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Well, the bankrupted girlfriend and I went car shopping today. The goal: find something for $200-$250/month for three years that was reliable and under ten years old. No can do - any loan shark company willing to finance a recently bankrupt person is charging 17%+ interest and dragging the loan out for over six years. No cars older than 2007 considered or cars with more than 80k miles. With every scenario we had, she was paying more than double the car's value over the life of the loan, and we were mainly looking at five to ten year old cars, so add another six years to the loan, and she's still paying $250/month for a car that could be fifteen years old then! She'd be walloped by repairs on an old car plus continued payments - financial suicide.
While her $850 2000 Grand Am coupe sucks and isn't reliable, I think she'd be far better served putting $1000 into that car to get it reliable, safe, and cleaned up, and avoid any payments, than to get roped into $250 month payments for six years on five to ten year old cars. She isn't getting that point. We went by Fry's and I showed her a basic, new washer/dryer set (hers are used and probably from the 90s) and said she could have the washer/dryer, and the Grand Am fixed with less than a year of payments, trying to get her out of the car purchasing mode.
I'm trying to protect her from herself here, but don't feel like I'm having much luck.
Well, the bankrupted girlfriend and I went car shopping today. The goal: find something for $200-$250/month for three years that was reliable and under ten years old. No can do - any loan shark company willing to finance a recently bankrupt person is charging 17%+ interest and dragging the loan out for over six years. No cars older than 2007 considered or cars with more than 80k miles. With every scenario we had, she was paying more than double the car's value over the life of the loan, and we were mainly looking at five to ten year old cars, so add another six years to the loan, and she's still paying $250/month for a car that could be fifteen years old then! She'd be walloped by repairs on an old car plus continued payments - financial suicide.
While her $850 2000 Grand Am coupe sucks and isn't reliable, I think she'd be far better served putting $1000 into that car to get it reliable, safe, and cleaned up, and avoid any payments, than to get roped into $250 month payments for six years on five to ten year old cars. She isn't getting that point. We went by Fry's and I showed her a basic, new washer/dryer set (hers are used and probably from the 90s) and said she could have the washer/dryer, and the Grand Am fixed with less than a year of payments, trying to get her out of the car purchasing mode.
I'm trying to protect her from herself here, but don't feel like I'm having much luck.
You're already making the same mistake a lot of people make going car shopping. You are shopping based on payment because you're working on a monthly budget.
You are doing it right. Keep that car running for now with the least amount of money outlay , save money to pay off all debt. Put a bit away for savings and emergency later for a car etc once out of debt.
Why is she shopping for a new washer and dryer. Use your old ones till they are broken.
The only time I replace appliances is when they break and are too expensive to fix. Our dryer broke. Took it apart bad belt. Replaced it for $20. Washer broke. Bad door switch $10. Had them for 5 years. Still working great
The bottom line i get from Dave Ramsey is living debt free. If that is your goal then getting rid of monthly payments on a financially decreasing asset like a car is one item to focus on.For example if you only have $5K in the bank for a car you go out and buy a $5K car and not use the $5K as a deposit on a $30K car committing yourself to high monthly payments for the next 5 years.
Well, the bankrupted girlfriend and I went car shopping today. The goal: find something for $200-$250/month for three years that was reliable and under ten years old. No can do - any loan shark company willing to finance a recently bankrupt person is charging 17%+ interest and dragging the loan out for over six years. No cars older than 2007 considered or cars with more than 80k miles. With every scenario we had, she was paying more than double the car's value over the life of the loan, and we were mainly looking at five to ten year old cars, so add another six years to the loan, and she's still paying $250/month for a car that could be fifteen years old then! She'd be walloped by repairs on an old car plus continued payments - financial suicide.
While her $850 2000 Grand Am coupe sucks and isn't reliable, I think she'd be far better served putting $1000 into that car to get it reliable, safe, and cleaned up, and avoid any payments, than to get roped into $250 month payments for six years on five to ten year old cars. She isn't getting that point. We went by Fry's and I showed her a basic, new washer/dryer set (hers are used and probably from the 90s) and said she could have the washer/dryer, and the Grand Am fixed with less than a year of payments, trying to get her out of the car purchasing mode.
I'm trying to protect her from herself here, but don't feel like I'm having much luck.
That's brutal, financing in that situation is suicide. Imagine how many people are in her situation that do it anyway. That's why these scum bag lenders are everywhere.
Also cell phone is a waste. We got by just fine with pay phones and pagers. Also cable is a waste. Plenty of good shows on network TV.
Electricity is a waste. You can save $200 a month by doing everything by candlelight.
I'll agree Cable can be eliminated, considering there are a decent number of free broadcast channels in most areas, that can be had for the price of an antenna.
As for eliminating cell phones, I don't think that's practical. I don't know about your community, but in mine, pay phones are few and far between, these days. I haven't seen anyone carrying a pager in years. The only place I see them are at busy restaurants, to notify you when a table is available, or when your order is ready. You can get a "dumb" phone, and pay-as-you-go plan for minimal cost. It would probably cost less, and certainly be more convenient, than a basic landline.
I can't imagine anyone cutting their electricity off, and using candles or lanterns. What would you do to keep food refrigerated? Electric lights don't cost that much to operate. Air conditioning does, though. If you live in a mild climate, maybe you can do without the a/c? I live where the summers are hot, but even with whole-house a/c, I've never had a bill as high as $200, and that's including gas!
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.
Exactly. The sales price and financing are independent of each other. You negotiate the price of the car ($25k) and then discuss financing. They won't come back and say "hey I've got good and bad news for you. Good news is you qualified for zero percent financing. Bad news is we can't honor the $25k price anymore due to this. We've gone ahead and added this $3000 fee"
And yes, we know there is built in padding of the price of the car to ensure dealers and manufacturers make money. We're not fools. No matter how good a negotiator you are they are still making money.
But qualifying or not qualifying for zero percent financing does does not exclude someone for negotiating a good deal on their vehicle. They are independent of each other. Two exact people with different credit histories can walk into the same dealership and buying the same car from the same salesman can get exactly the same out-the-door price but. It's just one would end up paying no interest from financing due to their excellent credit. Heck those two same people can go in together and negotiate the same combo deal paying the same price. But we all know they can't "combo" deal the financing. This is where their credit history comes into play. One will come out ahead due to credit history.
Manufactures do this because they are financing the vehicle, not an outside lender. They get a product sold and still make money on the car even at zero interest financing. Zero percent financing is only available to a select few, but available nonetheless.
Just because the salesman told you they're losing their shirt on this deal doesn't mean anything. Neither does that fake invoice sheet they sometimes show you. True cost of actual car and how much the dealer paid are numbers the general public will never see. Someone has to be a fool to think profit only comes from financing. No, they're just making additional profit from it. Price does not magically jump up once you get to financing.
Last edited by IShootNikon; 12-20-2015 at 08:03 AM..
As I posted before, I paid cash for a 2003 in June of 2004. The price was 1/3 off the sticker price. Both the manufacturer and dealer made a profit. I got a new vehicle for a reasonable price. Would I have borrowed the money? Not on your life.
How did the manufacturer and dealer make money if you paid cash and didn't pay any interest? And 1/3 off sticker price to boot
I have never bought a new car. I look for low mileage used vehicles in good shape and change all the fluids so I know where I am at with maintenance. I am a stickler with maintaining the vehicle and washing to keep the rust away. Also look for reliable brand vehicles like Toyota and Honda which are known for longevity. I have about 100,000 miles on Rav4 and Honda CRV and have goal of 300,000 miles on both. Both are paid for so when a repair comes it does not bite so bad.
Ive heard Dave Ramsey and many similar financial advisors comment on how car payments are a waste, and if you have to make payments, you cant afford the car, so you should save up and buy cars cash. Then they will usually quote the average payment is $450-650 a month for 6-7yrs at average 8-10% interest. Im not sure how many Americans are actually buying $30-50K cars where they have to make 6-8 year payments at such high and almost insane interest rates.
Then the next advice that is given is for people to buy a $1500-$3000 car and then save the $4-600 a month on car payments to buy the next car cash, while pretty much neglecting the topic of upkeep on old beaters. As per many threads in this forum, we can all agree that a $1500-$3000 car will most of the time need $1000-3000 of work to be in top shape, reliable , and give you a piece of mind that it will start and not leave you stranded, unless you are a DIY person or got a previously owned well maintained car.
There is always the middle solution and it's usually the better solution.
Buy a used but good 8-10-year old car that is in very good condition for about $10K-$12K which should last you 15 years of good service. Pay this within 2 to 3 years.
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