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The opportunity cost spent nitting this shit could finance a US military budget for a decade
This is more than a house where I’m at still
yes I should move I know
it doesn’t seem like it in my experience.
Because I work in the retirement industry, a pet peeve of mine is surveys asking people what they think about things they obviously do not understand, and then presenting the result as a meaningful number. Here is how the typical survey in the retirement industry goes:
Hey random person - you don’t know anything about interest rates, capital market expectations, taxes, longevity, or the cost of livng. How much do you think you need to retire?
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No. Dealerships earn some of their profits by originating loans. If anything you’re more likely to get a discount by taking their financing.
My cousin is the sales manager at a dealership and he told me if I have cash to pay for a car never tell the dealer that. Negotiate hard on the price and be totally indifferent to the financing terms. They might even lose money on the car if they can stick you with bad financing terms. Just make sure there’s no prepayment penalties (I think this is unheard of or maybe illegal) and then pay off the balance immediately.
The main profit centers of the car dealership are financing and service.
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Car dealers make money off of finance deals. They would much rather you finance it.
It used to be your deal could be exploited on the total price, monthly payment, trade in and financing. So if a customer was focused on one of those you could arrange the deal to still make money exploiting the areas less important.
Cash no trade in is as simple as can be but you won’t necessarily get the best sales price in that scenario,
This is good advice for a cash purchase, people often come in wielding paying cash as a sword that will cut them the best deal. The dealer will likely offer little wriggle room beyond their “best offer”, if you tell them upfront you are paying cash.
If you do have a multi faceted deal you should negotiate each component separately and try to lock it in. We had codes from the trade in estimate guys telling us how much room we had to work with on a trade in for example. So if you wanted $500 off the price and I am sitting on $1500 over on the trade in, I will give you that $500. If you then try to push on trade in, I am going to be less likely to move. But I might move 1-2 hundred to close the deal. Then I still made a decent amount on trade in and didn’t give up profit in the car.
Car dealers don’t give cars away. Sometimes the right circumstances can allow you to max a deal because they need numbers or they are trying to hit lucrative manufacturing incentives.
All my knowledge is like twenty years old so take it with a grain of salt. The internet was only starting to be a factor back then.
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Yeah according to my cousin the business has been completely transformed in the last ten years.
These types of discussions always make me happy I can just get my employee family discount and bounce from the dealer
That car was purchased before we bought our house and our income was maybe in the $250k range. We did pay it off a few years later. If I were to be looking at a car in the $30k-$50k range now I’d probably just buy it outright. Anything more and I think it’d be a lease or a loan that gets paid off quickly
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Discussions of car buying always make me happy that I have never had to buy a car. Recently I’ve been thinking about getting one - although the anxiety of the actual process is one of the big things that keeps me from doing. That, and car pricing still being pretty high relative to the past, although I suspect that really isn’t going to change much.
One thing Tesla got very right was reinventing the car buying process. Fuck all this negotiating nonsense, so glad I never had to deal with that.
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I will never understand why you would spend so much money on a car when so many people leave perfectly good ones right on the street.
It has been a while since we bought a car but when we last bought we followed a two step process:
- Submitted through some website where you say what kind of car you want and dealerships are allowed to enter a bid. This seemed to work quite well as we got prices much lower that what we got when we went directly to the local dealership and did the test drive / negotiate thing. A dealer about a two hour drive away beat their price significantly.
- AFTER the price is settled and they come to negotiate financing you just tell them “no thanks, I’ll write you a check”. We could tell they were frustrated with that as I think they bid aggressively hoping to make it back on financing.
Anyway, I’m not sure if this is the right approach anymore.
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Let’s say I’m the hypothetical $500k annual earner, with the following assumptions
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30% of my earnings ($150k) come in a lump sum in the form of a bonus at the end of the calendar year. So I’m grossing $30k/month in gross base pay, and I get about $85k net every December.
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After expenses, taxes, tax-advantaged savings, college fund savings, and a vacation sinking fund, I have $5500 in cash left over each month.
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I maintain an $80k emergency fund in a Schwab money market account that yields 4.95%.
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Each month, as long as my emergency fund is topped off, I put the extra money into stock index funds in an ordinary brokerage account.
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The current balance of my brokerage account is $400k. I have big unrealized capital gains on the older holdings. The newer holdings have small gains, but I have held them for less than a year, so they are subject to a 42% marginal tax rate.
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I’m not exactly sure when I might want to buy a new auto. I might buy one if my current auto is damaged or some stuff on it stops working and I don’t want to fix it. I probably would want to buy a new car no later than 36 months from now, but it could be anytime between now and then. Let’s say that I would likely buy a vehicle in the $75-90k range.
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If I need to finance a vehicle, I can borrow from my local credit union at 5.25%.
Given the above:
- Is there something objectively wrong with the way I am handling my finances?
- Suppose I get into a fender bender and decide I want a new car. How should I buy it?
That’s been the case here too for a couple of decades. It began when manufacturers realised that most buyers only compare the on road price and ignore total cost of ownership, so tey started driving car prices down and the cost of finance, parts and servicing up, which is where they make most of their profits now.
Margins on a typical family car alone might be of the order of 1 or 2%. (some are even made and sold at a small loss).
Re car financing. Need to reconcile two competing statements.
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The interest in car finance is minor compared to base rate. It doesn’t really matter whether you buy or finance.
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Car finance is where dealerships make all their margin.
Both of these things can’t be true.