Lazy borrowers

[CRFSaver]

So one of the things I am noticing more and more these days is how lazy people are when it comes to getting a loan. In particular I see this phenomena in auto lending then others but I see it in mortgages too.

When I bought my car I called 8 different banks/credit unions/dealer financing to figure where to get the best loan. How many of you are meeting people like this?

"How much did you pay for your car?"
"its 300 dollars a month"
"Yeah but how much did you pay?"
"300 dollars a month"
"whats your interest rate?"
"I dont know, i pay 300 dollars a month"

Sound like I am exagerating? I am not. More and more people go into dealerships and say I want that car and I can afford 300 dollars a month. They dont know how much they are paying or what rate or what the term is many times.

Is this the lender taking advantage of you or you just being lazy? I see it in the mortgage market where people rely on a broker to get their loan versus calling banks themselves. I don't get it. Am I wrong in my thinking?

[PRICEPLUS]

Some people will buy a bridge! I don't know if they are lazy or if they are apathetic. It certainly is an inappropriate way to handle your money though. Then again it is their money to waste if they want to do so!

[jmjj215]

I think the blame is shared. Advertising is so heavy toward the monthly payment I think it 'brainwashes' (for lack of a better word) the consumer somewhat. And man - they should read one of the hundreds of books on personal finance to find out what the heck they should be doing.

[PrincessPerky]

I didn't shop, but ours was '0%' and yeah the payment is '300 a month' Am I lazy or absentminded and forgetful? (actually it is 300something)

Oh yeah, DH knows, he knows the CC %, and the house % too. I do all the check writing paper work, but he knows all the details .

[Ima saver]

I usually finance my vehicles thru the company, ford, gm. etc. If course, I check on the interest rate they will charge, but since my fico score is high, i always seem to get a good rate.

[JBinKC]

Finance a depreciating asset? Helll no! Its no wonder why most people live paycheck to paycheck.

[Optsol]

Originally Posted by JBinKC

Finance a depreciating asset? Helll no! Its no wonder why most people live paycheck to paycheck.

There is a chicken and egg lesson in that quote somewhere

[sweeps]

Originally Posted by JBinKC

Finance a depreciating asset? Helll no! Its no wonder why most people live paycheck to paycheck.

If you need the asset, and the money could be used for a better purpose, why not?

Simple example: Dealer offers 0.9% financing on a car. Bank offers 4.25% APY on a savings account. Borrow the $20K for the car, save 20K in the bank. Save $670/year.

[locolorenzo24]

My credit isn't great...and I'm paying off a 3 grand debt from my college days that has dinged my credit long enough. I do know my payments are 151 a month with a 15% interest rate....dropped to 5% next month after showing a good payment history....WHOO

[baselle]

The borrower is lazy, but they would probably shoot themselves in the head if you showed them the payment schedule and how much extra they are actually paying. Ignorance is bliss, I guess.

Its even worse when they "buy" a house on the monthly payment. If the terms are sufficiently bad enough, that borrower will never own the house outright, they're just renting with an option to own.

[Ima saver]

I know people take the 30 year mortgage on their house to get the lowest payment. I try to take the shortest mortgage and make bigger payments.
I bought some land last year and borrowed $64,000 after putting down 20%. I make the regular payment each month plus add as much extra as I can. I have paid it down to under $38,000.
I just got notice from my bank that the rate is going up this year , but my payment has gone down over $240 a month. They don't want me to pay it off early. but I am going to continue on with the regular payment plus extra on the principal each month.

[Bruce Wayne]

If people aren't willing to find out how much they pay for an item then it's no ones fault but their own I'm afraid. There is a lot of help and advice out there to assist people in understanding the financial jargon so there is really no excuses for such lazy behaviour.

[tomkat]

I don't think it's laziness so much...it's just plain ignorance about how loans and interest work. A lot of people don't even think about the interest being paid, they're just thinking about what they can afford to pay per month. They're usually thinking short term, not long term. If they can get that magic "monthly payment" number, then they're happy and they think they've gotten a good deal. As long as they don't feel strained by that monthly payment, then they're good to go. It never occurs to them that, in the long run, they've paid out way too much money, even though they had reasonable monthly payments.

[Ima saver]

I think Tomkat is right. I know I was like that when I was really young. What mattered most to be was if I could afford the payments of my next car.