Yikes! why the heck do people buy cars they cant afford and put NOTHING down??

[iamwiz82]

I was just browsing the for sale forum and saw a thread for a very small car for a very high price. Why do people do that? I know a guy at my school that bought a corvette for the same monthly payments that the person in that thread has. It is scary how people dont put down payments on anything anymore. I heard an ad on the radio saying "No down payments on 30 year mortgages are very popular now, come see our rates." WHY WOULD YOU BUY A HOUSE WHILE PUTTING NOTHING DOWN?!

 

[spanky]

u referring to the corolla?

 

[iamwiz82]

<< u referring to the corolla? >>



yep.

 

[vi edit]

<< WHY WOULD YOU BUY A HOUSE WHILE PUTTING NOTHING DOWN?! >>



Because...houses are MUCH different than cars.

1. Houses appreciate
2. Interest is tax deductable on houses
3. 10,000 down on a 120,000 house makes like $30 a month difference

 

[iamwiz82]

<<

<< WHY WOULD YOU BUY A HOUSE WHILE PUTTING NOTHING DOWN?! >>



Because...houses are MUCH different than cars.

1. Houses appreciate
2. Interest is tax deductable on houses
3. 10,000 down on a 120,000 house makes like $30 a month difference >>



are you sure about that last one? i would think that teh interest from that $10000 would be more.

 

[yakko]

People have no concept of money anymore. They think they can just borrow more. Another thing is that bankruptcy is no longer as bad as it should be.

 

[iamwiz82]

i knew a woman at my work who bought a ford focus and financed it for 6 years. she was paying over $400 a month! :Q

 

[vi edit]

110k @ 30 years @ 7% = 732.18 a month
120k @ 30 years @ 7% = 798.74 a month

110k @ 30 years @ 6.5% = 695.59 a month
120k @ 30 years @ 6.5% = 758.83 a month

110k @ 30 years @ 5.5% = 624.82
120k @ 30 years @ 5.5% = 681.63 a month

Ok, so it's about $60. I'm looking at refinancing at 5.3%

 

[Orsorum]

I've seen too many people with bad credit and no concept of savings or responsible spending... it's disgusting.

Credit card debt is not that hard to avoid... don't spend it unless you have it!!!

 

[Semper Fi]

I can't understand why people do that either.


1. Houses appreciate
2. Interest is tax deductable on houses
3. 10,000 down on a 120,000 house makes like $30 a month difference


1) At least the home owner hopes so
2) True dat
3) 30yrs*12mos*$30=$10,800

I'll run the numbers with interest in a little bit but I'm pretty sure the difference is more than $10,800.
Gotta eat supper first.

 

[spanky]

<< I've seen too many people with bad credit and no concept of savings or responsible spending... it's disgusting.

Credit card debt is not that hard to avoid... don't spend it unless you have it!!! >>




TESTIFY MAH BROTHA'!!!!

 

[Orsorum]

<<
1. Houses appreciate

. >>



Unless some greedy idiots build a Wal-Mart near your house... grr...

 

[iamwiz82]

<<

<< I've seen too many people with bad credit and no concept of savings or responsible spending... it's disgusting.

Credit card debt is not that hard to avoid... don't spend it unless you have it!!! >>




TESTIFY MAH BROTHA'!!!! >>



i have CC debt, but AMEX is giving me 6 months no interest

 

[Orsorum]

<<

<< I've seen too many people with bad credit and no concept of savings or responsible spending... it's disgusting.

Credit card debt is not that hard to avoid... don't spend it unless you have it!!! >>



TESTIFY MAH BROTHA'!!!! >>



It's difficult when people literally have generations that have been doing it... credit cards are inherently very, very dangerous, even if used moderately.

I only have one, I used it a couple times a month, only for small purchases.

I'm trying to make the transition over to spending mostly cash.

 

[vi edit]

The biggest thing about not putting any money down on a house is getting charged for a PMI fee. Thats anywhere from $30 to $100 a month in just fluff fees. They do nothing for the principal you owe.

It's because of PMI that a lot of people like putting down 20%.

But, any way you look at it, 0% down, 5% down, 10% down, 20% down, whatever, is still far and away better than paying a monthly rent payment. (assuming you are looking at being there for more than two years or so)

 

[RossMAN]

When I buy a new car in the next few years it will probably cost $17-$20 and I hope to have a down payment of a few thousand so the amount financed is $15k.

 

[iamwiz82]

<< The biggest thing about not putting any money down on a house is getting charged for a PMI fee. Thats anywhere from $30 to $100 a month in just fluff fees. They do nothing for the principal you owe.

It's because of PMI that a lot of people like putting down 20%.

But, any way you look at it, 0% down, 5% down, 10% down, 20% down, whatever, is still far and away better than paying a monthly rent payment. (assuming you are looking at being there for more than two years or so) >>



I'm paying rent too. But my rent is FAR cheaper than a house payment in this area. Dumpy houses around here go for $150,000.

 

[vi edit]

<<

<< The biggest thing about not putting any money down on a house is getting charged for a PMI fee. Thats anywhere from $30 to $100 a month in just fluff fees. They do nothing for the principal you owe.

It's because of PMI that a lot of people like putting down 20%.

But, any way you look at it, 0% down, 5% down, 10% down, 20% down, whatever, is still far and away better than paying a monthly rent payment. (assuming you are looking at being there for more than two years or so) >>



I'm paying rent too. But my rent is FAR cheaper than a house payment in this area. Dumpy houses around here go for $150,000. >>



Complete opposite here. My mortgage on a $123,000 brand new house w/ 1600 sq/ft is only $250 more a month than rent on a $60,000 apartment w/ 750 sq/ft.

 

[PsychoAndy]

<< I've seen too many people with bad credit and no concept of savings or responsible spending... it's disgusting.

Credit card debt is not that hard to avoid... don't spend it unless you have it!!! >>


As Russ says, it's not how much debt you have; it's how you manage it.

 

[Semper Fi]

Well, I did the numbers of $100K @ 6.5% for 30yrs and the difference with and without a $10K downpayment is only $12,755.

The con of this is that after 30yrs that 12K has depreciated so you would have been better off keeping the 10K and spending it on something else, like any higher interest debt you might have at the time.

Did I figure that right?

 

[iamwiz82]

for $120000 @ 5.9% for 30 years

The monthly payment would be $711.76.
Your total interest costs for this loan would be $136237.35


for $110000 @ 5.9% for 30 years


The monthly payment would be $652.45.
Your total interest costs for this loan would be $124882.15

So... you would be paying $236,000 for that house with nothing down.

 

[vi edit]

<< Well, I did the numbers of $100K @ 6.5% for 30yrs and the difference with and without a $10K downpayment is only $12,755.

The con of this is that after 30yrs that 12K has depreciated so you would have been better off keeping the 10K and spending it on something else, like any higher interest debt you might have at the time.

Did I figure that right? >>



Pretty much. You could take that 10k and put it twords a car loan, student loan, or even credit card debt and free up hundreds of dollars, instead of $60 or so.

That is exactly the choice we made. We were better off knocking off some short term debt and freeing up a couple hundred dollars a month than we were paying $10,000 and saving ~$50 a month.

Of course, we pay PMI, but we still would have had that even with $10,000 down.

 

[RossMAN]

I'd rather put nothing down on a house and elimiate a car loan/cc debt.

Unless I had at least 20% to put down (to avoid PMI), at least you can write off the interest you pay on a mortgage.

 

[vi edit]

iamwiz82, thing is though, we aren't planning on being in this house for more than 5 or 6 years anyway, so we'll never pay that much interest.

 

[iamwiz82]

vi, did you see the thread in FS/FT? The person is asking for someone to take over payments for a corolla for $450 a month 0%APR for 3 years.