SOCIAL SECURITY and MEDICARE are next.

quote:

Originally posted by Zecpull:
The Zero interest car loans are the best thing for Car sales, as people are less likely to be upside down. More people have some equity instead of just paying interest.

Not always.
Most of the time the offer is either a rebate or 0 rate but not combo.

Together with the used car market. We are already seeing the used cars build up and the prices fall.

quote:

Originally posted by ONETIMER:
SOCIAL SECURITY and MEDICARE are next.

Really doubtful. The fed will continue to prop it up with new schemes and printing money. The WAR ON SENIORS that you hear chuckle cry about constantly is a paper dragon that gets trotted out whenever the left needs a boogeyman. It along with other entitlements will be protected as the golden goose that they are. Defense spending will go long before social security crashes.

NO, it's way too easy to repossess a car.

So many people out there are on a collision course with financial disaster.

It's so easy to borrow money these days. I know a guy who was making maybe $10k a year, he applied for a Trek Bicycle card and got approved for $1,500. I mean, do they not look at income? Same thing with auto loans, they'll just stretch out the payment so the monthly amount is less. But all it takes is one accident and someone is getting fucked. GAP is a huge money maker for banks but if you're under water and don't buy it, you're still screwed. People these days just always seem to want the latest and greatest. We have 2 cars: 2014 Kia Sportage and 2003 Honda Civic. Honda is paid off and we're about $2,000 over the Kia than what we owe. When the Honda goes, I'll most likely take over the Sportage while the wife gets a new vehicle. We always put money down and get good rates.

As for college loans, they're going to keep the cost of education up because I haven't heard of anyone get denied for a loan. Why would colleges start charging less when they have people beating down the doors with borrowed money to go to school? That's what a friend told me. She's a graduate studies professor at the University of Iowa. She said money is borrowed too easily. I also imagine there are some who are professional students, I know a guy like that. Undergrad in electrical engineering, couldn't (his fault) find work as an EE and ended up going to law school (tier 3 school) and now works at his mom's day care... He's in some pretty heavy student loan debt.

Want a new vehicle?

1. Payoff the old one.
2. Save money by being frugal.
3. Know the real cost. Negotiate.
4. Use Costco's car buying program. It took another $1000 off of the negotiated price.

I did and it works.

I agree, it is WAYYYYY too easy for WAYYYY to many people to borrow WAYYYY too much money. Everyone seems to want everything right now and also always want the latest and greatest item. It's ridiculous. All of these people live way outside their means. I'd guess easily 8 out of every 10 people 20-60 years old has credit card debt at a high interest rate, car loans etc.

Also if these people get a raise or bonus, they don't think about paying debt down. Now they want bigger and more expensive things and take on more debt.

quote:

Originally posted by Edmond:
I know a guy like that. Undergrad in electrical engineering, couldn't (his fault) find work as an EE and ended up going to law school (tier 3 school) and now works at his mom's day care... He's in some pretty heavy student loan debt.

At first I was like "Whoa, couldn't find work as a EE?!! WTF? But then saw the qualifier that it was his fault - oh, OK."

That gave me a start since I have two boys at Virginia Tech right now who are in the EE program.

quote:

Originally posted by JALLEN:
How can someone roll their negative equity into their new car, then trade it in with even worse negative equity, wash, rinse, repeat, while the car dealer is making money?

The dealer has to pay off the old car, finance the new one, with no cash down or not enough, pay commissions, etc.

Zero down sales merely substitute a higher price for a higher rate. The present value of the note is the same or very close. The car is worth what it is worth. Equity is illusory without significant down payments, because the value of the car is mostly lower with time.

Back when I worked for a car dealer (80s to early 90s) the sales force was pretty creative at the tactic. I never worked in sales but hung out with some of the salesmen and heard stories about some of the crap they pulled. The bigger the spread between the cost and retail price of a vehicle allowed more room to "bury" negative trade-in equity. Most banks then wouldn't full finance a vehicle over retail sticker price (except in special cases) but many had no problem financing 100% of MSRP.

If a customer was upside down in their trade sales would write the paperwork as if the new vehicle was selling at full MSRP and then use the difference between that and their real selling price to put against negative equity. For example: Chevy that retails for $20k but regularly sells for $17.5k has a potential $2500 to use for "burying". It was also not unusual for dealers to exaggerate fees and/or services to use for covering negative trade equity. Whatever it took to get it done.

Another tactic back then was "double-dipping" which was to finance whatever the bank would cover via normal loan and a second loan via HFC or other (predatory) small lender to cover the down payment. The trick was to submit both of them simultaneously so one didn't count against the other.

The results of these tactics was a customer that was so far under water on a loan they went poor paying it off or went bankrupt to get out of it. If they double-dipped the second loan was usually at a ridiculously high APR that sucked even more cash out of them. Some poor saps had the misfortune to suffer a total loss (wreck, flood, theft) on their vehicle to find out the insurance company paid only the actual value of the vehicle which left the customer owing a large amount from the loan. Nothing like forking out a big monthly payment for a car that's in the crusher.

I've been out of the car business a long time so I'm not familiar with how dealers operate now but creativity flows when there's a buck to be had. As long as certain car buyers are dumb enough to negotiate with "how much per month?" instead of "what's the total cost?" they'll continue to dig equity holes straight to China while the dealers get a percentage of whatever those customers swallow.

quote:

Originally posted by Audioholic:


Back when I worked for a car dealer (80s to early 90s) the sales force was pretty creative at the tactic. I never worked in sales but hung out with some of the salesmen and heard stories about some of the crap they pulled. The bigger the spread between the cost and retail price of a vehicle allowed more room to "bury" negative trade-in equity. Most banks then wouldn't full finance a vehicle over retail sticker price (except in special cases) but many had no problem financing 100% of MSRP.

If a customer was upside down in their trade sales would write the paperwork as if the new vehicle was selling at full MSRP and then use the difference between that and their real selling price to put against negative equity. For example: Chevy that retails for $20k but regularly sells for $17.5k has a potential $2500 to use for "burying". It was also not unusual for dealers to exaggerate fees and/or services to use for covering negative trade equity. Whatever it took to get it done.

Oh, please. There is no margin like that in car sales. They are lucky to get $100 over invoice, and work their butts off to get that much. Most cars are sold at a loss to the dealer. They make a little on service, but sales are a loss leader of sorts. Don't you know anything?

quote:

Originally posted by CPTKILLER:
Want a new vehicle?

1. Payoff the old one.
2. Save money by being frugal.
3. Know the real cost. Negotiate.

I did and it works.

Sage advice.
But the people taking out sub-prime car loans will never learn...
Some people will always live hand to mouth.
Delayed gratification is not a concept they can grasp.

quote:

Originally posted by JALLEN:

quote:

Originally posted by Audioholic:


Back when I worked for a car dealer (80s to early 90s) the sales force was pretty creative at the tactic. I never worked in sales but hung out with some of the salesmen and heard stories about some of the crap they pulled. The bigger the spread between the cost and retail price of a vehicle allowed more room to "bury" negative trade-in equity. Most banks then wouldn't full finance a vehicle over retail sticker price (except in special cases) but many had no problem financing 100% of MSRP.

If a customer was upside down in their trade sales would write the paperwork as if the new vehicle was selling at full MSRP and then use the difference between that and their real selling price to put against negative equity. For example: Chevy that retails for $20k but regularly sells for $17.5k has a potential $2500 to use for "burying". It was also not unusual for dealers to exaggerate fees and/or services to use for covering negative trade equity. Whatever it took to get it done.

Oh, please. There is no margin like that in car sales. They are lucky to get $100 over invoice, and work their butts off to get that much. Most cars are sold at a loss to the dealer. They make a little on service, but sales are a loss leader of sorts. Don't you know anything?

Every plaid-suited sales trainee gets one:

quote:

Originally posted by MikeNH:
Waiting for the next crash. On the road to building up savings so by the time the banks run the country into the ground again I should be in a place to buy a home maybe.

Same here.

quote:

Originally posted by RobLew:
At first I was like "Whoa, couldn't find work as a EE?!! WTF? But then saw the qualifier that it was his fault - oh, OK."

That gave me a start since I have two boys at Virginia Tech right now who are in the EE program.

To be fair the guy didn't have much common sense. Really book smart but just has no idea how the real world works.

He ended up working a few months at an EE firm and made pretty damn good money and it got to his head. This was in the late 90's. We were talking about sports cars and asked if he was going to get a Corvette. He said no, it wasn't exotic enough for him. Viper? Nope, still not exotic enough. He was going for a Ferrari.

Ended up bouncing around, worked briefly at Sears on the receiving dock, maintenance at village works before his mom opened a daycare and he drove the van. Went to law school, graduated and passed the bar. Now he's the "legal counsel" at the daycare.

I imagine it's hard for him to find work when they see so many gaps in employment. If I were an employer, I'd wonder if the guy had been in prison or something with gaps like he has. He's 37-38, same age as me and has maybe 1-2 years of full time work experience and living at home with mom doing nothing but at least he has a EE degree and JD.

People are taking out 72 and 84 month loans as standard now. I've read of ten year loans as well. Crazy! People's narcissism, self absorption, and keeping up with the Joneses, status, etc, totally override any and all financial sense.

I think it's just stupidity increasing at an alarming rate myself. I've talked to people trading in their car (upside down) to get a newer version because it integrates with their smart phone better. I said "You can get a Pioneer that will do the same thing for $400." Their response was "I don't want to mess with that, they'd have to take my car apart." So $400 purchase on a new head unit vs. $35-40k purchase. Which one makes more sense? Idiots.

Now if we're talking about 72/84 months at 0% or 0.9% then that would make sense but I believe that 0% typically is for 36 or 48 month loans.

But then again with a short loan period and the fact that many do not put money down on a car, they couldn't afford it on a month to month cost, either.