Car repossession question

[calumniate]

Originally Posted by Derek Sutton

Too much misinformation to address each one individually.... I've sold in the neighbourhood of 500 vehicles over the last 4 years and getting advice from people who buy a vehicle every 10 years is not the best way to go. Feel free to PM me with any questions you might have.

Depreciation averages 30% year one, 17% year 2 and 8% year 3. This varies by vehicle and market but it is a good rule to follow. So 55% in 3 years. There will be some variances based on km's and vehicle (a Dodge Journey for instance is much more then that and a Jeep Wrangler hold its value much better).

Resale value really only makes a differenc if you plan on re selling it in a short period of time. If you plan on driving it for ten years and miling it out, the resale is only going to be a fraction of the original price no matter what you buy.

Those advocating for a year or two old vehicle vs a new vehicle need to consider all the factors, beyond depreciation. Cost of ownership, payment, perks of buyIng new etc... What makes more sense of theses two scenarios?

One: Buying a $37000 two year old truck at a 6.49% interest rate for a payment of $760 a month over 5 years
Or?
Two: Buying a new $50,000 truck at 0% over 6 years for a monthly payment of $730????
That's why people buy new.

There also the leasing way of ownership which makes sense for so many people but the refuse to listen. If you are in the 3-4 year of ownership cycle, I strongly recommend exploring the pros and cons of leasing. Remember you don't truly own your vehicle untill the last payment is made and most people are trading it in long before the 6 or 7 years is up.

That interest rate differential is real? Seems like a bit of a salesman's crutch. 'Look the interest rates of used cars are higher than new cars. Might as well buy new.. #### rationality'

I get it, I guess. But it seems like dirty pool

[GGG]

RE: PHEV Toyota

Let’s say the PHEav is about 7k more than the regular hybrid. (Pricing isn’t out yet but a Prius price is about 4K more than a Prius including incentives)
Then at 5 cents per km cost difference the PHEV would have to drive 140k on electricity. At 50kms per day electric (assuimg you just charge at night) it would take years of PHEV trips to break even on price.

Now if the net difference in gas is more like 3 cents than it’s over 10 years, if gas it’s 7 than more like 10. So unless you get government incentives to drive the differential down the benefit is likely a slight loser at this point in time.

Of course this only considers cash and not environmental benefits.

[Strange Brew]

Originally Posted by calumniate

That interest rate differential is real? Seems like a bit of a salesman's crutch. 'Look the interest rates of used cars are higher than new cars. Might as well buy new.. #### rationality'

I get it, I guess. But it seems like dirty pool

Well generally the lower rate is subsidized by the manufacturer, who want to get you in the new car they’re selling. So don’t blame the dealer or the sales guy necessarily.

[Sylvanfan]

My 14 year old truck is starting to show it's age plus a 30km drive to work each way mostly highway makes it a bad vehicle choice. I want to find a 8 year old Camry with 120000km on it and drive it until it dies. At which time...I will be 65 I estimate....well not quite but should get 15 more years at 20k per year.

Hopefully at 65 I will be able to finance a brand new European ride for 100% of it's value and never make a payment. After 4 months they will take it back and I can trade my future credit that I don't care about for 4 months use of a fancy hyper depreciating asset? Why wouldn't I do that?

[Weitz]

Originally Posted by stazzy33

Since this thread has devolved into "How should I purchase my next car?", I figure I am going to throw my current situation to the hive-mind and see what you all think.

My current car is a 2014 Mazda 3 Sport with 165,000ish kilometers on it. My daily commute to and from work is 80 km round-trip and I take monthly trips from Edmonton to Calgary or the mountains. I've owned it since new and beyond oil changes I've put about $5,000 into it, including winter tires, some interior upgrades, roof crossbars, a refurbished alternator, and a new sunroof when mine exploded on the highway (thanks Mazda).

I would like to get into a CUV or SUV (mostly for the ride height and extra storage), and have been looking for a long time a vehicle that gets good fuel economy, has decent acceleration, all the new safety features that vehicles have these days (lane-keep assist, blind spot monitoring, radar cruise control, etc) and Apple Carplay/Android auto. My main contenders for quite some time have been the 2019 turbo charged Mazda CX-5 and a used Toyota Highlander Hybrid.

Recently though, Toyota announced the RAV4 Prime which looks to be a game changer. It is a PHEV that gets an estimated 30 miles on electricity alone, has 302 HP and a 0-60 less than 6.0 seconds, and gets wicked fuel economy. This vehicle is going to be a unicorn and is already in huge demand from the dealers I have talked to. The new RAV4 Hybrids have 6-8 month wait as it is.

So, CP, what should I do:

1. Buy the new RAV4 Prime when it comes out this summer and either a. finance it or b. lease it, at likely pretty high interest rates?

2. Buy a 2019 CX-5 turbo and either a. finance it or b. lease it, at 0% as there are still a few kicking around.

3. Look at buying a used Highlander Hybrid and pay for it in cash if I can get the right vehicle, I'll need to replace the stereo with one that has AA/CP.

There seems to be lots of experts in this thread, so I feel like you all can come up with the best solution.

Theres about a 0% chance you will get a Rav4 prime this summer so don't worry about it. I'd put a deposit down tomorrow if you want one this year. Allocation in Alberta will be extremely limited. Initial orders sound like late summer delivery already.

[bizaro86]

Originally Posted by GGG

RE: PHEV Toyota

Let’s say the PHEav is about 7k more than the regular hybrid. (Pricing isn’t out yet but a Prius price is about 4K more than a Prius including incentives)
Then at 5 cents per km cost difference the PHEV would have to drive 140k on electricity. At 50kms per day electric (assuimg you just charge at night) it would take years of PHEV trips to break even on price.

Now if the net difference in gas is more like 3 cents than it’s over 10 years, if gas it’s 7 than more like 10. So unless you get government incentives to drive the differential down the benefit is likely a slight loser at this point in time.

Of course this only considers cash and not environmental benefits.

If he happens to have plug ins at work where he can charge he might get 40km/day at 5 cents less and another 40k/day on the way home for free (maybe 10 cents less).

[stazzy33]

Originally Posted by GGG

RE: PHEV Toyota

Let’s say the PHEav is about 7k more than the regular hybrid. (Pricing isn’t out yet but a Prius price is about 4K more than a Prius including incentives)
Then at 5 cents per km cost difference the PHEV would have to drive 140k on electricity. At 50kms per day electric (assuimg you just charge at night) it would take years of PHEV trips to break even on price.

Now if the net difference in gas is more like 3 cents than it’s over 10 years, if gas it’s 7 than more like 10. So unless you get government incentives to drive the differential down the benefit is likely a slight loser at this point in time.

Of course this only considers cash and not environmental benefits.

The rumors are that the battery size will allow this car to be eligible for the $5000 federal rebate. That would definitely eat a significant chunk of the difference between the hybrid and the Prime. The other big factor is the 100 HP increase from the regular hybrid to the Prime.

Originally Posted by Weitz

Theres about a 0% chance you will get a Rav4 prime this summer so don't worry about it. I'd put a deposit down tomorrow if you want one this year. Allocation in Alberta will be extremely limited. Initial orders sound like late summer delivery already.

I have a deposit in with a dealership since early December, I know how hard these things will be to get.

Originally Posted by bizaro86

If he happens to have plug ins at work where he can charge he might get 40km/day at 5 cents less and another 40k/day on the way home for free (maybe 10 cents less).

That's the hope. The current info out there says the Prime will charge at a rate of approximately 5 km/hr, so if it is plugged in at work all day, that should get me the 40 km back home for free.

[Derek Sutton]

Originally Posted by calumniate

That interest rate differential is real? Seems like a bit of a salesman's crutch. 'Look the interest rates of used cars are higher than new cars. Might as well buy new.. #### rationality'

I get it, I guess. But it seems like dirty pool

Laying out options and explaining the pros and cons is dirty pool?? This is exactly what I mean by "too much misinformation." Did you read through the math in my post? Which makes more sense to you?
When you break down payments and total cost of ownership it is 100% rational. It is a simple question and as a sales professional needs to be asked. "Would you rather pay $6700 in interest or $0 interest and drive a brand new vehicle for the same monthly cost? The numbers I used are real and not just ones picked at random. On new vehicles the interest rate is determined by the manufacturer as they buy down the rates (sub vented rates) OAC. On used vehicles the rate is determined by the banks and will fluctuate based on term, credit history, down payment amount borrowed etc...

*This does not apply to a cash buyer, where to cost of borrowing does not matter, but they are very rare.

[speede5]

Originally Posted by Derek Sutton

Laying out options and explaining the pros and cons is dirty pool?? This is exactly what I mean by "too much misinformation." Did you read through the math in my post? Which makes more sense to you?
When you break down payments and total cost of ownership it is 100% rational. It is a simple question and as a sales professional needs to be asked. "Would you rather pay $6700 in interest or $0 interest and drive a brand new vehicle for the same monthly cost? The numbers I used are real and not just ones picked at random. On new vehicles the interest rate is determined by the manufacturer as they buy down the rates (sub vented rates) OAC. On used vehicles the rate is determined by the banks and will fluctuate based on term, credit history, down payment amount borrowed etc...

*This does not apply to a cash buyer, where to cost of borrowing does not matter, but they are very rare.

I think at the end of the day you pay one way or the other and for a lot f people new is just that much more attractive.

Question, is cash purchase going to save you anything? I've heard over and over that your best price will be with dealer financing due to commissions they receive. If cash is in hand better to take the financing and pay it out the next day.

[bizaro86]

Originally Posted by speede5

I think at the end of the day you pay one way or the other and for a lot f people new is just that much more attractive.

Question, is cash purchase going to save you anything? I've heard over and over that your best price will be with dealer financing due to commissions they receive. If cash is in hand better to take the financing and pay it out the next day.

I'd be curious to hear his take on that as an industry insider as well.

I bought my last car new with cash. It seemed to mostly make a difference to the incentives - some models you had to take the manufacturer financing to get the full incentive package. We ended up taking a model where the incentives were equal, so it didn't matter. But we had negotiated a deal for a different trim where the price was only good if we took the manufacturer financing (which was about 2-3% iirc)

[Derek Sutton]

Originally Posted by speede5

I think at the end of the day you pay one way or the other and for a lot f people new is just that much more attractive.

Question, is cash purchase going to save you anything? I've heard over and over that your best price will be with dealer financing due to commissions they receive. If cash is in hand better to take the financing and pay it out the next day.

New Vehicle: Cash may be cheaper depending what the current incentives are as they vary from month to month and vehicle to vehicle. Cash, finance rates and lease rates can be different for each vehicle, each trim level of that vehicle, and year of the vehicle (right now most dealers are still sitting on 2019's AND 2020's with there still being a few 2018's kicking around). Of course factors such as time of year, availability/ inventory, market strength, marketing strategies etc... all play a part in the incentives being set by the manufacturer.

The "X" % of MSRP are typically cash prices, which can still be financed at a bank rate however. "Employee pricing" is again not typically stackable (car term for combinging incentives) with 0% financing. Right now we have a $2400 savings on a cash purchase of a 2020 GMC Sierra, with finance rates from .99%- 1.99% depending on term. so do the math on that, take $60,000 out of your TFSA to save $3000 in interest as well as $2400 ourchase price, so overall $5400 less to pay cash. Thats just one example. Other then that GM currently has no other relevant cash incentives on a 2020 model year vehicle, so it is differently on a case by case basis. Back in September or maybe it was August, it was actually cheaper to lease a Buick Encore for a couple of months then pay it off as the lease incentive was $1000 more then the cash incentive, to encourage leasing. It is really a case by case basis.

Used Vehicle: No difference in price if paying cash or financing, the dealers do make more money when customers finance as the banks pay a reserve.

Overall dealers prefer financing or outright purchases for a couple of reasons. It is always easier to sell to someone already making payments, they banks pay a reserve when customers finance, people making payments are more likely to buy the "extras" such as warranty, insurances etc...

[stang]

Originally Posted by Scroopy Noopers

I can not say enough good things about buying a small $5000 commuter car. No need to fear future issues, as they are cheap to fix. Tires are cheap, parts are cheap. When your done with it you can sell it for ~$2500. I’ve done this 3 times.

You don’t need features. You need reliable wheels.

I’m the same but different.

Bought a $50 civic (yup $50) needed and engine, grabbed a VTec from the wrecker, replaced the timing belt (they fail and that’s why it needed engine) did control arms, brakes some new rubber (14” cheap!) and a new clutch while i was in there, and I’m maybe 1200 into the car. Put 30,000km on it, not a problem. I put my “payment” away in my savings for if I need to don something but so far she’s been bulletproof.

Found a guy selling 2 2010 civics for $2500 both need some work picking them up this weekend. Going to sell my older one, fix these up and drive one.

[bagofpucks]

Alright, bumping my old thread as I have a similar question. Different friend is in a dilemma. She has a 2019 SUV that she has $12-$14K of negative equity on. She is going through a divorce so it has become clear she can’t afford to keep it (probably couldn’t have afforded it in the first place, but I digress...). What are her options? Sell privately and eat the loss? Hand back the keys and take the 6-7 year hit on her credit? She has tried to discuss options with the dealer, but the issue is she really can’t afford any kind of payments, so there isn’t a lot of options there. Anyone else with experience on this have any insights?

[Canadianman]

I don't know much about it, but I do know Alberta has a 'seize or sue' law.



There are a lot of links on google if you search it.


https://resinrecovery.wixsite.com/se...ue/regulations

[flamesfever]

I purchased my first car (a 1939 chev coupe) at the age of 16 in the mid 50s, using money I borrowed from my grandfather. I paid him back, by working at a canning factory the following summer. At the time, I was the first person in high school to own a car. I found that, from the moment I owned a car, I was always broke, and could never seem to save any money.

I have noticed that cars represent different things to different people. For some, the car they drive represents who they are. For me, it is simply a means to get from point A to point B. I figure I have saved an enormous amount of money over my lifetime by never buying a new car. It stemmed from some math I did in high school. I took the average salary from an average household, assumed an overall profit of 10% per year, and found that if a family bought a new car every 3 years, that they would never accumulate any wealth...they would simply be working to keep the car companies in business.

I have always looked for a car, that someone had taken great care to maintain, and then decided, for whatever reason to sell it to me. It usually takes a lot of patience to find the right car. Maintain is the key here, and I have been lucky in that regard. I have owned a lot of great vehicles over the years, including a chevrolet, ford, dodge, buick, oldsomobile 98, jaguar (I admit to that one being the only one I bought to make me look good).

When I retired, I purchased my first new car, with the money I had saved. I did a lot of research and decided that the Japanese cars were superior in all aspects, particularly when it came to depreciation. So my first new car was a Toyota Highlander. When I drove the car off the lot, I made the salesman drive around the block with me, as I realized that I just lost $5000. I kept the car for 10 years, which I believed in doing, and sold it privately. i figured the car cost me an average of just under $ 5000. per year to own.

I realize that this is deviating from the intent of this thread. However, I tell this story because I see so many young people struggle with the cost to own new cars, and end up with nothing to show for it.

[speede5]

Originally Posted by bagofpucks

Alright, bumping my old thread as I have a similar question. Different friend is in a dilemma. She has a 2019 SUV that she has $12-$14K of negative equity on. She is going through a divorce so it has become clear she can’t afford to keep it (probably couldn’t have afforded it in the first place, but I digress...). What are her options? Sell privately and eat the loss? Hand back the keys and take the 6-7 year hit on her credit? She has tried to discuss options with the dealer, but the issue is she really can’t afford any kind of payments, so there isn’t a lot of options there. Anyone else with experience on this have any insights?

Wouldn't the vehicle be lumped into the assets of the marriage and become a 50/50 split, even if it's only her name on the title/loan it's should still be included.

Regardless my advice would be to avoid the bad credit option. Unless she's going for a total bankruptcy the last thing she needs is bad credit following a divorce, hard enough to get restablished with trying to start a new life single.

[Ducay]

Sorry, Im trying to do the math. How do you end up negative 12-14k equity on a 2019 SUV? Even a pricey domestic that has terrible value retention shouldn't be that far underwater unless you had some insane financing terms, like no payments for 2 years or something, or it was involved in an accident or had 200,000km on it.

Anyways, as an actual answer, I would suggest she talk with whoever the financing is with (Bank or the manufacturer financing company). I dont think I've ever seen financing through a dealer themselves (Aside from the shady used car places that are also loan sharks), so as long as it was a typical dealer they effectively have nothing to do with the financing once its off the lot.

Advantage there is you're likely dealing with a bank or manufacturer's credit company, and both of them have dealt with this situation plenty and should know the options and impacts.

[bagofpucks]

I think they’ve agreed to that she gets the vehicle along with the negative equity as part of the split. Long story short, they weren’t in a great financial position to begin with, so they’ll each get their share of debt.

I agree that damaging her credit is probably the worst path to go, I’m just not sure how much that would be worth. Selling it and then hanging to take out a line of credit to finish paying off something she doesn’t own seems fairly terrible too. $0 down and 72-84 months terms should not be made available to the vast majority of the population.

[Fuzz]

Hand the keys back to the lender and say "your stupidity signed off on this, it's your problem now." Maybe they'll stop making these loans.


Only half kidding.

[speede5]

Originally Posted by Ducay

Sorry, Im trying to do the math. How do you end up negative 12-14k equity on a 2019 SUV? Even a pricey domestic that has terrible value retention shouldn't be that far underwater unless you had some insane financing terms, like no payments for 2 years or something, or it was involved in an accident or had 200,000km on it.

I've got a friend in this situation, keeps trading in a car that is still negative and gets another and the dealers "make it work" and all she sees is the monthly payment. I think she's on her third car in a couple years and owes at least 15k more than she could sell this one for.

Some of these finaciers deserve what they get when people are in over their heads and have to hand in the keys but all they get is a loss to write off instead of a terrible credit score.