Where did that 2700 to 3000 come out of my bank account?

 

 

This is a controversial question and I've noticed that anytime this question is asked you get a majority of self-righteous answers. What I have also noticed is that those who pay cash or claim to make a significant down payment almost always buy the vehicles at much lesser discount because they are consumed by the fact that they are making a significant portion in down payment. They falsely believe that somehow the significant down payment makes it a wise financial decision although they are buying it at a higher price. I am not saying all are in this category, but I've observed that most are. There is no difference between rolling a negative equity and buying the vehicle at a higher price. Money works the same way - it's math.

Lending and borrowing is at the core of our economy. Those who have significant amount of money lend them at interest and those who have less of it borrow and pay interest. If the lending and borrowing was not prevalent, our economy would not be sustaining or prospering. While you want to be on the lending side of the equation, logically speaking, not everyone can be on that side. People's situations differ and we all have different goals in life.

Ideally no one wants to be in the negative, but it would be naive to say that if you have negative equity you shouldn't be buying a car. That's Dave Ramsey style nonsense and he made his millions selling it. It works for those who live in a picure-perfect tiny little world.

It is also safe to assume that those on this forum who have always purchased cars paying cash are not multi-millionaires or else they wouldn't be wasting any time on this forum.

What I am trying to say is you can't judge a person's financial situation simply based on negative equity. People have different situations and goals in life.

To the OP I would say to evaluate your financial situation very carefully. You don't want to pay a car loan using the money for groceries. If you have the financial band-width and are going to keep the truck for the long term go for it. Make sure you get GAP insurance. On the other hand if this is going to put you and your family in financial jeopardy, run clear of it. Only you can decide. There is no right or wrong answer here. If you do go for it, make sure to get a significant discount (something like $12k to $15k from MSRP). Also figure into your calculations the increased gasoline and insurance expenses. Also make sure you get a low interest loan such as a 3.49% or something and get a longer term to give yourself enough bandwidth. You can always pay it off earlier. Try credit unions to see what they offer. Smaller credit unions normally have the best rates.

My main question to you is: how did you get into $17k negative equity? If it's due to habitual negative roll-in due to constant trade-ins, then you may not be happy with your new purchase either. So be very careful as you make this decision.

 

 

 

I would have to guess that if only the ones who really need a new anything were the ones who bought one then America wouldn't survive very long. The old days of trading vehicles to keep their present one from nickel and diming them to death are just an excuse today. I've driven a few over 200,000 miles and traded but I can't say that I needed a new one. I just wanted one. Wanting is what keeps the factories running.

 

Then there are those of us who rack up 33K+ miles a year and within two months have a vehicle that is worth far less than average due to miles. Higher depreciation than average makes for being upside down longer term. My last three trucks were deemed to be long term. Wrecked the 14, GAP covered it. The 16 was a really bad POC that I was eager to be out of, and it too had too much depreciation due to miles and history, but thankfully I was able to cover the difference within $1500 to get out of it. In the end, though, I still owe less than MSRP including the financing when all is said and done. That included TTL and GAP. It all depends on where the bottom line on the vehicle is prior to anything above and beyond before financing.

So lets say the OP has $17K NE, and he finds a truck that has an MSRP of $53K. Banks will finance up to MSRP + TTL. He makes a deal for that truck for $36K, not unheard of, really, and after all is said and done he is financing MSRP + TTL. In this scenario, it is quite doable. Is it a smart move? If he/she plans to keep it during the full term or at least until the NE turns to PE, and can afford the payments with ease, then by all means, go for it, but get GAP!!!!

There are those who don't rack up miles and are able to put large down payments on a vehicle. Good for them. Not everyone has that luxury. In the end though whether you put a large amount down or not, you still spent that money. In my case, since I have already totaled out two vehicles due to bad weather, and had GAP, Putting little down and finance the rest has worked out very well for me. No matter what, when all is settled, you are going to be out the money spent, you are not getting it back. In the above post, putting down 15 and getting back 12 and losing 3, vs spending one payment of $600, I would rather lose the 600 over the 3K any day.

 

LOL so how is that even a fair comparison to op's case or majority of truck buyers for that matter. Obviously you're going to have a ton of equity if youre tripling payments. If anything being upside down 17k is more realistic than being 17k up in a year.



Sorry but i have to strongly disagree with that thought . If youve got $25k to put down on a truck your finances must be in order and your credit score has got be be amazing so 0% finance would not be an issue. Why not take advantage of a 5year/0%/0 down term and take that cash to invest in something thats going to make you money instead of throwing it into a depreciating asset. And if you really want to be smart equity wise it would have been way better to buy a 2-3 year old truck cash instead of financing half a new truck which the minute you drove off the lot you literally threw away $10k ish. You might have owed less than 1/2 msrp but you also just lost around 1/4 of the value on your brand new truck the second you drove off the lot......



Agreed for the most part. If youve got a large amount of cash to throw down as a down payment you'd be crazy not to borrow money for free and use your cash to make you money.

 

100% agreed. If need is the only basis for buying anything, then we only "need" a 500 SF house and a used banged up Toyota Yaris. I would say 50% of truck buyers and such buyers do not need them, but they want them due to various reasons. The beauty of our country is that we can legitimately want something and there are ways to get it without destroying ourselves and our families.

 

Well said!