Actually you are upside down the moment you sign the contract.
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Only if you owe more than the car is worth. Put down, say, 40% (including trade-in) and you wonāt be upside down.
No one is upside down on a loan unless they sell the car before the loan is paid off.
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I believe Universal Technical Institute pretty much fits that description
I donāt mean to offend any UTI graduates who are members of this website, or are just passing through . . . but Iāve seen MANY of these guys show up, ready to work, credentials in hand, but they donāt know which end is up. Even worse, they had massive debt hanging over their heads, they had to spend a lot of money on tools and supplies, and the pay wasnāt anywhere close to what the head hunter told them it would be
Not surprisingly, many of these guys washed out very quickly, or left of their own accord, because they didnāt like the idea of hard work and the flat rate system
Sure, Iāve known some UTI graduates who were fine mechanics, but enough bad ones, so that the name has no credibility in my book
This is the law with regards to mortgages in non-recourse states. Of course itās harder to ruin a home than a car: Fred could simply stop paying when he crashes his car. That would be solved by insurance, the way it is with mortgages; the lender would have to insist on maintenance, too, to prevent Fred from running it into the ground. Thatād probably be better for someone who wants a 72-month loan. My pickup turned 30 (years) 2 months ago. I paid cash, but a 72-month load could have worked out.
Have you heard about people leasing tires?
Only if the insurance payment was more than loan balance and donāt forget deductible.
Seems to make sense for fleets:
But individuals leasing fancy tires (low profile)ā¦just another way to know who the stupid people areā¦
;-]
If/when buyers have substantial investment equity in automobiles from day one they would tend to take care of them and if/when sellers can get nothing from delinquent buyers other than the car they will make great efforts to protect themselves from the shyster buyers.
I recall my father buying the home he lived in for 40 years in 1954. He made a substantial down payment on the price and signed a mortgage to pay interest on the loan annually for 8 years and then pay off the principal in a lump sum. The bank was always in a positive position on the deal. Home mortgages have changed considerably since then as have car notes.
Sometimes I wonder if a ālow credit scoreā really means that the banks donāt think they can make money off you because you seem like the type who always pays off his credit card balance in full every month.
I pay my balance off in full every month and have a high credit score
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Once I finally secured the loan as I described in an earlier post, the bank then wanted me to add new kitchen appliances to the mortgage. To me, this made no sense at all. I buy a new refrigerator and it is financed on the mortgage. The mortgage is for 15 years and the refrigerator croaks after 10 years. I then pay for a dead horse for five years.
Wonder no more. That is not what ālow credit scoreā means.
Home mortgages and car loans are traditionally considered differently. Cars are a depreciating asset and home are generally appreciating assets. Borrowing money for a depreciating asset always puts you at risk of being upside down.
Houses, not so much. Part of why the mortgage crisis became a crisis is because the housing market was hot - very hot in some markets - and zero percent down was a very low risk. There are lots of other problems associated with this crisis that I wonāt go into but based on that, you can see how that market appreciation drives behavior.
Home loans used to be the very first payment made to avoid eviction. Car loans got ignored if there was limited funds. I read recently that is totally flipped. The car loan gets paid first 'cause ya gotta get to work. The un-said flip side to this is foreclosure takes quite a lot of time and besides we have no equity in this house anyway!
Thatās true nowadays, as it has generally been throughout history, but there was a period in the late '80s-early '90s when housing values dropped and many homeowners became āupside downā. Thousands walked away from their houses and banks actually went bankrupt. Those were tough times all over. The causes were complicated and included the repeal of the Glass-Steagall Act and pent up demand from the preceding years when unemployment, interest rates, and inflation rates were all double-digit, but the result was a mess.
I donāt really understand that Credit card number. For months, this year, mine was 843, and one month dropped to 835. Makes no sense to me.
No, but I recently leased a 6 pack of beers.
Man, I was upside down on that deal as soon as I got back homeā¦
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Iāve always paid off our credit cars in fullā¦except maybe a two year stretch back in the late 80ās. Credit score is above 800. No problem getting credit (if I need it). If what youāre saying is trueā¦then I should have real low credit score.
I paid cash for my home, cash for my car, didnāt have a credit card until I was 35, always paid off the balance, have a credit score over 800.
Yes, exactly: lenders do it for homes, no reason they canāt for cars. For irresponsible people it could be a good deal, especially the mandatory regular maintenance. Some insurance companies offer a lower rate if you let them monitor the carās computer which lets them base it on the actual mileage and keep track of speeding and mechanical problems; that could keep irresponsible drivers behaving.
I donāt need to know my credit score. I get so many credit card applications that it has to be high.