New car for cheaper payment. Silly?

Discussion in 'The Okie Corral' started by Budqweiser, Oct 20, 2020.

  1. Dave514

    Dave514

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    And to add....I don't buy new cars. I get something that's got 20-40k on it and generally stick with Toyota products. That gets me a car for 60-80% of the sticker price with 80% of it's life still left. Then they become hand-me-downs. I have one kid driving an Avalon with 220k miles and another in a Lexus 350 with 240k miles on it. 1 rack and pinion and 1 AC compressor have been the only costs over the last 4 years besides general maintenance.
     
  2. syntaxerrorsix

    syntaxerrorsix Anti-Federalist CLM

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    I'd love to find a Tacoma for 60-80% off sticker with 20-40K on it. Not happening here.


    Used Tacomas might be discounted a grand or three from new prices.
     
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  3. Z71bill

    Z71bill

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    So it is sort of like Genuine imitation leather! :animlol:

    Well one thing I know for sure - 100% - when Toyota or Ford credit set up the loan on their books it will have interest factored in - when you make a payment and they record it on their books part of it pays principal and part of it pays interest. You agree with that don't you? I mean how could you not?

    Yes - Toyota (Ford) manufacturing side takes a smaller profit on the sale so that Toyota Credit can book this interest - the way the accounting rules work they must do it this way -

    I am sure the auditors at Toyota and Ford would not allow loans to be set up without interest.

    So sure - just like the free pair of shoes - you can say it is really zero interest if you want and it will say that right on the loan paperwork. But what goes on the company's books will tell a different story.

    So I will say you can look at it any way you like - just like the buy one pair of shoes and get one free - same thing really - it is just a marketing program -
     
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  4. Z71bill

    Z71bill

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    I have never bought the extended warranty - I think in total I am ahead - but once in a while I get hit - and think - I would have been better off with the warranty -

    Same thing with road hazard coverage on tires - I always decline - but have had a few tires get destroyed where the road hazard would have covered it - so that time I would have been better off - but in total still think I am ahead.
     
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  5. M&P15T

    M&P15T Well I'll Be Dipped!!!

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    We're not talking about cell phones here. We're talking about assets worth tens of thousands of dollars.

    Your thinking like an extended warranty newb. You don't buy them when you buy the car, rolling it into the financing. You buy them, in cash, just before the factory warranty is set to expire. That way if you sell the car before the factory warranty expires, you lose nothing.

    I've gotten Ford's ESP, directly from Ford in Dearborn, twice. Averaging right around $1100.00 for an additional 3 years of bumper-to-bumper coverage, on Mustangs 1 & 2.

    On Mustang #1 I used it time and time again, it saved me big $$. On Mustang 2 it again saved me some money, but only a little compared to Mustang #1. Mustang #3 I traded in before the factory warranty expired, so I never bought it.

    If I keep my current Mustang, I'll do what I've done in the past. I'll call Ford ESP with my card in hand when there's 35,999 miles on it, and get the warranty extended.

    If you do it right, it's a great financial tool. Do it wrong, as part of the vehicle purchase, and you're much more likely to get ****ed, or even waste it completely.

    This is all about knowledge, and doing your homework. Knowing how, when and from whom to buy one. Including paying extremely close attention to what is covered. If you're smart, by the time the 3 year/36K miles are up, you'll know exactly what the known issues are with your vehicle, and you make damn sure those components are covered. If need be, you get that **** in detailed writing.

    And if by the end of year 3, if it turns out your car is the epitome of reliability, and there's no known issues, just skip it altogether. Being a member of a car specific forum is key to that part.
     
  6. Dave514

    Dave514

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    Yeah, that's a problem here too because they are in the Truck category. Just about any kind of truck has a super high resale here. It's crazy. Over the last couple years it's even that way with cars if they are a Toyota or Honda. People have figured out that 300k miles with no breakdowns is pretty common.
     
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  7. Z71bill

    Z71bill

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    The way I look at extended warranties -

    On average they must be charging more for it than the expenses they incur -

    So if the extended warranty costs $1K -- and they sell it to 100,000 different people - on average the repair bills would maybe be $650.

    Some may have $15,000 in repairs, some $5,000 - but many will have almost zero $ in repairs -

    I think in this case - if you are really hard on your vehicles - or drive in very harsh conditions - maybe an extended warranty would be a good idea -

    Or if a really big repair bill would wipe you out - paying $1,000 may be worth it to avoid the possible $6,000 blown engine -


    But for most people that drive in normal conditions and have a little set aside in savings - buying the warranty would on average cost you money.

    Sort of like how big of a deductible do you want on your car insurance - or do you even want to buy full coverage?

    From memory - could be off a little - we jacked up the deductible - I think to $5K from $2.5K - and it lowered the premium almost $500 a year --

    Same thing with homeowners - we put on a $25K deductible - but in that case I think it will take more like 15 years without a major claim to be "ahead". We have been in this house for 30+ years - never had a claim -- so we are way ahead - but sometimes I think I should maybe lower it - at some point a hurricane is going to do some damage.
     
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  8. M&P15T

    M&P15T Well I'll Be Dipped!!!

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    Do your own investigation, as it's assumed you won't believe me. Ford and Toyota are the only two manufacturer's financing arms that do a genuine 0%.

    Not all the time, usually only late in the fall, but they do do a real, genuine 0% (for 72 months) where the lost profit isn't accounted for elsewhere, like by raising the cost of the vehicle, or not discounting them as much.

    Which, as odd as it sounds (at least to me), Ford hasn't done this year.

    Understand; the car buying experience is different from one part of the country to another, and one dealership to another. I myself am lucky to live where I do, where Fords are sold at the cheapest prices on the planet, including 0% on top of massive discounts off MSRP. And the 0% isn't offered across the country, only in certain areas at certain times.

    To give an example, since you live in Texas; on the Mustang forum I am a member of, we have tons of people join to ask about the prices they're being offered at their local dealerships. For whatever reason, in California they might get $1200-$1500 off a 5.0 GT. Here in NoVa, we get several thousand off in the fall. I got over $7K off (plus 0% for 72 months) my current car last fall. But in California? Nope. So lots of people in Cali buy their cars here and have them shipped across the country, or fly, buy and drive them home.

    Again, it's all about doing your homework, and also being patient. When I got my current car, I waited several months for the 0% to finally happen. Hell, I got lucky, really.
     
    Last edited: Oct 21, 2020
  9. Z71bill

    Z71bill

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    How would anyone "investigate" this?

    I think I understand what you are saying - or what you believe to be the truth. Is it really a true lower price - and I will say, yes it sure can be. It is like most marketing promotions - it gives you a break on price.

    But do you also understand that when Ford Credit records your loan - it will not be treated on their financial statement as a zero % loan?

    It will work like this - say you take out a 48 month, $500 a month 0% loan for $24,000 using Ford Credit.

    When Ford Credit makes the loan they will book it as a 48 month, $500 a month 3.0% loan for $22,589.34. I am guessing at the 3% - it could be 2.5% interest rate with a loan amount of $22,816.43 or even a 2% interest rate with a loan amount of $23,046.65.

    And when you make your first payment on this 3% loan Ford Credit will say - you paid $443.53 against the principal - reducing it from $22,589.34 down to $22,145.82 and they will also book $56.47 in interest income.

    Now you can claim you didn't really pay that interest - that Ford - the manufacturing side of the business paid it - and I would understand where you are coming from.
     
  10. M&P15T

    M&P15T Well I'll Be Dipped!!!

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    Your point above raises an interesting question;

    Would the detailed financial statements containing retail loan information be public information?

    It's been an accepted, established fact within the car-guy & gal community that Ford & Toyota were the only two manufacturer's lending arms that do a true 0%. But how would one actually know that?

    I'm guessing it's info someone that worked at Ford Credit leaked in the past.

    Anyways, call it what you will, it represents a massive discount. 'uge.
     
  11. brlfq

    brlfq

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    It's your money, spend it your way.
    Here's mine:
    - Buy a used car for $15,000 cash.
    - Liability ins. only. Saves $500 per year in ins. cost X 11 years = $5500 saved
    - Yearly taxes are less each year. $60 per year X 11 years = $660 saved
    - Repairs. $2000 spent over 11 years.
    Comparison:
    I've spent $17,000 on my car over 11 years.
    You've spent $500 per month X 11 years = $66,000. Plus you've spent $5,500 more on ins. and $660 more in taxes than I did. (I assume we both spent roughly equal money on scheduled maintenance.)
    So, $72,060 - $17,000 = $55,060 that I spent less than you did.
     
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  12. Z71bill

    Z71bill

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    There are more important things to some people than having the lowest overall cost on a vehicle.

    Some guys drink cheap booze even if they could pay more - it is not worth it to them.

    Different strokes for different folks.
     
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  13. Z71bill

    Z71bill

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    upload_2020-10-21_12-49-37.png

    upload_2020-10-21_12-50-35.png
     
  14. syntaxerrorsix

    syntaxerrorsix Anti-Federalist CLM

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    That's fine if you don't do anything but drive to the grocery store and back. If I had an 11 year old car it would have ~440,000 miles. Some of us pay to have reliable transportation. For some that's a vehicle every 4 or 5 years and VERY few folks will have cash to buy that new car every 4-5 years. That means a payment and full coverage insurance.

    It is very much situationally dependent.
     
  15. Z71bill

    Z71bill

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    Because everyone knows that car-guys are the best source of the internal financial dealings of captured financial subsidiaries of auto companies! :bunny:

    I don't have any special knowledge about Ford or Toyota - but really doubt they are any different.

    I will venture a guess about Toyota - they are known for being pretty tight with the rebates and special programs - so in the rare case where they are offing a deal - it could sure be seen more as a "real" discount - simply because they don't normally have giant rebates across the whole product line.

    Not like GM and Chrysler - they are total whores - but I sure see Ford more like GM & Chrysler - willing to do whatever smoke and mirror deal that can clear the showroom.

    I have not followed any car company for a long time - but I use to track them pretty close because I bought a lot of GMAC and Ford Credit bonds.

    Back then it seemed like the auto manufacturing -really didn't make any money - and it was the finance company that brought home the bacon. They didn't do this by making below market loans -

    But you know things in finance are now about as crazy as I have ever seen them -

    A Danish bank was actually making negative interest rate mortgages - may have also happened in a few other places - crazy.

    Take out a $360,000 mortgage for 30 years - pay back $995 a month for 360 months - only pay back $358,200 but you are considered to be paid in full.

    Tells you how manipulated the financial world is -- but it is what it is.
     
  16. brlfq

    brlfq

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    Whoa! That's about 30 days a year in your car! I hope you're getting paid while driving!!
     
  17. syntaxerrorsix

    syntaxerrorsix Anti-Federalist CLM

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    Windshield time is about half my work day.
     
  18. brlfq

    brlfq

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    That should give you a whopper of a tax write off every year!
     
  19. syntaxerrorsix

    syntaxerrorsix Anti-Federalist CLM

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    It use to until Trump changed the tax laws.

    The TCJA eliminated this deduction entirely starting in 2018 and continuing through 2025. This means that if you're an employee who drives for work you may not deduct any of your car expenses on your personal tax return. You should seek to have your employer reimburse you for your work-related mileage.
     
  20. Glock-O-Rican

    Glock-O-Rican

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    Well beware of people at the Car Dealership who do the back office work. They will try and sell you all sort of unnessary stuff to help you, protect you. Again they too work on a comission basis, if they are good salesmen, they maker big bucks.

    Remember I was going to buy a New Nissan Truck, the back office guy works so hard on me trying to sell and extended warranty. I finally said you really think I need this for another $750.00.

    He replied yes I recommend this to supplement your factory warranty. I said I think you don't make such a great vechicle, if the factory warranty is not good, and I need to spend another $750.00.

    I said I done, I leaving, I will buy something built better. That is not destined to be in the shop. I thought Nissan were dependable. NO I did not buy a Nissan.

    Went out and bought an S-10, it was dependable, never had warranty problems, and served me well for years.
     
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