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I will let the others do the "real" math, but just based on current $$'s, it will take you about 90k and about 5 years just to break -even- .. the only problem is, the average buyer is trading vehicles about every 28 months.
Terry.
I don't care if the car is a Maybach 62, nobody should be able to finance a car for fifteen years!
For FIFTY YEARS!!!!
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Every lender has limits on their maximum Loan to Value (LTV). For instance a lot of Credit Unions only finance 100% and give you a super low rate. Other company's like WFS Financial will take more risk & finance higher LTV's, but charge a slightly higher rate. It's up to you what fits best.
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Priceless.
Yeah, it's the LOAN'S fault, or the BANK'S fault...
Of course the buying individual has to enter into an AGREEMENT.
This upside down epidemic has been going on for years - the main reason, of course, is two-fold - people are buying way more car than they can afford and there not setting themselves up for an equity position.
Dealer publications say that the average down payment on a car, nation-wide, is $500 - that chump change doesn't do much when you're buried in your current car and you buy another car that depreciates like a rock, then you finance it for 72/84/96 months to make it affordable - knowing good and well you'll wnat to trade it in 2-3 years. STUPID with a captal S.
The only way to overcome this cycle is to curtail your spending on other things for a while, like foregoing that new DVD player or plasma TV, in order to pay down your current loan and pay less interest. The goal is to pay the car off while it's still "tradeable" - under 100k, no major damage, good maintenance. That way, when you DO trade, it's like cash money, instead of a the typical handicap of digging yourself out of one car, only to be buried in another one.
The final goal is like my uncle used to do - he wasn't rich, by any means, but he bought a new car every 2 years and paid cash for the difference between the new one and the trade. He started off in older used cars that he paid cash for, and over just a few years, worked his way into paying cash for new cars - buy NOT financing for a long time!!! And buy not buying the most expensive thing out there so you could impress your neighbors.
Personally, I'm MUCH more impressed by someone who buys the Honda Civic they can afford and takes their family on a real getaway vacation every year, than the idiot with the new Benz and 20" rims who can't afford to take his kids to Mickey D's. And will never "own" a car until he's 60 - what danged shame.
'11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S
I can't tell you the number of people I see in my job who buy Corvettes, Porsches, BMWs, etc, who realize they can't afford the car and still get their laundry cleaned, and cry wolf, trying to make a lemon law case out of a nuisance sound or a dash rattle.
Buying a sports car that is more than you can afford, and putting little or no money down, getting unburied from one car only to get buried in the new one...is just like buying a Lexus LS430 because your neighbor has one - it's all the same, it's just that my first example (in my previous post) is much more common.
But hey, they can say say "I own a Mercedes".
First, $35,000 for a vehicle is a LOT for me. Can't see spending the money on a Porsche 911 unless I made 3 times what I make now.
I also explained my lottery dream - it isn't a Lamborghini or a Ferrari - it's 15 hot rods, like the EVO, Z06, STi, etc, that I can drive every day and wouldn't eat me out of house and home.
The luxury in that type of purchase is that I could drive a different one every day of the week, or section a couple only for competition use.
Back to reality, the Cobra is a great deal because it costs $20,000 less than a Z06, and with about $1,000 in mods, can easily bump 500 hp.
No credit check necessary because they'll sell you a $5,000 car with $4k down and 22% interest. Heck, I'd hold the loan on that!!
I didn't hear that the first time around, and couldn't figure out why they would give $8k for a car like a 1987 Taurus, until I realized they wouldn't.
AS
It says, like you said: "$8k for your trade or your first two payments on your new car."
That's $8,000 OR your first two payments - that could be no payments for 90 days, which isn't a stretch if you've got decent credit, or they discount the car equal to two payments ($500-800, big whoopee).
I find that odd since BMW/Merc/Audi all come with 4 yr/50K miles maintenance at no extra charge.
Odd ..? .. no extra charge .? .. there's nothing odd about it, Plus your paying for it in the price and definitely in the service dept ...
Terry.
It IS free up to a point, but like I said, when someone buys a used ride, they usually don't get that factory free maintenance, and they start spending money on $1,000 a set for tires, $2k for struts, $800 for a tune-up....
Lots and lots of people...I have a high school buddy with three BHPH lots in Clute and Lake Jackson, TX - he became a millionaire with no debt 11 years after starting the business.
That was 7 years ago - he's worth 4.2 now.
Thanks for the explanation.
Incidentally, just the other day I saw a "buy here pay here" lot with a sign:
"Small dealer with big heart"
and then below it, "huge collection of late model repos"...
I had a good laugh out of that one.
"The best way to get on your feet - Is "not" to make a payment"
Terry
There sure are a lot of them in this area... I was hoping the majority of them just sold used cars to people who might actually be able to afford them.
-Mathias
Size doesn't matter, when it comes to BHPH lots - it's the number of cars on the street, bringing in those weekly payments.
If a poorer person needs a car, why not just buy an older car for a couple hundred and just be done with making payments? Heck, good cars can be found if you're not too picky and take your time to look. I knew a girl who got a really nice 1988 Ford Crown Vic for a mere $800.
because people don't want to bee seen in a $500 car, they have to impress their friends and neighbors, masking their poor credit and low income -
In that light, they'll pay WAY too much for a 5-6 year old Pontiac Bonneville with 119,000 miles, drop $500-1000 in down payment, plus $100 a week, plus full-coverage insurance...
Instead of doing like I did when times were tough - buy a decent beater, save money, pay off bills, clean things up, and then buy a new car when you can afford it.
Long story, took me 6 years, but I overcame major medical problems and job loss because I didn't do the BHPH thing because I HAD to have some bling bling in my ride.
You'd better bet that if I'm in a position to do it in a few years, I'll jump into the BHPH scene with both feet and a two truck (and extra sets of keys). There'll always be idiots who have to have that nice newer car or SUV, although their credit sucks and they have low income - I'll be taking those down payments and repoing cars just like on TV.
The customer pays the repo fee (usually $250-300) that is stated in the contract, plus any payment amount they are behind in order to get the car back.
If it isn't paid, whatever the customer has paid into the car is gone, and the car is sold again.
Call Fomoco on their 1-800# and explain to them that you have that bugger sold and where might be the closest office and/or dealer to actually do the paperwork in and which office is holding the title ... like here for example "some" not all are being held in Maitland and they will send the title overnight when they receive the funds, of course you pay for it .l.o.l. .. that can be accomplished in short time if you send the funds Via wire transfer ...
I hope this helps ...
Terry.
I would like to find someone to 'take over' the payments.
Would they be able to get insurance on the vehicle,HOW?. And would I have to register the vehicle in their name?
Any help or suggesstions on the matter will be appreciated. THANKS
Also, what does that have to do with insurance? When someone does take over payments, there still has to be a a transfer of ownership... if you plan on having someone else use the car while it's still in your name, better be prepared to "take over" their driving record for a long time. Not a good idea.
Being realistic rather than helpful, I remain,
-Mathias