Help on current car loan

[bkjt05]

It's 25% of your annual income. And the dead giveaway that you CANNOT afford it is that you financed it.

makes since, but saving up 11k isnt a walk in the park! haha

 

[skippy]

this is covered almost every week on clark howards consumer radio show.if you can't afford the payments on a 36 month loan,you really can't afford the loan as a general rule.as stated before,interest will kill you the longer the loan runs.they loan the money to make money and they ain't your buddy.

 

[Ozwynn]

It's 25% of your annual income. And the dead giveaway that you CANNOT afford it is that you financed it.

For comparison, I paid $2000 for my Exploder. Getting my Bronco II cost me nothing and cost the previous owner almost $200 (expired tags). The Chevy was less than $1000.

Spending money on a vehicle is always equivalent to throwing it away. Financing a vehicle compounds the mistake. You assumed you got the money for free. Well, you didn't.

My first car was a $300 1975 Impala with a caved in rear and good 350/350. I guess I splurged compared to Will.

And my second car was a hand-me-down 1978 Mustang II.

My first car was a 1971 2 Door Toyota Corolla station wagon with a bad oil pump I paid $25 for and it lasted me 3 days. went from that to a 78 Datsun 810 wagon that cost $250 and from that to an 85 CJ7 that I had to give the old man $150 a month until I got out of highschool.

 

[krugford]

If you bought a car and the dealer took care of financing, you signed a simple interest contract. I work for a dealer, used to work for a few others, it's the same almost everywhere.

Yep, that's how it goes when you finance through the dealer. I did the same thing for my new (to me) Ranger. It's a contract that says you pay this many dollars for this many months. Double the payments and you cut the time in half, but you don't get a break on the interest. Which doesn't leave much motivation to pay it off early unless you just have the cash laying around...

I don't mind the fact that I'm overpaying for my truck due to the interest because I didn't buy my truck so it could make me money (directly). I bought it because I needed a vehicle that I could hopefully run to 200,000 miles and beyond without a major failure. Any vehicle you have to take a loan for is already a bad investment financially. As was the $1000 warranty you got. My only regret was taking the 72 month loan instead of the 60 month loan. Next time, if I can't easily afford the 48 or at least 60 month loan, I won't buy the vehicle. Lesson learned.

 

[bkjt05]

Yep, that's how it goes when you finance through the dealer. I did the same thing for my new (to me) Ranger. It's a contract that says you pay this many dollars for this many months. Double the payments and you cut the time in half, but you don't get a break on the interest. Which doesn't leave much motivation to pay it off early unless you just have the cash laying around...

I don't mind the fact that I'm overpaying for my truck due to the interest because I didn't buy my truck so it could make me money (directly). I bought it because I needed a vehicle that I could hopefully run to 200,000 miles and beyond without a major failure. Any vehicle you have to take a loan for is already a bad investment financially. As was the $1000 warranty you got. My only regret was taking the 72 month loan instead of the 60 month loan. Next time, if I can't easily afford the 48 or at least 60 month loan, I won't buy the vehicle. Lesson learned.

i didnt finance through the dealer, a bank gave me the loan, unless you mean the dealer contacted the bank and got the loan which is true.

also i learned my lesson, next time i sign a contract, im making sure i fully understand what im signing. also like you said, i dont care if i pay more then its worth, its about me having something that i need and want and am happy with.

 

[bkjt05]

Also, just curious, how much have any of your paid on a 03-04 ranger. i want a fx4....i found a white one with 52k miles and looks mint, but no asking price, just the market value price of 19k. I did a edmunds blue book on it, and dealer retail is only 13,500. i offered the dealer 12,500

 

[Sasquatch_Ryda]

How come a kid your age is financing a $10,000 car? My first car was $150 and I paid for it with money from washing trucks, changing oil and mixing fertilizer in tanks. Now everyone thinks they have arrived when they haven't done jack shit.

Cuz he can? Things have changed a bit Will. I'm 20 now and I bought my ranger when i was 16 for $4800 (loan from parents), Bought a house a year ago for $122,000 (mortgage) and am looking at new house now for $180,000, and just bought an 05 sport trac for $20,000 (5 year bank loan) 3 months ago and I still live very comfortably.

 

[bkjt05]

Cuz he can? Things have changed a bit Will. I'm 20 now and I bought my ranger when i was 16 for $4800 (loan from parents), Bought a house a year ago for $122,000 (mortgage) and am looking at new house now for $180,000, and just bought an 05 sport trac for $20,000 (5 year bank loan) 3 months ago and I still live very comfortably.

thanks!!! Yea i got bills, yea i pay them without the parents help, and yes i live comfortably too!

haha i just want a damn newer truck, im tired of my car, tired of 2 2 wheel dive in the winter, and tired of feeling like im driving a go kart. i want a truck! haha

 

[RobbieD]

I used to do the buy-new-and-trade-them-in thing, but we'd go the shortest loan term. Pay higher payments, but you get ahead of the game come trade-in time. Then after the sixth Ranger we bought, I decided that no payments was the best deal of all; paid it off and just kept it.

I honestly think that you can keep a good RBV running forever down here where they don't rust out. I'd rather drive something older, keep it maintained, and do the wrenching myself when it's needed. It's kind of like mobility, or mechanical, self-sufficiency, I guess. But there's nothing wrong with driving a new one, if that's what you want, and don't mind paying for it.

 

[Will]

Well, let me think about this...we're having a crisis in the country from people defaulting on loans. And you tell me things have changed and that now it's normal for people to own shit they can't afford.

I'm with you now.

My position is the same. My current daily driver is 20 years old. I am splurging--I could probably make do with a 25 year old truck but that's just me being extravagant.

I realize I'm a realist with my feet solidly planted and I do apologize.

Ten years ago we were looking for our first house. We got approved for $250,000. Both of our cars were long paid for--I had a 1964 and my wife had a 1990--and we had no credit card debt or student loans. And my wifes contemporaries were all in new cars and buying thesse new houses for that much. We didn't think we could be happy and be in that much debt with those payments. We bought a $130,000 shack. Now, our income has doubled or even tripled. Our friends still live in their huge houses and have new cars. My wife has a new car at my insistance (paid for)--I still have an old beater. We could pay our house off but the interest rate is so low it's better not to. I feel no financial crunch because of stupid decisions. I see what bad decisions I could have made certainly--I just decided not to make them.

Life doesn't have to be as expensive as you make it. Do whatever you want, but I am quite happy in a 20 year old pickup truck. It's reliable because I need it to be and I take care of it. I have no ego wrapped up in it--it's all business.

 

[4x4RangerGuy]

Life doesn't have to be as expensive as you make it. Do whatever you want, but I am quite happy in a 20 year old pickup truck. It's reliable because I need it to be and I take care of it. I have no ego wrapped up in it--it's all business.

However, maybe he's not, and you still have to respect the fact that he may be happier in a newer car.

I think you're reading this wrong. It's obvious he can afford the payments; he was just asking if the loan terms were worse than they were. Obviously he can pay it if he still has his Ranger and lives comfortably.

Things have changed. $150, at least around my area, will buy you a car without an engine. To get my 98 Ranger, which was purchased in 2000, my dad bought it no problem. However, I made payments for about 5.5 years on the truck with a typical interest rate to pay off the 14K it cost him (this was due to only working 2 jobs during high school). It was tough, but it was what I wanted and it's been a great investment so far, at least as far as my happiness is concerned.

 

[Donnie strickland]

Don't feel too bad, bkjt05. It's part of life: you've learned about financing a vehicle, and about reading the fine print. Now the key is to take this knowledge and apply it wisely the next time.


I'm 39. I started driving in 1984. My first car was a '64 Ford Falcon basket case for which I paid $525. I had the engine and transmission rebuilt, and had it painted and had a new interior put in. All of that cost around $3000 back then, paid for out of my savings (which pretty well wiped 'em out).

I have financed 4 vehicles in the meantime, and bought 3 more outright. I currently have no car payment and want to keep it that way for as long as possible. Why? Because as you have discovered, vehicles are NOT an investment. They are an expense, plain and simple. It kills me when I hear people speak of their cars as an "investment" when they are nothing of the kind. To invest your money is to expect an increase over time.

You are correct in that now you owe about $4000 more than you can expect to get for your car. If you try to finance another vehicle, they'll have to put that money somewhere, likely into the new loan, and you'll be even further behind. Your instincts are correct -- follow them. Try to get this vehicle paid down as much as you can before you do decide to trade.

I feel your pain -- buying a new (or almost new) vehicle outright is hard for most all of us! Financing is a part of life. Just try to put as much money down up front as you can -- it will save you a lot in the long run.

Hope this helps.

 

[AllanD]

Now the suprise....
If you had bought a shiny new car with a loan for the same
number of months you COULD have gotten a new car for about the same payments.

How is this possible? easy the manufacturer subsidizes the interest.
If you get a new Ford or GM the manufacturer is loaning you the
money at 1/4-1/3 the going rate.

what's worse is now that you are over a year into the loan
the car isn't worth what it was, so if you were to have an accident you'd still be on the hook for the balance of the loan
because the insurance company is only going to pay what the
car is worth in the "book"

The first car that I bought with financing cost me $6500
the interest on the loan was ~13% and it was a 36month note.
I did pay it off, but for the second and third year I was annoyed
that because of the differences in interest rates on a NEW car I could have had a shiny new Mustang GT on a 48month loan
and would have ended up paying about $25 LESS per month
the insurance would have been the same.
Why? because even with only $1000 down the Mustang would have come on a 3.9% loan.

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[srteach]

When you sign the contract, that is THE contract. If it is sold, terms stay the same, or else the assignee (who buys the contract) has voided all collection authority and ability in most states. The terms cannot be altered in the middle of the contract, even if the contract is sold.
In the sale, the current contract holder usually will discount the contract in order to get someone to buy it. They get the use of their money back to finance someone else, but you still have to pay according to the terms of the contract.
When you finance anything, you will pay for the ability to use someone else's money. It will cost you, according to the terms of the contract you sign. Consider this loan an investment in your money education.

Vehicles depreciate faster than they can be paid off. They should NEVER be considered an investment.

 

[Simple_serf]

I buy my stuff cash.

If I can't afford it, I just plain don't get it. Why? Because of a lack of trust invovling lending institutions. On this truck I got screwed, as is usually the case with vehicles.....I actually would have been better off buying a new truck, without having to rebuild everything...and not having to put new rotors on every year would be nice....damn 98/99 rotors in the salt belt.

My first truck was a 86 Isuzu that I paid $225 for and sold for $400. I didn't do so good with the mazda, bought it for $1400 and sold it for $700. The ranger i paid $3000 for and I am going to be it's last driver....just so I can get my $8000 in parts back out that I have put in over the last 4 years.

Oh...and Crdit unions can be very very good when buying a car....they usually have much better rates and don't screw you as bad.