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Smart Shopper Owe more than it's worth... I'm upside down and I can't get up!
1160 messages, Last post on Oct 22, 2009 at 7:11 PM
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...but upside down, in the auto-financing business, means that immediately after purchase, and often for several years thereafter, the vehicle you are driving is worth thousands less than what you could get for it in a trade-in, because your loan agreement has allowed you to shirk payments on principal. Priceless. |
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your loan agreement has allowed you to shirk payments on principal Yeah, it's the LOAN'S fault, or the BANK'S fault... |
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They said "your loan agreement". Of course the buying individual has to enter into an AGREEMENT. |
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it's not my fault, article writing style. This upside down epidemic has been going on for years - the main reason, of course, is two-fold - people are buying way more car than they can afford and there not setting themselves up for an equity position. Dealer publications say that the average down payment on a car, nation-wide, is $500 - that chump change doesn't do much when you're buried in your current car and you buy another car that depreciates like a rock, then you finance it for 72/84/96 months to make it affordable - knowing good and well you'll wnat to trade it in 2-3 years. STUPID with a captal S. The only way to overcome this cycle is to curtail your spending on other things for a while, like foregoing that new DVD player or plasma TV, in order to pay down your current loan and pay less interest. The goal is to pay the car off while it's still "tradeable" - under 100k, no major damage, good maintenance. That way, when you DO trade, it's like cash money, instead of a the typical handicap of digging yourself out of one car, only to be buried in another one. The final goal is like my uncle used to do - he wasn't rich, by any means, but he bought a new car every 2 years and paid cash for the difference between the new one and the trade. He started off in older used cars that he paid cash for, and over just a few years, worked his way into paying cash for new cars - buy NOT financing for a long time!!! And buy not buying the most expensive thing out there so you could impress your neighbors. Personally, I'm MUCH more impressed by someone who buys the Honda Civic they can afford and takes their family on a real getaway vacation every year, than the idiot with the new Benz and 20" rims who can't afford to take his kids to Mickey D's. And will never "own" a car until he's 60 - what danged shame. |
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| ...I'm even more impressed with the guy who buys a new car he can afford and keeps the car in good condition for ten or fifteen years - long after its paid for. | |
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It's the desire to show your bling-bling and keep up with the Joneses that puts people in the hole. What people don't realize is that the Joneses are paying their Visa bills with their Mastercards, but they sure drive a nice ride and dress well!
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Replying to: driftracer (Apr 20, 2004 11:26 am) |
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having a fast car, like mine, is great, and I'm one of the most hard-core enthusiasts most people know. The thing is, I can afford it. I can't tell you the number of people I see in my job who buy Corvettes, Porsches, BMWs, etc, who realize they can't afford the car and still get their laundry cleaned, and cry wolf, trying to make a lemon law case out of a nuisance sound or a dash rattle. Buying a sports car that is more than you can afford, and putting little or no money down, getting unburied from one car only to get buried in the new one...is just like buying a Lexus LS430 because your neighbor has one - it's all the same, it's just that my first example (in my previous post) is much more common. |
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| ...who buy high-end cars like Mercedes and BMW fail to realize that its one the to be able to buy the car and quite another to also maintain it. As a result, I see a lot of ratty-looking late model Bimmers and M-Bs. | |
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Lots of late model rides running around Philly with either bald Michelins or cheap Pep Boys' Futuras! But hey, they can say say "I own a Mercedes". |
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