Last post on Jul 16, 2012 at 1:49 PM
You are in the Smart Shopper
What is this discussion about?
#1147 of 1186 Re: 'upside-down-ness' [fezo]
Jun 27, 2009 (7:30 pm)
"And you'll never be upside down either way"
Which is one of the reasons why i bought the Camry.
Subarus are nice but the back seat is too tight for my kids. The new Forester is out of my budget range for now. Also don't need full time AWD.
#1148 of 1186 Re: 'upside-down-ness' [dtownfb]
Jun 28, 2009 (7:46 am)
I've been down that Subaru back seat path. Had it not been for that we would have bought a Legacy wagon in late 99 but the seats were just too small. Ended up in an Accord which sadly was not available in a wagon anymore at that point. I still have it.
#1149 of 1186 Re: fez method [fezo]
Jul 31, 2009 (9:11 am)
Yes, we even would refer to it as a self managed lease. One reason he likes it better than leasing from the dealer is that if he hit a bad patch for any reason he has more control over the situation.
I did the self managed lease back in my 20's. It worked great. I would buy a car at the model year end for a deep discount and then drive for 2-3 years and sell. Worked best with Hondas. My first one was also my first brand new car, bought a 1999 Civic in October of 99, right after the 2000's rolled onto dealer's floors. Paid $15,500 for it, sold it in 2001 for $12,000 ($3500 in depriciation over 36 months comes out to $97/month in self lease), did the same with 2001 CR-V, but it got stolen. Then got a 2002 Civic Si (it was heavily discounted from it's $19,800 MSRP) for $15,000, sold it in 2005 for $12,500. $2500 over 36 months worke dout to be $70/month).
It is not bad if one does it with calculated approach.
#1150 of 1186 Re: 'upside-down-ness' [dtownfb]
Oct 11, 2009 (5:10 pm)
"Being "upside down" is not a problem if you wait until your car is paid off before buying another one. Never understood why people who must finance to afford a new car feel they "need" a new car every 3-4 years. All you are doing is putting yourself at the mercy of the dealers."
I haven't read all 115 pages of this thread, heck, I only read the first page, but I found it interesting. The bit quoted above is something that has been a mystery to me too. Most people I know hate the car buying process (including myself) and are relieved when it's over. They keep their cars for a minimum of five years. It's only when I started researching my 2009 Honda Fit purchase on various car sites and reading message postings that I learned how often people trade cars. Leases were created for people who MUST have a new car every three years, but some people don't even stay in the lease that long! It's crazy. It's also crazy that any lending institution would finance negative equity. Why would any bank want to finance negative equity on a fast depreciating asset like a car? If I were a loan manager I would not take any loan application that had negative equity in it. That reeks of an irresponsible buyer and no one I would want to finance. Frugal, smart, responsible car shoppers don't role negative equity into a new car, period.
Negative equity to me is part of the greater problem that has caused this current financial crisis, which is greed and excess. People buying more home, more car, and more credit than they could actually afford, and the incredibly lenient lending practices all conspired to create this huge problem. No one policed themselves and had the conversation, "Can I really afford this new luxury home? Do I really need that new car when my two year old car runs just fine? Do I really need a home equity loan to furnish my big luxury home I can't afford the mortgage on?" America, the land of excess, waste, and greed. Sometimes I'm not proud to be an American...
#1151 of 1186 Re: 'upside-down-ness' [dgs4]
Oct 12, 2009 (5:38 am)
Frugal, smart, responsible car shoppers don't role (sic) negative equity into a new car, period.
I can be just as self-righteous as the next person in this conversation (I don't own a Pious yet though, so I've got room to grow), but I've got to think that the reason this thread has gone basically dead is that upside-down financing isn't offered so much anymore and/or people have decided they can hang on to their present cars for awhile longer than they might have two years ago.
Like you, I didn't realize there was such a thing as upside-down financing until a few years ago. Since an auto loan is supposed to be secured by the value of the vehicle, it seemed a pretty dangerous practice to me. It was done all the time though, maybe most of the time, until a year or so ago.
Maybe it still is -- I don't know, but I doubt it.
#1152 of 1186 Re: 'upside-down-ness' [dgs4]
Oct 12, 2009 (5:48 am)
There are times when rolling negative equity into a new car is appropriate or desirable. Speaking strictly for myself, I won't do such a deal as a general rule, however, back during the summer of 1993, I leased a new Ford Probe GT 5-Speed only to find out not twenty-four hours later that my wife and I were expecting our first child (to say we were shocked is an understatement). Eighteen months later when our son graduated from an infant seat to the smallest forward facing booster seat we could find, it became painfully obvious that he wasn't going to fit back there for even a month or two and the search for a new car began. In the end, I wound up rolling the remaining portion of the lease into a new 1995 VW Passat GLX 5-Speed.
This turned out to be an even better deal for me than it might have as I ended up driving the Passat well over 100,000 miles during the term of the four year lease. "A good deal?" some might ask, "What about the charges for the excess mileage?"
I paid no excess mileage charges. Why? Apparently the 1995-1997 Passats had a problem with the instrument cluster where it would gradually burn out and lose all memory of the miles driven. When I turned my Passat in at lease end, there were only eighteen miles displayed on the new instrument cluster (the third since the car was new), and the VW service records only recorded enough miles to add up to something like 50,000 miles.
#1153 of 1186 Re: 'upside-down-ness' [shipo]
by Kirstie@Edmunds HOST
Oct 12, 2009 (6:04 am)
Ha! You're the first person I've heard of who's actually benefitted from the widespread electrical issues associated with VWs.
I wonder whether consumers are getting smarter, and realizing that being upside-down is rarely in their best interest? It'd be nice to find out that that's the case, rather than finance companies saying "no." Dealers?
#1154 of 1186 Re: 'upside-down-ness' [kirstie_h]
Oct 12, 2009 (6:26 am)
Funny thing, I actually gave VW a chance to do it right.
When the instrument cluster was in the process of failing for the second time, but before the odometer was completely unreadable, I took the car in and requested another new cluster. They said, "No" without even a second thought. I countered with my assertion that the instrument clusters were a "known issue" and since it had already been replaced under warranty it should be replaced again. They laughed in my face and told me that they wanted something like $1,200 for the parts and the work.
I turned to a local shop that specialized in VWs and had the job done for $500 (including the purchase of the new cluster). When VWoA called me after the car had been turned in and asked me to "estimate" how many miles were on the car, I stuck to my guns and asked, "What do your service records show?" In the end, my final lease disposition paperwork showed eighteen miles on the car at turn-in. I have no idea why they didn't add the initial (documented) seventeen thousand miles from the first cluster to the thirty some thousand miles that were on the second cluster during the cars' last visit to a VW service department, but they didn't and that was okay by me.
#1155 of 1186 Re: 'upside-down-ness' [dgs4]
Oct 14, 2009 (3:16 pm)
Why would any bank want to finance negative equity on a fast depreciating asset like a car? If I were a loan manager I would not take any loan application that had negative equity in it.
The short answer is that NO deal is sent to a bank with negative equity showing.
the numbers are massaged to show either a neutral trade or trade equity.
One of the reasons why trade in values here and places like KBB are off.
the selling price of the new car is raised.
The problem now is that banks aren't doing 100% financing for the most part. They won't do 100 or 120% of MSRP or retail book anymore, so hiding neg equity is much harder.
#1156 of 1186 Re: 'upside-down-ness' [volvomax]
Oct 16, 2009 (10:36 am)
Chase won't even finance 100% of invoice on a new Saab anymore and they won't finance longer then 60 months.
I think the max they will do is 70% of invoice.