"Wobbles the Mind" (wobblesthemind)
10/20/2015 at 19:21 • Filed to: Car Buying
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"Wobbles the Mind" (wobblesthemind)
10/20/2015 at 19:21 • Filed to: Car Buying | 0
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I had to buy a new phone and found out Verizon does 0% APR for 24 months on their phones. So if you want a $600 phone, it would cost $25 a month. The catch being you must pay off the phone before you can change your contract or something. I don’t remember because I saw that it required a $149 payment up front! So they just charge you over 22% interest before you even pay for the phone. Granted, they do give you two free phone accessories but it made me think, why don’t car companies just do this?
Say you find a nice new car for $20,000 and the dealer tells you they have a deal for 60 months at 0% APR. All the financing people go, “that’s pretty much free money!” Whatever. The catch being they require $1,562.63 that day in order to drive off the lot. So a full 5 years of interest at around 3%. Your monthly payments are $333.33 on that $20,000 car. You cant purchase another vehicle outside of the brand until its paid off (resale value helps a lot here). This makes it so that there is no haggling, automakers get predictable returns, and the full loan interest profit is yielded in 100% of transactions (so no lost profits in a consumer paying the vehicle off early).
Want a $30,000 car? Just pay $2,350 that day and you can drive away with only a $500 monthly payment for 60 months. How about going crazy and buying a $90,000 car. Only $1,500 a month for 60 months with a little over $7,000 down. Of course realistically the 60 months at 3% interest would be the low end, but dealers could mess with that portion and let the vehicles and options be exactly at factory costs. If a dealer wants to go lower, it doesn’t hurt the brand. The dealer and financer are getting their money that day.
I think this could hit a sweet spot if someone with an education worked all this out. Vehicles are turning into technology and this could be the perfect synthesis between leasing and buying. Buy a $30,000 car and decide you don’t want it after 24 months, it is still worth $17,000 and you’ve paid $12,000 already over the 24 months. Thus your new car will only cost you an additional $1,000 to get you into any other brand of vehicle you want. Staying brand loyal? Maybe wave that last $1000 as part of a customer “brand loyalty” incentive.
Bman76 (no it doesn't need a WS6 hood) M. Arch
> Wobbles the Mind
10/20/2015 at 19:30 |
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If only, lol.
(leasing, I know)
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Wobbles the Mind
> Bman76 (no it doesn't need a WS6 hood) M. Arch
10/20/2015 at 19:35 |
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Hey, I’m actually a firm supporter of leasing new vehicles that aren’t going to be daily drivers, are high performance oriented, or super techie (everything over $50,000). Cost of ownership makes financing a vehicle you are barely going to drive pretty silly.
jjhats
> Wobbles the Mind
10/20/2015 at 20:45 |
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No just no...financing cell phones is stupid as hell and verizon edge is the biggest scam in the industry. If you want a new phone buy it. No phones don’t cost free...I hate consumers who need to be tricked into seeing they can in fact afford a $600 phone but only if it’s at 25 bucks a month. Rant over but yea leasing is stupid and financing a cheap disposable phone is idiotic