REVscene Automotive Forum - Introducing the 97-month car loan

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- Vancouver Auto Chat (https://www.revscene.net/forums/vancouver-auto-chat_173/)

- - Introducing the 97-month car loan (https://www.revscene.net/forums/682843-introducing-97-month-car-loan.html)

SpeedStars

04-11-2013 06:38 PM

If they introduce a 120-month plan...I might actually finally be able to afford a R35 GT-R :alonehappy:

MindBomber

04-11-2013 06:42 PM

Quote:

Originally Posted by Gridlock (Post 8209503)

Spoiler!

Fortunately, your taste in extinct reptiles is better than your taste in women.

:badpokerface:

tofu1413

04-11-2013 08:26 PM

Quote:

Originally Posted by 4444 (Post 8209638)

then, with all due respect, you shouldn't ever get into a 'cost' discussion with anyone, as time value of money is ALL that matters in a cash vs. finance type decision

keep in mind the average consumer doesnt keep in mind of time value of money.

time value of money is ALL that matters to people that KNOW about it.

We dont factor time value of money in our finance. its the truth. I am no financial expert myself.

We are here to get people into cars, get them what they want and away they go at a deal the consumer is happy with. Thats all there is.

My initial post states only that cash price vs finance price, the dealer makes more money with finance price even at "0%", and that is the truth.

4444	04-11-2013 08:43 PM

Quote:

Originally Posted by tofu1413 (Post 8209831)

you make my head hurt!!!! we're going to have to end this discussion now... :)

dared3vil0

04-11-2013 08:46 PM

Quote:

Originally Posted by 4444 (Post 8209852)

you make my head hurt!!!! we're going to have to end this discussion now... :)

You're so smart and we're all so stupid. Like what the hell do you want him to say? He is right after all... Dealer gets kickbacks for the loan. :suspicious:

tofu1413

04-11-2013 08:50 PM

well he seems to be a banker guy, so he factored in time value of money.

Makes sense for him and people that knows about it... but not us average joes.

I read the wiki article actually.... and my head hurts.

StylinRed

04-11-2013 09:41 PM

im really sleepy but ill try to explain...basically,

your moneys worth more to you now than the same amount of money later on due to inflation and the fact that you could invest that money and make a % off of it

so if a car dealership says 0% and you owe $40k to be paid over 5yrs that means 5 years from now they have $40k

so whats $40k worth today? its not $40k because of the ability for you to invest etc
and really, today, you should be able to buy the car cash for like $37k (just an arbitrary # for example purposes)

so even though a company says 0% or "dont pay until 2020" it's considered that interest is calculated into that price

so yes you're right the dealership does make money from 0% financing not only from the "invisible" interest but also from getting a finders fee? from the financing company, sure you may be able to negotiate a bit off of the dealerships finders fee but you could negotiate much more if you offered to pay cash now (and in some cases you could save money by borrowing from a bank instead if you had to)

hope that made some sense

edit here this would hopefully be clearer http://www.accountingcoach.com/onlin...e/80Xpg01.html

some_punk

04-11-2013 11:50 PM

Had a customer purchase a brand new suzuki grand vitara from us. Choice of either 0% financing or $2-3000 off msrp. The customer chose the 0% financing, and got the coverage from icbc that gives the full replacement. Well within 3 weeks of financing the car, the customer gets hit and the car was a total loss. Icbc would not pay him what he paid for the car because it is possible to get the exact same car but cheaper. Think about it that way I guess.

UFO	04-12-2013 07:13 AM

Quote:

Originally Posted by some_punk (Post 8209995)

Well yeah. Your guy could have gone into your dealership with icbc cheque and bought the exact car for 3k off MSRP because he is now paying cash. Was he expecting to get full MSRP cheque, buy car with 3k cash rebate, then continue his old payments?

UFO	04-12-2013 07:40 AM

Quote:

Originally Posted by tofu1413 (Post 8209552)

per say 0% finance. 0 rebate on cash. principal price is the same. however, dealer technically makes more money if they were to get the customer to finance the car. In theory, finance deals makes more money, so those deals have that little bit more room to make a deal.

invoice price for cash or finance is the same with 0 incentives and 0% interest. Dealer makes money for setting up the loan. The bank pays dealer to set up the deal and the manufacturer pays for the interest.

If the above were the case, i had thought that it's better to take advantage of the interest free finance. Of course cash rebate are common place nowadays so that changes things.

Finance experts: I dont understand time value of money currently, but here is what I thought I understood

Inflation: 10k now will be worth more than 10k 5 years from. My 0% finance terms don't account for this. So I should come out ahead over 5 years

Opportunity cost (I think that's what its called): by paying 167/mth for 5 years, i can take my initial 10k and put it towards my mortgage, other debts, or even invest at a conservative 5% return and take advantage of compounding. Alternatively i pay 10k upfront, but set aside $167/mth to the above but won't save as much on interest or make as much on compounding.

I'm likely missing something, but don't understand it in time money terms

UFO	04-12-2013 07:46 AM

Quote:

Originally Posted by StylinRed (Post 8209901)

sure you may be able to negotiate a bit off of the dealerships finders fee but you could negotiate much more if you offered to pay cash now (and in some cases you could save money by borrowing from a bank instead if you had to)

So the assumption is there is a cash incentive/ rebate, or you can actually negotiate a significant savings.

In the absence of either, what is time value's role?

Tim Budong

04-12-2013 08:37 AM

At the end of the day, if you are smart with your money, you shouldnt really need to have a big debate on this.

heleu

04-12-2013 10:23 AM

Quote:

Originally Posted by UFO (Post 8210107)

So the assumption is there is a cash incentive/ rebate, or you can actually negotiate a significant savings.

In the absence of either, what is time value's role?

You could be using the same money to either pay off a debt (e.g. your mortgage) or invest and earn interest/capital gains.

FerrariEnzo

04-12-2013 01:55 PM

unless you get 0% interest, not point in having that long of a term... lol

shenmecar

04-12-2013 03:35 PM

Quote:

Originally Posted by darthchilli (Post 8210120)

At the end of the day, if you are smart with your money, you shouldnt really need to have a big debate on this.

I think the lesson to be learned here is that FINANCIAL guys and SALES guys don't work on the same fundamentals. I agree with tofu though, TVM isn't a subject that everyone knows. Thats why there ARE people who commit to stupid ass 84 month financing terms.

4444	04-12-2013 04:56 PM

Quote:

Originally Posted by dared3vil0 (Post 8209855)

You're so smart and we're all so stupid. Like what the hell do you want him to say? He is right after all... Dealer gets kickbacks for the loan. :suspicious:

i'm sorry, but when people start talking about things they don't fully understand or appreciate and I correct them (because this is my area of expertise), i'm not doing it to try and be all high and mighty- this is the internet, you don't know who i am, i don't need you to think anything of me, i was merely correcting a blatant error

not everything is a size of your dick contest, maybe when you grow up and mature you'll realize this

for the record, i was arguing that consumer gets a lower price with cash through negotiating a lower 'principal' amount vs. 0% financing. dealer kickbacks are effectively moot in this argument.

also, simple finance is an EXTREMELY important thing for anyone to know - time value of money is so key to big purchases in life, i'd strongly recommend EVERYONE try to understand it

dared3vil0

04-12-2013 05:03 PM

Quote:

Originally Posted by 4444 (Post 8210500)

Not everything is a size of your dick contest yet you feel the need to constantly remind everyone you're soooo much more mature and much smarter than us, So how about you grow the fuck up?

4444	04-12-2013 05:10 PM

Quote:

Originally Posted by dared3vil0 (Post 8210505)

Not everything is a size of your dick contest yet you feel the need to constantly remind everyone you're soooo much more mature and much smarter than us, So how about you grow the fuck up?

haha, what? i'm doing anything to try to show how mature or smart i am, the fact that you take it that way shows a clear issue with you, not me

the dude was straight up wrong, admitting as much - i was right, i don't need to prove my rightness for any reason than the greater good.

i know exactly how smart and mature i am, and don't need some nerd behind a keyboard to pat my back and tell me how good i am, maybe you do, but i don't

i'll be grown up and just be done responding to you, how's that

dared3vil0

04-12-2013 05:43 PM

Quote:

Originally Posted by 4444 (Post 8210507)

You keep proving my point over and over, way to try to act all grown up by ending yet another conversation because you can't stop being a condescending prick.

StylinRed

04-12-2013 05:45 PM

Quote:

Originally Posted by UFO (Post 8210107)

So the assumption is there is a cash incentive/ rebate, or you can actually negotiate a significant savings.

In the absence of either, what is time value's role?

maybe 4444 would like to chime in on this but as i understand at that point it doesn't play a direct role but you do have the knowledge that your money can be better used elsewhere

UFO	04-12-2013 07:32 PM

Quote:

Originally Posted by heleu (Post 8210190)

You could be using the same money to either pay off a debt (e.g. your mortgage) or invest and earn interest/capital gains.

Yeah i get that part, as I explained. 4444 was saying its better to pay the cash price, but then you're using the cash and cant use it to service other debt or generate income, which sounds contrary to what I think he would say.

Quote:

Originally Posted by 4444 (Post 8210500)

for the record, i was arguing that consumer gets a lower price with cash through negotiating a lower 'principal' amount vs. 0% financing. dealer kickbacks are effectively moot in this argument.

So in the absence of a lower cash principle amount vs. Financing principle amount, as tofu explained the car's invoice price is the same in either case, is better to finance at 0%? And the longer the term the better, as long as one spends withineans and uses the original principle amount in a productive manner?

UFO	04-12-2013 07:37 PM

Quote:

Originally Posted by StylinRed (Post 8210531)

maybe 4444 would like to chime in on this but as i understand at that point it doesn't play a direct role but you do have the knowledge that your money can be better used elsewhere

Thats what I'm trying to say. At 0% financing, assuming no ability to negotiate a lower cash price, you're better off financing and using the money on other productive things

VRYALT3R3D

04-12-2013 08:00 PM

Most people don't qualify for 0%, and most people are impulse buyers who overpay for their cars.

I would personally not finance a toy(GT-R, ZR1, Viper, GT500, ect)

4444	04-12-2013 08:13 PM

Quote:

Originally Posted by StylinRed (Post 8210531)

Not to escalate this, but you can be patronizing and if that's the impression you give off to others it's not their fault it's your social skills. the fact that you put the blame on others just furthers the view they have of you. just saiyan http://i1035.photobucket.com/albums/...okuIcon001.png
not to say that you were a dick in this thread, in fact i'd say its a vast improvement over some of your other discussions fwiw

maybe 4444 would like to chime in on this but as i understand at that point it doesn't play a direct role but you do have the knowledge that your money can be better used elsewhere

it's the internet, i'm sorry if i don't want to sugar coat everything i say. as a successful businessman (i'm sure daredouche is going to have a fucking field day with that one), clearly i have ample social and business skills in teh REAL world... real world and revscene != same thing

and, no, not going to chime in anymore, clearly certain pussies (not you) are getting their panties in a twist if i clarify things, as they think i'm trying to prove something...

i have nothing to prove to anyone on here, that's for sure

4444	04-12-2013 08:14 PM

Quote:

Originally Posted by dared3vil0 (Post 8210528)

You keep proving my point over and over, way to try to act all grown up by ending yet another conversation because you can't stop being a condescending prick.

nice one!!!!!!

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