Quote:
Originally Posted by UltArc
If I could pay 179/month tax, title, no down payment, out the door, for a 20k car, I would definitely do it.
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It sounds like a great deal. Who wouldn't take an expensive car for a low low monthly payment?
But look at the big picture, and it's not a great deal. With no down payment, and lumping the taxes with the car price in the loan, you are immediately upside down on the loan when you sign the papers. If you ever need to sell it you have to cough up the difference to get out from underneath the loan. Even if you plan on keeping the car until you pay it off, by the time that happens you have just paid thousands of dollars in interest, on top of the price of the car. If you pay $20k cash you pay $20k cash. If you take out a loan you would pay $25-$30k for the same car.
The people that do this are constantly involved in car loans. They take out a 6 year loan on a new car. By the time they pay it off, the car has plenty of miles and would be considered older. Without a loan payment many people feel tempted to buy another car and take out another loan. This perpetual cycle leaves them paying banks to roll around in money, and keeping car companies happy. It all might sound convenient, but its financial stupidity.
Hypothetical numbers aside, my point is that banks and car dealers can work people over to the idea that the overall price is not important, and only the monthly amount matters. The overall price is what matters, not how much your loan payment is. Banks can restructure loans to make your payments whatever you want. But you will pay for it with interest.