Car financing...... - Ford Forums - Mustang Forum, Ford Trucks, Ford Focus and Ford Cars

back2thefutura · 12-21-2003, 01:33

Apologies if this is in the wrong forum......

I'm kinda new to the forums, so I'll say hi while I'm at it. HI!

I have been thinking about buying a new car for a while now, as while I love my EF to bits its not getting any younger, and the head gasket time bomb issue is looming on the horizon. Basically, while I love the car, I'm being practical about it and there's just no point putting money into/on it, because I'll never see the money again. That, and I'd like some of the mod cons that just aren't possible on the EF without serious dollars.
So, I've started looking at buying a BA XR6 Ute, as I've driven a few (due to a family friendship with the dealers) and I like them alot (hell who doesnt!). My plan is to wait until around April/May of 2004 before I start seriously looking around for one, as by that time, if I have my info right, BA II shouldnt be too far away (hopefully), and I will be able to buy the ute as an 18th birthday present.
Basically I'm operating on the principle that a BA XR6 Ute with a few options (sequential, leather, LSD, Citric Acid, Sportsbar, Alarm, Passenger Bag etc) will cost me around $34-35000 new, this is coming from a few quotes I have already obatined via the Internet. I'm 99% sure I'll be able to beat this price at the local dealers, and if runout deals are around at that time, I should be able to pick one up for closer to $30K.

I have an EFII Futura that Ive modded a bit (lowered + exhaust + mags etc), has 173000kms on it, so I would aim to sell that for about $8000 privately. Assuming I sold it for that price, that would leave me a $22-25000 changeover price. Using Ford Credit I have calculated that through them I can borrow about $30,000, paying back $500 a month for 60 months (5 years). I'm pretty sure I can afford to do this, as I dont live away from home, and if I do go ahead with the ute I wont move out because it'll mean less costs so I can pay the ute off quicker, but I will be going through all my financial details as well as the purchase etc with both the dealers as well as a friend of mine who is a financial planner.

Basically my only 'worry' with the whole thing is that I will be paying a large amount of money off when I am 18 years old. This doesnt worry me much because I'm sure I can do it, but the intial fact that I'm playing with a large sum of money with little room for error just has me a little hesitant. I still have 6 months to play with as I wont be 18 till April next yr, and yeah I know it sounds crazy buying a BA when Im only 18, but in all seriousness, if you were me, would you do it, and do you have any advice on this? I just wanna make sure I know as much as possible and have as much knowledge from people who have been there done that before me, so nothing takes me by surprise.

Any advice/comments/info would be greatly appreciated!

Thanks,

Aust (Sadowsky5).

Phat XLS-ute · 12-21-2003, 02:11

whilst you and i are only young,
i still think investing money into housing or property would be smarter,
borrowing money for a car is dead money,
u will never make ur money back on it
thats why cars are bad investments in some circumstances,
although we think cars are top of the agender, in 5 years time u will relise u could have been paying off a house (slowly) but at least started cause house prices arent getting any cheaper!
thats my opinion anyway

XRFPV8 · 12-21-2003, 05:24

go for it, enjoy your young life theres plenty of time for houses cars and baby's....$125 a week you get to drive a new Ford...fill the back up with chicks ...

blackout · 12-21-2003, 10:41

It just depends on how much you earn.

I pay just about $300 per month on my EL Fairmont - and some months it seems a bit much for me. But if you can really afford it - then why not? I'd do it.

Ford Grunt · 12-21-2003, 19:07

Personally, I waited until I got a house mortgaged upto then I never spent over $1500 on a car, which was blown out by paying $17k for an ELXR8.

There are several advantages in this over buying a car before you have a house.

One advantage is by buying a house first and waiting a period of time (I can't define as depends on when housing prices increase) you may effectively be able to finance the car on the equity in your house without having to use other expensive financing products like Ford Credit.

Take this example buy house for $200k borrowing 80% thus $160k. House value increases to $275k now with refinancing you have $60k equity ($275k x 80% = 220k - 160k = 60k) to play with to buy your car @ home loan rates ie. 6.5% as opposed to car rates of 7.5% or greater plus you can pay it off over 30 years meaning you have the option of better cash flow.

If you decide to buy the ute, I can just about guarantee u that you could find a better finance deal other than Ford Credit.

Cheers

Gadro · 12-21-2003, 22:10

We've all been at this point in our life before....even though it doesn't make much financial sense to buy a given thing....should we buy it anyway to enjoy it now rather than later! :)

Mate, I know exactly the kind of prob your having making this decision. I'll disseminate some negative and positive aspects of your plan to you, hopefully you'll find them handy in assessing whether 'chicks in the back seat' are worth it.

PROS
1. You get a schmick car that makes Holden fans jealous.
2. You have a warranty that covers you for 3 years!
3. You'll probably see some fuel reduction consumption......if you don't thrash it, drive it non stop.
4. Chicks will fill your back seat somehow.

CONS
1. Don't expect any huge discount on a BA XR6. These things just sell too damned well. Sure you MIGHT be able to pull a steal like this off if it is a standard 6 ute florr model. But you will probably have to custom order yours so I wouldn't factor massive reductions into your budget so to say.
Because you are 18 and drive an older car you don't have a lot of buying leverage. So...prepare for this by saving up a BIG desposit, it'll give you the power to say 'I'll buy right here right now if you give me this price' and it will reduce your total borrowings. If they don't give you the price you like, walk away. End of story. They hate it when you flash a wad of cash in there face as you walk out too :)

2. A BA Falcon is a sweet ride to enjoy when you are young. Prob is, you are very young! Be aware that you will find insurance for your age/choice of car hard to come by. If you do find one it will be very painful to look upon (all those digits!) because of your rating. There is no way around it either as ALL lending organisations in their right mind will REQUIRE you to have comprehensive insurance before they give you $30,000 and it will have to be in YOUR NAME.

3. "$30,000, paying back $500 a month for 60 months (5 years)."
I'm not an accountant. But according to this maths above the money you have borrowed has no interest rate!!! If you apply an interest rate of 7% (which is a decent assumption for a car loan) then your actual payment becomes closer to $600/month.

4. If you borrow, avoid baloon payments. All they do is make the last payment frickin hard and increase the total interest you will pay over the 60 months.

5. "I'm pretty sure I can afford to do this, as I dont live away from home, and if I do go ahead with the ute I wont move out"
You're damned straight you won't move out!

So chicks will wanna be in your back seat, but you still have to take them back to YOUR FOLKS place! Unless you earn a fair bit for an 18 year old, the choice is between having a cool car, and having your freedom (moving out) or maybe even travelling the world while you are young!

5. "I wont move out because it'll mean less costs so I can pay the ute off quicker"
It's a good theory, the extra money you save from living at home will be paid into your car loan! Right?
In reality, I have several friends who think this at the beginning, make a few extra payments during the honeymoon period and then revert to just making the normal payments. So do not factor any extra payments into your budget.

6. Paying $150 a week for a car for 5 whole years is a major committment. I hope your job prospects are very steady. :)

Sorry if I dampened the mood a little, but reality botes....and I just wanted to give you my honest opinion. I hope you work it all out!

Cheers
Gadro

supermono · 12-21-2003, 22:34

Unless you can gain some tax offset by claiming vehicle expenses against your income, no.

If you can, yes.
As long as you are reasonably sure about your employment for the next few years.

Balloon payments often only work well when you get paid a car allowance and intend to buy another new car at the end of the finance period.

This is what I have done on my last couple of cars and it has worked well.
You need to rotate three cars, a new one, the last one you bought (now effectively written off for tax purposes and passed on to your wife/partner/kids etc), and the previous one that you handed on for a trade-in (now worth bugger all).

So you get a new car, someone close has a not very old car, and the wholesale market gets another clanger to shift.

falcon coupe · 12-21-2003, 23:48

[QUOTE=supermono]Unless you can gain some tax offset by claiming vehicle expenses against your income, no.
If you can, yes.

I tend to agree with Supermono, if you are an apprentice tradesman, or similar, you may just make it worthwhile, otherwise dont do it, by the time you own the car it will be worth about 50 % of the purchase price, (not including the intrest) , also in that time, ford will have better cars out which will make it obselite, trust me, i bought a new sports roadbike every second year from 94 til 2002, and i lost 5k on every one, now i have an xa gt. which i should not lose on, maybe even gain on over the years.
You must also remeber the insurance costs on an xr6 ute will be nasty compared to a standard ba ute, which the xr6 has no performance advantage over anyway, maybe you should look at a secondhand standard ba ute in the low 20k region with a nice set of wheels on it ?

fullthrottle · 12-22-2003, 00:00

Geees you guys are making me thinking of selling my ba xr8 ute and buying an investment property. Such sensible heads in here :o)

Fireman Sam · 12-22-2003, 02:21

Personally I think your nuts, why the hell would you wan't to be $30k in debt (to a car whats more) at the age of 18, I could understand if it were a house, but a car...

My advice... Re-Read Points 1 - 6 by Gadro.