Need to vent - wtf?

[Debt Vigilante]

Originally Posted by thekid

Why is there always somebody there to say something like this?

Why 10k$ and not 5k$? Is the fact that he is entitled to make purchases he can afford as he sees fit as per his own priorities pertinent?

A pet peeve of mine, but people often don't realise that purchase price is not the determinant factor in figuring out how much a car will cost you. Price per years of use is. Or more acturately, [Purchase price + Maintenance costs - Resale Price]/Years of use.

Cars don't depreciae in a linear fashion. If he's buying a reliable make that's 2-3 years old for 20k$, it may end up costing him about the same per year of use than an older 10k$ car with higher maintenance fees.

I was thinking the exact same thing...Who cares how much car he wants to buy. If you have the money, be smart, but enjoy it.

[disneysteve]

Originally Posted by Debt Vigilante

I was thinking the exact same thing...Who cares how much car he wants to buy.

Sorry. This is a personal finance board. If you post a question here about a major purchase you are thinking of making, you need to be prepared to answer questions about that purchase, like if you really need it and if you can really afford it, even if that isn't the purpose of your post.

There was a thread last week by someone who was asking about taking out a home equity loan in part to buy a brand new $25,000 car. Confused; what to roll into a HELOC and is the HELOC the way to go Several of us questioned the need to get a new car or to spend that much when the person clearly can't afford it. That wasn't the question, but it would be irresponsible for us to answer the question while ignoring the big picture.

[maat55]

Originally Posted by am_vanquish

1. I was denied by 2 more applications since this morning. Submitted 5 applications this weekend online, and ALL have been denied.

2. I checked the credit report with all 3 bureaus before applying. All of my accounts were listed and were in good standing. It shows 4 accounts spanning 4.5 years, all paid on time and in good standing.

3. I don't need a car at all. But, I've saved, researched, shopped, and found one that I really like that I can afford that will give me some additional happiness. Also, I will soon be moving 400 miles from my wife for a new job and will need to commute back and forth a few times a month for conjugal visits. I am willing to put a premium on comfort and reliability during this time rather than wondering if my 1999 Protege with 150,000 miles can make another 12 hour round-trip without stranding me in Podunk, Alabama (Keep paddling, I hear banjo's!!!) I'll still be saving over 20% of salary, so I feel comfortable (but thanks for keeping me accountable!)

4. I talked to my banker and discovered my credit report was "too thin." I told him I have 4 accounts spanning 4-5 years. Even though it's "thin", I expected to receive an elevated interest rate (already priced into our budget) rather than being denied completely. Turns out only 1 of my accounts is being counted because it's the only one with a balance. My other 2 current accounts aren't being counted in the credit scoring system because I pay them in full every month. The fourth account has been paid off for about 3 months, so it also is not being counted.

I had a pretty lengthy conversation with the banker about "the system." He agreed that it's odd that I'm being punished for doing what most people don't, but he also can't change the system. At one point he "joked" that I go buy a tv on credit at BestBuy and then come see him again (I didn't laugh). His best suggestion was to make it a joint loan with DW so we can count the 1-2 accounts that have a balance in her name. He also suggested letting the dealer work some magic with their banks because they might be able to pull strings he can't.

DW and I are going to apply jointly tonight and then let the dealer try their banks. Luckily, the dealer agreed to pull the car off the market for right now until we can get something worked out. I tempted to raid the EF and pay CASH just to avoid the dirty looks I get when people here I was DENIED!!!

And many wonder why the country is in an financial mess, they give loans to them who cannot pay and none to those who can. We pay people to sit around with the earnings of those who work, etc. etc..

I'd get mad and just save a while longer and start paying cash.

[jpg7n16]

Originally Posted by Debt Vigilante

I was thinking the exact same thing...Who cares how much car he wants to buy. If you have the money, be smart, but enjoy it.

If you have to borrow, you don't have the money.


Like DS was sayin, many times people come asking one thing, when what they need to hear is something different.

So it's pretty normal in my mind to see someone asking about debt consolidation, and my answer be to "sell your car and/or move to a cheaper place." They came here thinking debt consolidation was the answer to their cash flow problem, when a much better solution is found in reducing car/home expense (in many cases I've seen).


thekid- I'm noticing that I come across more argumentative than I mean to be at times

Sometimes I mean it. This was not one of those times.

My intelligent questions line was my thought process, not an accusation or anything.

Even still - I'll go with your numbers. Say $354 of extra depreciation. But you forgot the extra finance charges of interest, so there's still roughly an $854/year gap that the $20k car (with 15k financed) is going to cost over the $10k car (with $5k financed). And I don't think maintenance expenses for $10k cars run anywhere close to $350/year - let alone $850.

My car was an '06 Accord bought in summer 08 for $13k cash. I've had to replace the brake pads, and that's it. So over 2 years, I'm a long way from $700.

[am_vanquish]

Got approved by a credit union at 3.45%. It was very helpful to sit down and talk with a "small bank" person rather than going through "the system". She admtted their lending standards were more flexible because they wanted to win our "long-term brand loyalty". They'll definitely start gettin more business from us.

We talked about paying cash, but we really wanted to use a car loan to boost our credit scores before shopping for a home loan in a few years. I know no one should justify taking out a loan tobuild credit, but in our case we have clearly saved for it and can afford it. We will pay minimal interest by paying ot off early.

Without a car loan on our history, we believe it would be tough to get approved for a home loan. If we could get approved, I doubt the interest rate would be as good as if we had an auto loan. In the long term, I expect that this car loan will save us a LOT of money on mortgage interest by helping us get a better rate due to a more complete credit report.

As for the new vs used discussion and how much $ we're spending: DW and I decided that we don't want to apply a broad rule of thumb to this decision. We can afford it, we're happy with the decision (especially now that it looks like it will go through), but we wouldn't recommend others do the same thing without a thorough look at their situation and resources.

[ktmarvels]

Originally Posted by Joi

I never realized that you need a balance on your statement to look good to future lenders.

This could be interpreted a couple of different ways. DH and I always have a 'balance' on our credit card because we use it frequently and when the statement comes we pay the statement balance in full, not the entire balance. We never pay interest on that card, because we pay it off each month. I assume this is the better way to carry a balance on a card. However, I could see people interpreting the above statement to mean, I don't have to pay this CC month so I have a balance (and pay interest).

[cschin4]

I don't know why you would "be angry". I don't see anything to get angry over. I would just go investigate and ask the lenders why you didn't qualify. If you have a bad credit score due to some mistake, then it is a good thing you found out so you can correct it.

[am_vanquish]

Originally Posted by cschin4

I don't know why you would "be angry". I don't see anything to get angry over. I would just go investigate and ask the lenders why you didn't qualify. If you have a bad credit score due to some mistake, then it is a good thing you found out so you can correct it.

I'm actually surprised that it got to me so bad also. The frustrating part is that we were actually being denied BECAUSE we paid everything off. It was very aggrivating to talk to bankers who were suggesting I shouldn't have paid off my couch before the promotional rate expireed or that I should go buy a television I don't need at BestBuy.

This will probably exacerbate the discussion on how much $ we're spending, but an online listing for the car is here. Not sure how long it will last though, we're probably going to sign paperwork today. The point I wanted to make was that DW & I feel like we're getting a lot of value for the 20k we're spending. Sure, we could get by on much less, but this is a personal reward for a LOT of very hard work, very long hours, and diligent saving over the last 2-5 years.

[am_vanquish]

Originally Posted by ktmarvels

This could be interpreted a couple of different ways. DH and I always have a 'balance' on our credit card because we use it frequently and when the statement comes we pay the statement balance in full, not the entire balance. We never pay interest on that card, because we pay it off each month. I assume this is the better way to carry a balance on a card. However, I could see people interpreting the above statement to mean, I don't have to pay this CC month so I have a balance (and pay interest).

KTmarvels is correct. This is how we pay the one card (Citi) that is being counted. But our AmEx card we use less often, so I pay the full balance every time I use it to prevent missing a due date. If we paid the AmEx the same way as we pay the Citi card, it probably would have been counted in the system.

However, if you haven't used the card AT ALL in the last month or two, and it has a balance, then it will not be counted.

[disneysteve]

Originally Posted by am_vanquish

Got approved by a credit union at 3.45%.

We talked about paying cash, but we really wanted to use a car loan to boost our credit scores before shopping for a home loan in a few years. I know no one should justify taking out a loan tobuild credit, but in our case we have clearly saved for it and can afford it. We will pay minimal interest by paying ot off early.

Without a car loan on our history, we believe it would be tough to get approved for a home loan.

Congrats on getting approved and finding a lender that looked beyond the numbers. Dave Ramsey talks about this all the time. It is called manual underwriting - actually sitting down with the loan applicants and determining if they can afford the loan. Imagine that. Most lenders today focus purely on the FICO score and income figures. FICO really does nothing to show how well a person is managing his money.

I agree that you shouldn't go into debt in order to raise your FICO. When you are ready to buy a home, you would just need to use a lender who does manual underwriting, the same way you just did for the car. That's the way it always used to be done in the past. If you wanted to borrow money, you had to sit down with a loan officer and document that you had the means to repay the loan.

Originally Posted by ktmarvels

DH and I always have a 'balance' on our credit card because we use it frequently and when the statement comes we pay the statement balance in full, not the entire balance.

Same here. Our credit reports always show a balance because we use our credit cards nearly every day. We pay our bills in full every month but by the time we pay our bill, we are about 3 weeks into the next billing period so new charges have occurred.

[thekid]

Originally Posted by jpg7n16

thekid- I'm noticing that I come across more argumentative than I mean to be at times

Sometimes I mean it. This was not one of those times.

My intelligent questions line was my thought process, not an accusation or anything.

Even still - I'll go with your numbers. Say $354 of extra depreciation. But you forgot the extra finance charges of interest, so there's still roughly an $854/year gap that the $20k car (with 15k financed) is going to cost over the $10k car (with $5k financed). And I don't think maintenance expenses for $10k cars run anywhere close to $350/year - let alone $850.

My car was an '06 Accord bought in summer 08 for $13k cash. I've had to replace the brake pads, and that's it. So over 2 years, I'm a long way from $700.

No prob. I'm quite argumentative in my delivery as well, while simply looking for is a good discusion.

I did refer to financing costs in my post. If you stay within the same make, you will necessarily buy significantly older if you want to half the purchase price and that will cost you much more maintenance (possibly completely offseting -and beyond- the extra depreciation/financing).

My point in all thi was simply that value of a car purchase cannot be determined by purchase price alone, as depeciation will be fairly steady from year to year after the initial 2-3 years of heavier depreciation. So once you chose a make, buying a 2 year old car or a 6 year old car will cost you roughly the same for say 4 years of use even if the newer car will have a higher purchase price. I take it you went with this conclusion yourself since you bought a 2 year old car.

That's for the how used should you go debate (and hence the determination of value within a make).

The choice of make, that's really a question of afordability to a partiular buyer and his/her own priorities. The fact that the OP was going for a 20k$ used car really doesn't tell me anything without regard to his overall financial situation.

[feh]

To the OP - were you recently transferred, or did you take a new job? I wonder if that might have had something to do w/ the loan denials...

[abcfisher1]

I enjoy all of the discussion on this board.
In my own experience, I purchased a 1998 BMW 528i in Jan 08' from a private owner for $8700. I took out a loan at my credit union at a low interest rate for 3 yrs. Just paid it off March 10' total interest paid was 671.45
TOTAL repair expense since purchase around $400.00 for brakes and a suspension part.
Point is older cars may last if you take care of them. Do your own oil and brakes if you can. Do not drive the he.. out of them. You will save money on cost of purchase, the yearly tag cost, and if you get liability insurance only, you save there too. This car was $50000 brand new!!!!!
This is just my experience. I have purchased a brand new car before at 12% interest in the past then traded it on another car as soon as it was paid for including purchasing a new transmission the year prior. I will NEVER do that again. My opinion is to shop around, be patient. Make sure you are making the right decision for you. Some may think my car is old. So what. I bet that old 99' you have would handle the 12 hour trip better than you may think, just a thought. Enjoy your new car.

[am_vanquish]

Originally Posted by feh

To the OP - were you recently transferred, or did you take a new job? I wonder if that might have had something to do w/ the loan denials...

I recently made a verbal agreement to take a new job in another state. Nothing's been signed and the move won't take place until Nobember. I can't see how it would have made it to my credit report when only my wife & new hiring manager know about it!

[wincrasher]

it sucks that you are having trouble getting credit. times have changed and it's just harder these days. you'd think a secured loan with 25% down would be enough.

Used car loans have always been alittle tougher than for new ones. Usually it's reflected in the interest rate. You may want to shop new cars and see what kind of deal you can make.

Life choices are not just numbers on a spreadsheet. There is a value to pleasure, peace of mind and risk avoidance. Those are hard to quantify. If buying a new car will make you happy and you can afford it than why not. This is a money saving forum, not a "living like a monk" forum!

Don't be too pissed off though. I'd rather be young with "not so good credit" than old and great credit.

Good luck.