Toys4RJill

Heard an ad on Toronto radio today. 84 mo finance now available for a BMW. Who is poor enough to need a 84 finance, but doing well enough to warrant a luxury brand car?

I don’t get it. After 48 mo there is no warranty. So from month 49 to 84 you have no warranty. Paying for a car that might be worth less than what you owe.

I guess it’s a different world now.

mmarshall

It's obvious (to me, at least) who this is aimed at......the guy (perhaps a female, but usually a male) who has to Keep up with the Jones's, lusts after a new M3 or M5, and has convinced himself he has to get one to impress his friends (or that girl he has been trying to get).

You make some good points about potentially getting underwater on what is still owed and the payments outlasting the warranty. Also, don't forget that BMW electronics and hardware get increasingly unreliable with age, and cost an arm and leg to repair or replace.

Part of the problem IMO, is that the German upscale brands (Audi, BMW, Mercedes) steadfastly refuse to offer warranties any longer than 4/50 Bumper to Bumper/Drivetrain, where Lincoln, Cadillac, Buick, Acura, Infiniti, and Lexus offer 6/70 and 4/50, and Genesis, of course, offering 10/100 and 5/60. That is a policy that, IMO, drastically needs to change in the German auto industry.

Toys4RJill

[QUOTE=mmarshall;10505617]It's obvious (to me, at least) who this is aimed at......the guy (perhaps a female, but usually a male) who has to Keep up with the Jones's, lusts after a new M3 or M5, and has convinced himself he has to get one to impress his friends (or that girl he has been trying to get).

You make some good pointsQUOTE]

It just seems odd that someone who wants to finance a luxury product is also needing a super long term loan.

mmarshall

You yourself, though, said it in the thread-title...the average person living in his or her parent's basement is not likely to have the cash on hand to write a clear check for a new BMW, particularly an M or other upper-level model. Mom or Dad might not have the money themselves, either, to leave one under the Christmas tree for Junior. So, the result? Junior signs off 7 years of his future to satisfy the Gotta-Have lust of the moment.

The other possibility, of course, is for those who aren't necessarily after a super-expensive M model, but just want the BMW nameplate at a low price (and as low a monthly payment as possible). Then, of course, they run into the potential problems you stated about getting underwater and/or warranty problems later in the vehicle's life.

-J-P-L-

Wouldn't a lease satisfy this scenario? The lease payment shouldn't be much more than the payment on an 84 mo. term. If the whole point is to drive a new car you can't afford is to show off or for personal pleasure, just lease, especially if its German.

Toys4RJill

The lease payment for a 36mo lease would likely be higher than a 84 finance payment. I think

sam430

iTrader: (10)

yeah, it's a bmw. It'll probably break before he/she/it pays the loan off

Johnhav430

What I find fascinating is how many people and even whom I know, have already sold their homes and are living in apartments. I think they are ahead of the curve. Many "ordinary" people will no longer itemize starting in 2018. So if anything, a person who is "prudent," I would think, would have more disposable income, not less, so a 84 mo. loan is going the wrong direction. In other words, yes, there are those who must keep up with the Joneses, like my brother's crowd (he got a Ford Raptor and now 2 friends did too? These vehicles push 70k+ lol. I have heard of this one upmanship but actually never witnessed it), but I would not bet the farm as a 84 mo. car loan salesman. A person has to be a bit dumb to pay that much interest. Yes, I said it, dumb.

Those BMW jokes are funny though. I think of that tune where a person is afraid to open the door and hopes the person in the hall passes by. Even the BMW forum jokes about BMWs, but the difference is having skin in the game.

edit ps now that I think of it Canada always had "diminutive" models that we didn't get in the USA. My relatives had a E90 323 which was never sold here, and a F30 320 which did come here. They don't appeal to most here, at least not anyone who is remotely an enthusiast. I also remember seeing weird Mercedes that I don't think I've ever seen here, as well as strange Nissans. So maybe it's different in Canada.

geko29

To answer the subject question, yes. I was one of them, twice. Though I did spend most of my time at home in the basement (that's where my computer and home theater were), I technically lived on the 2nd floor.

The first time, I was 21 or 22, and switched jobs from one that was a 7 mile commute to the train station, to one that was a 50 mile drive each way. My Dodge Dakota was paid off (or very nearly so, don't remember exactly), but only got about 13mpg on the highway. Gas prices were also rising, so that was getting expensive quick. I went shopping, fell in love with a 3-series, and bought it on a 60-month loan. That payment plus the insurance was about the same as I had been paying just for gas in the truck. After several months, I did wind up finding an apartment closer to work, so I kept the truck for another year or two before selling it to a friend.

Then I lost my job in the aftermath of the dot-com bust, and moved back in with my parents to conserve cashflow. I had enough to pay off the car, but lived off of that while job hunting for 9 months. Within a year of landing a new job (which had a company car keeping miles off of mine), I paid the car off, probably around the 3.5 year mark on the loan. Got married and moved back out about a year later, drove the car for 12 years and 155k miles, then bought another one, which is now 8 years old.

But as for the actual topic of the thread, yes these ridiculous loan terms are a major problem that I've railed on about before. It's just one symptom of the troubling and uniquely American tendency of "Buying things we can't afford, with money we don't have, to impress people we don't like." (Credit to Dave Ramsey for the quote, even though I'm not a fan of his). The auto loan crisis isn't nearly as bad as the mortgage one was a decade ago, and is unlikely to completely tank the economy like we saw in the great recession. But the house of cards will tumble, and it will be quite painful nonetheless.

tex2670

There are a lot of people out there that feel they are entitled to drive a nice car, and are not savvy about $$. There was a thread a while back about record number of loan defaults. This is the same issue.

People see all these other people driving nice cars, so they think they are entitled. Even though they don't know the first thing about that other person's finances.

And the banks are smart enough to take advantage of this.

It's not that different than the housing market before the crash. Mortgage companies "pre-approved" buyers for max-out mortgages because "real estate always appreciates". And then one spouse loses a job, and there's no contingency play to pay that monthly mortgage payment.

mbarron37

It’s about people living beyond their means. Do these people with 84 month auto loans put money into retirement, have an emergency savings stash in case the unthinkable should happen? We all get the itch for new wheels, but if
you need to extend to such a long term then possibly you should save and wait. Also, do people need new iPhones every year? Crazy world we live in today.

Toys4RJill

Thanks for sharing your interesting story.

Johnhav430

I love the stories where one's life has changed completely over the course of car ownership. I bought a Nissan Maxima brand new in 1998 and I said I will never need a new car ever again this car is so nice. It was my first new car--when I put my hand on the stick, I thought there is no car nicer that I would ever need. That feeling only lasted about 4 months. I still have the car today. I did take a full 60 mos. @ 5.9%, dumb, but I was young. I remember the payment was $364/mo. The 2007 BMW 335i I also financed over 60 mos., but paid off in 35, a little cheat and misstep because I was already into the "you should never finance over 36 mos. or you can't afford it" mentality. The 60% downpay was needed to keep the payment in the high $300's, and was from stock plays so I just told myself spend it before it's gone. And in 2009 I felt it was the right move now or never deal and how the **** am I going to retire (I remember the folks who magically went to cash and were fine, while I was down 70% lol). Wife's car 36 mo. loan, 2006 Lexus cash. I am in no way the same kid that took the bus to pickup the 1998 Maxima at the dealer. Really can't duplicate that satisfaction of the first new car. (I did have a brand new Porsche at 19, that's a super long story, license revoked etc., mixed up with the wrong crowd at college, blah blah blah, so I choose to omit that as a new car)

tex2670

I think the sales figures of those German cars provide little to no incentive for them to provide longer warranties. Particularly when you factor in the percentage of those vehicles that are leased.

And BMW reduced "free maintenance" term a few years ago, if that's any indication of any "trend" with respect to warranty coverage.

JDR76

When I bought my GS a few months ago, they were offering up to 96 month financing. I passed.