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First thing salesmen are taught is to convert a buyer into payments.
After that, it is just a matter of lease/purchase discussion, extending the term to meet the buyers expectations or increasing the down payment.
It is amazing how many people have 84 month car payments. Crazy, but if it fills your boots, go for it.
Location: In a little house on the prairie - literally
10,202 posts, read 7,926,708 times
Reputation: 4561
Quote:
Originally Posted by ColdAilment
I have a 39 month lease.
Ah, you rent your car under restricted conditions. How do you like your forever payment plan?
I'm sure it works for you. I have not had a vehicle payment since my mid-20's, my son never has had one, nor has my daughter. Used works better that way. I've always taught my children not to make payments on depreciating assets; they are not investments. If you can't afford to pay in full, you can't afford it period is our family's mantra. Of course, houses are exceptions.
Ah, you rent your car under restricted conditions. How do you like your forever payment plan?
I'm sure it works for you. I have not had a vehicle payment since my mid-20's, my son never has had one, nor has my daughter. Used works better that way. I've always taught my children not to make payments on depreciating assets; they are not investments. If you can't afford to pay in full, you can't afford it period is our family's mantra. Of course, houses are exceptions.
I like how people throw out financial phrases they don't understand like "depreciating assets." If you truly understood finances, you'd realize that sinking a whole pile of cash into a depreciating asset is a terrible idea, and the better way to go is to put as little as possible into it. It's not a bad thing to make a payment - if the bank is willing to loan me money at a rate far lower than the return I can get, then I'd be stupid not to take them up on it.
I assure you I can afford my car, but why would I want to tie up tens of thousands of dollars in a car when I can instead make a relatively small monthly payment and use that cash on something else?
They get you on mileage. Drive anything over 10K miles/yr, and you will be amazed on how quickly that $250/month translates into $500/month, all-in.
Another erroneous statement / misconception. It doesn't double your payment to add more miles. In fact, it's very inexpensive to go to 12,000 or 15,000 miles per year.
It is amazing how many people have 84 month car payments. Crazy, but if it fills your boots, go for it.
Not that hard to find an 84 month note for 3.5% or less with good credit. In a cheap money era and given reliability of modern new cars, I don't find that kind of term to be too crazy for a buy-and-hold borrower. But then we went with a 72 month term on our new car because we wanted to keep the monthly payments low- had tried to keep the VW on the road until the primary mortgage is paid off in a little over 2 years, but it had hit a point of cascading entropy failure events and it wasn't worth putting any more money into it than we already had in repairs. Interest cost on the loan works out to a few Starbucks coffees a month.
Location: In a little house on the prairie - literally
10,202 posts, read 7,926,708 times
Reputation: 4561
Quote:
Originally Posted by LeagleEagleDFW
I like how people throw out financial phrases they don't understand like "depreciating assets." If you truly understood finances, you'd realize that sinking a whole pile of cash into a depreciating asset is a terrible idea, and the better way to go is to put as little as possible into it. It's not a bad thing to make a payment - if the bank is willing to loan me money at a rate far lower than the return I can get, then I'd be stupid not to take them up on it.
I assure you I can afford my car, but why would I want to tie up tens of thousands of dollars in a car when I can instead make a relatively small monthly payment and use that cash on something else?
I may well understand financial terms much better than you suspect. Go do a FV versus PV analysis, considering you are dealing with after tax dollars, paying a higher cost base, factor in the required maintenance checks to maintain the warranty, which can cost more than I spend a year on maintenance, and then tell me the results. Do you assess the approximately 20-30% depreciation the moment you drive it of the lot? That depreciation is also after tax dollars. Now take your sunk costs (because that is what they are) and take the difference of those I may incur over a 30-40 year life span, and then take a look at what that means in retirement. Used always wins, no matter what fiscal justification you may attempt to make.
By a significant margin. I'd rather buy another rental property than drive new vehicles.
I've never leased a car. It always seems to impractical in a state like Maine, where everything is far apart. A lot of the advertised lease rates are for mileage around 10,000 per year. I usually average about double (and some years triple) that! I guess if you had money to burn and just wanted a weekend cruiser, it would be feasible.
I don't lease for the opposite reason. 10,000 miles a year is a lot of driving, way more than I'm likely to do on a single vehicle. I don't want to have to drive a particular vehicle just to use the miles I already paid for. If manufacturer lease programs offered 5,000 miles a year at a decent price, that could work. 10K/yr for 3 years is 30,000 miles. You may as well fly if you're driving that much.
I may well understand financial terms much better than you suspect. Go do a FV versus PV analysis, considering you are dealing with after tax dollars, paying a higher cost base, factor in the required maintenance checks to maintain the warranty, which can cost more than I spend a year on maintenance, and then tell me the results. Do you assess the approximately 20-30% depreciation the moment you drive it of the lot? That depreciation is also after tax dollars. Now take your sunk costs (because that is what they are) and take the difference of those I may incur over a 30-40 year life span, and then take a look at what that means in retirement. Used always wins, no matter what fiscal justification you may attempt to make.
By a significant margin. I'd rather buy another rental property than drive new vehicles.
Required maintenance checks? What are you babbling about? And I lease, so I don't care about depreciation. Artificially inflated residuals take care of that.
I don't lease for the opposite reason. 10,000 miles a year is a lot of driving, way more than I'm likely to do on a single vehicle. I don't want to have to drive a particular vehicle just to use the miles I already paid for. If manufacturer lease programs offered 5,000 miles a year at a decent price, that could work. 10K/yr for 3 years is 30,000 miles. You may as well fly if you're driving that much.
Miles are always negotiable. You can get less miles and pay less.
And most people do 12,000 to 15,000 miles a year. Should I be flying from home to work every day?
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