The terrible financial decisions game

LeVeL

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I was listening to a podcast today and the discussion revolved around people financing car parts. Basically people who really want to modify their cars but can't afford to do so go through finance companies such as Affirm to take out high-interest loans for their parts list.

The podcast hosts did a challenge where each one picked a brand new car to buy, came up with a mod list, then got rid of the car after two years. Taking into account depreciation, interest rates, etc they were then able to determine how much money they lost during that two year period.

This gets a bit mathy (can't wait for narf to pick this apart) and you have to do some research but I think it's a fun game to play. Feel free to take mods off and sell them before trading the car in to recoup some costs, use different interest rates or loan durations, etc - do this however you'd like. Obviously a big part of it is vehicle depreciation, not just money wasted on mods, but that's part of the game.



Here's my build:

2019 Lincoln MKZ Reserve II
Base Price: $44,995
Price w/options, including AWD and the 3.0 Ecoboost: $53,339

mkz.jpg


Car Financing:
Term: 5yrs
Interest Rate: 3.5%
Monthly Payment: $970
Cumulative Total at Loan End: $58,217
Total Paid after 2yrs: $23,288
Amount Still Owed: $34,929
Blue Book Trade-In Value after 2yrs and 24k miles: $24,193
Amount Lost: $10,736

Mods:
Livernois Tune: $600
20" MRR wheels + Pilot Sport 4S tires: $4,210
Steeda Rear Sway Bar: $185
Window Tint: $380
TOTAL: $5,375

None of this stuff would get removed when trading the car in, yet the mods won't add any value to the vehicle - they basically never do.



Mod Financing:
Term: 2yrs
Interest Rate: 20%
Monthly Payment: $273.56
Cumulative Total at Loan End: $6,561
Total Paid after 2yrs: $6,561
Amount Still Owed: $0
Blue Book Trade-In Value after 2yrs and 24k miles: $0
Amount Lost: $6,561

Total amount lost: $17,297
Lost per month: $721
Lost per week: $166


:oops:

The scary thing is that people actually do this. I can't wait to try this with a Wrangler :LOL:
 

bone

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i wouldn't even take a loan to buy a car, let alone for the mods...
a house you finance, but that's it, if you can't afford the car, get a cheaper one! (imho)
 

prizrak

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i wouldn't even take a loan to buy a car, let alone for the mods...
a house you finance, but that's it, if you can't afford the car, get a cheaper one! (imho)
Below is about the US since I obviously have no knowledge of other markets but...

It’s not quite as cut and dry as this, when buying a new car financing through the dealer will often get you a better deal than paying in cash, because dealers tend to have incentives to push you into their financing. Additionally with APRs being as low as they are it is worth much more to take the money you would have spent on the car and invest elsewhere.
Average new car is around 40k in the US, invested wisely that’s going to yield much more money than 3-4% apr you would pay for the loan.
 
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CrzRsn

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There are A LOT of wheel/tire shops around here that finance out wheel. I've actually seen a recovery service repoing a set. That was a wild sight - thought the guy was stealing rims off the car in broad daylight, but then saw the tow truck he was loading them onto and the police cruiser nearby.

There really is a auto loan crisis here right now, similar to the housing bubble from 2007-08. Predatory lending left and right to people who have no business buying new cars, ultra long loan terms, not enough financial education, etc. Almost on a daily basis, I hear these ultra obnoxious radio ads for a local Chrysler/Dodge/Jeep/Ram/Hyundai/Kia dealer that claims "are you underwater on your trade, will no one else give you a loan? Come to us because we will help! We approve loans other lenders won't to help get you into that new car that you really want." And people go for it too thinking the dealer genuinely wants to help them get a new car, without realizing that the amount they're underwater by just gets rolled into the financing for the new car - instantly putting them EVEN FURTHER underwater. Its one thing to finance $20k for a $20k car (not saying thats a smart decision), but most of these people are financing $35k for a $20k car (before interest). I get it, everyone wants a new car - they're comfortable, they have cool features, its nice to drive a new car, but really most people should be buying $5k cars off Craigslist, especially the ones that need to go to a dealer that will "approve loans other lenders won't." Now I'm all for separating stupid people from their money, but not in a predatory fashion like this.

/soapbox
 

GRtak

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Re obnoxious commercials, Mitsubishi runs some of the worst low entry to a new car type of commercials.
 

CrzRsn

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Re obnoxious commercials, Mitsubishi runs some of the worst low entry to a new car type of commercials.
Don't know if you get ads for Summit Place Kia or LaLonde Chrysler in your part of Michigan, but they are easily the worst I've heard in a long time.

Though come to think of it, when I lived in Kentucky, there was a used car lot that would have weekly or monthly adverts on the radio claiming that "WE MUST SELL 21 CARS BY THE END OF THE WEEK BECAUSE WE MADE A MISTAKE AND TOOK TOO MANY TRADE INS SO WE'RE APPROVING EVERYONE" and the following week it would be like "OH MY GOD WE MUST SELL 49 CARS BY THE END OF THE MONTH OR WE MAY NOT SURVIVE SO WE'RE APPROVING EVERY TRADE!". I got so disgusted by the ads that I would change radio stations everytime it came on as a form of protest that got nothing accomplished or even noticed.
 

GRtak

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Don't know if you get ads for Summit Place Kia or LaLonde Chrysler in your part of Michigan, but they are easily the worst I've heard in a long time.

Though come to think of it, when I lived in Kentucky, there was a used car lot that would have weekly or monthly adverts on the radio claiming that "WE MUST SELL 21 CARS BY THE END OF THE WEEK BECAUSE WE MADE A MISTAKE AND TOOK TOO MANY TRADE INS SO WE'RE APPROVING EVERYONE" and the following week it would be like "OH MY GOD WE MUST SELL 49 CARS BY THE END OF THE MONTH OR WE MAY NOT SURVIVE SO WE'RE APPROVING EVERY TRADE!". I got so disgusted by the ads that I would change radio stations everytime it came on as a form of protest that got nothing accomplished or even noticed.

I am sure I have either heard or seen their ads at some point, but I generally don't watch Detroit area TV stations much any more, and radio stations get flipped when a commercial comes on.

There used to be dealers here that used similar tactics in their ads here, but they went away in the 90s.
 

LeVeL

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I doubt that most of the people who can't afford cars are buying them - I bet they're all leases. When they expire they are followed by new leases and people end up having a monthly payment forever. There are circumstances when leasing makes sense but for most of the folks we're discussing here it certainly does not and they should really just stick to used cars. It's also incredibly stupid to start modifying a leased vehicle and being able to finance mods is, in a way, a predatory practice.

I'll cost out a leased car the same way I did above and see what it looks like when I have time.
 

CrzRsn

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@CrzRsn I keep telling you to stop listening to regular radio and start streaming ;)
Drive to work is 101.1 WRIF just because of the absolutely hilarious morning radio show. Driving home, or anywhere else at any other time is either podcasts, autobooks or Spotify.
 

prizrak

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I doubt that most of the people who can't afford cars are buying them - I bet they're all leases.
I don't think it's necessarily true, leases tend to have mileage restrictions that are pretty damn low. Also leases still require a credit check and I'm not sure that they are quite as lax about it as actual car loans.
 

CrzRsn

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There is a local chain of wheel shops that has 11 locations around Metro Detroit that very prominently display "we finance wheels" signage. I've driven by a few of them and its always amazing looking at the cars out front.

And I get it, sometimes you bend a rim and can't afford a replacement and you have no option by to finance a replacement wheel.... but I don't think you're getting a set of 24" dubs in that situation

 

gaasc

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I am getting a cheap steely if I don't just find a sufficiently compatible one on the side of the road in that situation :p
 

CrzRsn

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I am getting a cheap steely if I don't just find a sufficiently compatible one on the side of the road in that situation :p


I was thinking that too, though I think mixing wheel weights might fuck up axles
You should see some of the cars rolling around here on different size rims on all 4 corners.
 

ScarFace88

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Don't know if you get ads for Summit Place Kia or LaLonde Chrysler in your part of Michigan, but they are easily the worst I've heard in a long time.

Though come to think of it, when I lived in Kentucky, there was a used car lot that would have weekly or monthly adverts on the radio claiming that "WE MUST SELL 21 CARS BY THE END OF THE WEEK BECAUSE WE MADE A MISTAKE AND TOOK TOO MANY TRADE INS SO WE'RE APPROVING EVERYONE" and the following week it would be like "OH MY GOD WE MUST SELL 49 CARS BY THE END OF THE MONTH OR WE MAY NOT SURVIVE SO WE'RE APPROVING EVERY TRADE!". I got so disgusted by the ads that I would change radio stations everytime it came on as a form of protest that got nothing accomplished or even noticed.
I'll just leave this here...
 
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