Before You Go and Get Ripped Off on Your New Auto Loan...

FilingOnMyOwn · 09-02-2006, 06:44 PM

I've been reading all these posts about getting 'approved' for auto loans. Getting 'approved' can also apparently mean that you should prepare to bend over and get raped it seems. Before you sacrifice your new financial virginity after bk, let me show you how bad the damage can be:

"Approved" for 30k @ 16% interest for 60 months = You Pay $43,772.40

Thats $ 13,772.40. In interest charges alone. Money lost. Flush down toilet.

Or a milder less painful one I read. "Approved" for 28k @ 13% interest for 60 months = You Pay $38,798.40

Thats $ 10,798.40, once again, in interest alone.

Thats a down payment on a house. And a really big housewarming party.

FilingOnMyOwn · 09-03-2006, 02:43 PM

So I see the thread has survived overnight this time.

I had been looking for the first auto loan contract that I ever had. 5 years ago, I loaned $9,600 for a 5 year old used car. Only 48 months to pay, @ 16%. When I first started making my car payments which were $276, I realized that over $200 of my first payment went straight to interest, and less than 1/4 of it to principle! If I had not have sold the car 6 months later for 11k and turned a profit instead, I would have ended up paying $ 3,654.72, on interest alone. For a 5 year old used car.

Heres an example of my 'best' loan, it was a motorcycle. 'Only' 9% interest, sounds like a deal right? But on 4,500$ loaned for 48 months, the interest would have ended up being about $1,000. See how that mere 9% turns out being over 20% of the purchase price in additional charges?

Go ahead, figure out what you have paid in interest, and post it.

Bobby'sGirl · 09-03-2006, 04:14 PM

When the world was golden (so were stocks!) paid $26,000 cash for my GMC van. 0% interest that way. Still runs, thank goodness and generally less than a thousand per year's repair to keep it going these past few years, so still way cheaper than financing a "new/used" car as you have pointed out above. I certainly can't come up with the cash for one today!

FilingOnMyOwn · 09-03-2006, 05:59 PM

Yeah I certainly wouldn't go out and pick up a new auto loan for what cars sell for these days. Its like losing 5 grand the moment you drive off the lot. If I did have the cash to buy new though and pay in full, I would go for a toyota prius or something like that. Or wait 2-3 years when honda's new fuel cell vehicles come out - No gasoline required - now thats an investment.

**BassBoy** · 09-04-2006, 02:23 PM

Yes, the amount one will pay in interest is shocking once you velge into like that. Most people are so stoked about getting a new/newer vehicle that they can be blind as to how much they'll actually pay in interest over the 60 mo's.

Koodos to you FOMO for showing some numbers....gives everyone a lot to think about.

brokentex · 09-08-2006, 03:55 PM

Quote:

Originally Posted by FilingOnMyOwn

I've been reading all these posts about getting 'approved' for auto loans. Getting 'approved' can also apparently mean that you should prepare to bend over and get raped it seems. Before you sacrifice your new financial virginity after bk, let me show you how bad the damage can be:

"Approved" for 30k @ 16% interest for 60 months = You Pay $43,772.40

Thats $ 13,772.40. In interest charges alone. Money lost. Flush down toilet.

Or a milder less painful one I read. "Approved" for 28k @ 13% interest for 60 months = You Pay $38,798.40

Thats $ 10,798.40, once again, in interest alone.

Thats a down payment on a house. And a really big housewarming party.

Do have a mortgage filingonmyown?

FilingOnMyOwn · 09-08-2006, 04:54 PM

Quote:

Originally Posted by brokentex

Do have a mortgage filingonmyown?

No, why do you ask? Like I could afford to buy a house where the averages run 300k-600k

brokentex · 09-08-2006, 08:28 PM

Quote:

Originally Posted by FilingOnMyOwn

No, why do you ask? Like I could afford to buy a house where the averages run 300k-600k

So you mean you are throwing money away on rent ? I only have one point to make. How much is that 300-600k house going to cost you in interest over 15 to 30 years ?

**lrprn** · 09-08-2006, 09:11 PM

Quote:

Originally Posted by brokentex

So you mean you are throwing money away on rent ? I only have one point to make. How much is that 300-600k house going to cost you in interest over 15 to 30 years ?

If to have a house makes you so house-poor that you have work two jobs or slave 60-80 hours a week and have no quality of life or time with your family just to make the house payments every month, who cares about the tax break and investment potential (and with the currently crashing housing markets all over country where people can't sell their house for any price, that "investment potential" is not a given any more). Why have the house if the house overshadows everything else in your life? No one should ever live for a house. (And yes, we do own one ourselves.)

SinkingFast · 09-09-2006, 08:31 AM

Quote:

Originally Posted by brokentex

So you mean you are throwing money away on rent ? I only have one point to make. How much is that 300-600k house going to cost you in interest over 15 to 30 years ?

We have OWNED several houses in several different states over the last 20+ years.

We've been house poor and we've been owned by a house.

We rent now and I LOVE it!!

The ice maker quit. Called the Landlord. Had a new icemaker the next day. No charge to us.

The water heater didn't work properly. Called the maint guy. Maint guy here next day to service the water heater. No charge to us.

Bathtub didn't drain right. We fixed it on our own cause we wanted to. Not cause we HAD TO to dodge a plumber bill.

Renting is cheaper and easier. If a problem comes up that we want to take care of on our own, we do. If it's something we can't handle or don't wanna buy the parts out of pocket, we call the Landlord or the Maint Guy. Owning is one stress we do not need right now.

brokentex · 09-09-2006, 10:32 AM

There is nothing wrong with renting, hell buying a house is part of the reason I had to file a 7, not because we were over extended but because everything broke on it in the first 2 years and got put on CC's. The OP was raving about throwing money away on interest on automobile loans and made a statement about how that wasted money could be used for a down payment towards a house. Last time I checked a downpayment involved a mortgage and I was simply pointing put the amount of interest paid on cars will be nothing compared to the mortgage interest.

JeepMom · 09-09-2006, 11:18 AM

Quote:

Originally Posted by brokentex

Last time I checked a downpayment involved a mortgage and I was simply pointing put the amount of interest paid on cars will be nothing compared to the mortgage interest.

My van we paid $27,267 @ 9% Intrest for 66 months. If we made every payment as planned we would pay $7,403.33 in intrest. (We pay extra every month so actual amount will be lower)

My house we financed $112,000 @ 10.3% Fixed 30yr. If we made every payment on the day it's due we would have $253,382.34 in intrest fees. (We pay early, and extra) We are planning on refi in Jan 2008.

FilingOnMyOwn · 09-09-2006, 05:55 PM

Quote:

Originally Posted by JeepMom

My van we paid $27,267 @ 9% Intrest for 66 months. If we made every payment as planned we would pay $7,403.33 in intrest. (We pay extra every month so actual amount will be lower)

My house we financed $112,000 @ 10.3% Fixed 30yr. If we made every payment on the day it's due we would have $253,382.34 in intrest fees. (We pay early, and extra) We are planning on refi in Jan 2008.

Yeah, the car is horrible.

The house however, is not. If you pay 112,000 + 253,382.34 = 365,382.34 in total, that may sound high but guess what? Your car may die in 5 years, but in 30 years do you think you will be able to buy the same house for $365,382.34? My guess is that it would be worth upwards of 500k.

If the average of 6% home appreciation continued year over year, it will be worth $2,098,570.24 in 30 years.

FilingOnMyOwn · 09-09-2006, 06:01 PM

Quote:

Originally Posted by brokentex

So you mean you are throwing money away on rent ? I only have one point to make. How much is that 300-600k house going to cost you in interest over 15 to 30 years ?

Not really sure what point you were trying to make? Regardless, no way in hell I can afford to be paying 2,500-5,000 a month on a mortgage, when I dont' even make 2,500 a month.

Hello_It's_Me! · 09-10-2006, 05:49 AM

Plus, let's not forget the TAX BENEFIT of homeownership. FOMO makes a good point about appreciation and the interest you actually pay on your mortgage is reduced by 10-30% because you can write off the interest and property tax on your income tax every year!

But right now, I'm with SinkingFast, I'm digging renting for the time being and not looking to be a homeowner again anytime soon.

I was however, sick at the stomach, when I projected our taxes for this year without the deductions for the mortgage and property tax

09-02-2006, 06:44 PM	#1
FilingOnMyOwn Registered User B/F Guru Join Date: Oct 2005 Posts: 1,793	Before You Go and Get Ripped Off on Your New Auto Loan... I've been reading all these posts about getting 'approved' for auto loans. Getting 'approved' can also apparently mean that you should prepare to bend over and get raped it seems. Before you sacrifice your new financial virginity after bk, let me show you how bad the damage can be: "Approved" for 30k @ 16% interest for 60 months = You Pay $43,772.40 Thats $ 13,772.40. In interest charges alone. Money lost. Flush down toilet. Or a milder less painful one I read. "Approved" for 28k @ 13% interest for 60 months = You Pay $38,798.40 Thats $ 10,798.40, once again, in interest alone. Thats a down payment on a house. And a really big housewarming party.

09-03-2006, 04:14 PM	#3
Bobby'sGirl Registered User B/F Newbie Join Date: May 2006 Posts: 243	9 years ago When the world was golden (so were stocks!) paid $26,000 cash for my GMC van. 0% interest that way. Still runs, thank goodness and generally less than a thousand per year's repair to keep it going these past few years, so still way cheaper than financing a "new/used" car as you have pointed out above. I certainly can't come up with the cash for one today!
	August '05 Business failed. Spring '06 Found this site, thank heavens Chap 7 (no asset) filed 11/10/06; 341:1/31/07 disharged 2/26; closed 4/17/07

09-04-2006, 02:23 PM	#5
BassBoy Moderator B/F Guru Join Date: Oct 2005 Location: Northeast, Ohio Posts: 2,070	Yes, the amount one will pay in interest is shocking once you velge into like that. Most people are so stoked about getting a new/newer vehicle that they can be blind as to how much they'll actually pay in interest over the 60 mo's. Koodos to you FOMO for showing some numbers....gives everyone a lot to think about.
	Bankruptcy History: Chapter 7 filed - 10/12/2005 - Asset Discharged - 02/16/2006 Case Closed - 11/08/2007 A banker is a fellow who lends you his umbrella when the sun is shining and wants it back the minute it begins to rain ~ Mark Twain All suggestions are based on personal experience and research and SHOULD NOT be construed as legal advice as I am NOT an attorney. Always consult with competent counsel in your area with regards to your particular situation.

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09-03-2006, 02:43 PM	#2
FilingOnMyOwn Registered User B/F Guru Join Date: Oct 2005 Posts: 1,793	So I see the thread has survived overnight this time. I had been looking for the first auto loan contract that I ever had. 5 years ago, I loaned $9,600 for a 5 year old used car. Only 48 months to pay, @ 16%. When I first started making my car payments which were $276, I realized that over $200 of my first payment went straight to interest, and less than 1/4 of it to principle! If I had not have sold the car 6 months later for 11k and turned a profit instead, I would have ended up paying $ 3,654.72, on interest alone. For a 5 year old used car. Heres an example of my 'best' loan, it was a motorcycle. 'Only' 9% interest, sounds like a deal right? But on 4,500$ loaned for 48 months, the interest would have ended up being about $1,000. See how that mere 9% turns out being over 20% of the purchase price in additional charges? Go ahead, figure out what you have paid in interest, and post it.

09-03-2006, 05:59 PM	#4
FilingOnMyOwn Registered User B/F Guru Join Date: Oct 2005 Posts: 1,793	Yeah I certainly wouldn't go out and pick up a new auto loan for what cars sell for these days. Its like losing 5 grand the moment you drive off the lot. If I did have the cash to buy new though and pay in full, I would go for a toyota prius or something like that. Or wait 2-3 years when honda's new fuel cell vehicles come out - No gasoline required - now thats an investment.

09-09-2006, 10:32 AM	#11
brokentex Registered User B/F Newbie Join Date: Dec 2005 Posts: 61	There is nothing wrong with renting, hell buying a house is part of the reason I had to file a 7, not because we were over extended but because everything broke on it in the first 2 years and got put on CC's. The OP was raving about throwing money away on interest on automobile loans and made a statement about how that wasted money could be used for a down payment towards a house. Last time I checked a downpayment involved a mortgage and I was simply pointing put the amount of interest paid on cars will be nothing compared to the mortgage interest.

09-10-2006, 05:49 AM	#15
Hello_It's_Me! Registered User B/F Newbie Join Date: Sep 2006 Posts: 28	Plus, let's not forget the TAX BENEFIT of homeownership. FOMO makes a good point about appreciation and the interest you actually pay on your mortgage is reduced by 10-30% because you can write off the interest and property tax on your income tax every year! But right now, I'm with SinkingFast, I'm digging renting for the time being and not looking to be a homeowner again anytime soon. I was however, sick at the stomach, when I projected our taxes for this year without the deductions for the mortgage and property tax