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Purchasing Strategies - Questions & Success Stories
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They sound like people who probably overpaid for theirs car in the first place, may have had loans based on the Rule of 78 (definitely a bad thing to have in these circumstances), and then failed to haggle with their insurance adjuster about the appropriate value. (I would insist on getting full retail KBB, no matter what.)
Sorry, but these horror stories are going to be the rare exception, not the norm. For most people, such an insurance is a waste of money. And they will reduce their likelihood of needing it they negotiate effectively in the first place, and pay as little for the car as possible.
I disagree. A lot of people who are upside-down just made poor buying decisions: they "had to have" the leather and sunroof, or they got bored with their car after a year or two and traded it in on a new model, or they put nothing down and financed over 7 or 8 years. These are all potentially financially bad decisions and for many they come back to bite them. Overpaying for a car doesn't necessarily lead to being upside-down if you put enough of a down-payment on it.
Loans based on the Rule of 78? I doubt that's very common. Being upside-down, however, is very common. I think I read a statistic stating that around 20% of car owners are upside-down on their rides. Hard to explain away with bad dealer tactics - I think some people need only look into the mirror to spot the major problem.
Gap insurance will make no difference to the consumer who wants to trade in his car with an upside down loan. Most policies provide coverage only if the car is totaled in an accident.
The Rule of 78 is permitted in most (not all) states, and federal law only prohibits its use for loans of over five years, so it is certainly something to watch out for.
And given that many people don't negotiate their car purchases, or don't negotiate as hard as they could, then they contribute to their lack of equity by overpaying. If they paid less, they would have equity or a smaller shortfall.
The issue is what the likelihood is of having a car totalled (not just wrecked, but totalled) during a period in which the equity is negative. I'd say those odds are very low, particularly if the price is well negotiated.
And if the consumer really wants gap insurance, they can buy it independently from an insurance agent, rather than from a dealer. If interested, it would be worth shopping for this before buying the car.
It doesn't matter if you can out negotiate Herb Cohen and get that car for 2k under invoice if the car you are trading in is 5K under. Just think of the guy who bought a Mazda with zero down and no payments for 1 year and decides 18 months later, its time for a new car *bobble*
Before, I discovered that Honda had GAP built into thier leases I called my insurance agent to discuss the cost with him.
I am a believer you should not put any money down on a lease. And if 6 months down the road I totaled the car, or someone else totaled it for me, I would still be liable for another 24 payments? And who knows what my insurance would cover, but my guess is I would be sent a bill.
The quote I got for GAP on my lease was $60, I cant remember if that was for 6 months or a year. But even $120 is cheap insurance for 1 or 2 years.
Ok, lets not even bring up whether someone should be buying a certain car or not, but I think anyone who is putting less than 10% down or is negative should go out and shop a GAP policy.
And remember, it is not like you have to keep the policy for 5 or so years. Each year someone should evaluate how much they owe and what the insured value is and make a decision accordingly.
If that GAP is more than $1,000 I think a GAP policy is a nice insurance idea. Sure you can say, what is the likelyhood you are going to total a car its a waste of money? Well, you could say that about life insurance as well, couldn't ya?
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We see people that have previously rolled negative erquity in a loan, and then are upside down on their current car and trying to roll the negative from that loan also.
Some people think that they just sign a 5 or 6 year deal and then after 3 years wnat to trade. For Hondas the 3 year deal hasn't been much of a factor, but for any domestic it's a kiss of death.
Sorry, but these horror stories are going to be the rare exception, not the norm. For most people, such an insurance is a waste of money. And they will reduce their likelihood of needing it they negotiate effectively in the first place, and pay as little for the car as possible.
This topic has nothing to do with how good of a negotiator the owners were... Even if they did get an extra $1k, would it be that big of a deal when you're talking thousands? Sure, they rolled in a ton of negative equity, but that is not for you to judge. Sure, it probably wasn't a financially-sound purchase, but that is not what this story is about. We're talking about GAP, not making a smart car purchase. Please stick to the issue.
When it comes to insurance, you have to weigh the two options: purchased-insurance vs. self-insurance. This principle goes for anything... not just cars. If you just don't have cash sitting around to self-insure yourself against a total loss or ultimate disaster, and the amount required would put you in serious financial straits, then it could be a wise move to purchase insurance, especially when someone financing a car, for example, can also include it in their financing.
If you've got a butt-load of cash sitting around that you'd be able to tap into if such disaster happened, then the insurance probably isn't worth it....
socala4: Let me ask you.... Do you have medical insurance? Homeowners insurance? I would guess that you do, since most people don't choose to not have those.... What's the likely hood of having a terrible illness that puts you in the hospital for weeks? What's the likelyhood of a tornado/hurricane/earthquake/etc destroying your house? None of these is particularly likely (varies depending on what you do for a living or where you live), but that's the point of insurance.
Many people pay thousands of dollars in medical insurance premiums (sometimes more than auto insurance) every year, but then never require any serious medical attention? I guess you feel we should just self-insure ourselves for everything, huh?
Of course it does. If you overpay by $2,000, then you've just created a $2,000 gap that you might need to fill. That's a very obvious point -- making the gap as small as you can by paying a lower prices reduces the likelihood of insurance being needed to fill that gap.
Gap insurance doesn't cover trading in the car just for fun. The car needs to be either totalled or stolen for the gap coverage to kick in. That won't happen to a lot of people.
I wouldn't put medical insurance or homeownership in the same league, because both create disastrous consequences in the worst case scenario, which can be significant. (In the case of medical issues, the worst case scenario can be in the hundreds of thousands of dollars, with no caps.)
Let's put this in perspective: the gap covers only the gap of negative equity, not the entire value of the car. On a $22k car purchased at $20k with the use of a $17k loan, guess what -- the gap is pretty small, if it exists at all. (Based on KBB used retail, you might even have equity, at least on paper for the purposes for fighting with an insurance company.) Nowhere near the $5-10k figures being tossed about on this thread.
If you want to buy it, that's fine, and Golic is right that without a down payment on a lease deal, it makes more sense. But with many people making a down payment or a trade at purchase time, this is not going to be an issue for most people, particularly if they buy the car at the right place in the first place, and don't get nailed on their trade in.
With a lease I would consider GAP almost mandatory, since the goal should be to put nothing down.
Many, most ....? .. and what planet might that be..?
"Most" (not all) buyers put little or not money down, "most" (not all) don't put enough $$ down to cover their taxes and fee's ... let alone sucking up the first $5,000 or $15,000 of depreciation that the vehicle will incur when they drive over the curb, and that's just about every vehicle (not all) - anything from a Hyundai to a BMW 745i --- and we aren't even talkin' about their trade that was $3,000 in the bucket before they got to the dealership ...
Whether they buy it at the Credit union down the street, the dealer they bought the car from or Uncle Al's Army & Navy store, Gap insurance is CHEAP money and great protection ... because "most" people (not all) are flipped in their vehicle ..
If they never use it, fine, they dropped $150/$200ish for "just in case insurance" .. but it's needed every second of every day if someone even "thinks" they're rolling sideways .... besides, nobody has a crystal ball in their glove box and they don't now what their vehicle might be worth in 25 or 35 months ...
Saying it's not needed is like saying .. "I don't need Flood Insurance, because the flood zone starts across the street" ..... well 500,000 of those 750,000 people lived "only" across the street from the flood zone -- and we can see what happened to them .... that was the cheapest $200 insurance policy "They Wish" they would have bought ..... the price of the vehicle is important, but stop and think about it .... if you pay $300 less than everyone on the planet and you're still $5 grand buried, then it really becomes a moot point ....
Back to the rule of 78's .... those contracts have been dropped by 99% of the lenders and state laws, dealers haven't had one in 7/8 years, maybe even longer ..... we really need to get you out more ....
Terry.
Seriously, though, I can think of many cases where gap insurance is useful...When I bought my ford taurus, I was upsidedown by $800 when I sold the car....after more than 4 years into a five year loan. If I had totalled the car at one year, I would have been in a boat load of hurt.
When I totalled my 6 month old SAAB, the only thing that saved me is that ins. co. gave me a rediculus value (6K more than I paid).
Now, with my current rides, I put down 6K each. I currently own an '02 Sienna that is worth about 11 to 12K which I owe 6K and an '05 forester that is worth about 20K that I owe about 16K on.
Gap ins would not help me know.
It is not something you have to keep for as long as you own the car. Perhaps, after 2-3 years, you will be in a better postion.
One thing to keep in mind is that the median US household income is about 44,000. So that $1,000 gap is HUGE money to most americans.
As for your explanation of medical insurance, how much do you pay for medical insurance? Is it a one-time payment of $300? Oh yeah, probably not...... You pay A LOT more for medical insurance, because the potential cost is a lot higher.
As for "$5k-$10k numbers being tossed about", that is a pretty common amount for people to be upside-down.... You are using one example where someone put at least $3000 down on a $20k car. That is not reality for most people.
I think we've figured it out.... You don't need GAP, socala4. Fine. But, guess what? You seem to be the only one that seems to think that nobody needs it. That's because there are some people that should get it and do need it.
I will repeat the short version to show a point.
This customer had a 2004 Tahoe that she bought about 18 months previously. It was a very nice vehicle actually but it was a domestic and they gave their cars away for the past two years. It only had 20,000 some miles on it and she had 0% intersest loan for 60 months. She bought the car cause she really was tired of her old car and wanted something with good four wheel drive to get her to her job. I don't remember her exact job but whatever it was she always had to be there no taking snow days for her or something.
Her commute was kind of long and over lots of twisty mountain roads that were not plowed well so the her idea was somewhat sound. She was a couple of thousand dollars upside down on her trade but she figured rolling that into a 0% interest loan on a car she needed anyway was a good idea.
Six months later she changes her job and cuts her commute by 70 something percent so she is putting no miles on her new Tahoe. She is also driving the other direction. She isn't going through twisty curvy mountain roads but mostly straight roads.
Flash forward another 12 months and she is really disapointed with the Tahoe and she doesn't really need it anymore. She doesn't want something so big anymore that is so clunky to drive. Also with her new job being so close she can finaly lease a car and keep the mileage down easily. She knows she is somewhat upside down because of how the domestics gave their cars away but not sure how much. She has a few thousand to cover some of the upside down and wants to lease a LR3 which would drop her payment by a 150 bucks.
We had a very special V6 LR3 that was a former service loaner and the last 2005 LR3 we had so we could sell for less then 35,000 dollars and the original MSRP was 45,000 dollars. Normaly we couldn't lease her a LR3 for 150 bucks less then her note on the Tahoe but this service loaner let us do that.
The problem is that she is over 11,000 dollars upside down in her trade. Even with zero percent interest she is completly screwed. If her Tahoe was totaled no matter what "book" you use she is gonna owe thousands of dollars.
We tried to make it work and although we could bury the 11,000 dollars in the LR3 lease because it was a service loaner she didn't want to bury that much negative equity in the new car. That and it would have made her payment hundres of dollars higher then her Tahoe payment. So she is just gonna wait another year or so and hopefuly be closer to right side up next november/december when we will have another one or two LR3 servie loaners.
Just to put my two cents in, in the past I usually was upside down on my car loan for most of the loan term. Not because of paying to much or made a poor buying decision. But because I put a boat load of miles on cars. One year I actually put 60k miles on a car. Hard to keep right side up in cases like that.
Loans based on the Rule of 78? I doubt that's very common.
Its not common at all, FWIW loans based on the rule of 78 usually are given to those with bad credit.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
My sister and BIL have a GMC Yukon Denali. Bought it new a couple of years ago for something like $50K - they traded in a pefectly serviceable Odyssey on it. It has low miles since my sister works from home and all the major stores are close by her house.
Well, she wants to get out from under the gigantic payments and get into a lease of something affordable - she's thinking Acura MDX. Turns out she owes $35K on a truck that is worth high 20's at best on a trade in, and maybe $30-31K if she tries to sell it privately.
Needless to say, she's got a "For Sale" sign on it and has had no takers in the past month or two.
As if that wasn't bad enough, she lives in San Diego, where 12MPG gas guzzling full-size SUV's are a dime a dozen and everyone who wants one has one.
Good luck, sis.
She paid 41k-42k for the Tahoe about 18 months ago and owes 33k. The best we could do on the trade side was about 22k of real money. Yeah we could have inflated that 22k to 33k given her no discount on the new car and used all of the 2005 plus retired service loaner rebate money to pay off her trade but then she would be buried so far into the lease it is not even funny. Her payments would have sky rocketed too.
You're approaching from a dealer's standpoint buying a trade-in, who will likely offer to trade the vehicle at some thousands of dollars below KBB wholesale.
In contrast, a good haggle with the insurance company for a settlement should yield a price close to KBB retail. That would be my number to use in a haggle with an insurance company, as I would argue that I would need to pay retail to replace my car with a used version of same. Of course, the insurance company will try to argue for less, but I'd be a fool to let them get away with paying me something well southbound of wholesale KBB, as would a dealer with a trade.
So you're comparing apples and oranges, the two figures are literally thousands of dollars apart. Not even close.
Consumer groups advise that gap insurance be used only if the loan amount exceeds 80% of the value. Between negotiating the price well below MSRP and putting up a down payment or trade to reduce the amount of the loan required, you've more than covered that 20% gap in many cases. People who overpay for their cars and borrow too much will likely need it, but I would suggest that people who go that deeply into hock just to buy a car probably are buying too much car, and should be purchasing something more within their budgets.
And in any case, for those who want it, gap insurance should be shopped first as an add-on to your auto insurance policy. All things being equal, I'd rather make a small monthly payment on it than prepay it as a large lump sum, as would be necesary if you bought it from a dealer. You'll probably get a better deal buying it from an insurance agent, anyway.
KBB is only a small part of it .. it's just one of many info sources that a dealer will use because sometimes they are close - and sometimes not ... the dealer will look at the Black Book, Nada, maybe Galves if they live in the extreme NE and the KBB .. but most important, they'll look at the "auction reports" ... and depending on the vehicle, they'll want to be at least $500 back of those figures ....
Why would a dealer put "X" amount of dollars in a vehicle based on KBB info when they can purchase the same vehicle for less $$ at the local auction.?
You kinda forget .. KBB and the other sources are just a ballpark, a zipcode, they can only give someone an "idea" of what a vehicle is worth .... you can haggle til' the second coming of Jesus, but if KBB shows $10,000 and they're only doing $9 grand at the auction, then you'll be "haggling" with yourself after a few minutes ..l.o.l..
>>>**Consumer groups advise that gap insurance be used only if the loan amount exceeds 80% of the value...**
Good .. then let those "consumer groups" pay for the consumers negative equity when they go to trade in 28 months .l.o.l... ..... advise is always helpful when it doesn't effect *your* wallet.
Terry
When I go to a dealer, he can offer whatever he wants to offer. I expect him to make me offer an offer well under wholesale KBB, because that's how car sales work.
Gap insurance is to cover the gap that comes from the value assigned based upon my auto insurance policy and the loan payoff in the event of theft or a total. Unless I'm a dolt and don't understand the definition of "bad faith", the insurance policy is going to pay me retail because my policy covers me for the retail replacement value of my car, which is defined as what I (the little guy, not a dealer) would need to pay to replace it with a used version of same.
Those two figures are completely different numbers. The insurance adjuster will, after negotiation (see, you can negotiate just about anything), settle at a number at or close to retail KBB. That's why I paid those premiums for all those years.
As you've just admitted, you're several grand below retail, the amount the insurer is bound to pay me thanks to my policy. When it comes to my insurance policy coverage, your low-ball trade-in number is irrelevant.
I agree with golic in that GAP insurance should be looked at as something along the line of an ext. warranty. In reality, it's an ins. policy that buys you peace of mind.
I also agree with socal4 in that "most" people don't need it. I would fall in to the group that is upside down the moment I buy a car as I put as little down as possible. But if I had an accident and had to write a check, no big deal.
Even in a worst case scenario with the 05 Civic I bought last year, I could handle it. But if it was a Ford Taurus.....YES, I would have bought GAP. But I'm also not stupid enough to buy a Taurus either...LOL
There is such a thing as purchasing too much insurance, or unnecessary insurance. Playing on peoples' fears is not a very nice way to do business...or it shouldn't be, anyway.
This has nothing to do with disagreeing with salespeople.... I'm disagreeing with you and I'm not a salesperson.
My point is that all insurance is good for some people. Meanwhile, you state that GAP is only good if you suck at negotiating and make poor financial decisions. That is just ignorant.... It has nothing to do with a salesperson's point of view. It has to do with most people in this country not putting down 20% or wanting to trade out of their cars before the loan is paid off or etc...
True that these aren't the best long-term financial decisions. But if that's the case, then the only decent financial decision would be to buy a $10k car for cash and keep it for 20+ years and run it until it runs no more. How many people do that? There's a difference between ideal utopia and reality. Since most people live in reality, GAP insurance is there to cover those people's butts.
I think we've all agreed that GAP isn't for you. But it is completely ignorant to think that no one needs nor should buy GAP.
When did the term "most" become equivalent to "no one"? If you put little or nothing down, don't haggle, and buy cars that depreciate very rapidly, then you are a good candidate, but the consumer who trades in or makes a decent down payment doesn't fit in those categories. Yet do you think a dealer would discourage such a customer from buying a policy?
And in any case, you can buy gap insurance on monthly payments from insurance companies, generally at lower prices. No need to get it from the F&I guy, a fact overlooked by the salespeople on this thread.
"these horror stories are going to be the rare exception, not the norm" -- Sorry, maybe I shouldn't have said "no one." An exaggeration for sure, but your statement makes it sounds as though it's like a one-in-a-million or something....
I went back and read through your posts, and I've realized what has really irked me about your posts. It's the condescending attitute toward buyers that don't buy like you. It's the condescending attitute toward people that want to trade in cars that they are upside-down in or not put a lot of money down. Saying that "it's their own fault" and "they do it to themselves." These people are not idiots (in most cases), and it just comes off as real snobbery to talk about many car buyers that way.
Buyers should pay attention to the pitfalls, rather than assuming that they are being given objective information that serves their needs. Don't expect a salesperson to give you objective advice when his goal is to increase his commission, a mission that generally comes at your expense. But feel free to do as you like, that's your choice.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
It might help to know that Snake has advised people here that invoice prices aren't relevant (despite the fact that's what Edmunds provides for a living), and that he doesn't negotiate many of his own car purchases "because they feel right". Given that philosophy, I can see why he'd agree.
I would agree that leasing is a different matter, given that the down payment is low and the relationship with the lessor makes things stickier if there is a total or theft. I am focusing my attentions here on purchasing.
Actually I have advised people that the relevant thing is what are people actually paying for the car. You should find what the car is actually being sold for and work from there. Knowing the invoice is meaningless if you don't know the market.
and that he doesn't negotiate many of his own car purchases
I have negotiated all but one of my car purchases, and that one was a special case.
I only agree because he is right.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I am talking about the payments to your insurance agent. Most agent will bill you in either 6 month or annual installments.
If you pay your insurance payments monthly, most agency's will "add" a fee for that feature which can end up costing you more.
To extend this convo "If" I were to purchase a GAP policy I would want an annual policy so each year I can review where I stand. I am not sure how the dealers sell it, but I would not by a 3/4/5 year policy that gets financed into the policy.
My insurance company waves that fee if you have the monthly payment withdrawn from an account.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Let me rephrase -- on an auto policy, you are generally going to be able to change coverages mid-stream, and then either add to your premium or receive a refund/ credit based upon that change. If you want to add or take away gap on a policy that offers it, you are free to do so as you monitor your rate of depreciation against your balance. So there's no need to buy from it a dealer, when you may find that you didn't need it at all or as your equity position changes.
And the trade-in value isn't relevant, because that's not what you'll be paid by your insurer. The retail value is obviously going to be higher (otherwise, how would dealers ever make money?)
As for GAP if you buy it out right then you can for the most part do whatever time span you want but if you roll it into your fiancing of the car then I think you are limited to what terms you can choose.
I don't do F&I though so I might have some of the details wrong.
Saw a story about a "person" in Chicago. His Range Rover went off the road and plowed into a Metra train station, took out a barrier and took down a brick wall.
The car still looked great and the guy was awol, so he obvioulsy survived. Quite the impressive strength of the vehicle. Although don't call marketng yet, a metra employee was critically injured when the wall came down on her.
Also the ticket agent in the building was killed.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
True, but I think you're failing to take into account the usual type of buyer who would need GAP (snake and his 60K per year being another story). This type of buyer is only interested in their payment, not in the total transaction price. Instead of paying $100-200 all at once to their insurer, they can roll the $300-500 into their financing at the dealer and it work out to "only" about $7 more per month on their monthly payment. Wow, throw it in, it's only $7 compared to what my insurance wants! lol
Well, now you've exposed me. One of my objectives here is to get consumers to STOP thinking like payment buyers, and get them to focus instead on price and terms.
A loan payment is not magical or mysterious, it's based upon a formula that includes (a) the amount borrowed, (b) the interest rate, and (c) the term of the loan.
Change any of these numbers in the right direction, and your payment goes down.
-If you get a better price for your trade-in, you need to borrow less, and your payment goes down.
-If you pay less for the car, you need to borrow less, and your payment goes down.
-If you reduce your interest rate, your payment goes down.
The best approach is to do the best that you can with all three of these terms, and then once you've done this, get the shortest loan term that you can afford (unless you have some cut-rate financing available that makes stretching the term attractive.)
A dealer will tend to get you to focus on the payment, which can be lowered by increasing the term, while packing the other numbers so that you end up with too high of a rate, too high of a purchase price, too little for your trade, or a combination of the three.
That's why you should negotiate trade and purchase seperately (maxmize the former, minimize the latter) and get the best loan terms you can -- once you've done that, you will have the lowest payment possible. The whole "it's only twenty bucks a month" mentality is exactly what gets consumers to overpay in the first place, and a dealer will oblige this impulse if you let him.
Some where on the net there are some pictures of a Range Rover that was used by the Manchester, UK police after it ran off the road. It landed upside down, lawn dart like with the roof against an embankment. Didn't even look like it was damaged really and from what I can tell they just winched it back onto the wheels and drove off.
Salesman: What do you want your payments to be.
Me: I know what my payments are going to be -$300.
Salesman: How much are you going to put down?
Me: I'll tell you after we negotiate the car.
Salesman: I need to know that now, so I can see what we can do.
Me: Let me explain. My bank has offered me x% for financing. I want my payments to be $300. So, lets negotiate the car and whatever the difference is I will put down with a check. So, lets not even discuss payments and can we focus on the car. How bout I buy the car for X?
--Salesman leaves - and comes back--
Salesman: We can get you $351 with X down.
*headshake* How much for the car?
Salesman: It comes out to $351 with X down.
Me: Goodbye.
We cringe at payment buyers, but there things as payment sellers. I really dont even think he knew what he was doing.
I have been looking at the Subaru Tribeca since they came out last year. I was just waiting for the right time to jump in, and it happened to be this week.
I did my research, and came up with a target price of $31,900 for the Tribeca, and $8,000 for my trade, a '99 VW Passat. I had already done two test drives at a different dealer. I went to the dealer nearest my work yesterday on my lunch hour, alone.
Got a nice, young sales guy, he's selling cars for a few more months, then going to law school in the fall. Anyway, they took my VW around for the inspection/pricing. Then the salesman came back with $32,655 (MSRP was $35,569), and $5500 for my VW. I told him the prices I wanted above, and he went back to the manager. He came back with $7000 on the trade. I said I was firm on the $8k for the trade. He left for the manager one last time, came back with $32,855 (then deducted the $1,000 dealer rebate from Subaru I informed/reminded him about to reach $31,855) and a trade of $7800, and I accepted! (I figured the $200 in Subaru Bucks I gave them towards the down made up for the $200 shortage on the trade)
I completed a credit application and left. Last night I went back in with DH to go over the car, etc. I qualified for the loan alone - I went with 48 mo. @ 3.9%.
It was an extremely pleasant experience, and it was because I was prepared, and kept my cool. I liked the lunch hour thing because it was a slow time for them, and I had a good reason to bail fast if I needed an out. Thank you Bobst (and socala4 and Jenn) for the recent postings and confidence building!
I would have said zero.
As long as you had financing from the bank this was a cash sale as far as the dealership would be concerned.
We cringe at payment buyers,
Unless you have the cash to buy a car outright without financing your a payment buyer. Just that some do it differently than others.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Yeah, prolly on point one. But I was young and dumb then, today..I am just dumb. *sigh*
First of all, Edmunds is here to help the average car buyer, who has an average job, who makes average income to make smart purchasing decisions.
Although, many of your posts are helpful and insightful, I do not think everyone who pays more for a car than you do, got a bad deal.
AS for GAP Coverage. I SELL CARS AND I PUT GAP ON ALL MY CARS.
I did not pay too much for my truck and I have GAP. I have a 2003 FORD F-150 XL. The sticker was $19100.00. I put $1700.00 down and only financed 13000.00.(X-Plan) I owe about 8500 and its worth about 6000. I live in Downtown Dallas where either people drive horrible, or drive horrible with no insurance. So yes I carry GAP.
In a market where 60% people trade in their cars 48 months into 60 months there is negative equity unless you put a considerable down payment in excess of 30% down, and are in a product that has above average resale. (Certain Honda, Toyo and German Products) But most people do 0 down and say "roll it into the next note". It has nothing to do with poor negotiation.
Even if people in are in a good equity position, GAP covers your deductable also, so if you have a $1000.00 deductable, that is a nice out of pocket expense avoided if your car is totaled.
GAP gives you peace of mind, if you total your car most likely there are other issues at hand (Injuries or death) so you are not spending time haggling with and insurance companies.
You are not in the industry, so please do not speak of what you do not have full understanding.