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It NEVER ends well when money is cheap and people are desperate to pump up sales.
I had an ex that lived at home and went out and bought a car she didn't need and couldn't afford. Then, 6 months later she got fired. Them her mom moved in with someone.
So she was stuck working at a dead end job(x2) paying for it, AND now market rent. She moved into a basement suite that was literally the size of a bedroom and was completely underground.
So stupid me comes along, and starts dating her and we move in together, and one day she's like, "so I re-negotiated the car loan"
Oh. Yeah. Can't wait to hear the detes on this one.
She had a bit over a year and a half left at $550/month. Rolled it into a new loan for $420/month for another 4 years I think. Can't remember the specifics.
By the time she was done paying for it, at 400/month in year 7, she owned a piece of shit that got stolen or broken into all the time and was worth pennies on the dollar.
I remember her mom said to me once, "well, it was a good investment at the time she bought it". On what fucking planet is a single girl buying a 4x4 domestic truck...NEW...off the lot...for STICKER PRICE a good 'investment'?
I've heard of many people doing some stupid shit with cars(mostly here on RS but have yet to see this one matched.
Fortunately, your taste in extinct reptiles is better than your taste in women.
then, with all due respect, you shouldn't ever get into a 'cost' discussion with anyone, as time value of money is ALL that matters in a cash vs. finance type decision
keep in mind the average consumer doesnt keep in mind of time value of money.
time value of money is ALL that matters to people that KNOW about it.
We dont factor time value of money in our finance. its the truth. I am no financial expert myself.
We are here to get people into cars, get them what they want and away they go at a deal the consumer is happy with. Thats all there is.
My initial post states only that cash price vs finance price, the dealer makes more money with finance price even at "0%", and that is the truth.
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im really sleepy but ill try to explain...basically,
your moneys worth more to you now than the same amount of money later on due to inflation and the fact that you could invest that money and make a % off of it
so if a car dealership says 0% and you owe $40k to be paid over 5yrs that means 5 years from now they have $40k
so whats $40k worth today? its not $40k because of the ability for you to invest etc
and really, today, you should be able to buy the car cash for like $37k (just an arbitrary # for example purposes)
so even though a company says 0% or "dont pay until 2020" it's considered that interest is calculated into that price
so yes you're right the dealership does make money from 0% financing not only from the "invisible" interest but also from getting a finders fee? from the financing company, sure you may be able to negotiate a bit off of the dealerships finders fee but you could negotiate much more if you offered to pay cash now (and in some cases you could save money by borrowing from a bank instead if you had to)
Had a customer purchase a brand new suzuki grand vitara from us. Choice of either 0% financing or $2-3000 off msrp. The customer chose the 0% financing, and got the coverage from icbc that gives the full replacement. Well within 3 weeks of financing the car, the customer gets hit and the car was a total loss. Icbc would not pay him what he paid for the car because it is possible to get the exact same car but cheaper. Think about it that way I guess.
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2002 Pontiac Trans Am
1999 Camaro Z28
1995 Camaro SOLD
1995 Nissan 240sx SOLD
2009 Saturn Astra
Had a customer purchase a brand new suzuki grand vitara from us. Choice of either 0% financing or $2-3000 off msrp. The customer chose the 0% financing, and got the coverage from icbc that gives the full replacement. Well within 3 weeks of financing the car, the customer gets hit and the car was a total loss. Icbc would not pay him what he paid for the car because it is possible to get the exact same car but cheaper. Think about it that way I guess.
Well yeah. Your guy could have gone into your dealership with icbc cheque and bought the exact car for 3k off MSRP because he is now paying cash. Was he expecting to get full MSRP cheque, buy car with 3k cash rebate, then continue his old payments?
per say 0% finance. 0 rebate on cash. principal price is the same. however, dealer technically makes more money if they were to get the customer to finance the car. In theory, finance deals makes more money, so those deals have that little bit more room to make a deal.
invoice price for cash or finance is the same with 0 incentives and 0% interest. Dealer makes money for setting up the loan. The bank pays dealer to set up the deal and the manufacturer pays for the interest.
If the above were the case, i had thought that it's better to take advantage of the interest free finance. Of course cash rebate are common place nowadays so that changes things.
Finance experts: I dont understand time value of money currently, but here is what I thought I understood
Inflation: 10k now will be worth more than 10k 5 years from. My 0% finance terms don't account for this. So I should come out ahead over 5 years
Opportunity cost (I think that's what its called): by paying 167/mth for 5 years, i can take my initial 10k and put it towards my mortgage, other debts, or even invest at a conservative 5% return and take advantage of compounding. Alternatively i pay 10k upfront, but set aside $167/mth to the above but won't save as much on interest or make as much on compounding.
I'm likely missing something, but don't understand it in time money terms
sure you may be able to negotiate a bit off of the dealerships finders fee but you could negotiate much more if you offered to pay cash now (and in some cases you could save money by borrowing from a bank instead if you had to)
So the assumption is there is a cash incentive/ rebate, or you can actually negotiate a significant savings.
In the absence of either, what is time value's role?
At the end of the day, if you are smart with your money, you shouldnt really need to have a big debate on this.
I think the lesson to be learned here is that FINANCIAL guys and SALES guys don't work on the same fundamentals. I agree with tofu though, TVM isn't a subject that everyone knows. Thats why there ARE people who commit to stupid ass 84 month financing terms.
You're so smart and we're all so stupid. Like what the hell do you want him to say? He is right after all... Dealer gets kickbacks for the loan.
i'm sorry, but when people start talking about things they don't fully understand or appreciate and I correct them (because this is my area of expertise), i'm not doing it to try and be all high and mighty- this is the internet, you don't know who i am, i don't need you to think anything of me, i was merely correcting a blatant error
not everything is a size of your dick contest, maybe when you grow up and mature you'll realize this
for the record, i was arguing that consumer gets a lower price with cash through negotiating a lower 'principal' amount vs. 0% financing. dealer kickbacks are effectively moot in this argument.
also, simple finance is an EXTREMELY important thing for anyone to know - time value of money is so key to big purchases in life, i'd strongly recommend EVERYONE try to understand it
i'm sorry, but when people start talking about things they don't fully understand or appreciate and I correct them (because this is my area of expertise), i'm not doing it to try and be all high and mighty- this is the internet, you don't know who i am, i don't need you to think anything of me, i was merely correcting a blatant error
not everything is a size of your dick contest, maybe when you grow up and mature you'll realize this
for the record, i was arguing that consumer gets a lower price with cash through negotiating a lower 'principal' amount vs. 0% financing. dealer kickbacks are effectively moot in this argument.
also, simple finance is an EXTREMELY important thing for anyone to know - time value of money is so key to big purchases in life, i'd strongly recommend EVERYONE try to understand it
Not everything is a size of your dick contest yet you feel the need to constantly remind everyone you're soooo much more mature and much smarter than us, So how about you grow the fuck up?
Not everything is a size of your dick contest yet you feel the need to constantly remind everyone you're soooo much more mature and much smarter than us, So how about you grow the fuck up?
haha, what? i'm doing anything to try to show how mature or smart i am, the fact that you take it that way shows a clear issue with you, not me
the dude was straight up wrong, admitting as much - i was right, i don't need to prove my rightness for any reason than the greater good.
i know exactly how smart and mature i am, and don't need some nerd behind a keyboard to pat my back and tell me how good i am, maybe you do, but i don't
i'll be grown up and just be done responding to you, how's that
haha, what? i'm doing anything to try to show how mature or smart i am, the fact that you take it that way shows a clear issue with you, not me
the dude was straight up wrong, admitting as much - i was right, i don't need to prove my rightness for any reason than the greater good.
i know exactly how smart and mature i am, and don't need some nerd behind a keyboard to pat my back and tell me how good i am, maybe you do, but i don't
i'll be grown up and just be done responding to you, how's that
You keep proving my point over and over, way to try to act all grown up by ending yet another conversation because you can't stop being a condescending prick.
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Not to escalate this, but you can be patronizing and if that's the impression you give off to others it's not their fault it's your social skills. the fact that you put the blame on others just furthers the view they have of you. just saiyan
not to say that you were a dick in this thread, in fact i'd say its a vast improvement over some of your other discussions fwiw
Quote:
Originally Posted by UFO
So the assumption is there is a cash incentive/ rebate, or you can actually negotiate a significant savings.
In the absence of either, what is time value's role?
maybe 4444 would like to chime in on this but as i understand at that point it doesn't play a direct role but you do have the knowledge that your money can be better used elsewhere
You could be using the same money to either pay off a debt (e.g. your mortgage) or invest and earn interest/capital gains.
Yeah i get that part, as I explained. 4444 was saying its better to pay the cash price, but then you're using the cash and cant use it to service other debt or generate income, which sounds contrary to what I think he would say.
Quote:
Originally Posted by 4444
for the record, i was arguing that consumer gets a lower price with cash through negotiating a lower 'principal' amount vs. 0% financing. dealer kickbacks are effectively moot in this argument.
So in the absence of a lower cash principle amount vs. Financing principle amount, as tofu explained the car's invoice price is the same in either case, is better to finance at 0%? And the longer the term the better, as long as one spends withineans and uses the original principle amount in a productive manner?
maybe 4444 would like to chime in on this but as i understand at that point it doesn't play a direct role but you do have the knowledge that your money can be better used elsewhere
Thats what I'm trying to say. At 0% financing, assuming no ability to negotiate a lower cash price, you're better off financing and using the money on other productive things
Not to escalate this, but you can be patronizing and if that's the impression you give off to others it's not their fault it's your social skills. the fact that you put the blame on others just furthers the view they have of you. just saiyan
not to say that you were a dick in this thread, in fact i'd say its a vast improvement over some of your other discussions fwiw
maybe 4444 would like to chime in on this but as i understand at that point it doesn't play a direct role but you do have the knowledge that your money can be better used elsewhere
it's the internet, i'm sorry if i don't want to sugar coat everything i say. as a successful businessman (i'm sure daredouche is going to have a fucking field day with that one), clearly i have ample social and business skills in teh REAL world... real world and revscene != same thing
and, no, not going to chime in anymore, clearly certain pussies (not you) are getting their panties in a twist if i clarify things, as they think i'm trying to prove something...
i have nothing to prove to anyone on here, that's for sure
You keep proving my point over and over, way to try to act all grown up by ending yet another conversation because you can't stop being a condescending prick.
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but have yet to see this one matched.
