OT. Expensive Cars?

[Dean]

This article says Americans are having an especially tough time affording vehicles.

[hubops]

Some little yard tractors are more than I can afford :

John T.

[Dean]

My goodness, they. are proud of those things.

[rbowman]

You can buy a low hour John Deere real tractor for a lot less unless the $CDN has really went into the toilet since the last time I looked.

[Ralph Mowery]

I have said for a long time the vehicles are getting too expensive. It used to be that a loan was for only 3 years, then 4, now it can be 5 to

7 years for a loan. The interest rate is still about the same as years ago, and sometime even less or zero percent.

[Ed P]

I bought a new car in 2018. The same car today does have a few added goodies, but the sticker is $10,000 more.

I bought a new car last May. If the price had not increased I'd have bought the same thing but instead opted for something different for thousands less.

They also offered me $700 off to finance. So, I did, paid it off in three months and still came out $630 ahead.

[rbowman]

They didn't ding you with the Rule of 78 bullshit?

[Ed P]

I don't know. I used their 22k for a bit over three months and it was $68 in interest. It was worth it to save me the hassle. I'm in FL, my bank is in CT and I'd have to get a bank check, I assume.

[Ralph Mowery]

I bought a new car in 2018 also. They had a 0 % finance, so I financed it for the maximum number of years they would let me. I could have paid it off at any time but just left the money in the IRA and made money on that.

I had made a deal on the car and they tried to slip in a finance charge but I caught it. Told them it was 0% or no deal.

[Scott Lurndal]

If you'd paid cash, you could have negotiated a discount that would have exceeded your IRA earnings, probably by a significant amount.

[Ralph Mowery]

I doubt it. On a $ 30,000 car It would take a big cash discount. I doubt they would give a discount of $ 3000 to $ 5000 that I would make by leaving most of the money in the IRA over 5 years.

[Scott Lurndal]

Actually a 10% discount isn't out of ordinary for a cash sale. It costs them (or rather the finance company) to process those monthly payments. And by the fourth year, you're only earning interest on 7k not the full 30k.

[rbowman]

I did that in 1980. I didn't see a downside to GMAC giving me a Camaro for $99 down and 0%. It also would look good on my credit rating since I normally operated on a cash basis. When the hatchbacks came out in '82 I traded it for a Firebird and paid cash for that one.

[rbowman]

Doubtful. ]The real money is in the financing and a cash sale isn't attractive. I've been amused when I've told the salesman upfront it would be a cash sale and he still couldn't help himself going off on the financing spiel. I bought a Suzuki bike from the owner's son when the owner was on vacation. He had to call his father to find out how to do a cash sale.

[Colour Sergeant Bourne]

My experience is different.

When a dealer finances the vehicle, he can make more from the interest you pay over the years than he made on the actual sale.

I've had dealers make it clear to me they wanted me to finance the car with them and when I told them it was a cash sale or I was financing it with my bank, their enthusiasm for making a deal cooled noticeably.

[invalid unparseable]

Advice I am hearing is that you never tell the dealer you are paying cash until he gives you the out the door price. This is because they can make more off financing than the price of the car.

Last 25 years I got VIP deals from Subaru friend who worked for Subaru of America and did not worry about price. Last trade in I told the Subaru dealer what I expected for my trade in otherwise I would check other Subaru dealers. I got what I wanted.

[rbowman]

Exactly my experience. I don't know what the situation is today but years ago GMAC was what made money for the company; building cars was sort of a secondary endeavor to get an item to finance. It was about the same model as Epson selling printers cheaply to enable expensive toner sales. Koday did it a century ago; almost give away cameras and sell them film.

[rbowman]

Probably good advice but I'm not much of a haggler. I either like the price or I don't and I'd rather not do a bait and switch.

[rbowman]

Have you ever personally put that into practice?

[Scott Lurndal]

Yes.