Car repossession question

[GGG]

Originally Posted by Matata

Sitting in traffic, looking at all the shiny new SUVs around me, comparing their average value to the average house hold incomes and debts, and I wonder how many people are driving the stupidest financial decision of their lives, because it must be a lot of them.

On a cost per km basis I don’t know if it is that Stupid. It is certainly costly but I would say it’s in the ball park of a daily Starbucks.

If you drive a 10 year old car that you maintain yourself you can spend about 25 cents per km all in costs. If you don’t do your own maintenance you probably end up closer to 30. A new 30k vehicle you drive for 5 years you end up between 40 and 45 cents per km.

So at 20,000km per year a new car costs you about 15 cents extra per km so about $3000 per year. Even a 50k vehicle would only cost you about 6-7k extra per year. Now that’s expensive but a Starbucks in the morning runs you $1250 per year and eating out everyday for lunch costs you about 3k.

The other thing is that the reduced stress of having a reliable vehicle has some value. Driving a 10 year old car you will have the vehicle fail more frequently than a newer one. And psychologically it’s easier to make a monthly payment every month than it is to be hit with a $1500 repair on your vehicle worth 3k.

So I certainly don’t see the value in the 2 brand new vehicle household. I do understand the logic that gets people there

[Dynamic]

I guy I work with has had three brand new trucks in the last 4-5 years. Each time he rolls the negative equity into the next, I honestly don’t know how he does it. I’m assuming he is being sold by some salesmen that it’s only x amount of dollars more a month for another 3 years. He joked that he needed new tires for his last truck but couldn’t afford them, so he got a new truck instead. Except he wasn’t joking, he lives paycheque to paycheque. Yes these people live among us and he is among a large group.

[Derek Sutton]

Originally Posted by burn_this_city

Dealers cater to this mindset. Go in look at a vehicle and the first thing they'll ask you is how much a month do you want your payment to be. Insane.

There is a number of reasons for this wich serve to help both the buyer and the dealership
1) Cash deals are very rare at a dealer, like 10% is a high rate for cash deals
2) Cash deals make very little sense if you are financing at a subvented rate you are going to be further ahead collecting 2.5% on your money if you can finanace at 0%
3) If they are on a budget, they've likely already decided what they want their payment to be
4) Some customers can't figure that $350 a month will not get them a $40,000 vehicle
5) Dealers prefer customers to finance

Discussing Payment is also away to avoid sticker shock, $50k is alot of money, but $625/ month sounds a lot better doesn't it? How about $285 bi weekly? isn't that even better? Just $144/ week? So instead of going out for dinner Friday nights wouldn't you rather be rolling around in your new SUV?

[topfiverecords]

Originally Posted by GoinAllTheWay

This thread is what scares the eff out of me over buying a new car. I've been driving the same 05 Mazda 3 for 10 yrs, it's been paid off for 9. Still a hell of a car but it's starting to show it age. I'd love a new vehicle but don't know anywhere near enough about not getting screwed over when buying a new(er) one.

Are there any "buying a new car for dummies" kinda books out there I should be reading?

Buy a one to two year old used car privately on Kijiji in cash. Guy has already tried to trade it in on next years model and has been offered 50% what he originally paid for it. Give him 52%.

[burn_this_city]

Originally Posted by Derek Sutton

There is a number of reasons for this wich serve to help both the buyer and the dealership
1) Cash deals are very rare at a dealer, like 10% is a high rate for cash deals
2) Cash deals make very little sense if you are financing at a subvented rate you are going to be further ahead collecting 2.5% on your money if you can finanace at 0%
3) If they are on a budget, they've likely already decided what they want their payment to be
4) Some customers can't figure that $350 a month will not get them a $40,000 vehicle
5) Dealers prefer customers to finance

discussing Payment is also away to avoid sticker shock, $50k is alot of money, but $625/ month sounds a lot better doesn't it? How about $285 bi weekly? isn't that even better? Just $144/ week? So instead of going out for dinner Friday nights wouldn't you rather be rolling around in your new SUV?

The problem with this though, people are latching on to the payment aspect without considering the purchase price, interest cost ect. They end up with these disgusting 8 years loans at 5-7% interest that they are upside down in for the entire ownership period. It's borderline predatory nonsense.

[Sliver]

Yeah, what you have saved up is what you can afford for a new-to-you car. It's not any more complicated than that. Don't listen to dealership financing shell games - their job is to put you in a car regardless of whether or not you can afford it. Your job is to buy one you can afford. Good cars can be found at $5,000 right on up.

Also, steer clear from SUVs if you're on a budget. Higher mark-up, more maintenance, terrible on gas, and really lame to drive.

[GoinAllTheWay]

n/m

[Derek Sutton]

Originally Posted by burn_this_city

The problem with this though, people are latching on to the payment aspect without considering the purchase price, interest cost ect. They end up with these disgusting 8 years loans at 5-7% interest that they are upside down in for the entire ownership period. It's borderline predatory nonsense.

So many are wired this way though, for better or worse. They want to trade their car in and don't know how much they owe, not a clue, cannot figure out how to even calculate this, don't know how long they've financed for or remember how long they've had it. they just know they pay "X"/ month and don't want the payment to go up.... It is sad in a lot of ways but very few people look at the long term cost of anything. As posted above, calculate what Starbucks everyday costs, it ie never figured out to $125/ month or $1500/ year, it is $6. Same with your phone, who has ever wentr and spent $1500 on a phone? It is $30/ month. your home security system, is it $2400 or $100/ month for two years.

[Raekwon]

I bought a new vehicle to replace ours that was written off in an accident, it was paid off. I gave them my budget and really just wanted the same vehicle and after we made a deal they sent me to the finance dept even though they knew I was paying cash and they tried to get me to finance the vehicle. Blows my mind.

[stone hands]

to nail it home even further:
to calculate a weekly expense compounded over ten years, multiply the price by 752
for a monthly expense, multiply by 173

your $6 a day is actually 22.5 grand after 10 years, pretty sobering to put things into perspective

[Derek Sutton]

Originally Posted by Raekwon

I bought a new vehicle to replace ours that was written off in an accident, it was paid off. I gave them my budget and really just wanted the same vehicle and after we made a deal they sent me to the finance dept even though they knew I was paying cash and they tried to get me to finance the vehicle. Blows my mind.

yep Finance office is under as much pressure to sell as the sales staff. There is money to be made on a finance, warranty, life insurance, protection packages etc... Margins on the actual vehicles are often quite slim, however money can be made in the finance office.

[GreatWhiteEbola]

One of the worst scenarios I came across in my time in automotive finance was a 3 yo Dodge Caravan. Appraised at a generous $6000.00, many KMs and used as a work vehicle. The guy owed $36,000 on a 3 year old Dodge Caravan! That's a criminal level of refinancing.

[you&me]

The most overlooked aspect of a new vehicle purchase is resale value.

Regardless of interest rates or monthly payments, anyone looking at a new vehicle (or even slightly used, for that matter) should spend a little bit of time researching the used market prices for comparable vehicles that are 2-3 years older.

There's an enormous difference in TCO between a similarly equipped Honda Odyssey and Dodge Caravan.

[speede5]

Originally Posted by Derek Sutton

yep Finance office is under as much pressure to sell as the sales staff. There is money to be made on a finance, warranty, life insurance, protection packages etc... Margins on the actual vehicles are often quite slim, however money can be made in the finance office.

Don't forget the $500 admin fees they charge you for writing a reciept.

[blankall]

Originally Posted by Hockeyguy15

Woah now, what’s wrong with old Toyota’s?? Am I uncool driving a 2007 Tundra and 2010 Rav?

Lol. I drive a 2010 Toyota Matrix. That's why I used that example. I've only put 65,000 km on it. I think about replacing it all the time, but realistically, for a car that I'm putting 6,000 km/year and only driving a substantial distance once a week, I've come to the decision that replacing it is just pure consumerism. Spending money on a new car would delay my retirement by 1-2 years, and my car works perfectly now. There are just so many ways that a capitalist society chains people to working so that they can consume things they don't need.

I recently upgraded the stereo and put in a hands free dash, so that I can talk without using my phone. I'll probably keep driving this vehicle until: 1. there are major repairs, as I'm not willing to spend $2,000+ to fix a vehicle worth less than $3,000; 2. it gets to be in the 20ish year old range; or 3. I need more space for kids. In example 3, this car will probably become the 2nd vehicle, and we'll buy something with more space as the primary vehicle.

[chummer]

Originally Posted by bagofpucks

Crazy enough, they’ve already been back to another dealership and are back financing a used vehicle, so I can only imagine what their interest rate would be.

So they're back at another dealer hoping to do the same thing??

Won't defaulting on their payments and keeping 8k show up on their credit history? No way they can get approved again. Crazy!

[Bill Bumface]

I used to finance/lease cars and change things up every few years. Then I made a decision that I never wanted car payments again, so before the next car, I'd have to have the money saved.

The biggest thing this did for me is completely change what I thought was an appropriately priced vehicle to drive. Getting a bank draft for tens of thousands of dollars to go buy a car really adds to the gravity of the purchase/decision.

The biggest net benefit, in my opinion, is the financial flexibility. If you lose your job, or your income drops and. you have years left of obligations on an asset that is worth less than your remaining loan amount, that could be the difference between needing to take more drastic measures like moving houses or dipping into retirement savings early.

[GoinAllTheWay]

Originally Posted by blankall

I recently upgraded the stereo and put in a hands free dash, so that I can talk without using my phone.

Satisfying little project, no? I did the same thing with my car and it really added features I felt were missing in my car. Bluetooth music and hands free cell use. It's been a fantastic addition.

Don't necessarily like the small microphone sticking to my steering wheel column but it's really not that noticeable.

[GoinAllTheWay]

Here's another question.

If you're the type of person that tends to buy vehicles and hold on to them for a long time, say 8-10 yrs, does that start to blur the lines between the value of buying new or used?

[jayswin]

Originally Posted by chummer

So they're back at another dealer hoping to do the same thing??

Won't defaulting on their payments and keeping 8k show up on their credit history? No way they can get approved again. Crazy!

"Bring us $99 and a pay stub and you're approved!". I can't believe local radio stations actually run ads for this predatory bull****.