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Obviously went over your head; calculate the interest paid on say a $25,000 car @ 1.9%.
A 5 year loan gives you $1,200 in interest.
An average $20(!) dollars a month in interest.
WOW. Big whoop. I spend more than that buying fruit for my morning smoothies.
Paying interest on a new car is not where you take it in the pants.
And you just spent $26,200 that you don't have and obligated yourself to make payments for 5 years to retire the debt. In return you get to spend 5 years driving a used car. You can buy a new car, but you can't drive one.
There is no premium on the purchase price. The MSRP doesn't magically go up because the automaker decides to offer 0% financing to 720+ borrowers. The sales price is negotiated with the dealership, the financing is through the manufacturer.
The MSRP is whatever the M suggests. It includes thousands of dollars in padding, over and above a reasonable profit. The manufacturer can spend that on dealer incentives and rebates, or on interest free financing, whatever will motivate you to sign on the dotted line. About 40% of the sticker price goes into somebody's pocket who didn't actually build the car. About half of that is reasonable profit to the manufacturer and dealer, the other half is vig.
Borrowing money to "buy" a depreciating asset that nets you zero income doesn't seem like a good idea when you can pay cash for a used car that will get you where you need to go.
All cars are money pits with insurance, tag renewals, maintenance and fuel costs.
If you believe that, then you believe in a free money world.
Why would the manufacturer lend money for a vehicle purchase at a rate less than the current market rate?
As an incentive to entice people to purchase their product? Shocking concept, I know. The same people that qualify for 0% are the people that qualify for the better rates elsewhere, so why not get them into the manufacturer's finance company and product at the same time? The manufacturer makes enough money selling the car to dealers that loaning money to a certain percentage of qualified people doesn't hurt the bottom line, and the financing company makes it up on all the people who don't qualify.
The MSRP is whatever the M suggests. It includes thousands of dollars in padding, over and above a reasonable profit. The manufacturer can spend that on dealer incentives and rebates, or on interest free financing, whatever will motivate you to sign on the dotted line. About 40% of the sticker price goes into somebody's pocket who didn't actually build the car. About half of that is reasonable profit to the manufacturer and dealer, the other half is vig.
We've already demonstrated in this thread that you don't have any concept of actual numbers or interest rates, so I'm just going to go with that you're making up numbers again.
As to profit, well - they aren't in business to give things away.
The MSRP includes the financing. It's added way upstream before you can ever isolate it or know what it is. There is no free lunch. Nobody gives you 0% anything. The cost is in there, you can count on it. It has to be, and it is, because in reality money (which is time) is not given away in the sale of consumer goods.
There is no subsidized financing, it is built in to the price of the vehicle.
NO FREE LUNCH KIDDIES.
That's true for any product you buy. But a car a that costs $25,000 in a month when no 0% is offered doesn't magically coat $27,500 the next month when 0% is offered.
That's true for any product you buy. But a car a that costs $25,000 in a month when no 0% is offered doesn't magically coat $27,500 the next month when 0% is offered.
Don't be so sure. The window stickers can easily be reprinted. Nothing is beyond consideration when dealing with car dealers. They are schemers and scammers and liars. Their goal is not to bring value and earn an honest profit like most other businesses. Their goal is to separate you from your money in any way known, including misfeasance and malfeasance and anything they can get away with. When I go to buy a television or a computer or a watermelon I expect a carefree and pleasant experience. When it's time to buy a car, I am ready for an IED, psychosocially speaking. I am ready for war, and they will not disappoint me. It's a nasty and sordid business, like prostitution or loansharking. Fortunately, the war academy only has to be in session once every 5-10 years. Still, many research and relearning hours are due and payable to avoid the ripoffs and shell games and confidence games of these lowlives. BUYER BEWARE AND PREPARE. YOU WILL BE HUSTLED OUT YOUR AZZ.
I like Dave Ramsey because a lot of people never think to have an emergency fund or to donate to worthy causes. These same people often don't realize they too can invest their money & have it earn more. It's good to be reminded to save & not to indulge yourself into credit card debt. My worries are less if my loved ones, friends & neighbors are financially sound.
My dad said to NEVER FINANCE A DEPRECIATING ASSET!!
Years ago I was talking to a car dealership owner and we were talking about buying and selling cars. Where he differed with your dad's statement is he said "never BUY a depreciating asset".
He said "if you want a boat, rent one for the times you want to use one". Same with cars with one exception which is if you keep it for 10-15 + years then it could make sense depending on how one takes care of said vehicle and if it becomes a money pit. Young people rarely keep a car for the entire loan much less 10 years or more.
We paid $23k on a 5 year note for our 1997 Tahoe back in 1999 and it had 23000 miles on it. We still have it (on it's way out to another owner btw) with 202000 miles and very few repair $$ put into it.
It needs about $1k in repairs right now to keep rolling on but it doesn't fit what we need anymore.
We intend on keeping our "new" (year old) truck purchased for about the same $$$ for the same amount of time of course depending on how well it ages.
If it becomes a money pit or we cannot get into it anymore (due to our age,not it's age ) out the door it will go.
I've been young and dumb, pissed away more $$$$ on cars than I care to admit by trading off frequently but finally came to my senses. This is partially due to listening to people like Dave Ramsey and it being the right time in my life to be able to not only listen but to HEAR what he and others were saying. I wish I was thinking like a 50+ year old back when I was in my 30's/40's as it would have saved me soooo much money.
Don't be so sure. The window stickers can easily be reprinted. Nothing is beyond consideration when dealing with car dealers. They are schemers and scammers and liars. Their goal is not to bring value and earn an honest profit like most other businesses. Their goal is to separate you from your money in any way known, including misfeasance and malfeasance and anything they can get away with. When I go to buy a television or a computer or a watermelon I expect a carefree and pleasant experience. When it's time to buy a car, I am ready for an IED, psychosocially speaking. I am ready for war, and they will not disappoint me. It's a nasty and sordid business, like prostitution or loansharking. Fortunately, the war academy only has to be in session once every 5-10 years. Still, many research and relearning hours are due and payable to avoid the ripoffs and shell games and confidence games of these lowlives. BUYER BEWARE AND PREPARE. YOU WILL BE HUSTLED OUT YOUR AZZ.
Now you've gone full tinfoil hat. A quick check online can tell you what the MSRP and invoice should be.
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) out the door it will go.
