Posted on 01/07/2014 5:13:55 PM PST by dynachrome
A B.C. couple are speaking out about how they feel they were misled into a 25 per cent vehicle loan from TD, which has left them paying more than double the price of their car.
“We’re paying $21,000 for the loan — then $23,000 in interest,” said Angie Hauser of Kelowna. “They’re making money off of people who have no money.”
“We’ve been robbed by a bank with the help of a car dealer. I mean, that’s the only way I see it,” said her husband Enzo Gamarra.
"Why would I want to pay $44,000 for a car that's now only worth $15,000?"
Hauser and Gamarra declared bankruptcy in 2010 over credit card debt. The following year, they saw a sign at a Kelowna dealership offering financing for people with bad credit.
(Excerpt) Read more at ca.finance.yahoo.com ...
Having worked in personal lending, my guess is that the dealership had been feeding them lots of good paper and pushed TD/Canada Trust to take this flyer. To keep the dealer happy, they hooked it at 25%, thinking that the buyers would turn it down, but the salesman was good and the customers were less than diligent.
Back in the day, in my part of the world, ‘TD Bank’ (Toronto Dominion Bank) was nicknamed ‘Turn Down’ Bank, because their lending policies were VERY tight. Bank of Nova Scotia (Scotiabank) had a reputation for being loose. So loose in fact, that they approved deals that I (at AVCO Finance) would not touch.
Another stupid consumer.
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Dads advice always works for me. He told me to make car payments to myself and use cash. It's awesome to have the power of cash in hand when you negotiate with a private owner or car lot.
New cars are for wealthy people.
Every car on the road is a used car.
Our last 2 cars we paid cash for. I had an Avalon on a 4 yr loan and once it was paid for I started putting the payments in the bank. I drove it for 10 yrs so banked 6 yrs worth of payments. Sold it and with the 6 yrs worth of payments got a really nice deal on a not even 1 yr old Jaguar. I asked the salesman what the payment would be on it and started putting that in the bank. In June we paid cash for a 1 yr old Mercedes SUV. Didn’t even sell the Jag, still have it. I’ll never have a car payment again.
Of course, the first new vehicle I ever purchased lasted for 18 years and had 365,000 miles on it by the time I replaced it. By my very rough estimate, the initial purchase price plus the maintenance and repairs over 18 years cost me around 11 cents per mile when all was said and done. When measured per mile, the gasoline probably cost almost as much as that.
This is very similar to the circumstances of Shays' Rebellion.Very interesting read at link.
Just pay it off early. While tough, it wouldn’t cost you that much and it would help to restore their credit rating.
Good service.
1. Take the $25,000 and use it to get a five-year CD at a bank.
2. His bank at the time would then negotiate a fantastic rate with him on a line of credit. They'd give him a five year loan for about 1.75 points above the rate they were paying him on the CD -- up to a limit of $25,000. The loan was fully secured by the CD for its entire term, so the bank had no risk at all.
3. He'd then take the $25,000 and negotiate a cash purchase price with the dealership.
4. Five years later, his car was paid off entirely, and he had both his original $25,000 plus the interest it had earned for five years. He put that money in a separate savings account.
5. He'd then continue to "make car payments" after the car was paid off ... by conditioning himself to take the equivalent of his monthly car payment and putting it aside in that separate savings account every month.
He ended up driving that car around for another five years. By the time he replaced it, he had almost $40,000 in his bank account. He had the option of doing the same thing all over again with a $40,000 car, or settling for a $25,000 model (or whatever a comparable car cost ten years later).
I never sat down and did the math on this, because the one thing that I couldn't quantify was the price savings on the original car based on a cash purchase.
When I got out of highschool and got a job in a sawmill one of the first things I did was buy a new dirtbike. It was financed thru Household Finance Co at 22%. Was that usury or a fool being parted with his money?
Excellent methodology.
I could build a nice, efficient little house for less than the principle. On paying it off early, loans are rigged to define the greater percentage of their early payments as interest, so that wouldn’t help much.
Speaking as a shareholder of Toronto Dominion: keep it up, eh!
That is very shrewd.
Then you talk them down good on the car.
I think that is a good “bank on yourself” method.
Shoot everyone makes out in that situation.
CDs pay crap now as well as savings accounts. We never buy new. We buy at less than or at 1 yr old with few miles. We get almost half off new buy doing that.
The Jag was a little over one yr old and had 14000 miles on it. The Mercedes was less than 1 yr old and had 8000 miles on it
Those are barely broke in cars at almost half price.
Bought them both from a lot that was looking to move them.
My methodology has worked great for us.
Meant jag was a little under 1 yr old.
It goes in a totally separate ‘car’ account.
Keep those two cars up.
They can cost a lot in maintenance. (I am an Auto technician by trade)
Oh, but I bet they are nice.
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