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Credit Card Issuers Cracking Down On Consumers

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Most vehicles depreciate 60% or more within the first three years; 0% financing will never be enough to offset that kind of loss...0% makes a bad financial decision not quite as bad but it's still bad.

This isn't really related to financing. That's just the nature of buying a depreciating asset. It's technically no different than buying a refigerator...just more expensive. I loose 60% of the initial sticker price of a car regardless if I pay cash or finance it. Financing it with an interest payment compounds the loss, but the loss is still there.

This gets more into discussing the pro/con of buying new versus slightly used. Buying slightly used lets someone else take the tail-kicking in initial depreciation. Then your depreciation losses are less over time.

Car manufacturers are getting wise to the fact that people are figuring this out though. So the manufacturers have responded with extended powertain warranties that are only applicable to the 1st owner. All those cars with 5/60 bumper-to-bumper and 10/100k powertrain warranties...the 10/100k part applies only to the first owner and is non-transferrable. The second owner gets the balance of the standard warranty only.

This is ok for people who genuinely will keep the car for 10 years. But most people won't keep a car that long. So they go into a new car purchase with the mindset of protecting themselves from large car repairs for a long time, but are simply fibbing to themselves. They don't keep it long enough for the tradeoff of depreciation vs warranty to pay off.

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I sold cars for a couple of years during my sabbatical from engineering. I found that the "0%" financing had a cost to the dealership which translates to a cost to the consumer. Even if you get a discount on a vehicle and still receive 0% financing, you most certainly could have gotten it for less if you paid cash for it. That way you wouldn't be financing the 0% financing.

Of course you never tell anyone you are paying cash until you sit down to sign your documents. There is a chance that the dealership will try to offset a huge discount on the price with the commission from the finance company.

Make sense?

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This is ok for people who genuinely will keep the car for 10 years. But most people won't keep a car that long. So they go into a new car purchase with the mindset of protecting themselves from large car repairs for along time, but are simply fibbing to themselves. They don't keep it long enough for the tradeoff of depreciation vs warranty to pay off. Methuss

absolutely correct. average trade cycle in the US is currently a tad over 3 years(terrible financial move btw). chrysler initially had a 7yr/70k miles powertrain warranty but reconsidered that move and swithched it to pertain to the original owner.

and toyota does have 0%apr atm, its only for 36 months and yes you do have to be a stone cold bullet (780 plus beacon)

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I sold cars for a couple of years during my sabbatical from engineering. I found that the "0%" financing had a cost to the dealership which translates to a cost to the consumer. Even if you get a discount on a vehicle and still receive 0% financing, you most certainly could have gotten it for less if you paid cash for it. That way you wouldn't be financing the 0% financing.

Of course you never tell anyone you are paying cash until you sit down to sign your documents. There is a chance that the dealership will try to offset a huge discount on the price with the commission from the finance company.

Make sense?

sound familliar? :rolleyes::mrgreen:

oh yeah, and the "0% in lieu of rebates" is in essence the finance charge. the point where one is more advantageous than the other is depending on amount financed

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Of course you never tell anyone you are paying cash until you sit down to sign your documents. There is a chance that the dealership will try to offset a huge discount on the price with the commission from the finance company.

Make sense?

That is certainly one method. Negotiate the price and don't discuss how it's going to be paid for until the price is set.

The other methods I advise...use as situation permits:

If you know you are going to be financing then you get one of those "blank check" loans where the lender tells you your maximum and gives you a check to give to the dealer. You may or may not get a good rate from the blank-check lender, but that doesn't matter. You use that as a tool to try and get the best deal possible. You only have taken the loan if you use the check to buy a vehicle, so if you don't use it all you did is an inquiry on your report. The dealer is going to want that interest bump for themselves, so they will invariably ask what your rate you got is. Don't tell them. Just tell them to make their best offer on the financing (after you have negotiated and settled the purchase price) and if their offer is better they will get the financing part of the deal. This forces them to low-ball the financing. If they come even or close to what you've gotten or if you think they can do better you just say "That's not good enough." and let them come back with another offer. Never throw any numbers out yourself.

Another method; if you are paying cash, let them know it. Stand there with a wad of hundreds counting them out saying "I...Want...A...Bargain. Or I take my hundreds and buy elsewhere." (By the way, this works with furniture, appliances, and electronics really well, too). Cash says Finality. The deal is closed if a price is agreed on. It also says you are ready to buy and don't have to wait on some banker to bless the sale. Used in conjunction with "That's not good enough," silence, and a willingness to walk off the lot, and you will get a bargain. Again, you let them talk down the price...don't throw out numbers...They may drop the price lower than you would have started at.

Or, as I mentioned previously, if you have a good repor with your banker, get the VIN and research it. Do a CarFax report, have your banker look up the VIN in Manneheim, and have your banker tell you what the bank considers the wholesale price. Then go in and offer a five hundred to a thousand over what you now know they paid for it. If you let them believe you have other vehicles on your mind, you let them think you are willing to walk and you've made an offer they can make a profit on, but not a huge profit, they may take it.

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Well I don't believe that the dealers are doing all that great. Two Dealerships have closed down here and another Chrystler/Dodge dealer changed over to Mazda like overnight...(I am sure they had it planned for a while.) The two that went out of bussiness one was Dillon Ford..The other was Morande Lincoln...That is just in my town I live in. In another town last year a Chevy dealer shut down. These were not real small dealers either..they were not huge but they did appear to have a decent inventory.As far as I am concerned They get what they deserve. I think it is great...They probably have been ripping consumers off for 30 years or more. I was a mechanic at a Toyota dealership and I can tell All of you that the salesmen there were theives, liars, and every other name in the book. They LAUGH THEIR ASSES off to the BANK and at the Consumers all day every day. They used to come in the shop[ and BS with us all the time and tell us how stupid people are ESP> the ones who think they are GETTING A DEAL. Not to sound one sided or like a hater Us mechanics have our own gimmicks too....TRUST ME!!!! IMO the car bussiness in general is shady. Dealers are there to make as much $ as possible...bottom line.The same is true with repair shops as well.

The only dealers that SEEM to be doing ok are Hyundai, Honda, Toyota here. Oh and Subaru. I have had the same car since 1995...So I could care less. If my car dies I will go and pay cash again get another car and keep that one...so on and so forth. I do all my own repairs and could give two SH!Ts about the dealers gimmicks, or what people think of my ride. At least I live with in my means. Well thats just my 2 cents on the situation anyways. :)

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I have to agree with you on all points tommy. I'm making payments on a car now that I was originally supposed to be the cosigner on and its been one long headache. I'll be doing a payout on it next month just to get it out of the way. Every payment I make they seem to take a random amount for interest. I'd rather pay cash for a car and just be done with it. My primary vehicle is a 35 year old pickup truck that I paid $1500 for. I'll keep it a few years and then I'll get something else.

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I have to agree with you on all points tommy. I'm making payments on a car now that I was originally supposed to be the cosigner on and its been one long headache. I'll be doing a payout on it next month just to get it out of the way. Every payment I make they seem to take a random amount for interest. I'd rather pay cash for a car and just be done with it. My primary vehicle is a 35 year old pickup truck that I paid $1500 for. I'll keep it a few years and then I'll get something else.

That is what I do. I have had car loans before and I never had any money left over hardly after paying the dang payment and insurance. It works for me, but some people just gotta have a new car every 3 years or so, I dont know why. It feels good to have the titles to your cars and know that they are yours.:)

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