A seven year loan on a 3 year old used car

Coexist

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Wed Sep-12-07 07:25 AM
Original message

A seven year loan on a 3 year old used car

they are doing that now.

12%. How long until he is upside-down?

How long until the car no longer runs vs. how long he will be paying on it?

You do the math.

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Maggie_May

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Wed Sep-12-07 07:27 AM
Response to Original message

1. Is this a joke?

thats crazy at 12%.

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Coexist

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Wed Sep-12-07 10:02 AM
Response to Reply #1

9. no, this is what a guy I know just told me when I admired

his new car.

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backscatter712

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Wed Sep-12-07 10:11 AM
Response to Reply #1

11. Hey, I'm stuck with a 19% loan

Granted, I've got shitty credit (though I've been a good boy as of late) and it's only a 4 year loan, not a 7 year loan.

Still sucks though.

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BOSSHOG

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Wed Sep-12-07 07:30 AM
Response to Original message

2. One potential upside

(although that interest rate seems rather harsh), a seven year loan should mean a small monthly payment, which would allow for the doubling or tripling of the principal payment each month and which I would advise.

We'e wiped out 17 years of a 30 year mortgage in less then 4 years using that method.

12%???? - is there bad credit involved?

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HereSince1628

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Wed Sep-12-07 07:36 AM
Response to Reply #2

4. That assumes that there is a surplus to apply to the principle

Anyone who'd would step into this sort of car loan is probably in financial trouble.

Unfortunately, Using the rule of 72 a signature on the loan means paying out more than twice the value of the car, and that sort of thing is how poor people get trapped strategically by bad tactical decisions required to survive in the short term.

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BOSSHOG

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Wed Sep-12-07 07:43 AM
Response to Reply #4

5. Sadly true

I saw that nonsense occur on a daily basis when I was in the Navy. Its incredibly easy for a person to fuck up their finances mostly due to instant gratification and hot plastic in their pocket. And why pay more on a car payment when there is so much more stuff to buy? I'm not very smart but when it comes to money management I've done okay for us over the past 35 years.

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Coexist

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Wed Sep-12-07 10:02 AM
Response to Reply #5

10. he is young and said he has okay credit.

I don't know what "okay" means to him.

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groovedaddy

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Wed Sep-12-07 07:32 AM
Response to Original message

3. They prey on people's desperation

It's as old as the hills!

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demnan

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Wed Sep-12-07 08:03 AM
Response to Original message

6. It's easy to owe more on a car than it's worth

Any new car buyer who gets a 4 year loan has done that. When forced though, it beats having to work two jobs so you can pay a mortgage and buy a car so I'll keep it in mind. I may have to make that decision next year, depending on how my car does.

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Wiregrass Willie

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Wed Sep-12-07 09:11 AM
Response to Original message

7. Big Ed Wynn, the walking man's friend...

My cousin is in the used car business, but his major source of income is from financing them. He can get up to 35% on such a loan. Let's say he pays $5,000 for a car. He sells it for $8,000 -- collects $1,000 down -- and carries the balance of $7,000 for 48 months. It makes the monthly payment low. If the car sells for about $12,000, he'll carry it for 60 months.

It's better than a license to steal. Stealing requires work.

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guitar man

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Wed Sep-12-07 09:18 AM
Response to Original message

8. he's upside down

the minute he drives off the lot pretty much, depending on the sale price of the car.

Back in '03, we did a 6 year on a 3 year old vehicle at 8.5% We are trying to get rid of it now, not an easy task :(

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