Why I have finally accepted the fact that ShelbyDude is right!

[Dad's72Mach]

I still think if someone is patient, they can find one (08) now for MSRP or pretty close to it.

CC

 

I happen to know you are correct, but more on that later.

[mach1fever]

Well guys, In reguard to financing a vehicle like a shelby you have to think of it this way. What does 130% of the value really mean? That number represents what we could sell the vehicle for if you defaulted we would automatically take a 30% loss. How much sense does that make? You are talking about about a niche market vehicle that is too expensive for most people to afford which means selling it would be harder ie more risk. Everyone wants to give everyone a hard time for selling over msrp and would not buy with an adm (myself included) The economy is in the toilet. Loan volumes are down and collections are up which translates to tighter underwriting standards. Everyone demonizes the institutions you trust the most. Your financial institution. Its a business which ends up saving you in the form of interest rates etc. If you can't tell I work for a CU (which by their nature have much more reserves on hand than a bank), we take care of the little people and 99% of the time our interest rates will be less. Good luck on aquiring one, but if I were you I would try to get some of that negative equity out of the way and hold on to your truck a little longer.

 

Roger

[CH53Driver]

Wow, I didn't realize this thread was still going. To answer some of the above, and I know some of you are already aware of this, I finally got a GT500 from a local dealer. The only REAL issue that I was ever addressing was my surpise that the banks (at least the ones I talked with) DID NOT take into account what these cars were ACTUALLY selling for. The banks were only going by their BLACK BOOKS or whatever that institution uses. Yes, the negative equity hurt me. So what did I have to do? I had to spend some money out of pocket to decrease the negative equity( the real reason why the banks were "running" originally) to a few thousand dollars rather than nearly 12 thousand! Did it hurt? Yes. However, I knew it was time to pay up or shut up because these cars were only going to be around a little bit longer (and I wanted new or very close to new). In the long run, even with the negative equity, I still paid less than many so I am happy. And yes, I can afford the car. The only issue I was struggling with originally was the negative equity which is now taken care of ( because I paid most of it off and got a good deal on trade-in) and the fact that I was surprised that the banks I had talked to were not taking into the account the actual market on these vehicles (at least the one that existed not that long ago) into account.

[old guy]

Just a quick opinion here...

 

If you have more into the car than book value, see if you can purchae gap insurance. I usually don't like the add-ons, but in a case like this where the book value and the loan value are pretty far apart it's probably prudent. Gap insurance will cover the difference between the value of the car and the loan payoff if something should happen (car gets totaled, stolen, etc.) Without it you are left holding the bag for the difference between the published value of the car and the payoff. I don't think it's very expensive, and it can be canceled any time, so you can drop it when your balance gets close to or reaches the book value of the car.

 

I don't have it (bought mine outright) but my girlfriend got it when she bought her car. She figure she should be able to drop it in about 18 months.

[ShelbyDude]

Just a quick opinion here...

 

If you have more into the car than book value, see if you can purchae gap insurance. I usually don't like the add-ons, but in a case like this where the book value and the loan value are pretty far apart it's probably prudent. Gap insurance will cover the difference between the value of the car and the loan payoff if something should happen (car gets totaled, stolen, etc.) Without it you are left holding the bag for the difference between the published value of the car and the payoff. I don't think it's very expensive, and it can be canceled any time, so you can drop it when your balance gets close to or reaches the book value of the car.

 

I don't have it (bought mine outright) but my girlfriend got it when she bought her car. She figure she should be able to drop it in about 18 months.

 

 

You should buy gap on any car you buy unless you are putting a chunk of cash down. Even without negative equity on a reade in, if you are financing the full amount you should buy gap. The cost isn't much for the thousands you save IF you ever needed it.

 

Also, gap does not just pay off what you owe. Gap only pays up to 120% - 130% of book value. So if you owe more than that gap won't cover all of it, only up to the 120% - 130% depending on the company the gap is through.

 

So for example, lets say you owe $20k. The car books for $12k. Gaqp pays 130% which means they will pay up to $15,600. You would still owe another $4,400. But that is better than owing $8k.

[ShelbyDude]

Wow, I didn't realize this thread was still going. To answer some of the above, and I know some of you are already aware of this, I finally got a GT500 from a local dealer. The only REAL issue that I was ever addressing was my surpise that the banks (at least the ones I talked with) DID NOT take into account what these cars were ACTUALLY selling for. The banks were only going by their BLACK BOOKS or whatever that institution uses. Yes, the negative equity hurt me. So what did I have to do? I had to spend some money out of pocket to decrease the negative equity( the real reason why the banks were "running" originally) to a few thousand dollars rather than nearly 12 thousand! Did it hurt? Yes. However, I knew it was time to pay up or shut up because these cars were only going to be around a little bit longer (and I wanted new or very close to new). In the long run, even with the negative equity, I still paid less than many so I am happy. And yes, I can afford the car. The only issue I was struggling with originally was the negative equity which is now taken care of ( because I paid most of it off and got a good deal on trade-in) and the fact that I was surprised that the banks I had talked to were not taking into the account the actual market on these vehicles (at least the one that existed not that long ago) into account.

 

 

In the long run, even with the negative equity, I still paid less than many so I am happy.

 

 

 

Funny how you keep saying with the negative equity you still paid less than some. The fact is you paid less than 99% paid because you only paid $2k below MSRP. 99% paid MSRP or more!

 

Your negative equity has nothing to do with what you paid for the car. You are paying for your negative equity which was added to the loan. It wasn't added to the price of the car where you paid that much more for the car. You paid $2k below MSRP, period!

 

If you totalled your trade and the insurance paid less than you owed you would still have to pay the difference. If you went out a bought a new vehicle, would that mean you paid the price of the new vehicle plus your balance owed on your totalled vehicle you are still paying on? No, because whether you bought a new vehicle or not you are going to pay that negative equity regardless. They added it to the loan amount on top of the price you actually paid. It doesn't increase the price you paid by doing that. You still paid $2k below MSRP no matter how you cut it.

 

Even if you kept your truck, you still would pay for that negative equity. So by trading it you lost nothing. You either continue paying for the negative equity on it if you keep it or if you trade it. Either way you pay it and has nothing to do with the price you paid for a new car.

 

 

BTW, I hear people say all the time, no, I'm not trading because I don't want to get into a negative equity position on the new car. HUH??? You already are in a negative equity position. It doesn't matter if you trade or not. If you keep the car you have, guess what? You are still going to pay for the amount you are currently negative. If you buy the new car you are going to pay that same amount by just transferring that negative equity onto the new loan. No matter what you are negative and you are going to pay it. So the only question is, do you want to pay all that negative equity on the car you no longer want, or do you want to pay it on the new car that you do want? Either way you are paying it!

[old guy]

In the long run, even with the negative equity, I still paid less than many so I am happy.

 

 

 

BTW, I hear people say all the time, no, I'm not trading because I don't want to get into a negative equity position on the new car. HUH??? You already are in a negative equity position. It doesn't matter if you trade or not. If you keep the car you have, guess what? You are still going to pay for the amount you are currently negative. If you buy the new car you are going to pay that same amount by just transferring that negative equity onto the new loan. No matter what you are negative and you are going to pay it. So the only question is, do you want to pay all that negative equity on the car you no longer want, or do you want to pay it on the new car that you do want? Either way you are paying it!

 

 

If you keep a car until you can sell it for more than it's worth, you have no Negative Equity. If you finance no more than what the car is worth when you drive it off the lot then you have no Negative Equity. You pay interest on NE. No matter what the finance guy (or gal) at the dealership tells you, that's the way it is.

 

The thing that people forget here (or is never pointed out to them) is when you trade a car with negative equity on a new car, you not only have the original NE, but the additional NE that you incur as soon as you drive the car off the lot. People do this all the time, and after the 3rd iteration or so they can't figure out why their car is worth so much less than they owe.

 

Let's say the dealer "does you a favor" by paying off your original loan and adds $5K to your new loan to cover your existing NE. You buy the car and as soon as you drive it off the lot it is worth $10K less than what you just paid for it. You walked in with a $5K NE and 2 hours later walked out with a $15K NE. And don't forget that you now have interest payments on $15K NE instead of $5K NE.

 

I know buying a car is emotional, but when I was younger and couldn't afford to buy my cars outright, I never financed more than what the car would be worth after I drove it off the lot. If I couldn't do that, then I couldn't afford the car. If you don't think about your own financial situation then you will never realize this. In the above example the buyers net worth jut went down by an additional $10K.

 

Buy and enjoy your car, but be smart about it. You will be thankful several years down the road when you haven't blown tens (possibly 100's) of thousands in NE and the associated interest.

 

 

BTW: We rarely actually "hate" our existing cars... we just like something else a little better.

[mach1fever]

Agreed, and gap is needed. I hate to tell you this but if we were to repossess it we would still lose because it has to be sold to auction. We average about a 4k loss, a 500 wouldn't be much different. Its not about the individual its about the whole and according to the regs we have to abide by we can't really make exceptions for individuals.

[ShelbyDude]

If you keep a car until you can sell it for more than it's worth, you have no Negative Equity. If you finance no more than what the car is worth when you drive it off the lot then you have no Negative Equity. You pay interest on NE. No matter what the finance guy (or gal) at the dealership tells you, that's the way it is.

 

The thing that people forget here (or is never pointed out to them) is when you trade a car with negative equity on a new car, you not only have the original NE, but the additional NE that you incur as soon as you drive the car off the lot. People do this all the time, and after the 3rd iteration or so they can't figure out why their car is worth so much less than they owe.

 

Let's say the dealer "does you a favor" by paying off your original loan and adds $5K to your new loan to cover your existing NE. You buy the car and as soon as you drive it off the lot it is worth $10K less than what you just paid for it. You walked in with a $5K NE and 2 hours later walked out with a $15K NE. And don't forget that you now have interest payments on $15K NE instead of $5K NE.

 

I know buying a car is emotional, but when I was younger and couldn't afford to buy my cars outright, I never financed more than what the car would be worth after I drove it off the lot. If I couldn't do that, then I couldn't afford the car. If you don't think about your own financial situation then you will never realize this. In the above example the buyers net worth jut went down by an additional $10K.

 

Buy and enjoy your car, but be smart about it. You will be thankful several years down the road when you haven't blown tens (possibly 100's) of thousands in NE and the associated interest.

 

 

BTW: We rarely actually "hate" our existing cars... we just like something else a little better.

 

 

 

No, if you keep a car and sell it for more than it is worth you don't have negative equity at that point, but you did have it. You just kept it long enough to pay off the negative equity, but you still paid for that whether you traded it or kept it long enough until you paid it off.

 

If you finance the car for no more than it is worth then you are just paying off the negative equity up front at the time of buying the car. They are ALL going to be worth a lot less than what you paid when you drive it off the lot, whether it is new or used. The only advantage by putting enough cash down up front to cover the amount of negative equity you would have after driving it off the lot is the interest you save on that amount you didn't finance.

 

And the dealer doesn't "do you a favor" by paying off your loan. YOU are paying off your loan and adding any negative to YOUR new loan. Unless you are buying at a dealer that does "buy here, pay here" where the dealer holds their own paper, the dealer has nothing to do with what you owe, what your negative equity is, or whether the bank approves you for the loan or not. The dealer doesn't do the financing. The bank does. The dealer doesn't pay off your car, YOU do.

 

You are correct that if you trade a car with negative equity that you will be increasing that negative equity amount because you have the negative from your trade and the negative on the car you will have once you drive it off the lot. But that only affects you if you going to trade it again in the near future. If you buy the new car RIGHT, then you should be even on that in 2 1/2 - 3 years. This is assuming you buy right, take the rebates, and finace for no more than 60 months.

 

So if you buy it right, wait 2 1/2 - 3 years before trading again, then you should only have the same amount of negative equity you had when you first traded the other car. The equity on the new car should be even.

 

Where people get into trouble is when they trade within the first 2 1/2 - 3 years after buying the car. Especially when trying to trade again within the first year. You will take a bath on the car and have huge negative equity.

 

If you have no trade and buy a car out right, you should be able to break even on the trade in 2 1/2 - 3 years, assuming a 60 month loan and you have average miles on it and it was taken care of.

[CH53Driver]

Look guys, I was never trying to start a war on here. I think there are valid points to both sides. YES, I got the GAP insurance. Yes, I was in a negative equity situation...almost 12k worth with my old vehicle and it kept dropping as fast as a brick from a 40 story building (jeez, I wonder why...a used truck with gas almost $4 a gallon and huge incentives on brand new trucks...doesn't take a rocket scientist to figure out what that does to the value of a used truck). Another way to look at this is this, my car was stickered at 45.6K...out the door after all the negative equity was taken into account etc I financed right at 50K. So if I had bought this car at MSRP, not put anything down, and paid the taxes, title tags etc it would have been around $48K. So yes, I still have some negative equity, but I would rather have the negative equity on this car rather than the truck I used to have. Plus, I actually plan on keeping this car so my goal is to have it paid off in three years (which is doable for me) and then let the real mods start! :happy feet:

[ShelbyDude]

Look guys, I was never trying to start a war on here. I think there are valid points to both sides. YES, I got the GAP insurance. Yes, I was in a negative equity situation...almost 12k worth with my old vehicle and it kept dropping as fast as a brick from a 40 story building (jeez, I wonder why...a used truck with gas almost $4 a gallon and huge incentives on brand new trucks...doesn't take a rocket scientist to figure out what that does to the value of a used truck). Another way to look at this is this, my car was stickered at 45.6K...out the door after all the negative equity was taken into account etc I financed right at 50K. So if I had bought this car at MSRP, not put anything down, and paid the taxes, title tags etc it would have been around $48K. So yes, I still have some negative equity, but I would rather have the negative equity on this car rather than the truck I used to have. Plus, I actually plan on keeping this car so my goal is to have it paid off in three years (which is doable for me) and then let the real mods start! :happy feet:

 

 

Mine was $44,865 + 750.....after tax, title & lic I was right at $49k. It was $48,924.49 to be exact.

 

You must have lower sales tax there.

[CH53Driver]

Well, it's 3% in NC and if you traded in they only tax you on the difference. So my out the door was 50K and my trade in was 15K so 3% of 35K so a little over 1K in taxes if my math is right. Of course, I am a pilot so my math skills aren't very good, that's why they give us gauges to look at!

[ShelbyDude]

Well, it's 3% in NC and if you traded in they only tax you on the difference. So my out the door was 50K and my trade in was 15K so 3% of 35K so a little over 1K in taxes if my math is right. Of course, I am a pilot so my math skills aren't very good, that's why they give us gauges to look at!

 

 

Only 3%???

 

Is that normal State sales tax on everything there or just cars? I may need to move to NC

 

We pay 6.75% here.

[CH53Driver]

No just 3% on car sales. The normal sales tax is a little over 6% I believe. There is one weekend a year where there is no tax at all, that's when a lot of people buy cars. I can't remember the weekend though. Sometime in the summer, might be Memorial Day? Someone from NC on here will maybe chime in on this.

 

Oh yeah, I will add this though. There is a yearly tax on vehicles depending on their worth. Usually it's a little over a $100 per vehicle, but I don't exactly remember as I am exempt being AD military.

[old guy]

No, if you keep a car and sell it for more than it is worth you don't have negative equity at that point, but you did have it. You just kept it long enough to pay off the negative equity, but you still paid for that whether you traded it or kept it long enough until you paid it off.

 

If you finance the car for no more than it is worth then you are just paying off the negative equity up front at the time of buying the car. They are ALL going to be worth a lot less than what you paid when you drive it off the lot, whether it is new or used. The only advantage by putting enough cash down up front to cover the amount of negative equity you would have after driving it off the lot is the interest you save on that amount you didn't finance.

 

And the dealer doesn't "do you a favor" by paying off your loan. YOU are paying off your loan and adding any negative to YOUR new loan. Unless you are buying at a dealer that does "buy here, pay here" where the dealer holds their own paper, the dealer has nothing to do with what you owe, what your negative equity is, or whether the bank approves you for the loan or not. The dealer doesn't do the financing. The bank does. The dealer doesn't pay off your car, YOU do.

 

You are correct that if you trade a car with negative equity that you will be increasing that negative equity amount because you have the negative from your trade and the negative on the car you will have once you drive it off the lot. But that only affects you if you going to trade it again in the near future. If you buy the new car RIGHT, then you should be even on that in 2 1/2 - 3 years. This is assuming you buy right, take the rebates, and finace for no more than 60 months.

 

So if you buy it right, wait 2 1/2 - 3 years before trading again, then you should only have the same amount of negative equity you had when you first traded the other car. The equity on the new car should be even.

 

Where people get into trouble is when they trade within the first 2 1/2 - 3 years after buying the car. Especially when trying to trade again within the first year. You will take a bath on the car and have huge negative equity.

 

If you have no trade and buy a car out right, you should be able to break even on the trade in 2 1/2 - 3 years, assuming a 60 month loan and you have average miles on it and it was taken care of.

 

 

OK - I ain't gonna beat this horse 'till it's dead, but many community colleges offer courses in basic financial planning.

[ShelbyDude]

OK - I ain't gonna beat this horse 'till it's dead, but many community colleges offer courses in basic financial planning.

 

 

Just go back and read the title of this thread! ShelbyDude is right!

[mach1fever]

Congrats on the new purchase and thank you for your service

[owenkelley]

In Montana we have no sales tax except for motel rooms, rental cars, and anything else you rent for entertainment, like snowmobiles and wave runners. They do however nail you on property taxes, and when you go to license your new car you pay throught the nose. So you may not pay sales tax, but they get you one way or the other.