Most of the truly wealthy in this city, lease new cars. Rule #1 of most wealthy people, is never use your own money if you don't have to, always borrow it. Especially on depreciating commodities, which cars are. The typical rich guy mentality is, pay $40k to lease a brand new $90,000 S-class for 3 years, than to buy a 3 year old one for $50k and sell it for $20k in 3years. The leasing option only costs him another 10k, which is probably 1 or 2 weeks salary for that type of client. Over 60% of our clients in our luxury lines lease, that is fact, and if you saw some of those credit applications, your eyes would bulge out and touch the paper.

I can assure you, most working millionaires in Calgary aren't driving an 07 Camry. Drive through Mayfair, Pumphill, Bearspaw, Mount Royal and Springbank where all the real money in this city is, and it is a train of Benz's, BMW's, LandRovers, and Lexus's going into those posh areas.

That little Ross Perot / Warren Buffet created myth where all rich people drive Jalopies is BS. Even the stat where Toyota is claimed as the best selling millionaires car, doesn't take into account more than 60% of those Toyotas, are actually a Lexus.

The other piece of BS in that stat are people like my folks. Who yes are technically millionaires on paper, but it is due to a paid off home, and a bunch retirement investments accumulated over decades. They drive a Tiguan, and a 12 year old Dodge truck. They may be worth a couple million on paper, but they are an entirely different breed than some hot shot oil exec pulling down 500k/yr.

[pylon]

Originally Posted by flameswin

I feel like I'm really stupidly missing something here. When dealerships offer .9% financing, you're paying .9% not earning .9%, and therefore it would be a better financial move to pay cash for the vehicle.

Seriously, I'm so confused by your post lol.

Be careful there. It is never that simple. Sometimes you are borrowing at 0.9%, but also giving up a rebate to get the low rate. Most manufacturers have a disclosure line giving you the true APR. They take the cost of borrowing over the loan at the subvented rate, add the rebate, then give you the true cost of borrowing had the rebate been calculated as interest. So if you had say a $3000 rebate, your 0.9%, is now really 5.26% or something. So sometimes you are better off to cash out the rebate, and take a loan at 4.9%. ESPECIALLY if there is any chance you trade it in before the term is up. As you will be ahead on the loan balance for the majority of, if not the whole term of the loan, and in many cases with a lower payment.

[Dion]

Originally Posted by pylon

Be careful there. It is never that simple. Sometimes you are borrowing at 0.9%, but also giving up a rebate to get the low rate. Most manufacturers have a disclosure line giving you the true APR. They take the cost of borrowing over the loan at the subvented rate, add the rebate, then give you the true cost of borrowing had the rebate been calculated as interest. So if you had say a $3000 rebate, your 0.9%, is now really 5.26% or something. So sometimes you are better off to cash out the rebate, and take a loan at 4.9%. ESPECIALLY if there is any chance you trade it in before the term is up. As you will be ahead on the loan balance for the majority of, if not the whole term of the loan, and in many cases with a lower payment.

What about cases of paying cash for a vehicle as opposed to leasing or borrowing money? Is there ever any advantage to paying cash? Or is the myth of getting a better deal just a myth?

[Temporary_User]

Originally Posted by Red John

The guys bragging about how they never spend more than $2 are probably the kind driving old cars that aren't exactly show n shine calibre. There's a difference between washing your vehicle routinely to keep it relatively clean, and shining it up to showroom condition.

Oh definitely. I drive a Audi A4 '96. I can't remember the last time I washed it. I can't even remember the last time I drove it. It would have been 2-3 months ago. I went to drive it last weekend and the battery was dead from sitting in the cold unused for so long.
I live downtown so I never have a real reason to drive anywhere.

I've thought about selling it, but I only have an uncovered parking stall so I don't really think there is a market to rent that out and I only pay $40 a month for insurance. I figure that is worth it for the times I do need to drive.

[pylon]

Originally Posted by Dion

What about cases of paying cash for a vehicle as opposed to leasing or borrowing money? Is there ever any advantage to paying cash? Or is the myth of getting a better deal just a myth?

Car dealers hate cash buyers nowadays. You make way less money, and have way less opportunities to make money on the transaction. So for selfish reasons I want my clients to finance. Dude strolling in the dealership saying "I'm a cash buyer." isn't impressing anyone nowadays. Since more than half of the so called 'cash buyers' are doing the absolute dumbest possible thing you can do, and are using their HELOC to buy a car.

However with the average true borrowing rate after you factor in rebates and all the other BS sitting at around 3.5%, I shake my head when people pay cash. It is such a dumb decision when you can leverage that cash you are going to blow on a commodity against a blue chip investment, and pick away at the car at historically low interest rates.

I am not an investment advisor so it isn't my place to meddle, but the math is very simple.

[Red John]

Originally Posted by flameswin

lol, for all the jokes about CP and 1%'s, I don't think it should come as a surprise that most people don't own "show and shine" caliber vehicles.

My post seems to have touched off a discussion on financing and looking rich. Not the intent at all, go back and read some of my past posts and you'll see a lot about living within your means.

Not judging people by what they drive, just pointing out that someone with a beater or 10 year old car probably has different expectations in terms of washing it and keeping it clean and therefore what they deem an acceptable car wash routine.

Someone who regularly enters their car in a show is going to give different advice (like table5) than someone with a run of the mill vehicle whose goal it is to keep it looking respectable instead of perfect.

So the foaming brush is fine if you're the latter. Not so much the former.

That's all my earlier post was trying to say.

[Table 5]

Originally Posted by Red John

Someone who regularly enters their car in a show is going to give different advice (like table5) than someone with a run of the mill vehicle whose goal it is to keep it looking respectable instead of perfect.

Just to clarify, my car is nothing special, and I definitely don't enter it in car shows. I'm just an idiot who thinks detailing a car is an enjoyable way to spend a Sunday.

[Coach]

Originally Posted by Dion

Simple solution is to let them play through. They will appreciate your offer and you will be able to continue your game without the threat of someone hitting into you. A course marshall would tell you to do much the same thing.

When the course is lined up letting guys through doesn't do much because either theyre waiting for you at the box or youre waiting for them. It doesnt mean they have to be a doosh and tee off when were still within their range.

[Regular_John]

I'm picking up a "new" (2012) car today, we're paying cash. For me personally it comes down to my personal policy of avoiding debt like the plague. Yes, I understand the math of "invest VS spend" suggest that financing at a low rate makes more sence.

But for me personally I get a great deal of piece of mind from simply having things paid off. If I were to lose my job, well yeah it would suck, but no one is gonna be chasing me for car payments while I'm looking for work. Likewise my credit card's balance is zero, and I'm a few years ahead on my modest mortgage.

One of the sales guys we met with while looking at cars actually said this to me "Do you know how much interest you'd pay on a 20k loan over two years? Just $200!" Well sure, except that becomes 20k I'm not putting towards my mortgage, and 24 months of reduced cash flow.

Oh, also I wash my car at the gas station, I'm a lazy SOB.

[MoneyGuy]

Originally Posted by Wormius

If you could find an investment that pays you more than the finance rate, then you would be better off putting the money into that than paying off the car right away.

Don't forget taxes on the investment.

[puckluck2]

Originally Posted by pylon

Most of the truly wealthy in this city, lease new cars. Rule #1 of most wealthy people, is never use your own money if you don't have to, always borrow it. Especially on depreciating commodities, which cars are. The typical rich guy mentality is, pay $40k to lease a brand new $90,000 S-class for 3 years, than to buy a 3 year old one for $50k and sell it for $20k in 3years. The leasing option only costs him another 10k, which is probably 1 or 2 weeks salary for that type of client. Over 60% of our clients in our luxury lines lease, that is fact, and if you saw some of those credit applications, your eyes would bulge out and touch the paper.

I can assure you, most working millionaires in Calgary aren't driving an 07 Camry. Drive through Mayfair, Pumphill, Bearspaw, Mount Royal and Springbank where all the real money in this city is, and it is a train of Benz's, BMW's, LandRovers, and Lexus's going into those posh areas.

That little Ross Perot / Warren Buffet created myth where all rich people drive Jalopies is BS. Even the stat where Toyota is claimed as the best selling millionaires car, doesn't take into account more than 60% of those Toyotas, are actually a Lexus.

The other piece of BS in that stat are people like my folks. Who yes are technically millionaires on paper, but it is due to a paid off home, and a bunch retirement investments accumulated over decades. They drive a Tiguan, and a 12 year old Dodge truck. They may be worth a couple million on paper, but they are an entirely different breed than some hot shot oil exec pulling down 500k/yr.

I agree with your post pylon but I wasn't talking about the truly wealthy millionaires. I was talking about the people being well off. Sure the millionaire in Pump Hill isn't driving around an 07 Camry but the guy who owns a Roofing company in the NE pulling in $150k might be.

So you are talking about something totally different in your post. My point is you have too many people living outside of their means. And I'm sure you get a lot of people who are making $40K buying a brand new vehicle who really can't afford to. If you are counting on your cheque at the end of the month to pay off your car loan that is a truly stupid financial move. What happens when you lose your job? That's how you get so many vehicles at Regal and other Auctions that are Repos.

And the option isn't either A) buy a brand new vehicle cash or B) buy a brand new vehicle by financing.

About 4 years ago my friend fresh out of a crappy job and a big career move made a purchase of a Dodge Ram. Brand new cost him $45K. At the same time I had a Pathfinder I bought for about $6K. He'd be lucky to sell his for $15K now so that is a $30K loss no questions asked. I recently sold mine and in 5 years I spent $3k on driving a vehicle while he spent $30K. What did he gain that I didn't? Having a nice vehicle? Well the money I saved I put it else where and invest and probably tripled that difference.

In the end it's everyone's own money but you can at least come out and not deny you're making a bad financial decision. If you don't have at least the cost of the car in your bank, financing it is a dumb decision and I'll always believe that.

[Red John]

Originally Posted by Table 5

Just to clarify, my car is nothing special, and I definitely don't enter it in car shows. I'm just an idiot who thinks detailing a car is an enjoyable way to spend a Sunday.

Was just saying an enthusiasts advice would be similar to yours in terms of wash routine.

[MoneyGuy]

I'm very OK with owing money. We paid off our mortgage and went out and borrowed well into six figures to invest. It works well if you know what you're doing.

[Regular_John]

I'm in a spiteful mood right now, so I'm naming names.

Calgary Hyundai grinds my gears. Calgary Hyundai's sales staff have been badgering me non-stop based on a single online inquiry. Even after I've let them know I purchased another vehicle.

This goes past the usual "hey let us know if we can help" emails. It's been 7 days and I've got NINE emails from 3 different sales people. All about a single inquiry, which leads me to believe they are either incompetent, or absolutely desperate.



NINE responses in a week from Calgary Hyundai... NINE. And yes, I've asked them to stop, and yet they continue. If they really don't clue in I'm just going to start making appointments and missing them, just to see what it will take to get black balled in their CRM so they really never contact me again.

[Ducay]

All dealers are like that. When I bought my Audi from the States last year I contacted a dozen or so dealerships and was getting at least 10 emails a day. After unsubsrcibing, etc, I still get an email a day maybe.

[WhiteTiger]

Originally Posted by fotze

but I hate owing anything.

I'm this way. Having been on the other side of the coin, down to the point where I'm hitting the food bank or starving...I loathe the idea of borrowing/owning anyone money, and do everything I can to live within my means.

[Nage Waza]

I went to purchase an Audi about a year ago. I told the salesperson what I wanted, the exact model, colour and options and I said that I had to run, call my cell and left him my business card. I had spent about an hour with the guy. I never received a call, so I went to their website, emailed their email listed on the site and even named the salesperson thinking he must have lost my card. I didn't receive a single email back or a call back - and I was a sure sale. Instead, I get monthly sales inventory sheets sent to me from the dealership! I bought another car and emailed them again to tell them they suck. No response.

[Antithesis]

I know it's been said before but pulling up to the self-checkout at the grocery store with a couple of items only to end up waiting for people with carts full of groceries to scan their items at a glacial pace.

What are you going for here? There's no way that you can go faster than the cashier through those lanes, or that you can even beat a line 3 deep with that much food. Just complete ignorance.