9
   

Buying a car in todays economy

 
 
cicerone imposter
 
  1  
Reply Mon 20 Oct, 2008 06:31 pm
@hawkeye10,
It was somewhat similar to the housing market; most who leased cars couldn't keep up with the payments when fuel and food costs continued to escalate, and many also lost jobs. When the payments on leases stopped coming in, they repossessed those cars, but the market to resell them were gone.
hawkeye10
 
  1  
Reply Mon 20 Oct, 2008 06:38 pm
@cicerone imposter,
You missed the point again.......the lease included a residual value at the end of the lease, the person who had it for two years was supposed to pay for all of the value used plus extra to go to the financial institution. However, when the residual value was actually much lower than expected the bank (or whomever) who had to sell it at the end of the lease lost a ton of money. Many of these leases were for trucks and SUV's, and with the run up of gas prices they become worth much less at resale. Nobody wants a gas hog. The drop in prices now will not matter, the mindset is set, everyone expects the gas prices to resume their run up sooner rather than later.

Now many if not most of the players are leaving the lease business....too risky. So Calamity will have fun trying to lease again. SHE will at least pay more for it.
cicerone imposter
 
  1  
Reply Mon 20 Oct, 2008 06:41 pm
@hawkeye10,
Too bad you don't see the similarities between homes and cars.
hawkeye10
 
  1  
Reply Mon 20 Oct, 2008 06:44 pm
@cicerone imposter,
the difference is that mortgages will still be available, but you are right that deed holders are taking a bath the same way leasing companies are.
0 Replies
 
Nick Ashley
 
  1  
Reply Mon 20 Oct, 2008 07:06 pm
@hawkeye10,
I've never really considered an American car anyways. If I needed a truck I would probably buy American, but not for a car.

I'll probably end up with either a Mazda 6, or Nissan Altima. We'll see, though.
0 Replies
 
CalamityJane
 
  1  
Reply Mon 20 Oct, 2008 07:13 pm
@hawkeye10,
hawkeye10 wrote:

have fun trying to lease the next one.
Leasing companies took a bath this year, as residual values tended to be far below what was written into the lease. as with so many other financial things, leasing included more risk than the parties believed was the case.


I just leased a new car last month, it wasn't an American car though and
I have dealt with the same dealership and their corporate financing for the last 15 years, so they know me and my good credit rating.
0 Replies
 
CalamityJane
 
  1  
Reply Mon 20 Oct, 2008 07:16 pm
@hawkeye10,
hawkeye10 wrote:
So Calamity will have fun trying to lease again. SHE will at least pay more for it.


No, I don't! Actually, my previous lease wasn't even finished yet, and the
dealership took over the remaining lease payments, and whatever fees there
were. It's all part of negotiations, like everything else in life.
0 Replies
 
Nick Ashley
 
  1  
Reply Mon 20 Oct, 2008 07:16 pm
@parados,
Looks like Nissan is offering 4.9% APR financing for up to 60 months OR $500 cash back.

Mazda is offering 3.9% APR for 60 months, and no cash incentive.

Thats just what I've found from their respective websites...
CalamityJane
 
  1  
Reply Mon 20 Oct, 2008 07:19 pm
@Nick Ashley,
Mazda is clearly offering you a better deal here.
People see foremost the incentive of a cash back which isn't always the better
route to go.
CalamityJane
 
  1  
Reply Mon 20 Oct, 2008 07:22 pm
@CalamityJane,
Nick, these are today's APR rates according to Edmunds

http://img263.imageshack.us/img263/6761/picture2io4.png
cicerone imposter
 
  1  
Reply Mon 20 Oct, 2008 07:33 pm
@CalamityJane,
Gee, I can borrow at 1.9%. I should go into the lending business. LOL
0 Replies
 
parados
 
  1  
Reply Mon 20 Oct, 2008 07:42 pm
@Nick Ashley,
The websites may not be up to date. Local dealerships may have incentives that aren't on the manufacturer site.

High volume dealers can get special deals or are willing to move cars that are sitting on the lot so will do local incentives.
0 Replies
 
TTH
 
  1  
Reply Mon 20 Oct, 2008 09:22 pm
I have an idea. Why don't you save the money and pay cash. That is what I do.
Nick Ashley
 
  1  
Reply Mon 20 Oct, 2008 10:44 pm
@TTH,
Where does the cash come from? I assume you keep the money in some type of investment like stocks until you can afford the new car? Not a horrible idea, but not necessarily the best idea either.

Any annual return you are getting on your money is lost when you pull it out to pay for the car (obviously). So say you are getting 10% APR on your money in the stock market. Then you sell off your stocks to pay for the car, to save having a 6% loan.

Had you just gotten the car at the beginning, with the 6% loan, you could keep your money in the market earning 10% APR, and using the profits to pay the 6% loan. This leaves you with an extra 4%APR. And, you got your fancy new car when you first wanted it, rather then having to wait!
OGIONIK
 
  1  
Reply Mon 20 Oct, 2008 11:09 pm
@Nick Ashley,
lol, im buyying a motorcycle, good on gas, very cheap too, usually less then a cheap car for a top of the line bike.

my 0.02
Nick Ashley
 
  1  
Reply Mon 20 Oct, 2008 11:41 pm
@OGIONIK,
I agree Ogionik! I have cheap little ninja 250. Its a great bike, fun to ride. Because it is a 250, it puts it in a very low insurance bracket. (I pay something like $150/year for insurance). I get about 55-60mpg on it without even trying (I'm always the first off the line) and it only cost me $2500. Can't beat it!

However, I still need a bad weather vehicle (we have cold winters in Omaha) and something that I can haul stuff around with (like people, groceries, on road trips, etc.)
OGIONIK
 
  1  
Reply Mon 20 Oct, 2008 11:43 pm
@Nick Ashley,
oh god i dread the grocery shopping.


i dread it so much...

so much indeed...
0 Replies
 
TTH
 
  1  
Reply Tue 21 Oct, 2008 10:08 am
@Nick Ashley,
Nick Ashley wrote:
Where does the cash come from? I assume you keep the money in some type of investment like stocks until you can afford the new car? Not a horrible idea, but not necessarily the best idea either.
No, not the stock market.

Nick Ashley wrote:
Any annual return you are getting on your money is lost when you pull it out to pay for the car (obviously). So say you are getting 10% APR on your money in the stock market. Then you sell off your stocks to pay for the car, to save having a 6% loan.
I am earning an average of 17%.

0 Replies
 
Green Witch
 
  1  
Reply Tue 21 Oct, 2008 04:40 pm
@TTH,
Quote:
I have an idea. Why don't you save the money and pay cash. That is what I do.


I've never paid a penny of interest to a bank because I do what TTH suggests. My first car was a $3000 dollar Toyota Corolla that I paid cash for. I then pretended I was paying a car loan, but I paid it to myself (including the current interest rate) and put the money into a conservative investment. I kept that Toyota going for almost five years (repairs were few), sold it for $800 and then paid cash for a Subaru Outback. I then started the process over again. I'm now on my second Subaru and I could buy a new one with cash tomorrow, if I wanted to. Outbacks are great in the winter and for hauling groceries.

So TTH, how are you getting 17% in this market? Annuity?
Nick Ashley
 
  1  
Reply Tue 21 Oct, 2008 08:46 pm
@Green Witch,
Again Green Witch, glad it works for you, but I would prefer to do thing differently.

You are spending cash for a vehicle, which makes no money for you. Why not keep that cash in investments, making money for you? As long as your investments are making more ROI then the banks APR, you are going to end up with FAR more money by taking the loan then by paying cash.

I know it feels like you are throwing money away to the bank in interest, but in actuality the bank is allowing you to gain a ROI on an investment you otherwise couldn't afford.

 

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