7 Year Loans-Even Honda Agrees They're Stupid

[SteveSRT8]

Originally Posted By: SlipperyPete
Exactly. My last new vehicle was purchased with a nearly free loan. Price was just shy of 25% OFF LIST. The loan was mine, From my CU , NOT THE STEALERSHIP'S.

Very satisfactory transaction and it costs me peanuts. I'll keep my 40k working for my retirement, thank you...

You should have financed ten trucks instead. You could probably retire by the end of the month. I heard that's how Warren Buffett does it.


Luckily I did not take any of your financial acumen to heart. We run a successful business and finance trucks all the time and MAKE MONEY with them.

I'm certain you do much better...

 

[SlipperyPete]

Originally Posted By: SteveSRT8
Originally Posted By: SlipperyPete
Exactly. My last new vehicle was purchased with a nearly free loan. Price was just shy of 25% OFF LIST. The loan was mine, From my CU , NOT THE STEALERSHIP'S.

Very satisfactory transaction and it costs me peanuts. I'll keep my 40k working for my retirement, thank you...

You should have financed ten trucks instead. You could probably retire by the end of the month. I heard that's how Warren Buffett does it.


Luckily I did not take any of your financial acumen to heart. We run a successful business and finance trucks all the time and MAKE MONEY with them.

I'm certain you do much better...


I wouldn't talk about anyone else's financial acumen if I financed vehicles, especially for a business.

 

[Clevy]

Originally Posted By: SlipperyPete
Originally Posted By: SteveSRT8
Originally Posted By: SlipperyPete
Exactly. My last new vehicle was purchased with a nearly free loan. Price was just shy of 25% OFF LIST. The loan was mine, From my CU , NOT THE STEALERSHIP'S.

Very satisfactory transaction and it costs me peanuts. I'll keep my 40k working for my retirement, thank you...

You should have financed ten trucks instead. You could probably retire by the end of the month. I heard that's how Warren Buffett does it.


Luckily I did not take any of your financial acumen to heart. We run a successful business and finance trucks all the time and MAKE MONEY with them.

I'm certain you do much better...


I wouldn't talk about anyone else's financial acumen if I financed vehicles, especially for a business.


Huh?
I own and operate a construction company with up to 50 men and I can say with absolute certainty financing vehicles/forklifts/scissor lifts etc is the only way to go. Especially if the rate is 3% or less.
I write off the payments and interest off my taxes,it keeps me with more working capital which is imperative when I'm signing 100000 grand in cheques by-weekly,not to mention inflation which equates to paying less than a person who buys outright due to inflation.
You obviously don't own a business and employ people. If you did you'd realize that financing larger purchases is far smarter than paying up front simply because of the plethora of variables that make it favourable

 

[Hokiefyd]

Originally Posted By: Pop_Rivit
You fail to understand that there is no such thing as free money. It simply doesn't exist unless you are receiving a government welfare check. Somewhere that 0% interest rate is being made up and you are paying for it.


What has to be recognized here is the auto maker is offering free financing in exchange for a sale. They're not losing money on you; the auto maker offers a low rate to get you in the door and out in a new vehicle.

There are many strategies to getting free financing, as outlined previously. One of them is negotiating a cash price with the salesperson, then asking for financing after the sale is made. They make plenty of money on folks who walk in and pay sticker; a savvy negotiator can usually walk in and do very well.

 

[pandus13]

Originally Posted By: Pop_Rivit
Originally Posted By: hattaresguy
Factually incorrect.
A lot of companies like GM and Fiat for example will kick you an additional bonus if you finance threw them, on the 14 Ram's it was $500, and 0% BTW. If you write a check you don't get the $500.
I'd take an 84 month loan in a second if the interest rate was lower than 2%, they are paying me to take the money at that point.

You fail to understand that there is no such thing as free money. It simply doesn't exist unless you are receiving a government welfare check. Somewhere that 0% interest rate is being made up and you are paying for it.

On a side note, I assume you meant to say "through them" not "threw them". And I'm not sure what you are referring to with "0% BTW". If you mean "by the way" your grammar is horrid and your sentence structure so poor that it is nearly incomprehensible.

Pop, he is a businessman (under 30 i think). probably same age as your godsons. the grammar may be from typing on the phone and using the auto-correct. this means he is on a construction/reno site producing something. not sucking a welfare check...
i respect your live-debt free style, but not all of us here live paycheck to paycheck.
i would really appreciate (respectfully) if we would get the wise Pop_Rivit instead of grumpy Pop_Rivit. i was raised with "who does not have elders should buy some"[/OT]
gents, good suggestions on this thread. keep them coming

 

[SlipperyPete]

Originally Posted By: Clevy

Huh?
I own and operate a construction company with up to 50 men and I can say with absolute certainty financing vehicles/forklifts/scissor lifts etc is the only way to go. Especially if the rate is 3% or less.
I write off the payments and interest off my taxes,it keeps me with more working capital which is imperative when I'm signing 100000 grand in cheques by-weekly,not to mention inflation which equates to paying less than a person who buys outright due to inflation.
You obviously don't own a business and employ people. If you did you'd realize that financing larger purchases is far smarter than paying up front simply because of the plethora of variables that make it favourable


We get a tax break here for business equipment without having to finance. What happens to your business if you hit an extended downturn. Do you think it might be easier to stay afloat with less or no debt and your equipment doesn't get repossessed?

Every single person I know personally who said "I could have just paid cash, but I financed because of......", really couldn't afford it.

 

[JTK]

I remember when 36-48mo auto loans sounded insane. Then again, in those days, interest rates were double digits.

I really doubt Honda thinks 7yr loans are stupid. If auto manufacturers want to keep churning out profitable product, the finance word will have to keep lengthening the terms. Nothing is getting cheaper.

 

[supton]

People =/= business.

Clevy etc make more money off that equipment than they spend on it. A person spends money on a car and it... doesn't make them money. It just uses money. Clevy and Steve buy equipment which then goes out and makes money. Wild guess here but I bet after a couple of years it's made enough to pay off the equipment (they might let the loan go longer but the equipment itself has made more than it cost). And, if necessary, they can firesale it if a downturn is that bad and pay off the note and be done. Or have some amount of cash that floats them through bad times, from which they pay the loan minimum (and wages to workers etc).

 

[KrisZ]

I think business and personal finances should not be compared. These run on a different set of tax and bankruptcy rules.

Also, in my opinion, the reason these threads always run in circles is that most people look at their situations and use the logic "hey, it works for me, so it is good". What is often lost is that the majority of the American public simply does not think in the same terms we do. In essence, I think that, at least in this thread, both the pro-debt and anti-debt groups are right because they use these options to their financial advantage.
However, the general public simply does not look at debt as "free money or cheap money" that frees up their assets to be invested elsewhere. They look at debt as "yay, I can afford another brand new toy". National statistics prove that debt is, at its core, extremely bad and damaging to personal finances. Actually, it's not just personal finances, but national as well. The money we have been printing so far will have severe repercussions down the road.

 

[hattaresguy]

Originally Posted By: Pop_Rivit
Originally Posted By: hattaresguy

Factually incorrect.

A lot of companies like GM and Fiat for example will kick you an additional bonus if you finance threw them, on the 14 Ram's it was $500, and 0% BTW. If you write a check you don't get the $500.

I'd take an 84 month loan in a second if the interest rate was lower than 2%, they are paying me to take the money at that point.


You fail to understand that there is no such thing as free money. It simply doesn't exist unless you are receiving a government welfare check. Somewhere that 0% interest rate is being made up and you are paying for it.

On a side note, I assume you meant to say "through them" not "threw them". And I'm not sure what you are referring to with "0% BTW". If you mean "by the way" your grammar is horrid and your sentence structure so poor that it is nearly incomprehensible.


Do you dress up in a suite before posting? The internet is serious business.

 

[hattaresguy]

Originally Posted By: KrisZ
I think business and personal finances should not be compared. These run on a different set of tax and bankruptcy rules.

Also, in my opinion, the reason these threads always run in circles is that most people look at their situations and use the logic "hey, it works for me, so it is good". What is often lost is that the majority of the American public simply does not think in the same terms we do. In essence, I think that, at least in this thread, both the pro-debt and anti-debt groups are right because they use these options to their financial advantage.
However, the general public simply does not look at debt as "free money or cheap money" that frees up their assets to be invested elsewhere. They look at debt as "yay, I can afford another brand new toy". National statistics prove that debt is, at its core, extremely bad and damaging to personal finances. Actually, it's not just personal finances, but national as well. The money we have been printing so far will have severe repercussions down the road.


More or less, which is why I have a steady supply of renters with nice cars and lots of CC debt. Love it!

 

[apwillard1986]

It is only going to get worse. Safety and technology are great but the more of it that becomes mandated by the government the more the costs rise. Our society is spoiled by cheap, easy credit. Expensive vehicles won’t translate into less desire to replace perfectly good ones every three years. Add to that the fact that no American wants to be told they can’t (or shouldn’t) afford something. Bang! Extended term auto loans become the norm.

 

[Tdbo]

Originally Posted By: dishdude
If the manufacturer is offering 0% or a very low financing rate such as .9% or 1.9% and there is no penalty such as giving up a cash rebate in order to take advantage of that offer, why wouldn't you take advantage of that? As mentioned, sometimes there even is an additional rebate for using that finance offer.

I get your "no such thing as free money" argument, but if they aren't going to reduce the sale price of the vehicle, and the offer isn't a low APR financing OR cash rebate, why wouldn't you use their money to finance it?

Yeah it's built into the price of the vehicle, but you're paying for it even if you don't take advantage of it.



+1. Anyone with financial discipline would be stupid not to.

 

[jimbrewer]

Of course Honda thinks a seven year loan is stupid. They would like to see you back in the market every four or five years.

I'm seeing an annual capital cost of maybe 3,000, with a 2,000 down payment on a $20k car. What did you think transportation cost?

Will the car last 7 years? Almost certainly yes, even for the bad cars, given maintenance by the book.