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Old 11-09-2014, 09:50 PM   #81
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I don't consider my car unsafe just because it is older (12 years heading into 13 GMC Yukon) as I keep it well maintained.
I also don't actually count it as part of my net worth, I just based the calculation on what it shows online as being worth compared to my current net worth (including my house which has no mortgage).
It will be replaced with a new vehicle in 2017 when we retire and will probably be used for the next 10-15 years before being replaced again.
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Old 11-09-2014, 10:04 PM   #82
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Correction 1% - I counted my wife's addition to net worth but not her car.

heh heh heh - silly me.
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Old 11-09-2014, 10:27 PM   #83
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Old 11-09-2014, 11:42 PM   #84
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Okay, what the heck... I'll play.

0.2%

15 year old pick up that I am in no hurry to say goodbye to. Great, great vehicle. Probably one of the best truck models ever conceived.
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Old 11-09-2014, 11:49 PM   #85
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If I counted them in, and I don't, it would be much less than 1%.

A 21 yo utility vehicle bought when it was 5 yo, a 18 yo pickup bought new, a small 5 yo crossover SUV bought new. All total, not worth much, but worth a lot to me personally, because I know them and have maintained them and worked on them over the years. No rust.
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Old 11-10-2014, 12:31 AM   #86
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15 year old pick up that I am in no hurry to say goodbye to. Great, great vehicle. Probably one of the best truck models ever conceived.

Ford Powerstroke 7.3 Diesel ?
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Old 11-10-2014, 03:40 AM   #87
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If I counted them in, and I don't, it would be around 3.3%. That's because of low net worth, not fancy cars.

Since I don't really care what our cars are worth, I had to look it up. I was actually quite surprised at the quotes for a 2001 Volkswagen Golf with low mileage. They still trade at 3,000 € or more.

I do think my 2007 Toyota Avensis is a good representation of myself: Cheap, reliable, doesn't give a f*** what the neighbours think.
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Old 11-10-2014, 07:08 AM   #88
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Would this be the same as paying cash? Or would using tomorrow's dollars to pay today's debt be considered income?

0 Percent Car Financing Could Save You Thousands - ABC News

Quote:
Zero percent loans are a good deal for car dealers, because cars are such a huge purchase that it’s a way to get people to buy. And they’re a good deal for customers because they can save you money, according to auto website Edmunds.com.

“I think people don’t realize how much you save by getting a lower interest rate,” said Edmunds Senior Consumer Advice Editor Philip Reed. “If people took the time to calculate it they would be stunned by how much they’re paying in interest and that’s money that’s lost forever."

Actually, you don’t have to calculate it yourself. A new analysis by Edmunds says a zero percent loan can save you as much as $3,554 compared with a typical auto financing deal! To give you an idea, the website did the math using a $28,000 loan at 4.31 percent for 67 months.
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Old 11-10-2014, 07:50 AM   #89
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Instead of 0% financing you can get an extra discount for paying the full amount immediately.

The cost of capital is simply added to the total price you pay so you don't see the interest rate hidden in the purchase price. With today's low rates the difference is not that big on short term time scales though.

So make no mistake, you do pay interest indirectly

Now, how much interest you pay vs. how much your own money yields is a different matter. It makes sense to borrow at a low rate (say 2%) if you have your own money yielding 3% or more. But that's not a given.
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Old 11-10-2014, 08:06 AM   #90
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The cost of capital is simply added to the total price you pay
Perhaps. But that (negotiating the purchase price) is a separate issue.
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Old 11-10-2014, 08:08 AM   #91
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Maybe I don't understand you then.

Was saying that you can get a lower purchase price if you forego the financing part. It's linked.
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Old 11-10-2014, 08:26 AM   #92
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Instead of 0% financing you can get an extra discount for paying the full amount immediately.
It's usually true, but not always. Sometimes manufacturers (not dealers) offer 0% financing and there's no "or $800 off" provision. Since I'm negotiating a price with the dealer (who usually already has a set wholesale price he's paid) and the financing offer comes from the manufacturer, it is possible to negotiate a low price and still get the favorable financing.
I'm sure there's still some interplay (e.g. if the manufacturer's low financing offer results in more customer demand, then the dealer's prices will be higher, or there's some sort of "holdback" that is reduced if buyers take the financing deal), but since three parties are involved the "total cost" pricing is bound to be a bit less efficient.
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Old 11-10-2014, 08:30 AM   #93
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Maybe I don't understand you then.

Was saying that you can get a lower purchase price if you forego the financing part. It's linked.
Why (or how)? Are you assuming the Dealership is the Finance Company -- with the interest going into the dealership coffers?

Why would the Dealership care (or have interest in) where the money is coming from?
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Old 11-10-2014, 08:36 AM   #94
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We have 4 cars (3 and 1 truck) that are worth about 1.8% of our NW based on a WAG. I don't include them in my NW calcs.
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Old 11-10-2014, 08:53 AM   #95
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Ford Powerstroke 7.3 Diesel ?
Not a domestic.
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Old 11-10-2014, 09:27 AM   #96
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Why (or how)? Are you assuming the Dealership is the Finance Company -- with the interest going into the dealership coffers?

Why would the Dealership care (or have interest in) where the money is coming from?
As far as I understand it, the actual financing entity in these deals is usually a company owned by the car manufacturer. That company actually can (and sometimes do) also finance other brands and the dealership as a whole, and they are also involved in leasing arrangements (for customers who are companies themselves).

Now, there is no way a separate financial entity (like a bank) can make money on 0% financing deals, so the money has to come from somewhere.

Here is typically how: The dealership gets discounts, marketing contributions and end of year bonuses based on what type of car they are selling, at what price, under what conditions, how many of them etc .. These can include strange things like getting a bonus on your BMW 5 series volume, but only if you also sell a certain amount of minis. Another item is a higher bonus if you can sell for cash instead of financing.

So in general, the margin loss from having to finance is balanced with a higher sale price. Given the current interest rates (2% - 3% typically) though it is a minor difference vs. the total purchase price.

Now, given the complexity of the system sometimes stupid things happen of which a smart buyer can take advantage.

But if offered 0% financing one should always ask what the price will be if you pay cash. Normally it's cheaper.
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Old 11-10-2014, 10:57 AM   #97
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2 drivers:

2014 Passat TDI (my car - sold 2005 Jetta w/165K on it 9/2014) 4K miles on it.

2013 Hyundai Santa Fe - 22,000 miles on it - (DW's car)

2002 Dodge Ram 1500 pickup - 230,000 miles on it. Extra vehicle. "The horse"

All three paid for and should last until The Man takes away our driver's licenses permanently.

Not considered part of net worth.
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Old 11-10-2014, 11:27 AM   #98
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Originally Posted by Totoro View Post
Instead of 0% financing you can get an extra discount for paying the full amount immediately.

The cost of capital is simply added to the total price you pay so you don't see the interest rate hidden in the purchase price. With today's low rates the difference is not that big on short term time scales though.

So make no mistake, you do pay interest indirectly

Now, how much interest you pay vs. how much your own money yields is a different matter. It makes sense to borrow at a low rate (say 2%) if you have your own money yielding 3% or more. But that's not a given.
And this is why financing should be a different transaction. When we got the wife's Toyo, the story was we were paying cash. This was disclosed up front and eventually we came up with the final price. Once that was established, we threw the "wait...aren't you offering 0% interest?". Of course, the FnI guy wanted to add in some crap (warranty, undercoat, all the scams) but we financed the agreed to amount at 0% interest.

On this subject, perhaps we should have a new thread to discuss what the % of income (or budget) goes towards transportation. Maybe I will set this up when I get back from grocery shopping.
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Old 11-10-2014, 12:12 PM   #99
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2% I was surprised at how much higher this is compared to other posters

11 year old Lexus SC430
14 year old BMW K1200LT motorcycle
2 month old Tesla Model S
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Old 11-10-2014, 12:27 PM   #100
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Quote:
Originally Posted by Totoro View Post
Instead of 0% financing you can get an extra discount for paying the full amount immediately.

The cost of capital is simply added to the total price you pay so you don't see the interest rate hidden in the purchase price. With today's low rates the difference is not that big on short term time scales though.

So make no mistake, you do pay interest indirectly

Now, how much interest you pay vs. how much your own money yields is a different matter. It makes sense to borrow at a low rate (say 2%) if you have your own money yielding 3% or more. But that's not a given.

I can agree with you here. My % is actually kind of high at 20%, but I have a loan for a brand new pickup. This may come back to bite me as I often see a trend in people retiring earlier whom have a lower or no cost of vehicle ownership.

I still plan to ER in 18yrs, with the same pickup, only paid off. They say the AVG american family buys 2 new cars and a home in there 30s and has 2 kids. DH needs a new vehicle but we have been driving a loaner from the ole man until she finds what she wants.

To be fair I drove the same 4cyl standard vehicle from 18-33 that I paid $6,000 cash and it saved me tons of money. My DH and I plan to drive the wheels off of these vehicles until our unborn is of driving age...then we will hand down the car, get my wife a new car and all should be well. DH doesn't commute daily like I do, but in the snow its very "convenient" to have a pickup and thus its one item I am willing to pay the "convenience" tax on.

If for whatever reason I lost my earning power I would sell the new truck immediately and buy a 4cyl until I found a new job...that would be a fine incentive to get a good job ASAP IMO.

For some reason the overwhelming feelings of justification for the expensive car and home purchases recently were the idea that I would BUY and HOLD both of them for as long as I can...coupled with the fact I get job oppurtunities daily, and have been highly targeted for work. I feel like its going to be quite some time before my earning potential diminishes. At least a decade which at that time I will be able to afford to pay cash from then on out for new vehicles.


I do as much maintenance as I can myself, unless the dealer or shop does it for free or its on sale. Some things arent worth cranking a wrench for.
The next vehicle purchase will likely be in 17years provided the bone yards don't go extiinct.
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