Warning: If you have a new car or lease, you should not read this. Doing so could induce nausea, vomiting, anger, upset sense of reality, whining, and pouting.
I have to comment on the long standing tradition of car companies pretending to "give" you cash back when you "buy" a new car. They call it Cash Back, or Bonus Cash, or a Cash Allowance. Turn on the TV for more than 5 minutes and you'll hear it. How nice of them, just giving you money if you buy one of their cars. I wonder where that money comes from? Hmmm... Well, it's not theirs. The car dealerships actually make more money off of selling a car loan than on selling a car (this is a fact). Try coming in with cash to buy a new car sometime and watch as they try and entice you into a loan. What this Cash Back crap is is them encouraging you to take a bigger loan than what is needed to "buy" the car, so they can "give" you cash. You are just taking out a loan to get cash that you will then pay interest on to the bank. Now, if you were just sitting here thinking, "wow, I'd love $2,000", you most likely would not go down to the bank and ask for a loan for some cash. But that is what you are doing with the Crash Back deal. And people fall for it every day. So you end up not only paying way more than the worth of the car, way more than the price tag value, then you pay an extra $2000 or more to get cash back. "Hey honey, lets go get a loan, pay thousands more for a car than it is worth, not to mention many thousands more than it will be worth once the wheels hit the pavement (buy used cars!!!!) so we can have some cash in our pocket, that we'll end up paying a lot more for than we actually get in our pockets!" That's almost as stupid as, "honey, lets get rid of our payed off car and spend $25,000 on a hybrid to save money on gas!" One final stupid one, "Let's spend $300 a month on a new car loan ($3,600 a year) so that we don't have to spend the $800 to get our 5 year old car fixed." OK, one more, "Lets spend $300 a month on a leased car that will never be ours so that don't have to drive a paid off car with no payments and an occasional repair that would be about what we pay a month on our lease." It blows me away what people are willing to pay for new car smell and the ability to say for a few months "I drive a new car." Stupid.
One more thing, a car is NOT an asset! If you want to use that term, try a depreciating asset. How about this: I have some stock for you! Buy it for $20,000, and in 4 years it will be worth 40% to %50 LESS than it is now. In fact, keep it long enough and you can only sell it for a few hundred dollars. But what most people do is just buy more of the stock for another $20,000 or more and let that depreciate. But hey, they look cool because of all that stock! If you want to be really cool, you can just lease the stock, and someday you can buy it if you want to, but it will still only be worth beans. But it's not about the money, right? It's about looking cool and that "new stock smell." Wake up!
Oh yeah, and then, after pouring your money into new car smell, you MUST complain about not having enough money at the end of the month and ask stupid questions like "Where does it all go?"
Enough said.
2 comments:
The "cash back" scam is another reason why many auto owners are "upside down" until very near the end of their loan period.
I leased once (what was I thinking? I was young.) By the end of my lease I obviosly didn't want to do that again. So I turned in my lease and rode away on my razor scooter. I had just paid on a car for three years and was riding away on a self propelled scooter. Talk about where did all the money go!
Post a Comment