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Abscate
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Joined: October 05, 2014
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Location: NYC/Upstate/ROW
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 Posted: Sun May 17, 2020 2:48 pm Post subject: Re: Used car market still strong...I am surprised. |
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Giving other people your cash for free because you aren’t disciplined enough to not spend it? This is going from idiocy to lunacy.
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Q-Dog
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Joined: April 05, 2010
Posts: 8868
Location: Sunset, Louisiana
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| Posted: Sun May 17, 2020 8:21 am Post subject: Re: Used car market still strong...I am surprised. |
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I am making more money than that on a cash back credit card. 
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Brian
'69 Dune Buggy
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jspbtown
Samba Member
Joined: January 27, 2004
Posts: 5258
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| Posted: Sun May 17, 2020 6:29 am Post subject: Re: Used car market still strong...I am surprised. |
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| Quote: |
| Some dealers make up for the lost income from 0% financing deals by offering less on your trade in, or by raising the price of the car you are buying, or by tacking on some other charges, or by taking any manufacturer rebates for themselves. |
Agreed....which is why I did say this:
"So if you don't have the money and need to finance you save about $2,120 (which is often offset by negotiations which may or may not be available when you use the 0% finance options)." |
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jspbtown
Samba Member
Joined: January 27, 2004
Posts: 5258
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| Posted: Sun May 17, 2020 6:24 am Post subject: Re: Used car market still strong...I am surprised. |
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| Quote: |
| Also, where are you finding a savings account with 1.5% interest |
https://www.americanexpress.com/personalsavings/high-yield-savings-account.html
American Express high interest rate. It literally just dropped to 1.3% but mine has not yet so it is still at 1.5%. Tied to my checking. No fees. Move money in and out very easily.
I have pretty much drained all my credit union savings accounts (non-investment) and leave it in there. |
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Q-Dog
Samba Member
Joined: April 05, 2010
Posts: 8868
Location: Sunset, Louisiana
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| Posted: Sat May 16, 2020 11:20 pm Post subject: Re: Used car market still strong...I am surprised. |
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| jspbtown wrote: |
| Quote: |
| Paying cash is 100% smart, signing up for payments is stupid. |
If you take $25k but in in a high interest savings account @ 1.5% APR(100% secure) and pay off a car at the end of 60 months at 0% interest you will have close to $1000 left in that account when you pay the car off.
If you pay cash you will have $0 in that account after 5 years.
Why again are payments stupid? Because you make more money doing so? |
If you have cash to buy a car, chances are you have not been keeping it in your mattress, and that money has already collected some interest. Also, where are you finding a savings account with 1.5% interest?
Dealers are not in the business of losing money. Some dealers make up for the lost income from 0% financing deals by offering less on your trade in, or by raising the price of the car you are buying, or by tacking on some other charges, or by taking any manufacturer rebates for themselves. That's why they ask if you will be financing and if you have a trade-in before they tell you how much the car costs. There is no free lunch. For the average car purchase today, paying 2.5% apr and putting a $2000 rebate in your pocket is cheaper for you than 0% apr and letting the dealer keep the rebate. Also, If you can qualify for the 0% financing through the dealer, you can qualify for good terms elsewhere and pay less for the car up front.
If doing the financing route works for you, great. I don't play their games. I pay cash and I own it. Works for me.
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Brian
'69 Dune Buggy
'69 Beetle Convertible
'70 Beetle |
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vwinnovator
Samba Member
Joined: July 11, 2005
Posts: 1555
Location: Still doing it in the back of your VW
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| Posted: Sat May 16, 2020 6:48 pm Post subject: Re: Used car market still strong...I am surprised. |
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| jspbtown wrote: |
| Quote: |
| Paying cash is 100% smart, signing up for payments is stupid. |
If you take $25k but in in a high interest savings account @ 1.5% APR(100% secure) and pay off a car at the end of 60 months at 0% interest you will have close to $1000 left in that account when you pay the car off.
If you pay cash you will have $0 in that account after 5 years.
Why again are payments stupid? Because you make more money doing so? |
Most ppl don't have the discipline to leave the $$$ alone for 5 yrs.
something exciting pops up and they spend it elsewhere...while being left with payments on car they are probably getting tired of...
Payments are the sign of "i want it now, but i really can't afford it"
zero interest with payments is simply the "interest" already built into the price. |
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jspbtown
Samba Member
Joined: January 27, 2004
Posts: 5258
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| Posted: Sat May 16, 2020 5:14 pm Post subject: Re: Used car market still strong...I am surprised. |
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| Quote: |
| Paying cash is 100% smart, signing up for payments is stupid. |
If you take $25k but in in a high interest savings account @ 1.5% APR(100% secure) and pay off a car at the end of 60 months at 0% interest you will have close to $1000 left in that account when you pay the car off.
If you pay cash you will have $0 in that account after 5 years.
Why again are payments stupid? Because you make more money doing so? |
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EverettB 
Administrator
Joined: April 11, 2000
Posts: 71846
Location: Phoenix 602
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| Posted: Sat May 16, 2020 4:35 pm Post subject: Re: Used car market still strong...I am surprised. |
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| Zundfolge1432 wrote: |
| I don’t see how , no matter the rationalization you somehow come out ahead buying a depreciating asset. The only way to minimize the cost? Buy a 4-5 year old vehicle Maybe older with low miles, garage kept, no accident history, one owner Then pay cash. |
Yes. If you find a deal and pay with cash, and sell it within 2-3 more years you could possibly break even or maybe come out ahead. Either way you got the usage for free.
I haven't done that with newer cars but I've done that with a couple popular older cars in the past. Cheap cars. Buy for like $3K, drive and play with a few years, sell for $3k at the end. I lost any labor I put into it though.
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Zundfolge1432
Samba Member
Joined: June 13, 2004
Posts: 12583
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| Posted: Sat May 16, 2020 4:24 pm Post subject: Re: Used car market still strong...I am surprised. |
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| jspbtown wrote: |
| Quote: |
| If I wanted a truck for instance there is a 2011 Toyota Tacoma On autotrader with 12k miles one owner for 16k clean Carfax |
Must have been a great deal....nothing like that on there now. One with 12k miles for $21k not $16k. |
Less than 3 minutes ago Naples Florida color white miles 12k price 19.6 they come and go. |
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Zundfolge1432
Samba Member
Joined: June 13, 2004
Posts: 12583
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| Posted: Sat May 16, 2020 4:07 pm Post subject: Re: Used car market still strong...I am surprised. |
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| Paying cash is 100% smart, signing up for payments is stupid. Own your life you’ll sleep better debt free. |
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jspbtown
Samba Member
Joined: January 27, 2004
Posts: 5258
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| Posted: Sat May 16, 2020 4:04 pm Post subject: Re: Used car market still strong...I am surprised. |
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| Quote: |
| If I wanted a truck for instance there is a 2011 Toyota Tacoma On autotrader with 12k miles one owner for 16k clean Carfax |
Must have been a great deal....nothing like that on there now. One with 12k miles for $21k not $16k. |
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Abscate
Samba Member
Joined: October 05, 2014
Posts: 24347
Location: NYC/Upstate/ROW
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| Posted: Sat May 16, 2020 2:59 pm Post subject: Re: Used car market still strong...I am surprised. |
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Vanguard 500 no load last 5 years averaged 11%
Just don’t let professionals manage your money.
Paying cash when 0% APR is available is financially idiotic.
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Zundfolge1432
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Joined: June 13, 2004
Posts: 12583
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| Posted: Sat May 16, 2020 10:58 am Post subject: Re: Used car market still strong...I am surprised. |
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I don’t see how , no matter the rationalization you somehow come out ahead buying a depreciating asset. The only way to minimize the cost? Buy a 4-5 year old vehicle Maybe older with low miles, garage kept, no accident history, one owner Then pay cash. Do not borrow money period . Don’t get lulled into zero interest, they still own it until last payment made. You want a snapshot of reality go to
www.autotrader.com Look at the NADA pricing which of late has been trending towards “good price” to great price” which translates into more cars less buyers.
If I wanted a truck for instance there is a 2011 Toyota Tacoma On autotrader with 12k miles one owner for 16k clean Carfax, Pay cash and you’ve got something that will last 300k or more. Even in this scenario you lose your money but it’s yours from day one, has good resale value, cheap to insure, and you have the utility of it. It could be considered a tool. Or you can be first guy on the block to be styling complete with a loan and maybe even gap insurance because you paid too much.
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vwinnovator
Samba Member
Joined: July 11, 2005
Posts: 1555
Location: Still doing it in the back of your VW
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| Posted: Sat May 16, 2020 9:34 am Post subject: Re: Used car market still strong...I am surprised. |
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when I trade options, I risk loosing 100% of the money or making 100-1000's%
when I buy new cars, I only loose $$$ year after year, gradually
last used car I bought is a 1999 honda CRV with 150K, inspected for $1400
2yrs driving as a shop beater car, 0% interest rate 
everything works on it including the A/C.
I'm going to see if I can get $2500 out of it this summer for a 30-35% annual return |
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jspbtown
Samba Member
Joined: January 27, 2004
Posts: 5258
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| Posted: Sat May 16, 2020 6:15 am Post subject: Re: Used car market still strong...I am surprised. |
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| Quote: |
| Redo your work with the futures value of a 60 month 25k investment At 7% return. You will have about 12k in the bank |
I get different numbers.....and a few different assumptions. There is really no conservative investment that will get you 7%. Sure..you could invest it and get maybe 7%...but then I guess you need to discuss what the plan would be if you lost money during those five years....the last few months certainly suggests that's more than possible. 
Secondly....even at 7% I think you might have failed to incorporate the monthly reduction in principle.
At 4% I get just under $3k left at the end of the term. At a more conservative & realistic 1% I get about $650.00. Even at 7% I only get $5,500 (which isn't small but not near $12k).
And I believe you are assuming the person has the $25k in the bank and it is discretionary. The original post which I quoted saying that "0% APR over a 60 month term is like buying the car at half price".
So if you don't have the money and need to finance you save about $2,120 (which is often offset by negotiations which may or may not be available when you use the 0% finance options). If you have the money, and are an aggressive and savy investor who can risk losing the money you might save $5500. If you are more conservative and can't afford to lose the principle then it might save you $650 over 5 years. |
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Abscate
Samba Member
Joined: October 05, 2014
Posts: 24347
Location: NYC/Upstate/ROW
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| Posted: Sat May 16, 2020 2:16 am Post subject: Re: Used car market still strong...I am surprised. |
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| jspbtown wrote: |
| Quote: |
| 0% APR over a 60 month term is like buying the car at half price, |
Huh?
$25k loan for 60 months at 0% is $416.66 per month x 60m = $25,000
$25k loan for 60 months at 3.25% is $452.00 x 60m = $27,120
Interest cost...…$2,120 over the term (or $35 per month) |
Redo your work with the futures value of a 60 month 25k investment At 7% return. Youll haveabout 12k in the bank
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Abscate
Samba Member
Joined: October 05, 2014
Posts: 24347
Location: NYC/Upstate/ROW
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| Posted: Thu May 14, 2020 1:26 pm Post subject: Re: Used car market still strong...I am surprised. |
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| ach60 wrote: |
Is 567,000 cars dumped on the market a problem?
https://jalopnik.com/a-hertz-bankruptcy-could-sink-an-already-struggling-use-1843414354
| Quote: |
Used car prices have been wonky through the current crisis, but it now seems they’ve decided on which direction to head: Down. Way down. And the eventual fate of car rental giant Hertz could flood an already underwater market.
Used car prices fell 34.4 percent in April, according to the Detroit Free Press, and used car dealers are cutting back on building up inventory. While the Freep says that used car prices could go up soon due to a shortage of new cars caused by plant closures, there is another factor to consider: The more than half a million cars currently sitting on beleaguered Hertz Car Rental’s books.
Hertz is currently considering its options for a possible bankruptcy, a move made necessary mainly due to a drastic slowdown in rentals thanks to covid-19 shutdowns, though it must be pointed out that Hertz hasn’t always made wise purchasing decisions when it comes to its fleet.
The two major banks holding Hertz’s debt, Deutsche Bank AG and Barclays Plc, need to decide in the next two weeks if it should allow Hertz to unload some of its fleet to pay the bills or simply slip into bankruptcy. But selling cars at the moment probably will not help much, considering tumbling used car demand. Hertz is currently on the hook for the leases on 567,000 vehicles, with another 200,000 internationally, spread out across its 12,400 locations. Here’s how Autoweek breaks down the options facing the company:
Even when the used car market begins to bounce back, the ability to sell all of these cars at their market value may be a question of years, not months.
Hertz’s future may depend on when airlines get flying again, as the company makes most of its cash through travelers. That is, in the increasingly unlikely event that the company can make it to the end of this crisis and start turning a profit again soon.
It’s a vicious cycle: used car prices are low, so Hertz has to sell more used cars to make enough to stay afloat, leading to even lower car values. A bankruptcy would also trigger a massive sell-off of the fleet, causing the same effect. Unfortunately, investors, shareholders, and banks dislike uncertainty and like money; Hertz simply has too much of the former and not enough of the latter. |
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An impact but the used car marketization 20M units or so, so 500k of Hertz crap isn’t that big. Those are big ticket used , too, 2-3 years old.
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kingkarmann
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Joined: November 05, 2003
Posts: 4640
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| Posted: Thu May 14, 2020 8:38 am Post subject: Re: Used car market still strong...I am surprised. |
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| Jon Schmid wrote: |
| I'm tempted to buy a new car (not really) under these circumstances. I own 4 cars. The newest is 20 years old (wife's Toyota Avalon). Then there is my 1996 Toyota T100 4X4. Finally, my Porsche 356's (both well north of 50 YO). And they all run fine. So for those of you buying a car and worrying about its worth 5 years from now, unless it's a total POS, hang onto it. Eff the depreciation--that only kills you if you want to dump it in a few years. And, unless your company is paying for it, NEVER lease. |
I bought a then new 2012 GTi zero down sign & drive 60 months. Now has 170k and had been meticulously maintained with all of the known weak spots addressed (I'm not concerned about the engine "grenading").
Anyhow, I've pondered going back to VW and taking a look at the new stuff but have decided I'm gonna hang on to what I have. No payment vs. $450-500 mo. even with no interest is a no brainer... even if the engine grenades  |
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ach60
Samba Member
Joined: May 14, 2001
Posts: 4137
Location: Santa Maria
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| Posted: Wed May 13, 2020 9:24 pm Post subject: Re: Used car market still strong...I am surprised. |
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Is 567,000 cars dumped on the market a problem?
https://jalopnik.com/a-hertz-bankruptcy-could-sink-an-already-struggling-use-1843414354
| Quote: |
Used car prices have been wonky through the current crisis, but it now seems they’ve decided on which direction to head: Down. Way down. And the eventual fate of car rental giant Hertz could flood an already underwater market.
Used car prices fell 34.4 percent in April, according to the Detroit Free Press, and used car dealers are cutting back on building up inventory. While the Freep says that used car prices could go up soon due to a shortage of new cars caused by plant closures, there is another factor to consider: The more than half a million cars currently sitting on beleaguered Hertz Car Rental’s books.
Hertz is currently considering its options for a possible bankruptcy, a move made necessary mainly due to a drastic slowdown in rentals thanks to covid-19 shutdowns, though it must be pointed out that Hertz hasn’t always made wise purchasing decisions when it comes to its fleet.
The two major banks holding Hertz’s debt, Deutsche Bank AG and Barclays Plc, need to decide in the next two weeks if it should allow Hertz to unload some of its fleet to pay the bills or simply slip into bankruptcy. But selling cars at the moment probably will not help much, considering tumbling used car demand. Hertz is currently on the hook for the leases on 567,000 vehicles, with another 200,000 internationally, spread out across its 12,400 locations. Here’s how Autoweek breaks down the options facing the company:
Even when the used car market begins to bounce back, the ability to sell all of these cars at their market value may be a question of years, not months.
Hertz’s future may depend on when airlines get flying again, as the company makes most of its cash through travelers. That is, in the increasingly unlikely event that the company can make it to the end of this crisis and start turning a profit again soon.
It’s a vicious cycle: used car prices are low, so Hertz has to sell more used cars to make enough to stay afloat, leading to even lower car values. A bankruptcy would also trigger a massive sell-off of the fleet, causing the same effect. Unfortunately, investors, shareholders, and banks dislike uncertainty and like money; Hertz simply has too much of the former and not enough of the latter. |
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oprn
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Joined: November 13, 2016
Posts: 15168
Location: Western Canada
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| Posted: Wed May 13, 2020 6:02 pm Post subject: Re: Used car market still strong...I am surprised. |
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The oil patch and related service industry here in this area have laid off closer to 90% of thier workers and some fields have shut down all of thier wells and facilities. Some are running about 5% of normal just to keep the equipment and pipelines from rotting with dead fluid. Our shop has given everyone a permanent lay-off and locked the doors until further notice.
All this by the way is because of people 1/2 way around the world having a price pissing match and has been complicated by the present stay at home policies.
Car and housing markets here in the immediate area are at a dead standstill. There is still some action in the cities though. |
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