re: Article: "Record number of car buyers 'upside down' on trade-ins"

quote:

---

Buy a 6k or 7k priced mid 2000s Camry. It's totally realistic if you can lower your standards for something that allows you to move from A to B.

---

Wasn't a study recently done that showed 7 out of 10 Americans have less than $1000 in their bank accounts?

Lots of college graduates out there making less than $40k per year. Say you're making $700 or so per week before taxes ($36,400/year). Factor in health insurance, car insurance, rent, bills, etc. and you must understand that not everyone can pull $7k out at one time for a car.

quote:

---

The most striking thing about this isn't the loans. It's the fact that the average price of vehicles starts at 34,000 dollars. That's ridiculous and I bet is almost double what it was just 15 years ago.

---

The tech in cars has slightly improved over the last 15 years. Do you expect it to cost the same (less inflation of course)? The tech you can get in a Honda Civic today is basically equivalent to that of a 15 year old top of the line Mercedes.

quote:

---

Get a secured credit card with like a $300-$500 limit, pay one bill a month on it, then pay off the secured credit card in full each month. Eventually, the bank will turn it into a regular credit card. Really good way to build credit at a young age.

---

Any first time credit user can get a $500 limit card. But, revolving credit is a small piece of the puzzle. Until you get $10-20k in available credit, they can hurt you a lot more than help. And a boged up credit score still won't get you financed.

My problem recently was I had not financed anything in over five years. Great score because my revolving availability was propping me up. But couldn't get more than a 70% ltv from my own credit union because I was so limited. I actually had to barter up that number by pointing out I had twice what I was getting a loan for in my checking alone.

I literally bought a vehicle solely to add a trade line so I can buy some property next year.

I didn't want to borrow against my own money in case SHTF post election and my field took a crap.

I agree you are teaching him responsibility. It's the right thing to do.

I just wish I would have had an adult in my life with an 850+ beacon score when I was 18.

I needed a kick in the arse

for all of you saying pay cash, Why in the hell would i do that when I can get a loan for sub 2% and keep my cash in the market making on average greater than 5%?

For the poors, sure make sense. But for those in the upper middle class that play the market and invest heavily, its stupid.

As much as I like Dave Ramsey he preaches this BS. but to his credit his advice is aimed at those that cant manage money.

In my case, my company pays for my vehicle up to $550 a month plus gas. It makes no sense for me not to have a newer vehicle when I can get a loan at a max of 2% and I am making atleast double that in the market.

My wife drives an Infiniti QX80 and I drive a Tundra and together we pay 1600 a month in car notes but our job gives us 1400 of that plus pays for all gas. the highest interest rate between the two is 1.25%. Would be absolutly retarded of me to pay cash. We make plenty of money to afford the vehicles and if one did lose their job, we could still afford it.

So the whole "pay cash or don't buy" is stupid for people like me and for anybody else that does well in investments.

quote:

---

So the whole "pay cash or don't buy" is stupid for people like me and for anybody else that does well in investments.

---

I do alright. I certainly would never pay cash for a brand new vehicle - dropping 30k would be absolutely retarded given interest rates. I'd rather pay 10k for a decent car and give no fricks, and it'd be trivial to finance that amount.

quote:

---

for all of you saying pay cash, Why in the hell would i do that when I can get a loan for sub 2% and keep my cash in the market making on average greater than 5%?

---

You're still buying a deprecating asset with ongoing revenue.

quote:

---

In my case, my company pays for my vehicle up to $550 a month plus gas.

---

Obviously, that changes everything. You would be dumb not to spend all of that $550 if the vehicle is titled in your name. Now, if they gave you the $550, and let you pocket the difference? Then we would be back to square 1.

quote:

---

As much as I like Dave Ramsey he preaches this BS.

---

Meh. Almost everyone who follows the advice will be better of than if they don't follow it. Sure, you have independently wealthy folks who can min/max finances, but those folks don't have any money problems to begin with.

Let me put it this way - if you follow Dave's method - however painful it is at times, you will be wealthier at the end than if you borrowed money - for any purpose other than borrowing money that generates long-term income.

Cars ain't it. Houses? Maybe. But not cars. Not ever.

quote:

---

so let me ask you which is a better deal

---

Don't buy a $50k car.

But, hey, do what you want to do, it's your money.

quote:

---

Ex. Go to buy a truck, with a trade-in vehicle. Do not tell the salesmen about the trade-in. Have done research on the vehicle that is wanting to be purchased and trade-in value expected. Say 35K for new vehicle on a 60 month note at 2%..38,500 for vehicle. Now that you're set on a price, tell about trade-in..now you know exactly what you're getting on trade-in, as well as the price you have come to on the new purchased vehicle

---

Why are you trading it in? You can get several thousand more just selling it yourself.

I've always heard, to abide by the 20/4/10 rule



1. 20% down payment
2. Finance at 4 years or less
3. Monthly note < 10% of total take home, including insurance payment

If you cant hit all 3 benchmarks then you cant afford the car. If you cant hit even 1, then you REALLY cant afford it

this is just a general guideline of course but it should help people set expectations for what they can afford

the fact that these AVERAGES are 35,000 and 68 months is frightening. and being given to people with 600 FICO??! yikes