A lot of people who buy new luxury cars are not flush with cash as you would expect as there would be no need for many dealers of those cars to offer 3 year interest free payment deals otherwise.
3tomany,
Jan 10, 2:30pm
sorry late answering this. You are correct if you can put a short term loan of say 3 years on the mortgage big savings can be made.I do this often. If you just add it to the 25 year mortgage, a $20,000 loan you will pay at 6% a whopping $14364.00 interest. 3 year hp at 13% you will pay $4260.00 interest
3tomany,
Jan 10, 2:35pm
On your scenario yes
kazbanz,
Jan 10, 3:23pm
Hey guys Understanding finance genuinely does not need to be complicated. allowing you are directly comparing apples with apples car wise -same year /make /model/condition/miles/colour etc The MOST important two numbers are How much are the payments and how many payments there are. Multiply those two numbers together and THAT is what you are paying on finance. It really is that simple - Put it on the mortgage,put it on the credit card,get a loan shark loan or go to a finance company at the dealership -it doesn't matter -The maths never lies.
trogedon,
Dec 27, 4:03pm
A friend said it was 60%. That seem horrendously high. What (roughly) is it?
kazbanz,
Dec 27, 4:38pm
I think you need to define "finance' matey. Finance by my definition is where you borrow money from a lending institution of some sort to pay for something. So no matter the source its borrowed money. Rather than money saved in advance or from a windfall of some sort. In that case I agree with your friend.
brapbrap8,
Dec 27, 5:12pm
Most company vehicles would be financed (added to the operating O/D), I would think. I have always paid cash for my personal vehicles though.
trogedon,
Dec 27, 5:34pm
You're right. I thought the word "finance" wasn't ideal after I typed it. So you'd agree - about 60%. It all looks good on the outside. not so good when the bills roll in.
tigertim20,
Dec 27, 6:01pm
be hard to figure out wouldnt it? - plenty of vehicles would be sold privately for cash, outside of mediums like trademe.
Plenty of vehicles sold on trademe would be joe bloggs selling privately without finance.
Kaz, whats the percentage of vehicles you sell as a dealer that are sold without finance?
kazbanz,
Dec 27, 6:13pm
pretty much what I posted above matey.I\d say 60% are on finance. Also those private sales.Still about 50% are on finance from the bank etc
gammelvind,
Dec 27, 9:10pm
Only bad when overcommitted when the bills come in. Otherwise it is the only way many of us can afford a decent replacement vehicle, by paying it off.
rovercitroen,
Dec 28, 12:44am
Another way of looking at things. If you have a mortgage, everything you buy is "0n finance" because the money you are spending on everything else could have been used to reduce the mortgage thus saving interest. So, for example, you have a mortgage of $200k and you use $40k of your own money to buy a new car, you are actually paying interest on the $200k loan instead of interest on $160k loan if you had have used the $40k to reduce the mortgage. Of course this ONLY looks at things from a financial POV and obviously there is more to life than that.
3tomany,
Dec 28, 1:16am
even people who walk in with cash might well have borrowed it from the bank
3tomany,
Dec 28, 1:38am
to put logic on it if you have a mortgage buying a car on finance is the only thing to do, so everyone with a mortgage should be financing their car. to pay cash for a car and not pay that cash of the mortgage is absolute stupidity. Paying 13% over say 3 years is a lot cheaper than 5% over 20 years. The only people paying cash must be freehold or retired otherwise it is economic stupidity.
timbo69,
Dec 28, 2:12am
Your assuming people that putting it on their mortgage are paying the minimum amount over the maximum time. A 25k car over 3 years @6% will cost you $2332, A 25k over 3 years @13% will cost you $5222 - obviously the clever choice is to put it on your mortgage.
kazbanz,
Dec 28, 2:28am
once the dust has settled with a deal we tend to find out how they got the money.-that's why I say 60% is fin ance of some sort
clark20,
Dec 28, 3:01pm
I lot of people do not realise this, like when they "save" money when they have a debt.
richynuts,
Dec 31, 4:33am
Correct if you have a mortgage you are buying everything on finance, no mortgage you are paying cash for everything. I have a mate who worked in a MC shop and said 90% of bikes were put on finance.
scarey65,
Dec 31, 11:20am
car dealers love finance due to the kickback
offer cash and see the reaction
of course everyone need a 15k car on tick
which In 4 years time will be worth bugger all
we should ask whats the repo rate and how many people did it ruin
especially yards like aqua cars set up to finance people no one else will
kazbanz,
Dec 31, 2:38pm
Actually You have it wrong. Its not that most dealers prefer finance. Its that because for a dealer there is very little difference between cash and finance. The result is that the buyers attitude that "cash is king" has become a fallacy. Now seeing as you made the statement/question."we should ask whats the repo rate and how many people did it ruin" I'd be happy for anyone to see my finance ledger -with the names/addresses blanked out. In the past 7 years (as far back as you can look) Ive had a totally clean ledger. The terminated loans have only been from accidents or early settlement. You see despite your opinion its not in most dealers best interest to sell "bad money" -YES there are dealers who target the less fortunate in life but they are very much in the minority.Hopefully the new "loan shark" laws will weed them out.
tigger8,
Dec 31, 2:45pm
"Paying 13% over say 3 years " and where do you get that interest rate for a car?
westwyn,
Dec 31, 2:47pm
Kaz is 101% correct- it's bad business for most dealers to sell bad money. Most don't. There are a few that do- and you don't need to be a rocket scientist to work out who they are. But it's not just cars- check out all the "0% Finance" and "No Interest for 12 months" and "No Payments for 6 Months" stuff in the big box retailers like Harvey Norman, Noel Leeming, Farmers etc. Oh, you're paying, all right- just got to work out exactly where! Car loans are actually far more transparent!
I do contract work for one of NZ's biggest finance companies in the post-possession field, and I can tell you the repo rate is RIGHT down by comparison to previous times. Most loan failures are due to external circumstances- common ones are leaving the country (car left parked at airport!), business failure (most small businesses finance their fleets), loss of job, death or incapacitation of primary loan payer. Few people these days just don't pay. Yes, there are some that don't- but it's WELL down on previous levels.
Although it's much derided, credit insurance (or CCI) is actually a useful backstop for a lot of loans and would prevent many that still DO go south from doing so.
kazbanz,
Dec 31, 5:14pm
14% is pretty much the current interest rate that the big lenders are doing at the moment. from memory even the loan sharkes from hadies (GE) were advertising 14.5 If you've had a credit hiccup or three recently or even one unresolved issue then you may find you are put to a finance company that charges more.
trogedon,
Dec 31, 5:41pm
westwyn wrote: Kaz is 101% correct- it's bad business for most dealers to sell bad money. Most don't. There are a few that do- and you don't need to be a rocket scientist to work out who they are. But it's not just cars- check out all the "0% Finance" and "No Interest for 12 months" and "No Payments for 6 Months" stuff in the big box retailers like Harvey Norman, Noel Leeming, Farmers etc. Oh, you're paying, all right- just got to work out exactly where! Car loans are actually far more transparent!
With this 'free' finance doesn't everybody end up paying more even those who pay the full price at the time the item is bought?
scarey65,
Dec 31, 6:07pm
and youre the sort of dealer id buy from
I was mainly referring about the aqua car arrangement they are on par with the mr rentals. dtr of the world.
preying on the bottom feeders
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