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(ABC Local)   Finally, one intrepid reporter has blown off the lid on the car loan industry, discovering long-term loans may not be the best bang for your buck. That's right; Ric Romero is on our side   (abclocal.go.com) divider line 87
    More: Obvious, Ric Romero, Kelley Blue Book, loans  
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5649 clicks; posted to Main » on 28 Jul 2013 at 2:19 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-28 09:16:49 AM  
"A general rule of thumb is that consumers should try and keep their monthly payments within 20 percent of their gross income,"

For a car loan? 20% of gross? Alec Gutierrez' mother needs to call her little boy up and tell him to lead a cleaner life. And maybe box his ears for good measure.
 
2013-07-28 01:27:50 PM  

rumpelstiltskin: "A general rule of thumb is that consumers should try and keep their monthly payments within 20 percent of their gross income,"

For a car loan? 20% of gross? Alec Gutierrez' mother needs to call her little boy up and tell him to lead a cleaner life. And maybe box his ears for good measure.


Came to say this... what a dick.

Unless he meant keep your monthly payment within 20% of your weekly gross income. That's reasonable.
 
2013-07-28 02:21:25 PM  
I think this might be the first time I've seen a "Ric Romero" article where it was actually Ric Romero.
 
2013-07-28 02:21:36 PM  
Cars are the problem, not the loans. Without cars there would be no car-loans, clearly no-one else has ever thought of this so I am a farking genius, pay me.
 
2013-07-28 02:23:26 PM  

rumpelstiltskin: "A general rule of thumb is that consumers should try and keep their monthly payments within 20 percent of their gross income,"

For a car loan? 20% of gross? Alec Gutierrez' mother needs to call her little boy up and tell him to lead a cleaner life. And maybe box his ears for good measure.


I was always told rent+utilities should be no more than 33% of gross monthly income (unless you live in a particularly expensive place to live) and car payments should be no more than 10% _net_ monthly income.  When did that change?
 
2013-07-28 02:24:04 PM  

mithras_angel: I think this might be the first time I've seen a "Ric Romero" article where it was actually Ric Romero.


Let's see... account created in... 2005?! wat
 
2013-07-28 02:24:09 PM  

rumpelstiltskin: "A general rule of thumb is that consumers should try and keep their monthly payments within 20 percent of their gross income,"

For a car loan? 20% of gross? Alec Gutierrez' mother needs to call her little boy up and tell him to lead a cleaner life. And maybe box his ears for good measure.


Even if you threw in gas and insurance, 20% is pushing it.
 
2013-07-28 02:24:18 PM  
20% of gross income? Has anybody else read the article and went WTF on that bit?
 
2013-07-28 02:25:50 PM  
next yeay my 98 grand am will be paid off, yeah
 
2013-07-28 02:27:38 PM  

letrole: 20% of gross income? Has anybody else read the article and went WTF on that bit?


Apparently, everybody.
 
2013-07-28 02:29:10 PM  
If I limited my monthly payment to 20% of gross, I could get that Maserati I want *now*
 
ZAZ [TotalFark]
2013-07-28 02:29:24 PM  
I noticed that your car payments are supposed to be over half your house payments. Anybody else think that is excessive?
 
2013-07-28 02:31:15 PM  
So... is the 132 month loan I just took out to buy a 5 year old RV not a good thing then?

/Seriously... 132 month. WTF?
 
2013-07-28 02:31:25 PM  
20% of gross is an absurdly large number.

That said, I'm of the mind that you shouldn't finance a car at all unless you already have the cash to buy it outright *and* you can get a 0% interest rate on the loan.   Car payments keep a lot of people poor.
 
2013-07-28 02:31:36 PM  

Electriclectic: mithras_angel: I think this might be the first time I've seen a "Ric Romero" article where it was actually Ric Romero.

Let's see... account created in... 2005?! wat


I usually didn't click on them.  Some oblivious newsguy saying something obvious wasn't all that interesting to me.
 
2013-07-28 02:31:44 PM  
A 96 month car loan?  I only have an 180 month loan to buy my HOUSE.
 
2013-07-28 02:32:19 PM  
"A general rule of thumb is that consumers should try and keep their monthly payments within 20 percent of their gross income," said Gutierrez. "So, if that means you have to opt for a five- or six-year loan as opposed to three- or four-year loan buy a cheaper car that generally makes sense."

FTFY.
 
2013-07-28 02:33:44 PM  

ZAZ: I noticed that your car payments are supposed to be over half your house payments. Anybody else think that is excessive?


Yes. 20% of gross for someone making 50k a year is $833 per month.

That's a hell of a nice car.
 
TWX
2013-07-28 02:34:04 PM  
I guess I'm of the mindset that if you can't afford to pay for the new car in five years or less, then you shouldn't be purchasing the car in the first place. You should be looking for a less expensive car.

The sellers/manufacturers will follow the demands of the public. If the public stops straining to purchase cars they can't afford and insists on less expensive ones, car makers will find a way to provide less expensive cars. They might have to return to *gosh* 15" wheels, manual windows, manual seats, and manual climate controls, but they'll strip the car down to its safety features and cloth interior if that's what people will buy, and I don't think that too many would be too upset if their seats don't move by the push of a button or their wheels are smaller. I don't know about you, but I don't move my seat unless my wife drove the vehicle last, and since she has her own car that event is so infrequent that it's almost not worth bringing up.

Unfortunately people don't seem to understand that they do themselves a disservice by living right at the ragged edge of their means.
 
2013-07-28 02:34:26 PM  
My wife is wanting a new car that costs $40,000.  I did the math, I told her that with our piss poor credit, we'd be looking at a loan of over $1,500 a month for five years.  She said "That sucks...are you sure?"  I explained to her that $400 a month at five years isn't $40k and $1,000/month for five years is $50,000, so $1,500 is what we'd be looking at for a new car.  She said "Well, I'm up for a promotion, so then I could get that car."  I said "No."  She looked at me kind of funny and asked "Why?"  I did the math and said "$1,500 a month for five years is $90,000.  Why the hell should we spend $90,000 on a car that only costs $40,000 and loses half it's value the moment we drive it off the lot?"  So I said that if we can afford to spend $1,500/month for a car we can save that much up each month and just buy it new in cash no financing required and save an ass load of money.  She agreed.  Then I said "And, if we wait until this time of year when the new model year is coming out, we can buy the out going model even cheaper.
 
GBB
2013-07-28 02:34:53 PM  
That's why I lease.  People tell me, "yeah, but at the end of your lease, what do you have?"  I say, "I get a new lease on a new car that has 0 maintenance issues that I have to pay for and a new warranty.  Why?  What do you get after 3 years on your loan?  Another few years of paying off that car and the start of major maintenance expenses?  At least I get an absolute minimum value for that car after the lease.  If It's actually worth more than that value, I can buy the car for that value and sell it for more.  You have no such guarantee.  So, nah"
 
2013-07-28 02:36:33 PM  

HaywoodJablonski: If I limited my monthly payment to 20% of gross, I could get that Maserati I want *now*


20% of gross, and I would have bought a much more expensive car. I'm just under 10% of net for my car payment.

The same people who think they should pay that much a month for a car are probably the same people who get interest only mortgages for a $500k house when they make $60k a year.
 
2013-07-28 02:38:16 PM  
If you have the funds or can get cheap loans just buy the car outright.

Dealerships often figure in what they make on a loan as part of the profit of a sale and can give a much better price if they assume you are also getting a loan.

It is priceless to see a salesman face drop when you ask whether he wants a certified check or will he take a credit card.
 
2013-07-28 02:39:08 PM  
Why not just save your money and buy the car outright? No financing = a lot less money.
 
2013-07-28 02:39:39 PM  
Cars do last much longer than they did 20 years ago. If you can safely assume your car will last 6 years, no reason not to get a 5 year loan. Cars used to only last 4 years till they started having issues, so 3 year loans made sense. Now if your talking about a 5 year loan on a used car, that might be dangerous.
 
2013-07-28 02:39:55 PM  
While some of you may already be mired in the cycle of paying off your current car, here's something that's always worked for me.  Make a car "payment" to yourself each month before you buy a car.  Then when it comes time to buy that next car you already have enough saved up so you can pay cash.

It also helps if you realize you don't need a new car every 3 years.  My car is 11 years old.  Not counting oil changes (which are very important), I've probably spent about $1000 in repairs over those 11 years.

Also, learn to do simple things like replacing the brakes on your own.  It seems intimidating at first especially if you're like me and don't know shiat about cars, but it was actually very easy and you also know that you did it right as opposed to trusting some flunky that will charge you too much to do the same thing.

It really is amazing how simple some repairs are.  I still leave the tough shiat to professionals though.  I know my limitations.
 
2013-07-28 02:40:12 PM  

GBB: That's why I lease.


Lots of people get grief over leasing... but it makes perfect sense depending on your priorities.

CSB: Back when I was still swinging hammer, Budget would rent Ford Rangers for about $325 a month... with unlimited mileage. I think I personally put an end to that program.
 
2013-07-28 02:42:07 PM  
It's the same crap with cars as it was with houses just with one less zero on the figures. People want what they can't afford.

If you are buying a car based on the "monthly payment" you are already an idiot.  You buy the car based on the PRICE. If it was legal, and there was a way to profit off it, car companies would love to sell me a $100k ZR-1 or 7series if the term was $200/month for 50 years.

If you are in a tight spot financially - you shouldn't even be looking at a brand new car. Go to CarMax, hit the used lot. There are tons of gently used cars out there some even with warranties.  Sure it's not straight off the assembly line, but it will get you from A to B and you might save 5K.  Hell I drove an 02 S10 as a daily commute/beater. it was a perfect little truck, you could treat it like crap, and it was only 5K in a cash deal. It would have ran for another 80K miles had it not hydroplaned and bounced off off a divider.

I've had my fair share of new shiny sports cars - and it's fun, but after a while you will realize other priorities in life. I bought new an 05 RX8, 08 Z06 when they came out, and between them i probably lost 40K in depreciation when I sold them. Sucks but you learn.  I'm in a '12 kia rio... it's not fun, but it does the job, gets me from A to B and is cheap enough to make double payments on without hurting (i hate paying interest).

Doesn't help that dealers exacerbate this problem because their approach is always "how much can you afford to pay per month".  You say that to me, I find a new sales person.  What you can afford to pay and what you should pay per month are two separate numbers.

Or how someone will buy a set of rims or pimp the car out when they don't even have a clear title.
 
2013-07-28 02:42:58 PM  
So... why is that jackass solely talking about monthly payments?  FFS!  What about the interest rate?
 
2013-07-28 02:45:06 PM  
Math is hard but necessary.  If you can't understand math then loans are great because 'I'm only paying (insert monetary amount here) per month.   Principal x Rate x Time = How much the bank is going to make off your dumbass.
 
2013-07-28 02:47:52 PM  
Here's something many people forget: A $20,000 car will get you to work in exactly the same amount of time as a $50,000 car.
 
2013-07-28 02:48:46 PM  

GBB: That's why I lease.  People tell me, "yeah, but at the end of your lease, what do you have?"  I say, "I get a new lease on a new car that has 0 maintenance issues that I have to pay for and a new warranty.  Why?  What do you get after 3 years on your loan?  Another few years of paying off that car and the start of major maintenance expenses?  At least I get an absolute minimum value for that car after the lease.  If It's actually worth more than that value, I can buy the car for that value and sell it for more.  You have no such guarantee.  So, nah"


I paid my car off, it's 8 years old, and I have had no major expenses. Nothing outside of regular maintenance. And I own the car. After a lease you own nothing.

If it made better financial sense to lease then nobody would buy a car. Your logic sucks.
 
2013-07-28 02:49:21 PM  

TWX: I guess I'm of the mindset that if you can't afford to pay for the new car in five years or less, then you shouldn't be purchasing the car in the first place. You should be looking for a less expensive car.

The sellers/manufacturers will follow the demands of the public. If the public stops straining to purchase cars they can't afford and insists on less expensive ones, car makers will find a way to provide less expensive cars. They might have to return to *gosh* 15" wheels, manual windows, manual seats, and manual climate controls, but they'll strip the car down to its safety features and cloth interior if that's what people will buy, and I don't think that too many would be too upset if their seats don't move by the push of a button or their wheels are smaller. I don't know about you, but I don't move my seat unless my wife drove the vehicle last, and since she has her own car that event is so infrequent that it's almost not worth bringing up.

Unfortunately people don't seem to understand that they do themselves a disservice by living right at the ragged edge of their means.


+1

while it's not fun or fast, my Kia Rio is base *everything*.   6 speed manual, manual locks, windows, seats. no fancy sat nav, or basass sound system. Just a clean economical car that only cost ~12k brand new with 100k warranty.    Sure, I can't blast around town looking cool, but going 400miles for only 10 gallons of gas is pretty damn nice. (i do wish the tank was bigger though a 12 or 13 gallon tank would have been nice)
 
2013-07-28 02:49:30 PM  

Great Janitor: My wife is wanting a new car that costs $40,000.  I did the math, I told her that with our piss poor credit, we'd be looking at a loan of over $1,500 a month for five years.  She said "That sucks...are you sure?"  I explained to her that $400 a month at five years isn't $40k and $1,000/month for five years is $50,000, so $1,500 is what we'd be looking at for a new car.  She said "Well, I'm up for a promotion, so then I could get that car."  I said "No."  She looked at me kind of funny and asked "Why?"  I did the math and said "$1,500 a month for five years is $90,000.  Why the hell should we spend $90,000 on a car that only costs $40,000 and loses half it's value the moment we drive it off the lot?"  So I said that if we can afford to spend $1,500/month for a car we can save that much up each month and just buy it new in cash no financing required and save an ass load of money.  She agreed.  Then I said "And, if we wait until this time of year when the new model year is coming out, we can buy the out going model even cheaper.


?
 
2013-07-28 02:50:24 PM  

accelerus: It's the same crap with cars as it was with houses just with one less zero on the figures. People want what they can't afford.

If you are buying a car based on the "monthly payment" you are already an idiot.


CSB: I did some work once for a guy that owned a very successful "independent" used car lot. It was there that I learned the dirty little secret of his business. I went to an auction with him once... and I was surprised at how much the cars were selling for. He bought a few... and I asked him how he could possibly be making money turning cars over for such a low margin. He told me that he would sell a car multiple times (some as many as 5 or 6) after repo-ing them from the previous buyer. Farking crazy.
 
2013-07-28 02:50:29 PM  
Shop the banks, do your math, and get your loan before you hit the dealership.  Keeps the negotiations with the car salesmen much simpler.  And, more importantly, it takes several variables that he can play with out of the equation.
 
2013-07-28 02:53:06 PM  

MindStalker: Cars do last much longer than they did 20 years ago. If you can safely assume your car will last 6 years, no reason not to get a 5 year loan. Cars used to only last 4 years till they started having issues, so 3 year loans made sense. Now if your talking about a 5 year loan on a used car, that might be dangerous.


20 years ago, maybe. Now, my cousin in Oregon has a 1948 Buick that was bought by his grandfather right after he got out of the Army from WW2. It was kept in good condition, garaged for most of its life and is still running on the original engine.

Of course, being a motorhead, Cuz is all about keeping it up. It needs paint, the doors rattle a bit. The shift linkage is a little loose. AFAIK it has the original glass. I've suggested going with a full restoration just to modernize the damn thing if anything else. But the body is in excellent condition overall.

They built them like tanks back then, when a gallon of gas was 22 cents.
 
2013-07-28 02:54:39 PM  
Never finance a car for more than 48 months. If you cant afford that, put whatever payment you can afford in the bank for a couple years until you can, better yet save up and pay cash for the whole car instead.

The dumbest thing I hear people say is that it's cheaper to buy new than it is to drive around an older car that you have to repair all the time. Put simply, that's bull shiat. If you're paying $400 a month for a car payment you're also spending an extra $100 a month on insurance compared to a paid off car with liability only. Unless you're driving an absolute lemon there is no way in hell you'll average $500 a month in repairs. Even if that was the case, you could buy a $1500 beater every 6 months and you would still only spend half what you would for a new car in a year.
 
2013-07-28 02:57:18 PM  

GBB: That's why I lease.  People tell me, "yeah, but at the end of your lease, what do you have?"  I say, "I get a new lease on a new car that has 0 maintenance issues that I have to pay for and a new warranty.  Why?  What do you get after 3 years on your loan?  Another few years of paying off that car and the start of major maintenance expenses?  At least I get an absolute minimum value for that car after the lease.  If It's actually worth more than that value, I can buy the car for that value and sell it for more.  You have no such guarantee.  So, nah"


There are those who can afford to have monthly payments on their car forever and those that can't.  Also the expense and effort of having to sell the car every three years.  Most top of the line new car warranties last 10 years or 150,000 miles/kms.  When I bought my 2003 it blew a rod through the short block in year 4 - and was still fully covered by warranty (transferred from previous owner). My loan term was 7 years, the car today has been fully paid off for three years now and aside from some other maintenance issues, the amount I was paying every month vs. what i'm paying today is no comparison - running my car costs me a lot less today than it did in the first three years of my loan - plus it's nice not having to worry about a car payment every month.

Nothing against leases, but if you have the money (or need the tax break) and don't think long term, then i'm sure they're perfect.
 
GBB
2013-07-28 02:58:39 PM  

KidneyStone: GBB: That's why I lease.  People tell me, "yeah, but at the end of your lease, what do you have?"  I say, "I get a new lease on a new car that has 0 maintenance issues that I have to pay for and a new warranty.  Why?  What do you get after 3 years on your loan?  Another few years of paying off that car and the start of major maintenance expenses?  At least I get an absolute minimum value for that car after the lease.  If It's actually worth more than that value, I can buy the car for that value and sell it for more.  You have no such guarantee.  So, nah"

I paid my car off, it's 8 years old, and I have had no major expenses. Nothing outside of regular maintenance. And I own the car. After a lease you own nothing.

If it made better financial sense to lease then nobody would buy a car. Your logic sucks.


How much have you put into the car with purchasing it and maintenance?  Starting when?  How much can you get for it today (kbb.com)?
 
2013-07-28 02:59:03 PM  

gfid: While some of you may already be mired in the cycle of paying off your current car, here's something that's always worked for me.  Make a car "payment" to yourself each month before you buy a car.  Then when it comes time to buy that next car you already have enough saved up so you can pay cash.

It also helps if you realize you don't need a new car every 3 years.  My car is 11 years old.  Not counting oil changes (which are very important), I've probably spent about $1000 in repairs over those 11 years.

Also, learn to do simple things like replacing the brakes on your own.  It seems intimidating at first especially if you're like me and don't know shiat about cars, but it was actually very easy and you also know that you did it right as opposed to trusting some flunky that will charge you too much to do the same thing.

It really is amazing how simple some repairs are.  I still leave the tough shiat to professionals though.  I know my limitations.


Great advice. This is exactly what I do. You need a fair amount of mechanical expertise and financial responsibility to take all that advice, though. It seems like most families have neither these days.

Furthermore, most people can't replace a thermostat or a toilet fill valve without flooding their house. Could you imagine that same person trying to mount new rotors?
It's a great philosophy for financially responsible tool users like us, but won't work for the majority of people.
/sometimes it pays to be blue collar
 
2013-07-28 03:00:52 PM  

HairBolus: If you have the funds or can get cheap loans just buy the car outright.

Dealerships often figure in what they make on a loan as part of the profit of a sale and can give a much better price if they assume you are also getting a loan.

It is priceless to see a salesman face drop when you ask whether he wants a certified check or will he take a credit card.


That is total bullsh*t. I was an F&I manager for 10 years at a major dealership and not once did we look down on cash buyers. We never raped anyone on finance charges nor did any other reputable dealership. Also, in my 10 years I never once offered or even suggested credit life. A good dealership will always have the service department making the lion's share of the profit.
 
2013-07-28 03:02:16 PM  

kmt11: Why not just save your money and buy the car outright? No financing = a lot less money.


Because your FICO score will never get above 550.

I've made three major purchases in the last 18 months and I've financed all of them even though I could have just written a check each time because my FICO score was in the toilet. One is paid off already... the other two will be paid off in a couple months. It's shocking what people will fall for. I just bought an RV... with 132 monthly payments at a ridiculous interest rate. If I actually took it to term... it would cost me 4 times what the actual selling price was.

And people sign those contracts every day.
 
2013-07-28 03:03:34 PM  
I bought an Elantra about 4 years ago. It was a 5 year loan but I worked an arseload of overtime and got it paid off in 3. Since I was already used to a car payment I'm transferring that amount into my savings account every month. I figure when it's time to trade it in the trade in value + what I've saved up will hopefully be enough to buy it outright. I'm looking at either a Sonata Hybrid or a Camry Hybrid.

/If they ever start making an Elantra hybrid I'd be on that like Oprah on a baked ham.
 
TWX
2013-07-28 03:03:53 PM  

Deathfrogg: MindStalker: Cars do last much longer than they did 20 years ago. If you can safely assume your car will last 6 years, no reason not to get a 5 year loan. Cars used to only last 4 years till they started having issues, so 3 year loans made sense. Now if your talking about a 5 year loan on a used car, that might be dangerous.

20 years ago, maybe. Now, my cousin in Oregon has a 1948 Buick that was bought by his grandfather right after he got out of the Army from WW2. It was kept in good condition, garaged for most of its life and is still running on the original engine.

Of course, being a motorhead, Cuz is all about keeping it up. It needs paint, the doors rattle a bit. The shift linkage is a little loose. AFAIK it has the original glass. I've suggested going with a full restoration just to modernize the damn thing if anything else. But the body is in excellent condition overall.

They built them like tanks back then, when a gallon of gas was 22 cents.


I actually did buy a used car for daily use with a five-year loan. I had three major reasons. First, keeping cash on hand. I could have bought outright but the loan keeps my bank balance emergency-ready, and the interest rate was so low that I was only going to spend a few hundred bucks over the cash purchase amount. Second, maintaining good credit scores through the use of my credit. Third, because the lender looks at the jointly-mortgaged home as if I may have to pay for it myself entirely, my monthly cap on their debt-to-income ratio formula dictated a term this long.

I can pay it off at any time, but it's costing me so little to borrow the money that there's no reason to do so.
 
2013-07-28 03:04:57 PM  

TWX: I guess I'm of the mindset that if you can't afford to pay for the new car in five years or less, then you shouldn't be purchasing the car in the first place. You should be looking for a less expensive car.

The sellers/manufacturers will follow the demands of the public. If the public stops straining to purchase cars they can't afford and insists on less expensive ones, car makers will find a way to provide less expensive cars. They might have to return to *gosh* 15" wheels, manual windows, manual seats, and manual climate controls, but they'll strip the car down to its safety features and cloth interior if that's what people will buy, and I don't think that too many would be too upset if their seats don't move by the push of a button or their wheels are smaller. I don't know about you, but I don't move my seat unless my wife drove the vehicle last, and since she has her own car that event is so infrequent that it's almost not worth bringing up.

Unfortunately people don't seem to understand that they do themselves a disservice by living right at the ragged edge of their means.


Yeah, pretty much this.  I'm going to drive my current car until the wheels fall of and the transmission falls out - either that or until it starts costing me more in repairs than a new car would cost.

I've come to the conclusion that it serves one purpose and that's to get me from point A to point B and back.  I don't haul a lot of stuff.  I don't need a shiat ton of acceleration.  I don't need to look cool in it.  I don't need to outrun the cops.

Granted, I'd like to have all that in a car, but I'm realistic.  I can't afford it.  All I need is something that can keep up with traffic and not break down.  Power windows are nice, but is it really that hard to actually roll down a window manually?

And electric seat adjusters?  Yeah, I have them in my car, but I haven't used them in years.  My seat is in the best position it can be in for me.  Why would I need to adjust it?

I don't understand most new "features".  My first car had manual windows, manual door locks, manual seat adjustment, manual side mirror adjustment and an 8-track player.  What it didn't have was reliability.  I was well acquainted with the folks at the shop.  Something or other was always breaking down on it.

Reliability is the one thing I demand of my car.  I always laugh when people say I used to drive a Chevy (or Chrysler or Ford or whatever) and it sucked and now I drive a whatever and it's great.  Really?  You're going to compare your 1974 Pinto to your 2009 Honda?  Okay, whatever.
 
2013-07-28 03:05:34 PM  

Pray 4 Mojo: accelerus: It's the same crap with cars as it was with houses just with one less zero on the figures. People want what they can't afford.

If you are buying a car based on the "monthly payment" you are already an idiot.

CSB: I did some work once for a guy that owned a very successful "independent" used car lot. It was there that I learned the dirty little secret of his business. I went to an auction with him once... and I was surprised at how much the cars were selling for. He bought a few... and I asked him how he could possibly be making money turning cars over for such a low margin. He told me that he would sell a car multiple times (some as many as 5 or 6) after repo-ing them from the previous buyer. Farking crazy.


I've seen a few articles on this practice as well. Pretty sad because the target demographic are the poor/uneducated/lazy people that fall for the monthly payment bs.  I'd love to see the credit agencies that actually put up money on behalf of these people who have a high probability of defaulting. At that point its almost akin to a weird broke-ass lease.

I personally would not mind seeing the return of debtor's prison.  Not for the purpose of satisfying a loan (anyone with a brain knows that the odds of getting the agreed upon return from some clients is 0%)  but more of a deterrent for making stupid choices.  If you think you can afford the Escalade with custom rims, tint, and a system but reality hits after 2 payments -- you get to spend month or two in a work camp.

The people that make these mistakes often have never had reality smack them in the face and tell them to "wake the hell up" and make smarter choices. When you get off scott free for years no matter how bad your choices are of course you are going to keep doing it.  Of course my idea won't ever take off because it might hurt their precious widdle feelings.
 
2013-07-28 03:16:38 PM  
As touched on by someone else -- having some DIY knowledge is what will help you keep your car running for 100 or even 200k. The combination of most people being too lazy or too stupid to change their own oil  means that service departments make a killing because you don't want to take 30 minutes  twice a year to do it yourself.  Saying you don't know how is a cop out. 15 minutes at the library on google and 15 dollars in tools from the store and you could do it yourself for the rest of your life.

I'm one of the nerdiest 31 year old guys you could meet - but I love working on my cars. Taking care of something you pay for is important to me (i'm balls deep in home improvement at the moment as I just bought my first ever home), and paying someone else 5X what it would cost me in time/parts is just stupid.  Sure there will be some cars with major issues (nothing is perfect) but you can vastly increase your odds of nothing going wrong, AND increase the amount of money in your pocket just by learning to do a few simple things.  Hell even checking your tire pressure these days seems relegated to the "ain't nobody got time for that" category.

Funny enough -- the entire mentality of "ain't nobody got time for that" is precisely the reason many people are in the piss poor situations they are in. You don't want to take the time to look/think/learn/or take care of the most basic items in a system.
 
2013-07-28 03:17:03 PM  
I bought a car that was about 50% of my gross income ... but that was about 14 years ago when I still lived with the folks and had no other legitimate bills.

// and then I made ~60k from stock and options during the dot com boom and increased my gross income several times by getting better jobs and working ridiculous amounts of overtime.

// 65 hours per week == 15 hours of overtime (which is equivalent to 22.5 hours of pay, it's like 3 weeks of pay for every 2 week paycheck.).

// still driving the same car because if it ain't broke, don't fix it

// totally over the car culture thing
 
2013-07-28 03:19:26 PM  
Ric Romero should have his own tag, one that reflects authentic Ric Romero stories, rather than just generic "Duh" stories where is name is used in meme fashion.
 
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