Interesting addendum to the buy-here-pay-here discussion


#41

You’re clearly a man that lives within his means

If every american were like you, the economy would be quite different, and various kinds of business would go under


#42

I have always been amazed when I have, on occasion, watched “House Hunters” on HGTV. A young couple will have a $500,000 budget. They will look at a house where, to me, the kitchen looks just fine. The couple will then say that the kitchen needs a complete makeover–new cabinets with granite countertops, new appliances when the old appliances look perfectly fine to me.
Consumer Reports reflects young consumers’ tastes. CR tests and rates refrigerators that cost several thousand dollars. I don’t see the problem with a regular top freezer upright. Even at my age, I still have plenty of strength to operate an ice cube tray. Yet these young couples have to have some expensive machine that disprnses ice through the door. I thought a refrigerator I didn’t have to manually defrost was great. Our vacuum cleaner is 41 years old. I don’t see the need for a vacuum cleaner with a HEPA filter.
I guess all these expensive tastes carry over to vehicles. Consumer Reports some years back published an article titled “Bait the Hook With Merchandise”. The article stated that what merchants were really selling were loans rather than merchandise. My brother had an interesting experience buying a new SUV. There was a particular Buick SUV he and his wife wanted. He couldn’t get a good cash price from the Buick dealer. He then went to the Cadillac dealer and bought the equivalent SUV to the Buick SUV which had a higher list price, but he paid less than what the Buick would have cost. He figured that the Buick dealer either leased or sold a lot of vehicles with monthly payments where the Cadillac dealer was used to selling vehicles to cash customers.


#43

OK, looks like the median home value there is $73K, with a median household income of $34K. 2 years income buys a home.

City in Western Oregon where I live has a median home value of $300K and median income of $48K. 6 years income buys a home.

Seattle metro area, home value over $700K, income over $80K. 9 years income buys a home.

But the F150 or Toyota Camry probably costs about the same in AL as it does in WA.

What kind of wage does a decent mechanic make in your neck of the woods? I have a guy at work, he’s in his mid-30’s, 2 kids and a stay at home wife. On a mechanic’s wage. He’s constantly trying to make ends meet, side work at home, always looking to flag more hours. It’s my understanding that at one point in the past being a mechanic could provide a man a living wage. Not so sure anymore.


#44

That was in 1994. Earlier that year my (now) wife bought a new Corolla, I think the price was $14K. Horrible car, traded it in a year later, but that’s a different story. I think a top of the line F150 back then was in the low $20’s. So back then a house cost 5 times what a car did.

2 years ago we bought a house in the low $300K range. Last year we bought a new car that had a sticker price of $63K. Our house cost about 5 times what the car did. Not so different.

Maybe the problem is that the cost of real estate in your area is not rising fast enough?

It seems to me that there should be many more new cars and trucks on the road in places that have low real estate values. I mean, in Seattle you’re paying $2200 a month to rent a 2 bedroom apartment. Not much left for a car payment. But if you can live in a decent house for $112K, why not put a new car in the driveway?


#45

We’re going to get slapped down again for going off target, but sometimes it helps to look around a little. In 1965 my folks built a 1100 sq ft, 3 bdrm, double garage with a full basement including bomb shelter for $16,000. In 1976 we built a 2400 sq ft 3 bdrm etc. starter house for $36,000. In 2000 we built a 5 bedroom cabin for about $120,000 including the lot. I’ve said enough but at what price do you walk away from one of the congested and regulated coasts?


#46

Forgiving the interest on a car loan after the vehicle has been repossessed is unrealistic, the lender is entitled to a return on the money.

To be able to repossess a vehicle after 3 1/2 years of use, wash it and resell it is a fallacy. Finance companies are usually required to sell the vehicle at auction to establish value, the auction value may be very low depending on the condition of the vehicle.

Parker is not going to confess as to the condition of the truck so no one can guess if it was worth $500 or $5000. People don’t maintain vehicles when they are on the run from the finance company and some advertise “parts for sale, no title” in the newspaper, it could have been stripped. Why would anyone take pity on a used car deadbeat without knowing the circumstances?

A $4000 loan for 27 years at 8% interest compounded annually comes to almost $32,000. Loaning $9000 to a high risk borrower is a bad investment. With $9000 in 1991 I could have bought a 1/4 acre lot nearby, recently a vacant lot a block away from my house sold for $72,000. That is for dirt to build your $300,000 house on.


#47

Like I said, the issue doesn’t really deal with cars as such, but rather the ethical and legal question of whether it is acceptable to have companies profit by taking advantage of poor and un-savvy customers, and whether it should even be legal to do so. Yes, people often make poor decisions, due to a combination of reasons such as limited education/poor financial discipline, desperation, or even gullibility. Discussing just how bad these decisions were in hindsight is of little value, except to warn people who would have been smart enough to avoid these mistakes in the first place.

I would argue that it should NOT be legal to make usurious loans, which are set up to fail, and where the cost and fee structure assures the lender of huge profits even if the borrower cannot pay. In fact, it would appear that the lender in this article actually makes MORE money upon default, unless the borrower happens to deliberately sabotage the collateral, dies, or declares bankruptcy.

And therein lies the rub. Most of the people who buy these cars with “sub-prime” loans are not only too poor and uneducated to figure out what the car costs and walk away, but also are too poor and uneducated to legally protect their rights and their earnings when the “set up to fail” loan does go bad. You or I would never tolerate having wages garnished for years on end for a debt that keeps growing due to interest and fees; we would have attempted to contest the lawsuit at the circuit court level, and declared bankruptcy within days of learning about a judgment. For some reason, these people do not.


#48

We bought our first house in the midwest for $42,500. It was a 3 bed, 1 bath house built in the 1920’s. It needed a bit of work but was in a good neighborhood. It was a smaller percentage of my yearly income than the house I grew up in was of my father’s income and it was bigger. We sold it 9 years later for a bit more than twice what we paid for it after a lot of sweat equity.

15 years after buying our first home, I bought a Suburban whose sticker price was $44,000.


#49

Now that I agree with. I just don’t like pendulum-swinging. It only leads to trouble.

It has nothing to do with insisting. Those people can’t borrow from anywhere else. Sometimes you make bad choices because the only choices you have are bad. BHPH lots would have to be much more competitive (read: not be such predatory vampires) if people didn’t actually need cars, but society has engineered it such that most of us do.

If someone tried that where I live they’d burst their pipes and then really be in a financial mess. This is the problem with assuming that your personal experience applies to everyone - it tends to make you assume that everyone else is screwing up just because you were lucky enough to come out the other side of your decisions intact.

And that’s the whole point I’m making. Look, I could wander into the nearby elementary school and shake down a little kid for his lunch money, and that would be a very scummy thing to do. The lenders are doing the same thing - they’re the financial adults and they’re preying on financial children. It’s wrong. Period.


#50

A good mechanic can earn well over $60k here working for a good dealership shop or one of the better independents. I closed and retired 10 years ago and my best mechanic was earning about$1k/week. He was 31 and had bought a nice home(about $90k) with an in ground pool and had a nice bass boat to boot, But he was very money wise which was unusual for men his age I thought.


#51

So a guy at the top of his game working hard at a quality shop can afford to live in a decent house in your neighborhood. Not so in lots of areas on the West coast. My coworker is rapidly finding out that it’s simply not possible to raise a family on a single income at mechanic’s wages.

Something for the average motorist to think about the next time your car is at the shop for service. That $100+/hour labor rate probably doesn’t allow the mechanic working on your car to live in the same neighborhood that you do.


#52

Very few single income families around here…


#53

My point (and I don’t know how to quote where you replied to me going without heat) is that sometimes people need to be willing to do without certain things if they can’t pay for it. Not necessarily heat. I’m not assuming everyone who goes to the payday loan joints are financing “wants” rather than “needs”. But you can bet that a good portion of them are. I don’t assume that all of them are little old ladies who can’t pay the rent either. But a good portion of them are I’m sure. And I truly feel sorry for those folks. I don’t feel much empathy for the guy who buys a flat screen at a rent to own place at high interest. I don’t advocate charging high interest and irresponsible lending. But I also don’t advocate irresponsible borrowing, especially for non necessities. I don’t view people with money or the banking system as evil and everyone who chooses to pay high interest as a victim. There are a million shades of gray in between.


#54

You know national credit cards weren’t always available. Back in the Army, if you ran out of cash a week before pay day, you really didn’t have much of an option but to borrow an extra $10 or so from the barracks banker. Usually the rate was 10 for 20. You got $10 now and paid back $20 a week later on pay day. You only did it a couple times though usually. Some guys were collecting income from their outside jobs while they were in but others of us were living off meager savings and Army pay. You just do what you have to do.


#55

Not to continue this but one reason I refuse to deal with Citibank for anything that I can help is that they moved their credit card operations to South Dakota. SD had no usury laws at the time so that allowed CB to charge whatever they wanted on credit cards. They seem to be laying off a little now so maybe things aren’t going so well anymore.

The other thing is when we got our first mortgage from a savings and loan, I was talking 30 years but the manager said to take the 25 year payback instead. He said we’d save a lot on interest and the payments were only a few dollars different. Also at the bank, whenever we’d go in for a car loan, the last thing the loan officer asked is if we were sure we could afford it. Yeah those nasty bankers taking advantage of people. Maybe it helped that we all went to the same church but I don’t think so. That’s just the way legitimate businesses do business.


#56

Thank you for stating my exact feelings!
Yes, sometimes they will show an older house with a tiny kitchen and/or cabinetry that is in bad shape, but–more often than not–they will show a kitchen that is essentially the equal of my late '90s kitchen and wifey will shake her head in disdain and announce that the kitchen will have to be gutted after they buy the house.

I really can’t figure out that type of attitude–unless it is simply done for the benefit of the cameras that are following them. For all we know, they might not actually do a gut-rehab of the kitchen.
:thinking:


#57

Yeah I’ll agree. I think the last one I saw, they took out nice wood stained cabinets and turned everything painted white. Now I don’t want to offend any relatives but it was just one big block of white-floors, ceiling, counters, cabinets. I like beautiful stained wood myself but even my woodworker former buddies would build beautiful cabinets and then spray them white. Tsk tsk.


#58

I read an online article about the HGTV home shows . I wish I knew where it was but there is a lot of misdirection on those shows. It also told of how some of the people really wish they had never got involved . It also claimed the goofy ’ Love it or Leave ’ show would film two endings then decide which one to show.


#59

People want a turnkey house, a turnkey car, everything has been done and willing to pay the price for no repairs no worries. Kind of in that boat myself looking for a summer or year round home in MN, There is an easy 100k swing on property values, 300k or so


#60

Let’s keep in mind that House Hunters, much like Orange County Choppers, has producers working on the show who want the show to go a certain way. The “real” people will either do what the producers think will juice ratings, or they’ll be replaced.

No one’s gonna watch a show full of sensible people making boringly sensible housing decisions. They want to watch the stupid idiots spending way more money than they have.