Ford begins 0-72 loans, includes subprime buyers

[Sizzler]

isn't a lot of Ford's truck business (F150...) fueled by contractors who buy a new truck every year, and write off the expense for taxes. And isn't there a big tax break on $50K+++ SUV's for those who want to take it?

 

seriously, there's a lot of talk about simplifying the tax code, but without the perceived ability to scam someone/some organization, I think a lot of business activity in this country would stop. Including Ford.

[BW-Blue]

Have you considered a Mazda6 Wagon?

[Ralph Greene]

Have you considered a Mazda6 Wagon?

 

Great choice. Nice wagon.

 

On a trip not too long ago, my rental car was a 5 door hatchback Mazda 6 sedan with 2.3 4 cylinder engine. Performance was adequate (for a car), economy was outstanding, interior was nice and seats were good. Interior space with rear seats folded was fantastic. And you could access it thru rear hatch. Plenty of room to haul bikes and stuff. I almost bought one since it could take the place of my beater Explorer to haul stuff. But again the same old issue. The Explorer won't depreciate much more, and a new car just starts the cycle again of losing money on cars.

 

There are plenty of small reliable, long lasting, roomy, economical to buy and operate, vehicles available.

Edited August 25, 2006 by Ralph Greene

[RichardJensen]

isn't a lot of Ford's truck business (F150...) fueled by contractors who buy a new truck every year, and write off the expense for taxes. And isn't there a big tax break on $50K+++ SUV's for those who want to take it?

 

seriously, there's a lot of talk about simplifying the tax code, but without the perceived ability to scam someone/some organization, I think a lot of business activity in this country would stop. Including Ford.

Few contractors replace their trucks that often. I believe Ford's F150 business is propped up by businesses replacing trucks every few years or so, on a regular basis at least.

 

I think the tax break has been phased out.

 

And as long as legislators write the tax code it will NEVER be simple. What law to come out Congress has ever been simple?

[goingincirclez]

Actually, I have indeed put the Mazda6 wagon on my short list , just haven't had time to check it out properly. I do know it's the basis for the Triplet platform after all. So it's my "Fusion wagon", incognito.

 

We did check out a Madza6 (sedan) at a used car fair a couple months ago, and had a favorable impression. But the wagons (used) seem to be few and far between. The only new Mazda dealer close by is in Lexington and doesn't seem to have too good a rep, and we haven't had time to go to Louisville for the sole purpose of testing cars. I wish the FLM dealer in Frankfort would carry Mazda; they have been so good to us and really deserve a crack at our business.

 

But I like the Mazda6 , other than my grandfather will roll in his grave if he knows I'm considering a "jap car".

[Extreme4x4]

I find it interesting that most people here consider people with bad credit to, somehow, be lesser human beings or something.

 

Would it be different if that bad credit was caused by something............. like.............. oh............... 9/11. Would I be less of a loser if I didn't have to live off of selling all my vehicles, and living off of credit cards due to the collapse of my business due to 9/11.

 

We sold everything, moved, got jobs, and somehow managed to stay afloat (with good credit............. but way too much of it) until last year, when my husband lost his job. Still, we didn't declare BK. He is now making good money, and we are working on paying everything. Do we have bad credit........... you betcha (short of house payment and car payment, which are good). However, we are, and will pay everything.

 

Do we deserve to pay 29% interest for a vehicle, if we need to buy one (we are not at this time.............. as long as the 69 Ford keeps going)??

 

Don't judge everyone the same. There are many, many people today who have bad credit due to no fault of their own. (Does 9/11 or Katrina mean anything to any of you??) Many of us are trying to do the right thing.............. and are not just blowing off the debts they acquired. We do not deserve to be stereotyped............... and the majority of us would make our new car payments on time (if we needed to buy).

 

I understand that there are true deadbeats. However, people with bad credit, jumped dramatically in the last few years. Its not all because they are losers.

[ANTAUS]

The above is a common senario that has been played out by many people for numerous reasons such as catastrophies and such. I know of some very good people, who the same occured to them.

 

Unfortunately there's something that exists now called "Universal Default Credit"... Notice those "0% interest for one year" offers? Then if you do default, it jumps to 21-25% APR ?" Well Universal Default Credit will not only apply towards that one card you have, but all credit cards you carry. So if you sink one, your sunken in all. That's something that the current adminstration passed.

 

And it gets even better...Now for numerous jobs, they requires a credit check, and if you don't have good credit, you simply don't get the job. So let me understand this...you NEED a job to pay off your credit cards, debt, and improve your credit, YET you can't get it, because you have bad credit? It's a vicious circle that all it does it push someone that originally made a decent salary, have to take some shitty job in the hopes they don't check their credit.

 

And this is ocurring currently and will continue to get progressively worse. Now just watch in the next few years all the people who pulled out "Interest Only Mortgages", that might have their houses foreclosed on, because the interest rates are obviously going up. So what once a $900 payment, is now going for about $2100 for that same homeowner.

 

And then come in the foreign investors buying our debt...

[Extreme4x4]

You are correct............... it is a viscous cycle. One of the cards I am paying is currently 30% interest, due to us going 60 days down once.................. in 6 years (when Rick lost his job due to complaining about his boss to human resources).

 

However, we are paying it. There are a few we are not paying on yet, but will when a couple are paid (of course they are collections already).

 

What I find interesting, is that the credit card companies give more and more credit to those with "good credit," that really cannot afford any more debt. Then, when those people use that credit, and get in over their heads, or something happens in life, that they have no control over............. and find themselves getting behind, they raise and raise and raise the rates. They add fee over fee over fee. Then the customer defaults due to a no win scenerio that they can't get out of.

 

They are then branded losers. You get higher insurance rates, and could not get a job.

 

Frankly, it just amazes me. 9/11 and Katrina are situations that noone could have been prepared for. We had an auto repair and towing business in a small town in central Nevada. 90% of our business came from the highway............ which was tourism. You know how tourism was after 9/11............. it didn't exist. We pretty much had no income at all for 6 months, and had a new baby in Feb 2002.

 

We will pay all of our debts, and we will not declare BK or use one of the phony Consumer Credit Counseling services (they are funded by CC companies). Yet, we will be branded losers for years.

 

Oh well. We no longer use credit, except for cars (maybe) in the future......... and if we ever buy another house. We do not live beyond our means at all, so we will get there. Now, if only children weren't soooooo expensive. LOL (oh well, he is certainly worth it)

 

BTW, I am not trying to toot my horn, or elicit sympathy from anyone. I am just using myself as an example of the fact that many of those with bad credit did not bring on the situation themselves.............. and should not be stereotyped.

[marc-o]

My wealthiest clients tended to buy somewhat luxury cars like Lincolns and Cadillacs and drive them until they died. They would never consider trading in a car that was 3-5 years old. They were well aware of the effect of depreciation on their net worth from constantly buying new cars, so once a car had depreciated down a bunch they just figured it didn't cost them much any more to drive. So as long as it was reliable, looked nice, and could be fixed, they tended to just drive them a long time. They understod the real cost of auto ownership is depreciation.

 

Unless you are a movie star, a sports celebraty, or a very wealthy head of company, for most people you can look like you have money with nice things and payments, or have money and possess more ordinary looking things with no payments. For most it's one or the other. Fancy cars and fancy houses are more a sign of debt than wealth. That's what I leanned in my work and patterned my spending accordingly.

 

If I were a US worker with house hold income less than $50,000-75,000, I would drive a Focus type vehicle....and if I needed something bigger or more rugged from time to time...I would just rent it for a few days. No way would I (with that income level) wish to own a big expensive to fuel, insure, repair, and pay for fancy car. Just doing that would probably give me an extra million or so over a life time...even if I were a career auto worker.

 

I also work in banking (not a VP though), and I think this is pretty much absolutely true. It's a generalization, but a fairly accurate one. Just Friday a doctor was trying to kill time, turns out his Lexus was in the shop. Naturally I asked why, he said "just regular maintenance, it's a 94".

 

 

Explorer 4x4 - You make very good comments; people adjust their spending to their income naturally, it's a shame that our current society doesn't place more emphasis on savings (which, incidentally now, Chinese and Asian cultures DO). People are too tolerant of having payments on everything, and I dont feel much compassion in those cases because they're mostly a result of personal choices (buy now or save for it). HOWEVER, there is no doubt that in extraordinary circumstances like 9/11 or after Katrina, or numerous other unpredictable catastrophies, the government has not stepped up to the plate (or worse, kept its promises) as it should (I feel). Even though it is the right thing to do, I don't think everyone that is/was affected will ever really get justice. That is, unfortunately, what "they" mean when they say life isn't fair.

[F250]

isn't a lot of Ford's truck business (F150...) fueled by contractors who buy a new truck every year, and write off the expense for taxes. And isn't there a big tax break on $50K+++ SUV's for those who want to take it?

 

seriously, there's a lot of talk about simplifying the tax code, but without the perceived ability to scam someone/some organization, I think a lot of business activity in this country would stop. Including Ford.

 

Trying to belittle Ford's truck success I see.

 

Well my first job as a teenager was delivering supplies to job sites for an electrical contractor. The truck I was issued was 8 years old but I was the go-for kid, the actual crew's trucks were new to 4 years old. Work trucks are not regularly taken off the job for scheduled maintenance and are driven by employees who, shall we say, don't treat them like their personal vehicles. The trucks were mostly base F-150 Customs (called XL today) and today would cost about $18K not the $50K in your fantasy example. We didn't weigh everything we threw in the beds or towed, you got the job done with the truck you had so they were frequently way overloaded. That combined with the much higher than average mileage (sometimes 100K in 3-4 years) meant the company was good friends with the local dealer.

 

They were never traded in every year, not even the owner's personal truck. Seeing the abuse those trucks took every day earned my respect for Ford trucks.

 

Of course I'm sure there are others who abuse the system, there always are. But frankly if some contractors are abusing the tax system and the result is providing jobs for the people who work (and pay taxes) at Ford dealers, Ford Motor Co and all of the suppliers who build and transport Ford products well...I can live with that. That tax system abuse is at least providing jobs for working people, far more so than say...welfare abuse.

[F250]

If you have the entire purchase price of a new vehicle finance it anyway. Put 10-20% down finance the rest at 0% (no cost) and invest your money so it can make more money. That's the beauty of 0% Ford financing. What can your $20-40K earn in 5 years.

[Guest Sixcav]

I opted out on this offer although it is a pretty good offer. I went by the lot and all of their Mustang GT's had that interior upgrade package which means they have that gaudy silver dashboard. I just don't like the look of it at all. So I'll just keep my current 06, I'm perfectly happy with it. With respect to this notion that people shoudln't buy a car they can't pay off in 3 to 4 years. Sure that sounds great and all but it doesn't really work in reality for a lot of people. First off, as you pointed out Ralph, it means that most people would have to opt for the cheapest version of whatever car. Anything over about 20 grand, forget it. Most cars these days are over 20 grand. Under 20 grand, ok you can probably pull that off. But consider this. An 18,000 car paid off in four years at an interest rate of 5% is a monthly payment of 414.53. Now, a 22,000 car paid off in five years at an interest rate of 5% is 415.17. Now that's the same payment basically for just an additional 12 months and you get a car with more options. There's a noticeable difference between say an 18K Fusion and the 22K Fusion or Accord, or Camry or whatever. So if you're opting for the el cheapo version just to pay off your car 12 months sooner than I pay my 22K version off. Go ahead, I'll take the additional 12 payments. Finally, consider that if you guys are all so concerned about Ford's future or whatever brand of car you prefer, how long do you think they will stay in business if all they ever sold were cars in the 15 to 18K range? I mean we're all soooooo worried about Ford's future as a company, but damn we don't want to spend more than 18K on their cars? lol I know, I know, it's an enigma. Now I know that someone will come back with the old "Dude, you just put a hefty down payment on a car that's over 20 grand and then you can still pay it off in 3 or 4 years." Yep you sure can, but guess what, you still had to invest the time to save up that large down payment and you still paid that money on the car.

Edited August 27, 2006 by Sixcav

[Michael Reynolds]

So you have bad credit and you are going to buy a new car?

Unbelievable.

 

Just curious. Do you ever intend on making sense?

[Guest Sixcav]

Why would he break with tradition Mister Reynolds. Once a fool, always a fool. lol

[Ralph Greene]

I know my ideas are old fashioned and not "with it" any more. I also understand it's easy for me to say because I'm retired and have already done my thing financially.

 

But those of you lusting after new cars....just keep in mind the payment amount is not the main item to consider. It's the amount of debt you incur to buy the car that matters. Some of you are just rolling up one debt into another larger debt, convincing yourselves that since the payment is now less, it's a good deal. To my way of thinking...you now owe even more than before...and are now paying even less on the debt....making it almost imopossible to get debt free. We have a phrase for that....it's attempting to borrow yourself out of debt.

 

I know it's nice to have a new car...a nice one. Even one you can't really afford. My Dad always said there is a big difference between being able to buy something....and being able to afford it. And we do need to keep Ford in business.

 

So sure...if you need a new car. buy one. Put some down and take advange of 0 % interest. Pay for it while you use it up. But be smart and lower your wants some.

 

I think cars cost you a lot more than you realize. I figure my money is worth at least 10% to me. So if I buy a $30,000 car I'm out $3000/year ($250/month) on my money, and a new car depreciates about $5000 each year ($400/month) on average for about 3 years. So a plain old $30,000 car cost me at least $750/ month to own for first few years. If you borrow the money you still have a money cost...to who ever lends it to you. Even at 0% there is still a money cost because if Ford can afford to subsidize your loan, then they could have just reduced the car price, so you are overpaying for the car. There is no free money.

Edited August 27, 2006 by Ralph Greene

[Guest Sixcav]

I have no doubt of your financial prowess Ralph. It's sound advice. You're looking back across a lot of years of experience. Now unlike Bluecon as you aged you grew wiser, more logical and so on. But a lot of people, young people in their twenties, buy cars as status symbols and we all know that. It's about fitting in. Not all, but for many that is the case. I opted for the Mustang GT when I could just have easily afforded a nice Fusion or whatever else I saw fit. But you know I said "Just once in my life I'm going to buy a damned sports car. Just to have some fun because you only get to go around once so why miss out on some of the nicer things in life right?" You can't really put a price tag on that Ralph. That's the point where wisdom and logic meet their powerful foe, emotion. Sure I could have saved up and bought a new Corvette and by the time I turn 40 I could afford one. But I didn't want to wait that long and who knows what could happen between now and then right. So I'm living a little now.

Edited August 27, 2006 by Sixcav

[F250]

Even at 0% there is still a money cost because if Ford can afford to subsidize your loan, then they could have just reduced the car price, so you are overpaying for the car. There is no free money.

 

So what other factory rebates did Ford cancel to offer 0% financing? Would those rebates excede the amount of interrest paid over 6 years? The deal is even better if the buyer gets A or D plans.

 

Currently Ford NA operations is not profitable but Ford Financial is. They are just temporarily using one to help bail out the other.

[Ralph Greene]

I have no doubt of your financial prowess Ralph. It's sound advice. You're looking back across a lot of years of experience. Now unlike Bluecon as you aged you grew wiser, more logical and so on. But a lot people young people in their twenties buy cars as status symbols and we all know that. It's about fitting in. Not all, but for many that is the case. I opted for the Mustang GT when I could just have easily afforded a nice Fusion or whatever else I saw fit. But you know I said "Just once in my life I'm going to buy a damned sports car. Just to have some fun because you only get to go around once so why miss out on some of the nicer things in life right?" You can't really put a price tag on that Ralph. That's the point where wisdom and logic meet their powerful foe, emotion. Sure I could have saved up and bought a new Corvette and by the time I turn 40 I could afford one. But I didn't want to wait that long and who knows what could happen between now and then right. So I'm living a little now.

 

 

I understand what you mean. Been there myself.

 

But here is something to think about. Why not have it both ways?

 

I personally am not a naturally thrifty person (but my wife is). I like things, like some of you do. So why not set some reasonable saving and investing goals for your stage in life (like investing in a retirement program...or maxing it out if you already have one) and then spend the rest. After you meet some saving goals, no real need to save more. That's what I did. Never did wihout anything important that way. I do admit to buying and modifying Mustangs, and not Corvettes or M3's. So I limited myself a little it's true. But no big deal.

 

Set your savings goals, and spend the rest. Live it up if you can. You don't have to be a tigh wad all the time all your life. Those of you working out of a hole, keep at it. You'll be stronger for it...smarter also for next hard times. Anyway....that's my message. It also goes by another name...."pay yourself first", than spend away.

[F250]

I have no doubt of your financial prowess Ralph. It's sound advice. You're looking back across a lot of years of experience. Now unlike Bluecon as you aged you grew wiser, more logical and so on. But a lot people young people in their twenties buy cars as status symbols and we all know that. It's about fitting in. Not all, but for many that is the case. I opted for the Mustang GT when I could just have easily afforded a nice Fusion or whatever else I saw fit. But you know I said "Just once in my life I'm going to buy a damned sports car. Just to have some fun because you only get to go around once so why miss out on some of the nicer things in life right?" You can't really put a price tag on that Ralph. That's the point where wisdom and logic meet their powerful foe, emotion. Sure I could have saved up and bought a new Corvette and by the time I turn 40 I could afford one. But I didn't want to wait that long and who knows what could happen between now and then right. So I'm living a little now.

 

Roger that!

Bottom line: Have fun but be smart and carefull.

 

As with everything else in life there is always the temptation to spend too much, drink too much, eat too much etc, etc... all of these things can have devastating results. On the other side I have known people who spent a lifetime scrimping and saving as if they derrived some perverse pleasure in banking every penny and never living life. Somewhere in the middle is a well adjusted person and that's the place to be.

[Guest Sixcav]

Good advice Ralph. I can't speak for everyone, I'm already in the state retirement system in addition to mutual funds. Have to cover those bases.

[Ralph Greene]

So what other factory rebates did Ford cancel to offer 0% financing? Would those rebates excede the amount of interrest paid over 6 years? The deal is even better if the buyer gets A or D plans.

 

Currently Ford NA operations is not profitable but Ford Financial is. They are just temporarily using one to help bail out the other.

 

Ford has a lot of cash they earn money on. Whether in manufacturing side or finance side. I would guess money is worth 5-6% annualized to them. So if they offer free loans, they are either using their own money or borrowing in short tem markets....again probably 5-6.5% cost. I'm guess the free loan over a 6 year period on a avwerage new car cost of $25,000 costs them about $3000 per vehicle....just roughly figuring it in my head.

 

I wonder why they don't offer that kind of discount to cash buyers...or to people who might want to get their own loans.

[F250]

I wonder why they don't offer that kind of discount to cash buyers...or to people who might want to get their own loans.

 

They usually do. The ads usually read 0% OR $3000 etc cash back rebate. But I haven't seen that this time. The rebate was an advantage for cash purchases or those who didn't qualify for the 0%.

[taxman100]

It's also a function of age and maturity. As you get older and have already owned what would be considered a really nice car, you start to realize it really doesn't make that much of difference in driving a $20,000 car vs. a $40,000 car. Also, as you get a family, a house, etc., new cars start to go further down the list of what is important use of your money.

 

I might be unusual, but I have not had a car payment since 2002. I paid cash for both Grand Marquis used, and my wife's car has been paid off for years. If I finance a vehicle, I go for only 3 years and less than $300 a month. Even though I can afford more (my wife wants a Grand Cherokee, but what for?), it seems to me the math of borrowing $10,000 plus whatever you trade and put down gets you about where you should be.

 

Pay for 3 years, drive for 4 more without a payment, and use the money saved during those 4 years on a downpayment for the next one. I should mention buying that Intrepid was the best hard life lesson I learned financially - spending $20,000 for a piece of crap Chrysler seems insanity looking back.

Edited August 28, 2006 by taxman100

[Guest Sixcav]

All absolutely true taxman. You sound like a level headed responsible guy. I figured the heck with it, I'm single, I'm gonna enjoy myself while I can. I figure this will be the last expensive thing I ever buy besides a house. After this it's going to be a nice used sedan with a low low payment. Oh the horror!!! lol

[Noah Harbinger]

AGH just bought my fusion last friday at 1.9... should i go bug them or be happy with the 1.9? lol

 

Assuming 17k financed at 1.9%, that is a difference of $13.90/month, or $1000.83 over the life of the loan.

 

Incentives are always luck of the draw, unless you've got inside information.