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Average auto loan now over $30k

fsanford said:
Guess 2nd misses Knapp had like a 400 credit rating. 10% yikes...
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No. It was basically the unsecured rate. Her credit score/rating is pretty good. She's since refi'd the note, but it's a mistake that won't be made again.

But...that Toyota loan is pretty effing predatory. Would love to meet that sales guy/credit manager
 
Must stomp out the savers and cash only types! They upset the echo chamber I’m working to create here!!

Not speaking to anyone specifically but I know when you’re ******* money down your leg on depreciating assets and have little to show for it in the bank, it makes you feel better when you find others doing the same thing. Contrarily, it is upsetting when you discover that not everyone conforms to the indebtedness “normalcy” that you’ve been fed by the culture.

If it makes you feel better, a lot of us learned the lesson over time. Many of us were where you were at one time too. The question becomes -- do you continue this way and thus risk being a job loss or family tragedy away from personal bankruptcy or do you change and start to take control of your own destiny? Sorry to say, the shiny new expensive vehicles tend to be towards the end of that journey, not all along the way.
 
capitalcityguy said:
Must stomp out the savers and cash only types! They upset the echo chamber I’m working to create here!!

Not speaking to anyone specifically but I know when you’re ******* money down your leg on depreciating assets and have little to show for it in the bank, it makes you feel better when you find others doing the same thing. Contrarily, it is upsetting when you discover that not everyone conforms to the indebtedness “normalcy” that you’ve been fed by the culture.
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Do you buy any food other than ramen noodles? Because you are wasting money if you do because you could be saving it.

Do you go to restaurants or bars? Because you are wasting money if you do because you could be saving it.

Do you spend money on vacations? Because you are wasting money if you do because you could be saving it.

Do you have a car that isn't old with 100,000+ miles on it? Because you are wasting money if you do because you could be saving it.

Do you live in a big house? Or god forbid you rent? Because you are wasting money if you do because you could be saving it.

Look, I get what you are saying. And there is certainly a middle ground. My whole point is to enjoy life, enjoy your money, etc. That doesn't mean going out and buying a $35k car when you make $35k per year. But if you can afford the car among all of your other finances, then buy the damn car if it makes you happy. But do it all sensibly.
 
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capitalcityguy said:
Must stomp out the savers and cash only types! They upset the echo chamber I’m working to create here!!

Not speaking to anyone specifically but I know when you’re ******* money down your leg on depreciating assets and have little to show for it in the bank, it makes you feel better when you find others doing the same thing. Contrarily, it is upsetting when you discover that not everyone conforms to the indebtedness “normalcy” that you’ve been fed by the culture.

If it makes you feel better, a lot of us learned the lesson over time. Many of us were where you were at one time too. The question becomes -- do you continue this way and thus risk being a job loss or family tragedy away from personal bankruptcy or do you change and start to take control of your own destiny? Sorry to say, the shiny new expensive vehicles tend to be towards the end of that journey, not all along the way.
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Actually, the mockery you think you're experiencing comes from the fervency that you Ramsey guys have as you push your beliefs on people.
Believe what you want. Nobody really cares either way. Instead of pushing it at people, let people ask for the advice. Then you have a welcome audience to share that message.

I don't care what culture says or doesn't say. I'm just going to do whatever fits for me. Be angry and defensive if you want. That's all up to you.
 
cycloneworld said:
Look, I get what you are saying. And there is certainly a middle ground. My whole point is to enjoy life, enjoy your money, etc. That doesn't mean going out and buying a $35k car when you make $35k per year. But if you can afford the car among all of your other finances, then buy the damn car if it makes you happy. But do it all sensibly.
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speaking as someone who drove a kia rio for over 10 years, I can understand the philosophy of not spending a ton of money on a car. However, it's important to enjoy life while you're saving up for that rainy day.
 
farminclone said:
I am guessing that most would spend less on cars if they had to write a check out for the entire purchase, rather than financing over 5 years. Most would look at the $35,000 in their bank account, say they worked too hard for that money to let it all go on a car, and look for a car in the $20,000 range - just my hunch, not scientific.

$583/month on a car - glad it is him and not me!
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Well, my wife's car. Mine was maybe half that much, but I have the daily-dad-driver, and she has the school bus, so to speak. My point was, we knew our budget, we knew how much vehicle we needed, and when I had the opportunity to take a long no-cost loan, I didn't hesitate. Just because someone has a huge and/or long auto loan doesn't mean they're a financial dunce... just that there's a good chance of it.

I don't disagree that it's an insane amount of money, but if you look at per-year cost, whenever we choose to unload, and it seems... less insane.

Less insane than paying lump sum cash up front so that you can invest the monthly payment amount, at least.

Edit: I suppose I should point out that her 2002 SUV was totaled in an accident. We don't upgrade every 3 years and go in backwards. And I love a good portion of what Dave Ramsey says. But he's selling you stuff at the same time, too. Borrowing is not inherently evil, and there is a middle ground. Everybody relax. It's almost football season. THEN we can panic.
 
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3TrueFans said:
You use the cash to buy the car rather than buying the stock that's guaranteed to make 15% return?
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It goes something like this

Every month I put $800 in the stock account. At the end of the year I've put in $9,600. After a couple of years that is worth $19,200 before the 15% discount. Even if it just breaks even I'm looking at $22k after 2 years.

I trade in the wife's car, which is paid off, and take lets say $15K to get her a different vehicle and pay cash.

I then do the same thing for the next two years and buy myself a car.

I will sometimes also use the money for major home repairs and try not to have over $20k in company stock at one time.

How is this worse than taking a loan with 0% interest? If the stock tanked I just wouldn't buy a car. If I lost my job I'd have no car payments. If money was running tight I just wouldn't contribute to company stock.
 
Have we reached a point where we should start sharing pictures of our mini-giraffes?

XzrdJ.gif
 
dmclone said:
It goes something like this

Every month I put $800 in the stock account. At the end of the year I've put in $9,600. After a couple of years that is worth $19,200 before the 15% discount. Even if it just breaks even I'm looking at $22k after 2 years.

I trade in the wife's car, which is paid off, and take lets say $15K to get her a different vehicle and pay cash.

I then do the same thing for the next two years and buy myself a car.

I will sometimes also use the money for major home repairs and try not to have over $20k in company stock at one time.

How is this worse than taking a loan with 0% interest? If the stock tanked I just wouldn't buy a car. If I lost my job I'd have no car payments. If money was running tight I just wouldn't contribute to company stock.
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A dollar today is worth more than a dollar tomorrow. If you can take the money out of company stock to buy a car you can take it out to diversify your portfolio. For the 99% a 0% loan is a better option than paying cash.
 
TitanClone said:
A dollar today is worth more than a dollar tomorrow. If you can take the money out of company stock to buy a car you can take it out to diversify your portfolio. For the 99% a 0% loan is a better option than paying cash.
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No.. It's really not..
 
Cyclonefan710 said:
No.. It's really not..
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Have 20k to buy a car? Let's go more conservative than mutual funds. Keep 4k for the 1st year of payments, put 16k into a CD year 1, 12k + the interest made on the 16k in a CD year 2 and so on. Year 5 you have more money than if you paid cash.
 
capitalcityguy said:
THIS.

I just went through this a about a year or so ago. Was looking to replace my small pickup. Had low $20K saved up but couldn’t find any decent used trucks with low mileage so started looking at new trucks. I got pretty fired up and caught up in looking at new trucks and pretty soon I was testing driving and considering truck pushing into the $30Ks (I was looking to buy small pickup, not full-sized…even though I started driving a few of those too). Would have been a piece of cake for me to “affordâ€￾ the more expensive truck than I planned by paying cash and just financing the difference. Emotionally, I was close to being there.

In the end, I held to not financing and writing that painful check (yes….it is painful…which is part of the point). I still got a new pickup (manual trans, manual windows/locks) but spent far less than what I would have had I financed. Yes, I probably could have gotten 0% loan and paid off within the required terms, but it wouldn’t change the fact I would be $10 - $15K poorer I am today.
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+10

The psychology of car loans is where people lose control
 
ArgentCy said:
Have you seen some of the price tags on those lots anymore? My goodness many of those cars have retail prices that cost more than my house. 60k plus.

First new car that comes up on my local dealership. New 2016 Cadillac MSRP $88,460 - struckthrough (OMG good thing I was beginning to be worried) Limited Time Savings - Our Price $83,649.


By the way that median and average home prices for the entire town are less than that by a decent margin.
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Where the heck do you live? My parents sold a 2 bedroom 13/4 bath in Denver for over 200,000. The pieces in my hometown are through the the roof compared to what you say your home is worth.
 
Dopey said:
+10

The psychology of car loans is where people lose control
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Toyota is pretty much offering zero percent interest in their car loans now. So paying in cash is pointless. In fact it makes more sense to put zero down with those terms if you believe in making your money work.
 
brett108 said:
Toyota is pretty much offering zero percent interest in their car loans now. So paying in cash is pointless. In fact it makes more sense to put zero down with those terms if you believe in making your money work.
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I wish there was a way to see what percentage of people with 0% 5+ year loans are "making their money work".
 
brett108 said:
Toyota is pretty much offering zero percent interest in their car loans now. So paying in cash is pointless. In fact it makes more sense to put zero down with those terms if you believe in making your money work.
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That covers only part of the point being made.

If financing a depreciating asset causes you to spend more on it than you would have had you disciplined yourself to save up and pay for it in cash, then in the end you are that much poorer.

You can only make up for this loss in net worth IF:

1) you are disciplined enough to invest the difference
2) you are a good enough investor to select the correct investment(s)
3) you are good enough investor to select the correct investments(s) AND the investments perform as expected (i.e...no tech bubble, no housing bubble, no 9/11, no black Friday, no periodic market correction, no...)

Bottom-line: let's not pretend most of us are assured to hit all 3 required steps for the transaction to "make more sense".

Only one option is 100% guaranteed result. The other takes some luck and good fortune (even more so with today's markets).
 
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