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It's basically obvious to anyone who has shopped a car over the years but car dealers are pressuring customers to use loans and not cash more than ever. They're more open about it now.
Keep in mind third party money helps fester price inflation and in a time when the driving public is being coerced into buying an electric car at double the price this can become an even bigger issue.
Also note auto loan debt is reaching all time highs and many find themselves underwater on their car purchase.
You want a loan on the car, not to pay cash. Paying 2 to 4% on a 5 year loan is much more preferable than having your cash depreciate at 7%+ inflation rate (and accelerating). If the dollar completely collapses that car becomes free
Simple solution: don’t buy from car dealers. Let someone else take the depreciation hit, buy used, pay cash. It’s been a winning strategy for me for 30+ years. On the rare occasion I’ve bought a new car from a dealer, I’ve regretted it every single time.
Right now the difference between buying new and used is the least it has been in my 30+ years of car ownership.
Hell, my wife sold her Subaru Outback ~10 mos after she leased it and had positive equity ($0 down when she signed the lease).
It's basically obvious to anyone who has shopped a car over the years but car dealers are pressuring customers to use loans and not cash more than ever. They're more open about it now.
Keep in mind third party money helps fester price inflation and in a time when the driving public is being coerced into buying an electric car at double the price this can become an even bigger issue.
Also note auto loan debt is reaching all time highs and many find themselves underwater on their car purchase.
Reportedly, about 31% of new cars are leased. Of the remaining inventory, 81% of outright purchases are financed.
I have always paid cash and bought used with low mileage. While I could appreciate the dealer’s motivation, I never felt coerced.
Consumers like shiny new things. As I understand it the average price of a new car is now about $47,000.
Some people use home equity lines of credit to fund new car purchases so the interest is deductible.
I'm glad I bought before the sh9t hit the fan. KBB also has my car worth more than what I paid for it - I guess it also helps that it's an extremely low mileage car. I'm paying off my 0% loan as slowly as possible.
KBB value mean nothing. No dealer uses KBB. KBB neither sells not buys vehicles so what they say it's worth holds no weight. Any dealership would tell you that.
You want a loan on the car, not to pay cash. Paying 2 to 4% on a 5 year loan is much more preferable than having your cash depreciate at 7%+ inflation rate (and accelerating). If the dollar completely collapses that car becomes free
That's the good news. The bad news is that cash you saved... isn't worth anything, either.
New cars are a horrible investment even without the inflated prices. If you can keep your ego in check and buy a vehicle a little older. You can keep it for a couple years and get pretty much what you paid for it like I always do. And pay cash private party. Stay away from the dealers. Trick is not overpaying in the first place. I financed my first 3 cars new. And did the math on how much money I wasted. Never again.
I don't buy new cars as an investment. I buy them because I like them and want one. Everything you buy isn't an investment. I don't go buy a new TV as an investment. I don't like getting other peoples problem.
I buy new for the warranty and knowing I'm the first and only one to drive it like a bat out of heck.
The reason automobiles are so expensive is due to financing. Most people only care about the monthly payment, not the total price. So, they can raise the total price and extend the number of payments, and most people wouldn't bat an eye. If more people paid cash, the total price would be all that matters. Most people wouldn't be able to afford a $50,000 SUV, so they'd have to lower the price to which enough people could afford it, and the automobile companies could still make a profit.
Of course, during these times, the ridiculous prices are caused by shortages and inflation. But, cars were already expensive before Covid-19.
You want a loan on the car, not to pay cash. Paying 2 to 4% on a 5 year loan is much more preferable than having your cash depreciate at 7%+ inflation rate (and accelerating). If the dollar completely collapses that car becomes free
If the dollar completely collapsed, and you still owe on the loan, the car can be repossessed, so not "free" until it is paid off. The car is not yours until it is wholly paid for.
Reportedly, about 31% of new cars are leased. Of the remaining inventory, 81% of outright purchases are financed.
I have always paid cash and bought used with low mileage. While I could appreciate the dealer’s motivation, I never felt coerced.
Consumers like shiny new things. As I understand it the average price of a new car is now about $47,000. Some people use home equity lines of credit to fund new car purchases so the interest is deductible.
Not sure that home equity trick works for most people anymore, since the SALT deductions changed and the standard deduction increased.
That's the good news. The bad news is that cash you saved... isn't worth anything, either.
That cash should have gone into productive assets by that point. Nobody should be holding cash right now
Quote:
Originally Posted by ansible90
If the dollar completely collapsed, and you still owe on the loan, the car can be repossessed, so not "free" until it is paid off. The car is not yours until it is wholly paid for.
In a Venezuelan or Zimbaubwaean type currency collapse, $1 can turn into 1 cent or much much lower. So if you owe $10,000 on the loan, you just need to work the equivalent of $100 to pay off the whole thing
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