Calculating True Cost of a car

General Discussion
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Well listen to Dad. House values do not always go up as we saw in the 2008 crash or whenever it was. If you have equity, you can usually weather the storm. I’ve never bought a house but have built several. Sweat equity and a 25% down requirement insures equity. We’ve been lucky with decent timing.

I read last night that there is a 17% national default rate on homes. If you are under water you are in trouble if you have an income adjustment. If you have equity you can always sell at a profit. The next article after that was the shortage of school bus drivers paying from $24 to $29 an hour. Sure not full time and have to have your bus endorsement but an extra hundred a day can mean a lot. As a kid, one of the drivers worked at theb Pure gas station but drove morning and night. Just sayin.

My dad always had a second job. We advised each other and tried to advise the kids. When dad built in 1965, it took several years to get rid of the old house. Finally did it on a contract to a couple that couldn’t qualify for a mortgage. If you have equity you always have options.

My second job was army reserves. Everyone finished training as an E4. After a few years you could be an E5. At that level camp and weekend pay provided a little buffer. Only the leadership got E7 which was a reasonable pay level. At the tim3 I wasn’t happy but it bought new clothes for the wife. Don’t tell m3 how hard things are for the kids although I have sympathy.

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Things have changed since the days when Banks, Credit Unions & S&L’s made mortgage loans and actually held them in their portfolio until it was paid off. Banks & S&L’s didn’t want to make risky loans so the standards were much higher.

Today loans are typically “bundled” into a Mortgage Backed Security (MBS) and sold on the Market to Investors which changes the Risk dynamic.

The builder gets their money when the house is sold / mortgage is made, likewise the real estate agent, the loan processor, the broker who did the bundling and the broker who sold the MBS to investors, leaving them with all the default risk. Since the risk of default is transferred it’s to everyone’s advantage, except the investor and home buyer, to make mortgages as high as possible and as risky as the market allows.

Back to car loans, the same thing is happening today in both the new and used car markets.

So what happens to Bob or Sally if they’re laid off and still have 4 years of payments on their $60,000 vehicle? Seems like everyone has already forgotten the last Mortgage Meltdown.

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The mortgage we had on our current house (paid off now) was with a small Bank (Lowell 5). They didn’t sell their mortgages. Very strict standards for them to write you a loan. But the vast majority of mortgages sold around here are through mortgage brokers.

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+1

Our first house loan was with a local S&L that didn’t sell loans. We refinanced with them after a few years when rates dropped. We got the loan for our second house with the credit union at work (NASA Federal Credit Union) and they don’t sell loans either. There were stories pre-2009 that buyers of bundled loans messed with their customers and we wanted to avoid that.

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One of our mortgages we had in the 80’s was with Citibank. We hunted for the cheapest fixed loan and found one through a mortgage broker and they sold it to Citibank. Rates were still dropping so we decided to refinance for a lower rate. I called Citibank and the BEST they could do was lower my interest rate by 1.5 points. I turned it down because I could get a loan through a mortgage broker for 3 points less. The whole refinance process took about a week. New mortgage was 3 points less than current mortgage. And that mortgage broker sold the mortgage back to Citibank. If Citibank just offered me a mortgage 3 points lower than what I had they could have saved themselves some money.

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That is one bank I won’t deal with after what they pulled in South Dakota. They moved card operations there because there was no interest rate cap. Then they could charge 28% or more. The people there think they are saviors when they just sold out for a few gold coins. Sorry to say, true colors when a little money is involved. I had a seminar with a couple of guys from the New York office and they were a couple of the most arrogant people I’ve met with little concern for costs.

Just me but of the card companies I dislike with a vengence, they are at the bottom.

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No one repossesses or foreclose when someone owes a dollar. They’d just pay the dollar.

Since You’re inquiring mind wants to know it costs a bank about $10k or more just in legal fees, eviction fees and court costs to foreclose. Then add in selling costs, broker fees, maintenance, security, property taxes, etc. the cost goes up monthly from there. So we never repossess unless the past due is more than that.

We work with buyers and usually grant forbearance. Extended terms and/or lower rates.

As noted elsewhere many people choose to walk away instead and home prices are now quite higher than what they paid.

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Why do you argue? Our percent foreclosure rate was very low. We had millions of loans. Some loans always go bad. That’s the business of loans. We never had a year when we lost money on our mortgage portfolio. A lot of banks did. Some went out of business. Our loans were well known in the industry as being good loans.

We never made subprime loans. We never made adjustable loans. We never made low down payment loans. We never made loans through brokers.

I pulled up my banks SEC 10-K annual reports for 2009-2015. The worst years of the mortgage crisis. Our foreclosure rate was never more than 2% and that was only 2010-2013. The other years were 1%. As one poster noted above it was about 20% nationally. So our record was 10 times better. I’d say that was good loan making under the worst mortgage crisis in history.

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At least here in TN, the lender begins foreclosure after you miss 3 or 4 consecutive mortgage payments according to a little research and to my wife who did loans for some years, not at a bank though, as well as dad was a real estate broker and had to deal with it all the time, he sold houses when interest rates were at their highest…

When we bought our 1st house, from start to finish for our loan only took 2 weeks, cause the wifey also did it for a living and new exactly what we needed before hand, this was when everyone else’s loans that we knew and she delt with was taking 3-6 months to get one… We did not go through her work for the loan, but used a bank… lol

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Accurate. Operative word though is begins foreclosure. My brother defaulted on his mortgage. It took a few years to get him out. In the meantime he paid no mortgage. And by the way my bank wouldn’t give him a mortgage. He didn’t qualify. He went through a broker.

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How did I end up on Bank Talk instead of CarTalk?

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I may have missed it from before, but I think it started here, but it had already gone off topic by then… lol

Then it went to ambulance ride cost, etc and then went to something else and then at some point went straight into banking and loans…

Welcome to Car Talk… :rofl:

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OK, I will grant that perhaps your bank is one-in-a-million, but you would not see so much kick-back from the members if they too had not been victims of various practices of banks that either crossed the line or down right erased the line…

I have never been a member of Wells Fargo, but about 10-15 years ago, they were the only bank (in my area…) that sold Savings Bonds at the counter (before the days of Treasury Saving Direct On-Line) and each and every time they insisted that we had to open an account and have direct deposit to buy a bond… None of which was ever true.

So, what other issues has Well Fargo had with the Banking Regulators… They have been fined for numerous infractions, including creating fake customer accounts, improper mortgage and auto-lending practices, and other illegal consumer activities.

1. Wells Fargo has been fined for a variety of mortgage-related misconduct, including improperly denying loan modifications, misapplying payments, and wrongfully foreclosing on homes. The bank also paid a $1.2 billion fine for improper mortgage lending practices dating back to the 2008 housing crisis.

2. For years, Wells Fargo employees created millions of fraudulent checking, savings, and credit card accounts without customer consent to meet aggressive sales quotas.

3. The bank has been fined multiple times for charging illegal and surprise fees (unlawfully charging overdraft fees and miscalculating fees on accounts and loans).

4. Wells Fargo also overcharged more than 11,000 investment advisory accounts and the fine for that alone a $35 million penalty for that violation.

I could go on, but as has been noted, this is CarTalk, not BankTalk, but every member on this site is at the mercy of their bank for one thing or another (Home Loans, Car Loans, Credit Cards, Debit Cards, Saving Accounts, Checking Accounts, etc…).

So when we use the term “those of your ilk” you are standing with a lot of shady bankers…

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Norwest bank was an excellent bank. Maybe 20 years ago they merged with wells Fargo. Like stirring muddy water in a glass of clear water. They both turn out muddy. I’ve never had a problem with wells but maybe because we have a good local branch. I just ignore all of their options and gimmicks. They are trying to go cashless now to avoid checks etc. not sure how that’ll work out for a bank. If they ever eliminate checks I’ll just quit them. Sometimes it seems like they have a bunch of kids in charge running from one new program to another.

Now twin city federal is one I’d be careful of. Before we were married, they had a deal where you could deposit $50 and get a place setting of fine China. So I got 8 or ten that way and we still have the China that we keep for good. Never really dealt with them since and been over 50 years.

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I will grant you Wells Fargo is pretty bad. Actually I’ll say awful. Sorry you had to deal with them. I’ve butted heads with them to no satisfaction. Maybe when I get the energy again I’ll try to get my money they owe me.

As with anything in life there are good and bad people and good and bad companies. I try to separate the two. Which is why I was doing those financial literacy courses. Which my bank offered.

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