So Troop, which way do you want it?

In the beginning of the thread, you seem frustrated by buyers who say they can only pay $350 a month, then in the end you say it makes your job easier when a customer says $350 a month is their limit.

What you really want is buyers who say $600 a month, right?

Seriously, buying a vehicle is a negotiation. However, financing is pretty much rocket science for some people, and when you don't understand it, you are easily fooled. I can imagine more recently it is very difficult to make money on the sale price of the vehicle, but today it is just as easy to make money on that rocket science financing - so that's the only real profit point for dealers.

Cash buyers finance themselves and keep all the financing profits themselves - so I would say they almost always pay less for vehicles than payment buyers - that is if they get a good price in the first place.

Mutt's simple financing calculator,
$100 a month for every $5k you finance. Depending what you put down, that'll keep you upside down for about two to three years, then give you an extra two to three to pay it off.
$150 a month for every $5k financed will be better for you in the long run. Up-ended for maybe a year, and you'll own it hopefully by the time you get bored with it.

That rule would keep your from being very much upside down. However most people pay less than that. That formula would force you to pay $500 - $750 a month for a $25K car - which I don't think very many people do.

"Life is tough, it's even tougher when you are stupid"
-John Wayne

Because they don't HAVE to, that's the whole problem. With 72 month financing and cheap leases it's too easy to get over your head and upside down. Couple years ago I bought a slightly used Maxima, went through the whole "what can you afford a month" crap, told him not too worry about it and I cut my best deal on the car. Went to the finance guy after the deal was done and told him to write it up for a 24 month loan, he punched it in and in a sarcastic tone said "the payment is going to be over $700 / month, let's look at a 60 month payment". I laughed back at him and just as sarcastic said " no problem, write it up at 24 months." I think they were po'd that I bickered them down on price so much, in their eyes I couldn't afford it, then I turn around and walk out with a payment like that. They actually said to me "you know what kind of car you could be driving for that kind of payment???"

[quote=Keith .....

Because they don't HAVE to, that's the whole problem. With 72 month financing and cheap leases it's too easy to get over your head and upside down. ...."[/quote]

So True!

What I try to teach my boys in a nutshell: Remember there's a big difference between kneeling down and bending over. -Frank Zappa

I find length of loan is dependent upon your situation, not financial, but driving situation.
My wife's car, I financed 60 months, she drives all of 8k a year. My car, i do less as I can rack up the miles, a long term would put me into a final payment on a worn out vehicle.
In my opinion, car dealers are hurting themselves by getting people upside down for a long time. Yes, they can make a big profit on that initial sell, but it takes a long time before that person can buy another car. A wise salesman told me once, "You can fleece a sheep its whole life, but you can only slaughter it once."

I sold my Audi A6 last week on craigslist.com. Guy shows up at my house and it turns out he's an Audi mechanic. He puts my car on the computer, up on blocks, checks everything for about 45 minutes then low balls me with an offer. I laugh and say "my car was just checked out by an Audi mechanic for 45 minutes and it passed... I'm thinking of keeping it now!" I did not take his offer but he still bought the car.

In their minds they left a sale on the table. You could afford a $700 a month payment - so they should have sold you a $50K car instead of an $16K car.

What guy in the world would spend that little when he could afford much more?

The haves live below their means, the have nots live above. Simple as that.

I sell used cars for cash, no financing. The prices and miles are painted on the window, even sale price and specials, and still the customers almost always want to negotiate. The reason most no haggle places went back is that even though they don't haggle the customer does. Buy the way where does that put me in the car sake guy spectrum? No financing, prices painted on the window, easy to buy, everything disclosed up front.
The reason I do it this way is that I think it is absolutely foolish to finance a depreciating asset or a toy. I would NEVER finance a car or a boat. If I can't afford it, I wait and save for it.

But who are you selling those cars to? People who can't get financing I assume, right?

I still have at least 3 more years to go before even thinking of replacing this truck. Maybe even more as it is probably at less than ½ of its design life. So that would make six years or more w/o a payment. Am I bored with it? No way and I'm not so sure about these new-fangled partical trap systems either.

There's no reason to haggle. Test drive what you like on the front line and then later ask for your best price on the exact vehicle you want with all the options you desire from several different dealer's fleet departements over the phone. Go with the one with the best price and be done with it.

If you have a trade, sell it private party and skip the dealer's profit on that.

Obtain your financing from the best time value of money offered by your C.U., bank or even the dealer.
Buying a car is two separate transactions if you have no trade; best price and best cost of financing. If you have a trade, it is three separate transactions; adding in selling your current vehicle at the best posible price which most likely will not be as a trade-in at the dealership.

The key though is to keep your vehicle well beyond the payments.

many go to their own bank, I don't finance because I don't want to be in the banking business, I sell cars for a fair price, if I wanted to sell to deadbeats I'd do buy here pay here.

I misunderstood. They show up with a check from their bank so they've still financed the vehicle, just not from you.

Keith & Indy, I love the way you guys think & operate I am not there - but that is my goal