Can someone explain car finance to me??? - Page 3

davocol · 05-12-2011, 10:04 PM

Sinking cash into a depreciating asset which you can lend at 7% if you look hard enough is far from wise. Imagine of instead of buying that 20K car you have in your driveway you had of invested that money into a share that has a better return than 7% p.a (which is not hard).

Other people also like to have a reliable car that does not spend half its life in the mechanic costing $600+ every time it has a service.

Quote:

Originally Posted by Mr Hardware

Good post Mr BA2003, well said. Unbaised, real world experience that's not out of the ordinary.

I feel sorry for anyone who can't see that cars on finance just aren't worth it. I can see the allure - "i get the toys today and future me can worry about how to pay for it! wheeeee!"

i just simply regard that as a short-sighted, childlike view. Yes I understand some people are in situations in life where their only option is a loan, but the vast majority of people i see who get a loan for a car fall into the category of 'so full of their own self-importance that they can't drive a banger'.

vztrt · 05-12-2011, 10:12 PM

Quote:

Originally Posted by Mr_BA2003

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Having to make repayments every week for 5-7 years may seem ok at the start, but things change. You may lose your job, have a baby, fall sick, and all these things add up. Fall behind far enough and the car will be reposed and you’ll have to make up the short fall. Paid $25,000 for a BA XR6 Turbo 4 years ago, would probably be lucky to see it sell for anything more than $12,000 at auctions now. The falcon we paid $16,000 for was sold for $8,000 in January 2008.

I'm more worried about my home loan then I ever was with a car loan. Default on a home loan and your in bigger trouble then a ****y car loan.

cycle myth · 05-12-2011, 10:59 PM

Finance is just a means to get something now that you don't have the money for in full.

It makes sense to some, others are happy to go without and pay in cash to avoid (good for them if thats what they want)

There are no tricks to finance. Time is money - so interest is an amount that you pay for the joy of now.

You pay more interest when you borrow more, take out over a longer term, use a balloon or residual, or all of the above.

When looking for a loan you need to consider:
- the interest rate.
- any fees (up front or exit)
- penalties for paying out early
- if you can afford it

Most car loans are secured against the loan (you don't pay you lose the car). Typically personal loans from a bank are not secured.

You could refinance you current 16% loan with a cheaper one if you can find a lower rate and if this is wise for you given penalties, fees, etc.

I would suggest, get the car you want and can afford, and take a reasonable loan out.

If you use the car for work / business purposes then it can be better to take a loan out then pay cash (debt is cheaper than equity).

Funding by your mortgage draw down can be good if you watch out how long you pay that bit of the mortgage back - a loan over 30years even at a lower rate can cost more than a 5 year loan with a higher rate.

Hope this helps.

SKYeXile · 05-12-2011, 11:02 PM

16%, dang, i was quoted last week from stratton finance for like 7.95, thats secured, ill probably endup going unsecured...but ****, pay that out fast and refinance a better deal.

flappist · 05-12-2011, 11:13 PM

It is simple really. Buy cheap crappy cars all your life. Save huge amounts of money so that you can spend your twilight years in a nursing home listening to everyone else's stories of how they had a full and enjoyable life driving and playing in high powered silly cars that cost them a fortune while you wait to die and leave all your money to someone else to enjoy by buying high powered silly cars to drive and play in.

Life is not a dress rehearsal, enjoy it while you can........

SKYeXile · 05-12-2011, 11:24 PM

Quote:

Originally Posted by flappist

It is simple really. Buy cheap crappy cars all your life. Save huge amounts of money so that you can spend your twilight years in a nursing home listening to everyone else's stories of how they had a full and enjoyable life driving and playing in high powered silly cars that cost them a fortune while you wait to die and leave all your money to someone else to enjoy by buying high powered silly cars to drive and play in.

Life is not a dress rehearsal, enjoy it while you can........

...and thats basicly what my dad said to me before he died, not that an E320 is cheap, but yea, prettymuch that message.

drew`SEVNT5 · 06-12-2011, 02:03 AM

Quote:

Originally Posted by flappist

It is simple really. Buy cheap crappy cars all your life. Save huge amounts of money so that you can spend your twilight years in a nursing home listening to everyone else's stories of how they had a full and enjoyable life driving and playing in high powered silly cars that cost them a fortune while you wait to die and leave all your money to someone else to enjoy by buying high powered silly cars to drive and play in.

Life is not a dress rehearsal, enjoy it while you can........

This.

But, be sure to balance the 'living' with being sensible about it.

I could have gone out and financed a new Cayman S.

But, I want to start really putting in to the savings account for a house deposit.

So, I lowered my sights, and am in a 370z. Work pays for most of it, but I made sure that I will be spending over what I get from work.

hawker · 06-12-2011, 03:24 AM

I just want to chip in my 2 cents worth. I'm not an expert. My car is financed though.

Don't forget, if you can save up some money between now and when you get the car, I'll just put a ball park figure out there, I'm not saying you'll make it, but say by the time you're able to look into a new car you have $7,000 in the bank and you want a car for $25,000. You don't have to take out a loan for the full amount. You could pay say $5,000 and get a loan for $20,000 and keep $2,000 as a back up. A few people I know have done it that way!

SIMBAD · 06-12-2011, 09:00 AM

I saved up and bought my 86 Toyota 4runner 2.4 diesel cash for 3.5k when I was 17.. 6 years ago.. Now I financed my current car through Toyota finance and it's fixed rate at 8% I think? Or 7.9 or something like that..
As much ad I do love my flash car I have spent reasonable about on it and still have a year and a half to go still paying it off, and absolutely love it when I drive it.. I still get more kicks out of my old 4runner.. It's driven nearly every day.. Take me camping, drags my boat where I want it to slooowly, pulls people out of the bog, gets the adrenaline going when doing some serious offroading, and dints and scratches won't bother me.. Just adds for a better story.. I guess nothing really comes from me saying any of this besides, I didn't really need the car. (but I'm never going to sell it)
One other thing.. My mate never financed anything and does basically the same thing as I do except he has been on about 10 more over seas holidays than I have.. One recently he went and toured Canada and the U.S for 11 months. He was always the real tight **** amongst my mates but I guess he gets the last laugh.
I get my money and I get a bit generous too..
If I could rewind time I think I would do things the same way as my mate did..
I think I'm just a little jelous that he's done so much more fun stuff in his life than I...
But that's life isn't it. Ah well only time will let me go and have more fun.. Can't imagine how much quicker the bank would grow if it wasn't for the finance thing!
COME ON LOTTO!

GT0132 · 06-12-2011, 10:30 AM

Quote:

Originally Posted by SteveJH

No such thing as interest free.

They add the expected interest assuming three years to pay back into the original price.

yes but the average Jo doesn't see it like that. It's all about perception and if finance for cars was marketed as interest free in spite of the loaded costs, then I think more people would be upgrading their cars

basteve · 30-01-2012, 08:22 PM

Very INTERESTING read! Im with jpd80. I always pay CASH for my cars. Its much better than paying interest thats for sure. 16 % interest thats mad !

drew`SEVNT5 · 31-01-2012, 12:24 AM

Quote:

Originally Posted by basteve

Very INTERESTING read! Im with jpd80. I always pay CASH for my cars. Its much better than paying interest thats for sure. 16 % interest thats mad !

That is like credit card rates!

Very happy with my 4.9% from Nissan Financial Services. Also very happy with the discount on the new car ($$$lots).

Finance is good if you can make it work for you.

basteve · 31-01-2012, 12:09 PM

Im very happy too if you save enough money and then use the accumilated interest from this saving it pays for the car rather than any finance. Also the car is 100% yours at the start not the finance companies executives. Finance has ruined many lives and repos are rampant. its a real risk and if you get sick or lose your job its even more a disaster. even 4.9% for x number of dollars is a debt and is risky....dont get sick and your ok but who can tell?.

charles_wif_xf · 31-01-2012, 02:38 PM

I own the FG outright, but I had the BA on hire purchase. I used to claim EVERYTHING associated with it as a tax deduction

Silliness aside, I would never again go for the credit option should I need another car. As others have pointed out, to borrow $30-40k to buy a RAPIDLY depreciating item such as a car is insanity. Unless you have an epic trade-in, get a corker of a discount and some ridiculously low interest rate, then I'd say, finance the difference as a hire purchase and claim the running costs as a deduction.

This thread highlights one of the major blights on society at the moment. If it wasn't for credit, there would essentially be NO new car sales at all. Very few people and organisations have the sort of cash to buy a new car without financing, let alone one every three to five years. This epidemic of affluenza that has gripped the nation isn't helped by government encouraging credit fuelled asset accumulation with all the tax breaks that come with buying on credit (be it novated lease, hire purchase or otherwise).

The FG I have will be the last new car I buy for a very long time.

DBourne · 31-01-2012, 04:52 PM

This is always one of those topics where you ask an innocent enough question and get a load of hot air and arrogance.

I used finance to buy my XR5 and paid it off 3 years early (by choice).

When looking for finance I wanted a loan which I could pay back early and had a good interest rate.

Pretty quickly I found that ford credit is an absolute joke (high interest rate and penalties for early completion).

Community First Credit Union were the pick of the bunch for me, good rate, allowed to pay off early etc.

In your situation, if you want to sell your car, you need to either get enough cash from the sale to pay off the loan, or you need to get the cash from the sale, and then chip in the rest. Unless of course you roll over to a new loan on a new car.

I.E.

You owe $10K on the loan for your current car.

You decide to trade it in for a $40K car and get a trade in of $5K

You now owe the bank $45K. $40K for the new car, $5K left over from the previous car.

If you sell privately, you also need to get a payout figure from the bank, which you give to the buyer and they can arrange a cheque / transfer of cash to your financial institution.

**PridenJoy** · 31-01-2012, 10:04 PM

The best way to buy a new or near new car in my opinion is novated lease. That only really works well if you're in a high-ish tax bracket, then you get the full tax benefits. the trick is to buy a car that is 2-3 years old that way most of the depreciation has already happened, as you can't claim depreciation under novated lease.