Are you upside down on a car loan? How much?
Are you upside down on a car loan? How much?
I figured it was more like 50 or 60%. People live waaaaaaay beyond their means these days.
Thank goodness we only have 4% unemployment.
The whole upside down thing makes my head hurt because to fix the problem you simply need pay off your existing loan. For the most part, these people are able to make the payments because they're buying another car which will have a term loan. Their situation either drastically changed so they need a new car (benefit of the doubt) or they're impatient.
Regarding the question of whether I'm upside down, it depends on how shitty a trade in value I would accept and my loan amortization schedule. Early in the term, I was probably upside down given the exponential nature of depreciation.
I'm probably upside down by about 5-8% of the loan value. But it was sort of on purpose. I had plenty of cash to make sure that was never the case, but with 0.9% interest, I'd rather hold on to the cash and do other things with it that make me money.
Bought a car cash - no loan.
Not surprising. You're upside down the minute you drive off the lot.
Assuming you pay the minimum pmt, you will remain upside down relative to trade in for much of the loan.
Suppose I can easily afford $500/mo for a car and enjoy driving new cars, it wouldn't bother me to trade in every 2 years and be perpetually upside down.
32% of trade-ins fall into this category? Not surprising at all.
FWIW I am not upside down because I can't afford new cars. $3k debt on a $5k vehicle.
I've never really heard the "upside down" terminology used with respect to car loans. Don't you kind of expect to be upside down on a car loan? The value of a new car plummets as soon as you drive it off the lot, so you are necessarily going to be upside down from day one if your loan was for a substantial portion of the selling price.
To be upside on a trade-in you are either trading in early on a car you didn't put much down on or are getting a real bad trade-in value from the dealer.
The auto industry may be doing a record job of low-balling trade-ins.
And a higher percent of people may be selling their car online instead of trading it in.
Car payments are for losers and suckers. Haven't had a car payment in 15 years.
ElvisCash wrote:
Car payments are for losers and suckers. Haven't had a car payment in 15 years.
I paid $50k for a car this spring. A 60 month loan at .9%. I had $50k in cash to buy it. I'll probably pay for half the car just in interest on my $50k over the 5 years.
Who's the loser and sucker?
X-Runner wrote:
To be upside on a trade-in you are either trading in early on a car you didn't put much down on or are getting a real bad trade-in value from the dealer.
The auto industry may be doing a record job of low-balling trade-ins.
And a higher percent of people may be selling their car online instead of trading it in.
Another factor is that gas is cheap now so people are trading in small cars that nobody wants as long as gas is cheap so the value is low. Then all the sheep want to buy a big hog gas guzzling SUV like everybody else has and those are not being discounted.
newer car guy wrote:
ElvisCash wrote:Car payments are for losers and suckers. Haven't had a car payment in 15 years.
I paid $50k for a car this spring. A 60 month loan at .9%. I had $50k in cash to buy it. I'll probably pay for half the car just in interest on my $50k over the 5 years.
Who's the loser and sucker?
I understand your position. I bought my last new car (in 2012) with cash. I considered taking a low-interest loan, because I figured that my money would be better off being invested. My chief concern with having monthly payments that I could easily afford would be what if I lost my job and/or had crazy medical expenses that I needed to cover during the period that I was making car payments. Yes, this is a very small risk, but I'm a bit of a worry-wart.
dddddd wrote:
newer car guy wrote:I paid $50k for a car this spring. A 60 month loan at .9%. I had $50k in cash to buy it. I'll probably pay for half the car just in interest on my $50k over the 5 years.
Who's the loser and sucker?
I understand your position. I bought my last new car (in 2012) with cash. I considered taking a low-interest loan, because I figured that my money would be better off being invested. My chief concern with having monthly payments that I could easily afford would be what if I lost my job and/or had crazy medical expenses that I needed to cover during the period that I was making car payments. Yes, this is a very small risk, but I'm a bit of a worry-wart.
That's a fair concern, no doubt. But my point (with which you agree) is that it's not an entirely boneheaded move to finance.
So if you lost your job you would rather have a paid off car than the cash?
You want to be liquid in that situation.
So having cash is better than car equity.
I think it's the mental stress of the car loan more than anything. It's probably silly, but that's who I am :)
L'tr wrote:
Are you upside down on a car loan? How much?
I pay cash.
X-Runner wrote:
So if you lost your job you would rather have a paid off car than the cash?
You want to be liquid in that situation.
So having cash is better than car equity.
True, assuming the person would not have a rainy day supply if they paid upfront. You could argue more cash is better, but if they're still left with substantial savings even paying up front it's not such a terrible idea.
This whole discussion also reminds me of if and when we get back to 8-10% interest rates people are going to realize just how good we have it right now.
random guy on internet wrote:
I figured it was more like 50 or 60%. People live waaaaaaay beyond their means these days.
People means have been waaaaaay reduced over the past 35 years as the uber rich have taken more and more and more of the pie via the corruption of government.
Straight ca$h homie.