How much, if any...

[TheX]

negative equity did you bring over to your BS? It seems to happen more and more, and the dealerships are VERY happy to let you do it.

Sponsored

 

[jkernitzki]

Zero. Trade-in was fully paid off. As is the BS.

 

[rugedraw]

Dealerships just want to sell you a car. We don't care if you're upside down or not......only the banks care if the loan amount exceeds their loan to value parameters. We don't get paid a salary or by the hour. We only get paid if we sell something. So if someone wants to buy a car, we want to sell it. Where you stand in terms of equity is not relevant.

 

[TheX]

Zero. Trade-in was fully paid off. As is the BS.

Same here, paid for trade and no payment on my BS.

 

[TheX]

Dealerships just want to sell you a car. We don't care if you're upside down or not......only the banks care if the loan amount exceed their loan to value parameters. We don't get paid a salary or by the hour. We only get paid if we sell something. So if someone wants to buy a car, we want to sell it. Where you stand in terms of equity is not relevant.

Dealers (a lot of them) get points or other kickbacks from financing so it is in their best interest to have you (generic buyer, not YOU) pay as much interest over time as possible.

 

[jkernitzki]

Dealers (a lot of them) get points or other kickbacks from financing so it is in their best interest to have you (generic buyer, not YOU) pay as much interest over time as possible.

Dealer reserve can be as much as 2.5% over the bank/finance company's buy rate.

One strategy--assuming you could purchase in cash in the first place--is to let them go through with the loan and financing process (to hopefully negotiate a better OTD price up front), then just pay off the loan with the first payment.

 

[RSH]

As vehicles continue to get more expensive people finance for longer periods so they can afford the payments. Salaries are not keeping up with vehicle price increases.

Depending on what make or even model of vehicle affects how much it will depreciate.
For example a Toyota Tacoma will hold its value while a Maserati Quattroporte value falls off a cliff.

You can become upside down very quickly if you didn't research the vehicle and all the terms associated with your initial purchase and now you want something else and the vehicle that checked all your boxes a while ago has lost half it's value or more and you owe more than its worth. And of course because you want that new vehicle, you drag your negative equity over to the new vehicle purchase and the bank approves it and the cycle starts again.

 

[TheX]

You can become upside down very quickly if you didn't research the vehicle and all the terms associated with your initial purchase

And...people think that they are going to keep their vehicle forever so the longer terms are fine...then 2 years later that old car is boring. Do that a few times in a row and BOOOM...big negative equity.

 

[rugedraw]

Dealers (a lot of them) get points or other kickbacks from financing so it is in their best interest to have you (generic buyer, not YOU) pay as much interest over time as possible.

Yes, the higher the amount financed, the more the finance reserve the dealer gets paid on. However, priority #1 is to sell the car. We aren't going to turn away a buyer just because they want to pay cash or because they aren't financing enough to make it profitable on the finance side. Especially for new & CPO vehicle sales where we have manufacturer pressure to meet certain quotas.

I guess maybe the verbiage you used in the first post could be worded differently. Dealers are happy to sell a car no matter how we sell it. Equity position of a client's trade in is more of a deal breaker or maker for the client.....not the dealer.

 

[Ernest T]

We seldom trade vehicles, preferring to sell our current vehicle then purchase the replacement. In the case of the BS, we weren’t replacing any vehicle so it was strictly a purchase.

We put $8K down and got a loan at our CU for the rest. Even with that, our ‘25 BS BL is only worth $32K in trade according to Carfax. Thats a huge hit.

Our last actual trade was in 2012 and it was a 15 year old F150 with over 150K on it. We were happy with the dealers offer of $2500.

 

[sajohnson]

No trade. We paid 50% cash and financed the other 50% through Ford at 0.9% for 3 years.

At 0.9% we would have borrowed 100% and not touched our retirement account but our only income is my pension and the payment would have been over $1,000/month.

As mentioned above, one way people get 'under water' is by purchasing a new car and then trading it after (say) 2-4 years, eating a good portion of the depreciation. I understand the desire to always have a new (<2-3 years old) car, but it is very expensive.

[EDIT for incorrect math]: If a $40,000 car depreciates 50% in 2 years, that's $10,000 per year -- plus all of the other costs: maint., repairs, insurance, fuel, registration. If that same $40K car is kept for 10 years (or longer) the depreciation may be 85%, but the cost per year will be just $3,600 ($300/month).

There's no right or wrong, it's just a matter of priorities and personal finances. I've always bought new and run them into the ground. My brother likes to buy new and trade after a few years. He points out that always owning newer vehicles usually means having the latest safety and convenience features, and better reliability (although that's not always the case).

 

[Robins21]

Zero. We keep our vehicles until they are well worn out.

 

[TheX]

The odds are that more than half of people here are in this situation, but...

They are quiet about it, which is totally fair.

 

[sajohnson]

The odds are that more than half of people here are in this situation, but...

They are quiet about it, which is totally fair.

I was thinking that too. This is one of those questions where the vast majority of replies will make the poster look good/smart.

Take extended warranties. Most people who buy them do not save enough in claims to cover the cost. They remain silent. The minority for whom the warranty paid off are happy to tell anyone who will listen.

It's the same with gambling or the stock market. Winners tell everyone, losers stay quiet. That can give the false impression that the majority of people are "winners."

 

[bushbunnie]

Dealers (a lot of them) get points or other kickbacks from financing so it is in their best interest to have you (generic buyer, not YOU) pay as much interest over time as possible.

Oh yes, they want you to finance and get all kinds of kick backs. We paid ours full cash. They offered us a extended warranty. I checked personally he next day with 4 companies and every one of them was $2000 to $2500 Cdn. for the same warranty.

Sponsored