topic Re: I'm pretty amazed /rant about car buying practices/ in Auto Loans

I'm pretty amazed /rant about car buying practices/

Cloudlb — Sun, 17 Oct 2010 16:41:55 GMT

at the crap thngs people are doing with their car loans. I'm guilty of this also--in 2001 I bought a new car with my crappy credit and got a subprime 18% loan. With interest, I ended up paying twice the amount of the car. Now I know better.

But even on these forums, where people are supposedly trying to improve their financial situations, I see people buying too much car (if credit is bad, why are people buying $40K+ cars?); putting down the absolutely minimum down payment, thus putting themselves underwater immediately, having to buy gap insurance, leasing a car which never lets them have no monthly payments, trading in cars with underwater loans, thereby still paying interest on a car they don't even own. getting ridiculously long loan terms (why would you want to be making payments for six years, for crying out loud?) and focusing too much on monthly payments and not total amount owed. (But I got a sweet ride! and my payments are lower!).

I know I'm lucky in that I've managed to save a decent down payment., my car is not dying (even though it's 9 years old), and that I've managed to improve my credit scores and financial situation enough that I can probably get a decent loan. I've learned so much lately, and there is so much that's helpful and useful here (many fine contributors). I just wish there were more informational articles in a broader sense focused on best practices, instead of just getting that loan. Maybe that's outside the substance of the forum, but I'm still left shaking my head at some of the car loan approvals and questions.

Re: I'm pretty amazed /rant about car buying practices/

soonerfan77 — Sun, 17 Oct 2010 18:04:28 GMT

@Cloudlb wrote:

people are supposedly trying to improve their financial situations, I see people buying too much car (if credit is bad, why are people buying $40K+ cars?)

Obviously there are a lot of people that live out of their means, but on the other hand credit history doesn't always reflect the current situation.

A person can pay off all their debt and resolve old accounts and still have a poor credit score. Nothing but time will fix that.

Re: I'm pretty amazed /rant about car buying practices/

Anonymous — Sun, 17 Oct 2010 18:20:39 GMT

1- unless more then half the value of the car is put down, GAP insurance is always recommended especially if you can get it for less then $500.

2- Years ago when people were required to put down close to half the value of the transaction to secure financing people were more carefull about the options they selected/purchased. People had both "wants" and "needs" and unless they could afford to front the money they were only going for needs.

Now that many people can buy vehicles with less than 10%-15% down, and every hundred dollar of option "only" adds @ $2.00 to the monthly payment, well to them it just does not seem like that much to pay for what they want.

3- People bought to much into "Go Big or Go Home."

4-the rising cost/msrp of cars has caused most people to become payment buyers, not total cost buyers. Unless you make a lot of money, you are looking for a payment that fits your monthly budget.

5- I also blame baby seats. Regulations involving their use now mean families must upgrade their vehicles instead of their houses as their family grows, since the seats are so large, required for so long for each child- yet have a very negligible impact on overall occupant safety in children over 2 years of age. Car seats are superflous for the costs they incurr. (Read Superfreakonomics for that.) especially on a new, starting out family that could end up needing to keep 4 kids at a time in them.

At least one customer a month I encountered was buying a new car only due to car seat concerns, and frequently trading in under 2 year old vehicles to do it.

6- For most people the car is the second larget purchase they will make and the second largest monthly payment so they want "to have something to show" for their efforts.

Re: I'm pretty amazed /rant about car buying practices/

Cloudlb — Sun, 17 Oct 2010 18:18:58 GMT

it's more than just numbers; it's people buying ridiculous vehicles for their lifestyle because they're pretty, they're trendy, they look good when you compare them to the neighbors. All those bloated SUVs on the road for example. Kids out of college buying (or worse--leasing) BMWs or kids living at home and working at McDonalds buying new Mustangs. Big trucks for daily drivers (lots of those in Texas!). And putting themselves into massive debt for these things, instead of analyzing what they really need v. want.

Re: I'm pretty amazed /rant about car buying practices/

marty56 — Sun, 17 Oct 2010 19:08:28 GMT

@Cloudlb wrote:
Kids out of college buying (or worse--leasing) BMWs or kids living at home and working at McDonalds buying new Mustangs. Big trucks for daily drivers (lots of those in Texas!).

Suzie Orman denied an 18 year old last night who wanted to purchase a 10k Paris shopping spree. She had a 5k left on an 8k CC bill for a rolex watch. The chrage was on her mom's CC bill which she was paying (to her credit).

I think I read somwhere that more than 50% of BMW's are leased. I don't think leasing is totaly evil and in some cases makes sense. As someone who used to be subprime via CC debt, it would have been kinda funny to see me driving in a leased BMW with 70k of CC debt in my wallet.

I would not have been embarssed to walk into a BMW dealer during my subprime days to attempt to buy or lease a BMW but these days, no BMW or sports car for me until my home is PIF (<3.5 years).

Re: I'm pretty amazed /rant about car buying practices/

Anonymous — Sun, 17 Oct 2010 19:11:21 GMT

I think bigger families are the main reason people buy new cars. I also think its a keeping up with Jones's thing. Everyone wants to one up each other.

The only reason my wife and I are looking for a new car is because our cobalt is small compact car and with a baby on the way. We wanted something bigger. So we can confortable travel with the car seat/stroller, diaper bag and pack an play ect.

With the econemy the way it is right now. There is no demand for new cars the demand is on used cars. From my own research the difference between a new 2011/2010 suv and a used 2009 or 2008 suv is only about 2500-3000k. With the finacing incentives and or rebates our payment was cheaper on the new suv then it would have been on the year or two old suv.

Also 80-90% of people do don't ever pay there cars off. They are always trading them in so thats why payment shopping happens. They want the new car and they know that they will not keep to 72mos or 78 mos or what ever but they want that low payment.

Re: I'm pretty amazed /rant about car buying practices/

MarineVietVet — Sun, 17 Oct 2010 19:41:11 GMT

@Cloudlb wrote:

it's more than just numbers; it's people buying ridiculous vehicles for their lifestyle because they're pretty, they're trendy, they look good when you compare them to the neighbors. All those bloated SUVs on the road for example. Kids out of college buying (or worse--leasing) BMWs or kids living at home and working at McDonalds buying new Mustangs. Big trucks for daily drivers (lots of those in Texas!). And putting themselves into massive debt for these things, instead of analyzing what they really need v. want.

As a proud Texan I resent that!!!

Just kidding. I have a truck but it's not a big, big truck.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800, 10/10-813
TU - 10/10-774
You can do the same thing with hard work

Re: I'm pretty amazed /rant about car buying practices/

jefftca925 — Sun, 17 Oct 2010 20:34:40 GMT

I bought a 2009 VW Rabbit (4-door with a sunroof) the other day that was used with a little over 11k miles on it. I test drove a 2010 Golf a couple of months ago and absolutely loved the car but at the time I wasn't ready to buy. I've been driving a 1995 Saturn and a '94 Mercedes (mom's old car) for the last few years but the cars have recently been needing repairs and I've been afraid to travel too far from home as they might breakdown. I've been doing a lot of research on the Rabbit/Golf since I test drove the car and knew how much I would have to spend to get one...about $20k. I went to the VW dealership to see what they had (VW is doing a 0% promo on the 2010 Golfs) and came across the '09 with the low mileage..AND..because it was a CPO it had an additional 24 months/24k warranty on it on top of the remaining warranty still on the car. The car had been there longer than the dealer would have liked and I got the car for a steal. I put 2k down and my pmts are 279 a month at 3.99%.

My point of this is that if you do your due diligence and do a lot of research you can ultimately find what you want in a car at a reasonable price. This was the car I wanted and by being patient I found it at a price that I could comfortably afford. It's silly to get yourself in a position of financial despair because you "want" a car and have no patience to get it. That's asking for trouble right there.

And I have to add that the VW Rabbit/Golf is an excellent car that is very safe, very roomy, and has a lot of cool bells and whistles that come standard. I'm very happy with it.

Re: I'm pretty amazed /rant about car buying practices/

Anonymous — Sun, 17 Oct 2010 20:39:10 GMT

@jefftca925 wrote:

My point of this is that if you do your due diligence and do a lot of research you can ultimately find what you want in a car at a reasonable price. This was the car I wanted and by being patient I found it at a price that I could comfortably afford. It's silly to get yourself in a position of financial despair because you "want" a car and have no patience to get it. That's asking for trouble right there.

In my experience, most people are unaware they have a problem until a year or two later.

Re: I'm pretty amazed /rant about car buying practices/

marty56 — Sun, 17 Oct 2010 21:21:10 GMT

@Anonymous wrote:
In my experience, most people are unaware they have a problem until a year or two later.

LOL in my case you would have to add a zero to the end of both numbers plus a few years.

Re: I'm pretty amazed /rant about car buying practices/

Anonymous — Mon, 18 Oct 2010 21:42:20 GMT

@Cloudlb wrote:
at the crap thngs people are doing with their car loans. I'm guilty of this also--in 2001 I bought a new car with my crappy credit and got a subprime 18% loan. With interest, I ended up paying twice the amount of the car. Now I know better.

Similar to yourself, some people just need to learn the hard way. As you mentioned you now know better, hopefully others who are on this forum are learning a similar lesson and will know better as well.

I believe the car continues to be an emotional buy for the majority of society. That's why you'll continue to find people trying to buy a luxury car even though they have bad credit. The mystique and idea of status is very appealing, even if the subprime interest rate is not. The U.S. is a society of appearances and the attempt at keeping that appearance is bankrupting us.

Re: I'm pretty amazed /rant about car buying practices/

daisyduke — Mon, 18 Oct 2010 23:26:55 GMT

I must be living in the wrong neighborhood - because the folks that work at the nearby McDonalds are not driving brand new mustangs or BMW's - but rather they use public transportation.

I understand that some folks who are most likely much younger than I am, do not really understand what they can afford when it comes to financing a car. So, take that opportunity to offer constructive, friendly advice.

Re: I'm pretty amazed /rant about car buying practices/

haulingthescoreup — Tue, 19 Oct 2010 00:07:45 GMT

I've never owned a car less than three years old.

That used to bug me, but now I love it. I've never been upside down on a car in my life.

I drive them until they drop, or actually until one of my kids' cars drop, and I pass it on to them.

I'm all in favor of letting someone else eat the depreciation. A small investment in a Consumers' Reports Used Car Guide and a couple of hours' time should turn up something that is perfectly fine. In fact, a few of my cars were leased vehicles that had been turned back in. They were pretty low-mileage due to the lessees' terror of putting on too many miles.

And if I need a new-car smell, I can pick up one of those leaf things that hang from the rear-view mirror at my local Pilot station.

Re: I'm pretty amazed /rant about car buying practices/

laz98 — Tue, 19 Oct 2010 01:22:49 GMT

marinevietvet wrote:
@Cloudlb wrote:
it's more than just numbers; it's people buying ridiculous vehicles for their lifestyle because they're pretty, they're trendy, they look good when you compare them to the neighbors. All those bloated SUVs on the road for example. Kids out of college buying (or worse--leasing) BMWs or kids living at home and working at McDonalds buying new Mustangs. Big trucks for daily drivers (lots of those in Texas!). And putting themselves into massive debt for these things, instead of analyzing what they really need v. want.
As a proud Texan I resent that!!!

Just kidding. I have a truck but it's not a big, big truck.

i resent that too! some people just like big trucks or SUV's, it's not a crime. some of us can actually afford them!

there are only 2 of us in our household, but we are going to buy a bigger SUV so that we can travel with our dogs

Re: I'm pretty amazed /rant about car buying practices/

haulingthescoreup — Tue, 19 Oct 2010 02:20:09 GMT

Having been forced off the road onto the right-hand shoulder (and behind) by folks sittin' high and proud in their SUV's and deciding to move into the right lane, where I am, I view them with a lot of caution and a bit of bitterness.

When glancing in the right-side outside mirror, the drivers often seem to forget that some of us aren't 12 feet high. Glance down a bit, please. I'm down here, not up there.

You'd think that a four-door Honda Accord would show up pretty well, but apparently not.

And I realize that many SUV drivers know what they're doing and drive safely and courteously, but after a few episodes of terror on morning commutes, they have an asterisk beside them in my brain.

(And my two full-grown Golden Retrievers and beagle-Sheltie mix adored my aging and decrepit (and pretty dang small) 1971 BMW 2002, back in the day. )

Re: I'm pretty amazed /rant about car buying practices/

mross1080 — Tue, 19 Oct 2010 03:27:56 GMT

I understand not having a car payment and buying a car you cant afford. I did that in my younger days and hurt my credit in the process. But years later with my lessons learned and my credit good and years of driving not so flashy older cars I totally enjoy driving flashy new cars and dont mind paying the premium that comes with new cars. I say if you enjoy it and can fit it into your budget do it! You only live once you might as well enjoy it. Now if you have to decide to make the car payment or eat. The cars not for you.

Re: I'm pretty amazed /rant about car buying practices/

Carloscda40 — Tue, 19 Oct 2010 05:13:02 GMT

If you don't mind me asking how much was the final price of the car & your credit score?

And congrats on your purchase!!

Re: I'm pretty amazed /rant about car buying practices/

jefftca925 — Tue, 19 Oct 2010 06:10:25 GMT

@Carloscda40 wrote:
If you don't mind me asking how much was the final price of the car & your credit score?

And congrats on your purchase!!

My auto-enhanced TU score which they pulled was 696. My CC TU score is around 725. I haven't had a car note in over 10 years so they had nothing to look at in that department. The dealer finally sold me the car for $15,300...which is below blue book.

Re: I'm pretty amazed /rant about car buying practices/

daisyduke — Tue, 19 Oct 2010 10:20:53 GMT

Hauling - you had one of the very rare BMW 2002's. I was over my friend's house in the summertime and his friend was visiting and he drove a 2002 (prior to this I had had never known about them) mint condition - the car is worth a lot of money!! it's a great car....there were only a few thousand 2002's made!! Collector's item for sure. Lucky you.

And my two full-grown Golden Retrievers and beagle-Sheltie mix adored my aging and decrepit (and pretty dang small) 1971 BMW 2002, back in the day. )

Re: I'm pretty amazed /rant about car buying practices/

Anonymous — Tue, 19 Oct 2010 15:06:40 GMT

I drive a 2002 Saturn sl2 with 205,000 miles on it, got it in 04 with 41k on it, (was a rental) for $6995.

mine has been a dream as far as mileage is concerned, very very minor issues (couple of accidents but still purring!)

I *want* a new car so my big puppy boy weim can have some room in the back, but we're just holding off til we have a baby.

But I have AAA and a very handy husband so if it breaks down, he can fix it. I'm keeping my Sadie forever, I'm hoping to hit the 300k club.

It's so hard to not be tempted to get a new car, at least for the peace of mind. But I can do it!

But I would Love to get one of those shiny Odysseys or Sienna's...