Is this true??

Susan in MI said:

I haven't personally researched this, but I have heard this over and over again. Personally, I've never leased and I don't like to take out a loan. Unless you can get a 0% loan, you pay way more than the vehicle is worth in the long run. Plus it usually depreciates faster than you pay it off. We prefer to pay cash here, which leaves us with older cars and/or cars with a lot of mileage, but that's OK with us.

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well the days of 0% loans are long gone. it may be possible to get very low financing through the vehicle manufacturer, but then that takes away any other negotiating chips you may have over the actual vehicle price.

i've bought every car i've owned with loans, since i've never had enough savings to throw away on a new car. but the trick is to get the best rate you can, then pay off the loan as fast as you can. i bought my mazda3 11 months ago for $18400. the best finance rate i could get was 5.8% for 60 months. i have been paying between 3 and 5 times the monthly payment and the loan will be payed off in three more months . the total amount of interest paid will be somewhere around $475 (i keep an excel spreadsheet which calculates the loan amortization automatically based on exactly how much i paid each month . and since i went into the dealer pre-approved for a car loan, i had a lot of negotiating power over the purchase price. i managed to get about $750 off of MSRP, which is difficult for this particular car. plus, if i decide to sell it in two more years, based on how much the 2004 models are fetching, it will have depreciated only about $3-4000. not bad for three years of ownership of a new car.

Susan in MI said:

I haven't personally researched this, but I have heard this over and over again. Personally, I've never leased and I don't like to take out a loan. Unless you can get a 0% loan, you pay way more than the vehicle is worth in the long run. Plus it usually depreciates faster than you pay it off. We prefer to pay cash here, which leaves us with older cars and/or cars with a lot of mileage, but that's OK with us.

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We do exactly the same thing. We may have older cars, but they're reliable. They don't have the lastest greatest safety features, but my kids are preoperly restrained to the limit of US-available seats.

well the days of 0% loans are long gone. it may be possible to get very low financing through the vehicle manufacturer, but then that takes away any other negotiating chips you may have over the actual vehicle price.

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not true at all. you can get 0% for 60 months on many many general motors cars and some ford cars most of the time. and since this portion of the new car deal is strictly through the manufacturer's finance company, you still negotiate the actual selling price of the car with your independantly owned dealership. if a dealer tells you otherwise, find a better dealer. :thumbsup:

I believe that leasing is only more cost effective if:
1) The vehicle is for business use, and the lease payments are a complete right off. and
2) You would like and/or need a new vehcile every couple of years.

If you can't afford to buy a brand new vehicle, you don't need it. There are lots of pre-owned vehicles that are still in great shape at a fraction of the cost. It was mentioned about a 2-3 year old vehicle earlier, and that is taking advantage of the cheap buy-out at the end of a lease, without the horendous lease payments. Also if you need to finace, don't be scared to research away from the dealer. 0% from the dealer is not 0%, and if you pay cash they will lower the price. Check with you're banks for loan options and go with the cheapest. An advantage of finacing through you're bank is that you also help build you're credit rating, which could lead to a lower rate for a larger purchase, such as a house. I drive a vehicle that cost under $5000 CAD, and I'm glad I don't have the auto payment every month. Older vehicles have larger repair bills than new ones, but it still usually costs less to repair the old vehicles. Another perk of older vehicles is lower registration and insurance costs.

Thanks for all the replies. It is good to see other peoples experiences, I was thinking of doing what one of you suggested. We are going to go to our credit union and see what rate they can give us. It is such a nightmare going through this whole process. You always think that the person who is "helping" you out might be screwing you over. I have a hard time with that, but I hope this will soon end. I was looking into carmax, what have your experiences with them been? TIA

southpawboston said:

well the days of 0% loans are long gone. it may be possible to get very low financing through the vehicle manufacturer, but then that takes away any other negotiating chips you may have over the actual vehicle price.

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I was a little surprised to see a Chrysler ad for the Town & Country today offering both a rebate and 0% for 60 months. I guess they need to move 'em...

Good point- never tell a dealer that you intend to pay cash. I always assume they'd not offer me as good a deal or that they'd back out of a good deal when I told the finance manager I was writing a check. So far, none have seemed to care. At that point, they're always a lot more interested in hard selling extended warranties.

Dealers do get kickbacks from banks and can hide numbers in financing and leasing. If you don't keep track, they can really take a lot of money from you. Still, based on energy spent by finance managers, the real profits must be in warranties and appearance packages like paint sealers, rustproofing and fabric protection. "We can roll a $1000 can of scotch guard into your loan for pennies a day!"

beeman said:

If you can't afford to buy a brand new vehicle, you don't need it. There are lots of pre-owned vehicles that are still in great shape at a fraction of the cost.

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This is true if transportation is the only concern. If you're a safety nut and looking for the latest occupant protection features, that brand new vehicle may well have something to offer over a pre-owned one. For example, things like side curtain airbags and stability control are not standard on many vehicles more than a couple years old and finding a pre-owned model with those options can be like a needle in the proverbial haystack. Granted, finding new ones on a lot with those options can be tough, too.

CPSDarren said:

I was a little surprised to see a Chrysler ad for the Town & Country today offering both a rebate and 0% for 60 months. I guess they need to move 'em...

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Yup, Chrysler likely wants to move out the '07 models so they don't have many left over when the redesigned '08 model hits the showroom later this year. I noticed Saturn Vues are being marketed with 0% financing up to 6 years, probably for the same reason, to rush more of them off dealer lots before the redesigned '08 model arrives and makes it harder to sell leftover '07 models.