I work in an office job that sometimes requires me to see the actual deals that are worked out at some of the car dealerships that use our product. Yesterday I nearly gagged when I realized someone out there is paying $74,400 for a Ford Expedition.
Here is how you make a cruddy car deal:
Step 1 – Buy a 2009 Chevy Tahoe for a “reasonable” amount in 2008.
Step 2 – Make the minimum payments on that Tahoe.
Step 3 – Decide you rather have a 2011 Ford Expedition.
Step 4 – Ignore the fact that your Tahoe is upside down (isn’t worth as much as you owe) by $13,000.
Step 5 – Roll that $13,000 debt into your new Expedition deal at 5.5% interest for 5 years.
End Result – a $50,000 Expedition plus $13,000 of leftover debt spread over 5 years at 5.5% equals a $1240 monthly car payment!
That is almost $75,000 over 5 years!
Unless that Ford freaking flies, I have no idea why this buyer signed on the dotted lines!
I have seen bad deals and good deals and serviceable deals. I constantly roll my eyes when I see an service contract added on that cost a third of what a buyer paid. I have not seen a deal that looked like this before.
It wasn’t hidden. All the costs were fully disclosed. The buyer signed right next to the $63,000 total and again on the contract that listed the loan terms and the $74,400 total after payments. It was all legit.
And people wonder why they are barely making ends meet on $250,000 a year…
What do you think? Does a $75,000 SUV sound like a great idea to you?
Feel free to check out my staff writer post at My Retirement Blog today too,
5 Ways to Ruin Your Retirement. 🙂
FYI: I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year. I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home. If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!). Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!