@IsambardPrince wrote:
@Horseshoez wrote:
@IsambardPrince wrote:
@Horseshoez wrote:Dude, wut?
Car loans are _awful_ AWFUL, *_AWFUL!!!!!_*, when you're signing one for yourself. They are generally a very bad idea followed by intense regret. Even if the interest rate isn't an outrage, you're doing a magic trick called "Let's take $70,000 and turn it into $30,000 in four years."
If I said to people you give me $70,000 and I'll hang onto it for four years and I guarantee you will lose $40,000 and then I'll hand you back the remaining $30,000, would anyone take me up on it? But car salesmen give people the same deal every day.
Car salesman do it for a living. It's like going into the ring with an Olympic wrestler. You are going to lose.
So, why do I keep hearing about people who have a perfectly reliable older car that's paid for and they're just "tired of it" and people signing "for a friend" that was too sketchy to fly past the bank's radar themselves? It's ridiculous.
My last post, in a nutshell.
Geez, there you go putting your tinfoil hat on again; clearly you do not understand credit or how to use it as a tool to make you more money. Given your lack of understanding, you are best advised to stay away from credit until you get educated; for many of us using credit wisely makes us money. Like it or don't, believe it or not.
Loans where you owe the bank a lot more money than the car costs (Experian says the AVERAGE is 7% on a new car, and average means half are worse than that) are not a way to make money.
What math class did you attend where paying a bank 50% more than the car costs in cash while the car loses more than half its MSRP value in the same time period "makes money" for the customer?
I keep asking a very very simple question and you keep responding with insults and invective nonsense instead of an answer
Since you're talking about a vehicle losing half its value, I assume you're thinking of a 5-year loan for a new vehicle. To pay 50% over the loan amount on a five year term, you'd have an interest rate of about 17.28%. But, as you say, average interest rate on a new car loan is around 7% (it's 7.18% this month), so that amount of interest-over-term is not something most new car buyers are going to see. A loan on a used vehicle that's at least a few years old isn't going to be facing nearly as much depreciation over a five-year term, either, so what @Horseshoez got from his math classes is probably that most car buyers can avoid the kind of numbers you're talking about pretty easily.
To the question of whether a car loan "makes money": a car purcase isn't an investment, and shouldn't be confused with one. Car loans are more like a utility bill, or a payment for a service: for most people, you need a car to live your life, so it's not like you can take the money you would have spent on the car and invest it at 12% or whatever instead. If you're talking about buying more car than you need: yeah, if you bring down your purchase price by buying less car and invest the difference in what your payments would have been, that's probably a better financial move, if you have those options. But if you need a reliable car to get to work and, like most people, don't have $15-$20k in cash over and above your emergency fund, then the necessity of a car loan isn't some kind of terrible financial move--like I said in my last post, you'll probably lose a lot more money not going to work than you will to interest or depreciation.
@Slabenstein wrote:
@IsambardPrince wrote:
@Horseshoez wrote:
@IsambardPrince wrote:
@Horseshoez wrote:Dude, wut?
Car loans are _awful_ AWFUL, *_AWFUL!!!!!_*, when you're signing one for yourself. They are generally a very bad idea followed by intense regret. Even if the interest rate isn't an outrage, you're doing a magic trick called "Let's take $70,000 and turn it into $30,000 in four years."
If I said to people you give me $70,000 and I'll hang onto it for four years and I guarantee you will lose $40,000 and then I'll hand you back the remaining $30,000, would anyone take me up on it? But car salesmen give people the same deal every day.
Car salesman do it for a living. It's like going into the ring with an Olympic wrestler. You are going to lose.
So, why do I keep hearing about people who have a perfectly reliable older car that's paid for and they're just "tired of it" and people signing "for a friend" that was too sketchy to fly past the bank's radar themselves? It's ridiculous.
My last post, in a nutshell.
Geez, there you go putting your tinfoil hat on again; clearly you do not understand credit or how to use it as a tool to make you more money. Given your lack of understanding, you are best advised to stay away from credit until you get educated; for many of us using credit wisely makes us money. Like it or don't, believe it or not.
Loans where you owe the bank a lot more money than the car costs (Experian says the AVERAGE is 7% on a new car, and average means half are worse than that) are not a way to make money.
What math class did you attend where paying a bank 50% more than the car costs in cash while the car loses more than half its MSRP value in the same time period "makes money" for the customer?
I keep asking a very very simple question and you keep responding with insults and invective nonsense instead of an answer
Since you're talking about a vehicle losing half its value, I assume you're thinking of a 5-year loan for a new vehicle. To pay 50% over the loan amount on a five year term, you'd have an interest rate of about 17.28%. But, as you say, average interest rate on a new car loan is around 7% (it's 7.18% this month), so that amount of interest-over-term is not something most new car buyers are going to see. A loan on a used vehicle that's at least a few years old isn't going to be facing nearly as much depreciation over a five-year term, either, so what @Horseshoez got from his math classes is probably that most car buyers can avoid the kind of numbers you're talking about pretty easily.
To the question of whether a car loan "makes money": a car purcase isn't an investment, and shouldn't be confused with one. Car loans are more like a utility bill, or a payment for a service: for most people, you need a car to live your life, so it's not like you can take the money you would have spent on the car and invest it at 12% or whatever instead. If you're talking about buying more car than you need: yeah, if you bring down your purchase price by buying less car and invest the difference in what your payments would have been, that's probably a better financial move, if you have those options. But if you need a reliable car to get to work and, like most people, don't have $15-$20k in cash over and above your emergency fund, then the necessity of a car loan isn't some kind of terrible financial move--like I said in my last post, you'll probably lose a lot more money not going to work than you will to interest or depreciation.
I'm not calling everyone who gets a car loan dumb, but some people who do that are because they pay more for the car than its utility value and don't at least get the "least bad" loan terms they can and don't figure out who will give them the lowest insurance rate.
For some people with stellar credit who need to finance a little bit of a cheaper new Honda or something that at least will be on the road a while, and can swing it, I'm not calling those people dumb.
But it's not a way to "make money". For you, at least. 
Debt is an odious thing to get into as least and as cheaply as you can, and get out of fast. If you can't do that, don't do it.
I'm not out there running the rat race, biting my nails, missing sleep because I'm not in a position to fall off the wheel and have a bank come after my car, like most people are.
@IsambardPrince, so let's evaluate my current car loan to give the lie to your screed:
- Vehicle: Fully loaded 2022 Tacoma TRD Sport 4x4 6MT (fully loaded means literally every option available plus several post-manufacturing add-ons)
- Purchase date: October 2022
- Purchase price : $43,993.00
- Financed amount: $38,802.00
- Finance term: 48 months
- Interest rate: 2.49%
- Interest cost: $2,004.62
- Average depreciation after 48 months: 27.51% (source: caredge.com)
- Imputed residual value after 48 months: $31,890.53
- Interest paid as a percentage of purchase price: 4.557%
So:
- Distortion/Spin/Lie 1: "What math class did you attend where paying a bank 50% more than the car costs in cash..."
- Last time I checked 4.557% is less than a tenth of the 50% you stated; what math class did you attend?
- Distortion/Spin/Lie 2: "...while the car loses more than half its MSRP value in the same time period..."
- Again with the math, the average depreciation on my car is just over half what you stated; I don't believe I've ever owned a new car which lost that much value in such a short period of time.
- Distortion/Spin/Lie 3: "But it's not a way to "make money". For you, at least."
- Make money is a relative term, I was going to buy the vehicle one way or another so the money was going to get spent one way or another; my options were:
- Borrow the money at 2.49%
- Take money out of a high yield savings account earning 4.25%
- Take money out of my investments earning about 10%
- So yeah, I'm "making money" by not reducing the earnings potential of the money I have saved and invested.
- Make money is a relative term, I was going to buy the vehicle one way or another so the money was going to get spent one way or another; my options were:
- Distortion/Spin/Lie 4: "Debt is an odious thing to get into as least and as cheaply as you can, and get out of fast. If you can't do that, don't do it."
- Debt is only "odious" if you don't understand how to leverage credit properly; in your case it is clear you don't understand it, so clearly your best option is to avoid it.
- In my case I currently owe $22,281.62 on the Tacoma; there ain't no way in hell I'm going to try and get out of debt one day sooner than the original termination date of the loan.
- Distortion/Spin/Lie 5: "I'm not out there running the rat race, biting my nails, missing sleep because I'm not in a position to fall off the wheel and have a bank come after my car, like most people are."
- Measuring everyone else by your yardstick is a fool's errand and you'd be wise to avoid doing so in the future. Yeah, there are folks out there with low paying jobs with high interest loans on $70,000 vehicles, but I do not believe they are even remotely "most people".
You have proven once again you don't understand money or credit. 'Nuff said.
@Horseshoez wrote:You have proven once again you don't understand money or credit. 'Nuff said.
I'm not the one cutting my "investment" in half by driving something that's getting door dinged at Walmart.
It's a car. Drive it and don't pay the bank anything.
Anyway, I guess I'll just have to go cry into a pile of money I didn't stupidly donate to a bank and an insurance company. C'ya!
"(fully loaded means literally every option available plus several post-manufacturing add-ons)"
It means you donated them another several thousand dollars on a car that will wind up at the crusher eventually. "Fully loaded" can mean things like the dealership installed $10 rubber window trim from Amazon and charged you $595 for it these days. Seen Ford dealers doing this.
How much is a $595 plastic trim with interest to the bank? Still "making more money", yes? Taking an entire paycheck from you for $10 worth of plastic. Someone's "making money", not you, but someone.
I miss the $2,000 rustproofing then the car strangely rusted out anyway. Do they still do that in a "fully loaded" car? Probably $5,000 by now.
Instead of donating my money to them on an "investment" that halved, I practiced the art of manlihood and just work on the car sometimes with auto store parts. Ho hum.
The only thing better than not donating your money to a group of pirates at the bank, dealership, and insurance company and still having the money is making additional earnings on the money, which you still have.
Poor people often got that way by developing expensive habits. Financing them with Added Pain and Regret. (APR)
Also, speaking of insurance company scum, a lot of them are starting to slip in language that says after an uninsured driver slams into your expensive car, your uninsured motorist coverage only kicks in if they're ever identified. So good luck with that if people are anything like the "Temporary Visitor" Driver's License people in my neck of the woods. 20% of the people out there will have no insurance and panic and flee the scene.
You know how things are with the entire country falling apart, the police don't care enough to figure it out so this is another way having an expensive car loan can end poorly for you.
It wasn't a plastic engine like your Toyota so it was mostly just a gasket set and some RTV sealant. You know what metal is, don't you? The stuff they don't make car engines out of much anymore. Probably got one of those "fully loaded" plastic oil pans. I hope you don't ever find out what a rock can do to one of those.