2014 Resale / Trade In Value

diannabill · March 21, 2014

So what about your purchase aren't you happy with, if you don't mind me asking?

The truck? The deal?

Some advice from an old guy....if you can't pay a new vehicle off in 3 years, it's too much vehicle for your budget. Just a good financial rule of thumb. If nothing else, it keeps you from getting too upside down--and you're way upside down now.

I do hope you have gap insurance.

rbiggers277 · March 21, 2014

I think you will lose money no matter which route you take right now. Wait another year if you can. I'd also like to know why you want out of it so quick?

TJay74 · March 21, 2014

What is bad about financing?

my truck was $53k, with the rebates, my GM employee discount, down payment and such I financed $43k for 72 months on a 1.49% rate. Cheap money in my eyes, plus I will drive this truck until well after it is paid for. I only average 10k miles a year so it will only have 60k miles on it when it is paid for.

Silverado Steve · March 21, 2014

I think the mindset against long term loans is you end up owing money on something that is worth less than what owe. Low interest loans are fine, but if you end up upside down right outside the gate for a few years thats bad finance and many of the major financial talking heads will say the same thing. Think what lead to the housing market crash. Unless you have Gap insurance on your truck, what happens if you suffer a complete loss on your truck? Or better yet your financial circumstance changes and you have to liquidate?

davidryan123 · March 21, 2014

I finance at low interest rate due to it being a severely fast depreciating asset. Key is have the money stashed to pay for whatever happens to it. You will always lose on any vehicle I have never seen a new appreciating vehicle. Finance it and dump it when you are tired of it you will lose money either way. Or pay cash for a 2004 vehicle that will last you a few years.

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softail_silverado · March 21, 2014

If you still owe that much you would for sure go belly up on a sale right now. I just bought mine 2 weeks ago, double cab, 4x4, LT for $34k out the door so I wouldn't have even considered used vehicles for more money.

The best advice I can probably give you is hold on to it for a while and every month when you make a payment write a separate check for $50 + and have them add it on to the principle of the the truck and knock the payoff amount down. Just make sure you tell them to put it on the principle or they will play dumb and just continue to dump it on the interest. The problem with long term loans is that you are primarly paying interest for the first 3-4 years of the loan and the actual payoff amount of the truck stays fairly high. You are better off tacking a bit extra onto the payment every month and building a bit of equity in the truck, then when you go to trade in you have a little better bargaining chip because you owe less on the truck than what your loan term shows.

The same principle applies to home purchases as well, the more you pay in the beginning of the loan term the more it knocks down the amount owed and can knock months or years off of a loan.

diannabill · March 21, 2014

What is bad about financing?

my truck was $53k, with the rebates, my GM employee discount, down payment and such I financed $43k for 72 months on a 1.49% rate. Cheap money in my eyes, plus I will drive this truck until well after it is paid for. I only average 10k miles a year so it will only have 60k miles on it when it is paid for.

There is nothing wrong with financing under the right circumstances.

For example: If you want to take advantage of low or no interest financing just to be using the bank's money rather than your own, that's fine. But you should have the savings set aside and earmarked to pay it off at any time, in full.

The problem for most people (and I felll into this trap when I was younger too) was thinking you're going to keep it until the wheels fell off, getting the new truck bug in two or three years, and trading it in with a huge balance. Now you've just added even more upside-down years to a vehicle loan. It happens all the time. Just look around at the vehicles on the road today. Just how many 10-year old vehicles do you see compared with the number of newer vehicles.

Lenders don't care about you or your financial future at all. They want a loan out of you. They've run the numbers. They know that odds are great that they won't be holding a 1.9% loan for 84 months. Somewhere well before the 84 months hits, they'll have their money back, you'll have paid most of the interest up-front, and they'll have a larger loan from you (or someone else).

Try this if you think you can: You've already got the loan. Don't dump the truck, but put aside enough cash each month so that in 36 months you can pay cash for a vehicle at that time. But wait! It's not that easy. You've got to save more than that for 3 years, because when you trade your vehicle in you're still going to owe considerably more than it's worth. And that's the problem.

softail_silverado · March 21, 2014

There is nothing wrong with financing under the right circumstances.

For example: If you want to take advantage of low or no interest financing just to be using the bank's money rather than your own, that's fine. But you should have the savings set aside and earmarked to pay it off at any time, in full.

I'd venture to say that there is a very very small percentage of people who live by this rule or even close to it in todays society. I agree that is totally the smartest way to go about it from a responsible financial perspective but in reality it is shocking the amount of people rolling around in brand new vehicles who are not only upside down on a loan but also don't have $50 extra in their pocket to even pay for gas let alone pay a vehicle loan off. The sad part is that dealers, banks, and lenders know this, yet 9 times out of 10 they push the loan through and end up setting you up for failure anyway. It is all about the all mighty $$$$

oldmann · March 21, 2014

You might get 32k.

diannabill · March 21, 2014

Take any offer over 30k rebates are only get bigger and no one wants to buy someone else's problems when they can buy new for just a few grand more. Just dip into your savings to pay the difference and call it a lesson learned.

Chances are, there aren't any savings to dip into. I wouldn't recommend taking such a huge loss right away, unless cash flow is an issue right now and he's having trouble making the payment. It sounds like that isn't the case, so the only responsible advice I could give at this point is to bite the bullet and work like hell to pay it off as quickly as possible. At least keep up with the depreciation so you don't get upside down when you trade it in.

If cash flow is the problem, I would recommend finding some way to either supplement my income, or sell it for the most you can. You're still going to take a significant loss, but what else are you going to do. And once you've sold it, the real lesson to learn is buy a used vehicle that you can afford and save for a new car.

diannabill · March 21, 2014

The advice I give comes from years of paying interest on mistakes until I figured it out. But it's still only my opinion, and you know what they say about opinions!

Financial advisor Dave Ramsey says we've all had to pay stupid tax at one time or another.

tanner709 · March 21, 2014

I was pissed at my dealer and my truck for a day so I went into dodge and seen what they would offer me... My sticker price was 52, I got the truck for 47 put 7 down and owe about 38 at the moment. They offered me 32k which surprised the salesperson that it was even that high... Just an FYI. So basically you take a hit of about 15k minimum is my guess.

travisray2004 · March 22, 2014

Well my SLE AT White truck Priced at 48k, traded in for 33k. Did how ever get a better interest rate but got screwed in the long run, should have just painted to truck blue... ugh.

cmpcpro · March 22, 2014

Wow, you guys losing $15k on a few month old purchase is horrible.. You are taking the depreciation hit twice! Not only is the truck cheaper because it's used but trading it in you are selling it for wholesale basically.. They have to make a profit off of it after all.. Keep in mind just how much a new vehicle loses value.. I know we are all probably stupid for going new, but if nobody bought new there would be no advancement in automobiles.. Just take a 7 Series or S class for example.. You can buy a 7 year old $120k car for about 25-30k right now.. That's about a 90k loss.. makes you wonder why people still buy them right? I guess we can't take it with us, so why not..

Northside · March 22, 2014

I'd have to be mighty unhappy with a purchase to take a hit like that. I love my Silverado, but that's me. Sounds like you'd be better off to just grin and bear it for a couple of years. It won't depreciate nearly as fast after the first year, and it's still a pretty nice truck to be "stuck" with.