Do you think financial advisors like Dave Ramsey..etc give people good or bad car buying advice on car buying? (best, buy)
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What are you talking about, It's a widely known fact, People buy them because A) they don't break down and b) they HOLD there value. my friends family has a huge used lot for over 50 years, sometimes when we get together we go thru craigslist to see whats out there. go look for a 03 4 runner, average miles and condition is probably around 8k. same year American say durango for example could be 2 to 4k. this is not an opinion. You won't find anyone who thinks long term depreciation is =. Go look for yourself I don't care enough to look it up for you.
No its not. Give me a couple examples and prove it.
Lets take three vehicles of the same year that are in the same class:
2010 Honda Accord
2010 Toyota Camry
2010 Chevy Malibu
I don't have the time right now to look but I can almost assure you that the Toyota and Honda depreciated much less than the Malibu over the past 5yrs.
I won't even get into comparing the depreciation rate of a brand like Cadillac vs Lexus.
Last edited by louie0406; 12-16-2015 at 01:33 PM..
Dave Ramseys advice is 1/2 true
It works great if:
- You are good buying used cars
- You make sure a mechanic checks the car before buying it
- You are good doing car maintenance and fixing old cars
- You have a trustworthy mechanic that won't screvv you over
It's not as simple as Dave Ramseys makes it sound
Sometimes it's a lot cheaper to buy a new car, than take your $2000 car to the mechanic every 2 months and pay $500 everytime you take it in.
What Dave Ramsey never says is that buying an used car is a gamble
Lets take three vehicles of the same year that are in the same class:
2010 Honda Accord
2010 Toyota Camry
2010 Chevy Malibu
I don't have the time right now to look but I can almost assure you that the Toyota and Honda depreciated much less than the Malibu over the past 5yrs.
I won't even get into comparing the depreciation rate of a brand like Cadillac vs Lexus.
Losing 20% the first year then 15% every year after would get you about 65% loss for 6 years. 2010 year models have about 6 years use on them now.
These numbers are from KBB. Also I used invoice prices which most people pay a little more than that and for some makes significantly more. So for the Accord your paid $21,609 and now can trade it in for about $8,000. This represents a loss of about 65%.
2010 Honda Accord INVOICE $21609 / AVG TRADE-IN $7993 = Loss of 65%
2010 Toyota Camry INVOICE $19820 / AVG TRADE-IN $7437 = Loss of 63%
2010 Chevy Malibu INVOICE $20734 / AVG TRADE-IN $6900 = Loss of 66%
Quote:
Originally Posted by Northeaster
What are you talking about, It's a widely known fact, People buy them because A) they don't break down and b) they HOLD there value. my friends family has a huge used lot for over 50 years, sometimes when we get together we go thru craigslist to see whats out there. go look for a 03 4 runner, average miles and condition is probably around 8k. same year American say durango for example could be 2 to 4k. this is not an opinion. You won't find anyone who thinks long term depreciation is =. Go look for yourself I don't care enough to look it up for you.
Well if your talking about over 10 years then I really don't know. I think a bigger influence would be on the desirability and/or reliability of each specific model. I haven't looked at older car prices very much. I will say that I would for sure pay more for an 03 4runner than I would a crappy 03 Durango.
I would even bet that if you are getting out to an 03 model on a 4runner it probably hasn't lost any money in the last 2 or 3 years and may have even appreciated slightly.
Last edited by justanokie; 12-16-2015 at 04:00 PM..
Dave Ramseys advice is 1/2 true
It works great if:
- You are good buying used cars
- You make sure a mechanic checks the car before buying it
- You are good doing car maintenance and fixing old cars
- You have a trustworthy mechanic that won't screvv you over
It's not as simple as Dave Ramseys makes it sound
Sometimes it's a lot cheaper to buy a new car, than take your $2000 car to the mechanic every 2 months and pay $500 everytime you take it in.
What Dave Ramsey never says is that buying an used car is a gamble
Oh boo hoo. Its not that big of a gamble to buy a used car. And finding a decent mechanic in the city the size of houston should be a snap. This is one of the favorite excuses people like to trot out to justify buying more car than they really should.
Here's the latest stats on the subprime auto loan bubble. So, who gets to clean this one up?
Average loan term for new cars is now 67 months — a record.
Average loan term for used cars is now 62 months — a record.
Loans with terms from 74 to 84 months made up 30% of all new vehicle financing — a record.
Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
The average amount financed for a new vehicle was $28,711 — a record.
The average payment for new vehicles was $488 — a record.
The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.
From article:
It doesn’t take a securitized products strategist to figure out what happens next (although as Ben Bernanke showed us in 2006, it is apparently far too complex for a PhD economist). Borrowers who never should have been given loans in the first place start to default and the ABS collateral pools quickly transform from collections of pristine credits to steaming cesspools.
I don't have a problem with taking a loan as long as your reasonable and don't go with the 5, 6, or 7 year payment plan. The vehicle and payment should be something you can afford in 4 years or less, and hopefully pay off sooner. Keep the car in good condition and drive it pretty much into the ground. Take all those years you don't have a car payment and put that away for a deposit for your next vehicle or so you can pay cash.
Problem is too many people buy the too expensive car over the course of 6 years and then trade it in before they have paid it off or right after. Then they just have another car payment again and usually do the same thing.
Here's the latest stats on the subprime auto loan bubble. So, who gets to clean this one up?
Average loan term for new cars is now 67 months — a record.
Average loan term for used cars is now 62 months — a record.
Loans with terms from 74 to 84 months made up 30% of all new vehicle financing — a record.
Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
The average amount financed for a new vehicle was $28,711 — a record.
The average payment for new vehicles was $488 — a record.
The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.
From article:
It doesn’t take a securitized products strategist to figure out what happens next (although as Ben Bernanke showed us in 2006, it is apparently far too complex for a PhD economist). Borrowers who never should have been given loans in the first place start to default and the ABS collateral pools quickly transform from collections of pristine credits to steaming cesspools.
At least this is not government sanctioned like the mortgage problem. You can't blame the automakers for trying to find ways for people to buy their cars.
I agree, though, they are reaching the tipping point. 7 years for a car loan seem ridiculous to me. The real problem is not the financing... it's fine to finance cars. The problem is twofold - 1) it's that the cars are too expensive and 2) people are not making enough money to afford them at reasonable finance terms. The average people - the ones who automakers need to buy cars - are making the same salaries that they were before the recession hit 8 years ago but the average price of a car has gone up 30% from something like $24K to 32K.
You may pay interest on the loan, but what's that rate compared to the rate of return you could get on investing the cash you would otherwise sink into the car?
People who borrow money on car loans are not the type who invest, they are the type that squanders their extra cash on interest payments. Just look at the number of people who are terrified of a car repair bill. They will borrow $20,000 to avoid spending $2000 cash on a repair bill. Those are not people who manage their money.
Here's the latest stats on the subprime auto loan bubble. So, who gets to clean this one up?
Average loan term for new cars is now 67 months — a record.
Average loan term for used cars is now 62 months — a record.
Loans with terms from 74 to 84 months made up 30% of all new vehicle financing — a record.
Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
The average amount financed for a new vehicle was $28,711 — a record.
The average payment for new vehicles was $488 — a record.
The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.
From article:
It doesn’t take a securitized products strategist to figure out what happens next (although as Ben Bernanke showed us in 2006, it is apparently far too complex for a PhD economist). Borrowers who never should have been given loans in the first place start to default and the ABS collateral pools quickly transform from collections of pristine credits to steaming cesspools.
We can only hope. Any time I find a great deal on an overstock of repo'd cars I'm ready with cash. The curren t used market is pretty thin thanks to the outrageous prices of new cars.
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