Loan for garage

[bdamico]

0% is never 0% with a car. . . You borrowed $35,000 at 0% but the cash price would have been $31,000. . .they'll get their money out of you if you finance. . .period. Save money, pay cash.

Not necessarily true. I've bought plenty of cars under invoice and 0%. And no, I wouldn't have gotten lower paying cash. In fact, I bought an SRT8 when it was specifically excluded from the Jeep financing offers (as speciality cars often are) and then days later, the dealer called me and said he was able to push it through. In any event, many of those offers are corporate run and the dealership cannot give a lower price when paying in full.

 

[woodersen]

0% is never 0% with a car. . . You borrowed $35,000 at 0% but the cash price would have been $31,000. . .they'll get their money out of you if you finance. . .period. Save money, pay cash.

Says who?

 

[KPSquared]

Cool. If you can make it happen then good on ya. Its a good move if you can get 0% at below invoice price.

 

[Ray916MN]

I'm on the side of not borrowing. When things are good, borrowing looks good. You get what you want faster. The problem is when things aren't good, you get what you don't want faster. Such are the perils of leverage.

 

[kywildcat]

Go for it!! If your credit is good and you can afford the payments. I have unsecured Line of Credit for 40K at 3.5 apr. It has a zero balance so I can use it when I want to. Im like a couple others in here, don't wait until your 53 like I was to build my first garage. I can't imagine the fun and relaxation I missed because I was to tight or to scared to "Go for it"

 

[NUTTSGT]

Borrowing is fine if one plays cards right.....best buy card for new tvs computers at 27% interest is foolish.....0% for 60 months for a car is smart borrowing. Seems like guys on this site really frown on borrowing for a shop, why i dont know.

I understand exactly where you're coming from. That's why I suggested if he gets it framed and can finish the rest himself, using a big box card for materials at 0% for 6-12 months is a no brainer. If you can do the work, pay off the balance before it's time, no reason not to use someone else's money.

 

[Mossmilo]

I'm not a real big fan of using credit cards at all but getting a loan for a shop/garage additions and stuff of that nature I really don't see that as a big deal as long as you know how to manage money. Interest rates are extremely low now yet the price of building materials goes up all the time. When I build y garage 5 years ago for example osb was 5.15 a sheet when u went to Home Depot last week I paid 10.79. So I truly believe that if you wait 5 years just the increase alone would pay for the interest of the loan. Just be SMART shop all over check your different options. Not sure if you have a seven seventeen credit union but I have dealt with them and they are awesome and fast. Whatever you do DO NOT get in I we your head the last thing you would ever wanna do is have to give it back to the bank.

 

[nosnerd]

shop is too small.............

dont get on your knees for money...get a credit card with a low interest rate..

 

[nosnerd]

I understand exactly where you're coming from. That's why I suggested if he gets it framed and can finish the rest himself, using a big box card for materials at 0% for 6-12 months is a no brainer. If you can do the work, pay off the balance before it's time, no reason not to use someone else's money.

agreed.....

 

[woodersen]

I understand exactly where you're coming from. That's why I suggested if he gets it framed and can finish the rest himself, using a big box card for materials at 0% for 6-12 months is a no brainer. If you can do the work, pay off the balance before it's time, no reason not to use someone else's money.

this is also a good option.

 

[JakeKohl]

0% is never 0% with a car. . . You borrowed $35,000 at 0% but the cash price would have been $31,000. . .they'll get their money out of you if you finance. . .period. Save money, pay cash.

That used to be the case, but it's not anymore. With the financing incentives the dealers get from the banks, walking in with a bunch of cash doesn't do anything anymore.

I figure 3% or less makes it worth playing with other people's money.

 

[woodersen]

What normal middle class american with a family of 4 is able to save 35000 for a car? No one i know does that, thats for sure lol

 

[KPSquared]

The same one who can make payments for 5 years. . .just takes discipline. . .not the "I have to have it now" mentality.

 

[woodersen]

The same one who can make payments for 5 years. . .just takes discipline. . .not the "I have to have it now" mentality.

Whats the difference between saving 60 months to buy a car or financing 0% for 60 months...?

 

[Modifieddriver]

Whats the difference between saving 60 months to buy a car or financing 0% for 60 months...?

I'm not an advocate of buying new, but I did so three years ago when I bought my first new car in 41 years. But the car was a left over 2008 and the 2010's were already out. Already two years old, but started fresh with a new car warranty. So it was a heck of a deal. I financed because withdrawal of money from my 401k didn't make sense. I have to pay taxes on it to use it and it's making more in there than the interest rate of a loan. So, any financial expert will tell you when money is cheap, it's always better to use theirs, not mine.

Now, if you have a piss poor credit rating you'll probably not qualify for a cheap interest rate loan.

I'm getting ready to put up a new shop. I'm borrowing the $dough$ for ten years with no prepayment penalty. Signed the papers this past Wednesday. Turns out my credit rating is better than 99% of the rest of the population. It's someplace over 800. Having good credit opens doors to low financing.

Reinforces the fact that if you have bills, pay them on time. If you borrow money, pay it back on time. Too many forget a loan is just that, a loan, not a gift.

NOW........................

As for building this shop. If you have good credit, go get the $money$ now, even if it's a refinance. Rates are as low as they'll ever be. Money in pocket and saving for your dream only serves one purpose, it deprives you of the enjoyment of your shop now. Building materials will escalate in price faster than you can save. Enjoy now and pay the bank or save and enjoy later. Later may not happen

 

[Ray916MN]

Whats the difference between saving 60 months to buy a car or financing 0% for 60 months...?

If you save for 60 months, no matter what happens you'll have your savings. If you finance, if you don't make the payments you'll end up with nothing.

 

[Modifieddriver]

If you save for 60 months, no matter what happens you'll have your savings. If you finance, if you don't make the payments you'll end up with nothing.

WTF . Remind me not to use you as my financial planner.

With your logic I'm aimed at a disaster before it evens happens. Or in other words you're looking at running the financial ship so tight that you can't really afford to make the payments you agreed to.

This is piss poor financial planning. You're setting yourself up for financial failure.

Do you hold a key government financial planning job? That's the logic the folks in DC are using.

Now if I have my savings and spend it on a vehicle, where did the savings go? Yes, if times get tough I can sell the vehicle and cash out, but I already lost my *** with a new vehicle purchase. Then what will I drive?

OR I can keep my savings in an emergency fund if something happens where I need instant cash and still drive the car. I doubt I'd let the bank repo it, 'cause then your credit rating goes in the septic tank.

I'm not an advocate of 100% financing and never will be. The buyer should have some skin in the game so they don't lose there personal investment.

That's why $0 down to buy a home is stupid. If I don't have anything invested, I can walk away, like many have. It's like walking out of a rental property. What do ya' lose, a security/damage deposit? Big deal.

 

[Ray916MN]

WTF . Remind me not to use you as my financial planner.

With your logic I'm aimed at a disaster before it evens happens. Or in other words you're looking at running the financial ship so tight that you can't really afford to make the payments you agreed to.

This is piss poor financial planning. You're setting yourself up for financial failure.

Do you hold a key government financial planning job? That's the logic the folks in DC are using.

Now if I have my savings and spend it on a vehicle, where did the savings go? Yes, if times get tough I can sell the vehicle and cash out, but I already lost my *** with a new vehicle purchase. Then what will I drive?

OR I can keep my savings in an emergency fund if something happens where I need instant cash and still drive the car. I doubt I'd let the bank repo it, 'cause then your credit rating goes in the septic tank.

I'm not an advocate of 100% financing and never will be. The buyer should have some skin in the game so they don't lose there personal investment.

That's why $0 down to buy a home is stupid. If I don't have anything invested, I can walk away, like many have. It's like walking out of a rental property. What do ya' lose, a security/damage deposit? Big deal.

There is no logic being applied. These are facts. If you save the money, you will have it and if you don't make the payments on a car loan you will lose the car and have nothing for all the payments you made.

The personal attack in the face of facts surprises me.

 

[Kevin54]

I'm not an advocate of buying new, but I did so three years ago when I bought my first new car in 41 years. But the car was a left over 2008 and the 2010's were already out. Already two years old, but started fresh with a new car warranty. So it was a heck of a deal. I financed because withdrawal of money from my 401k didn't make sense. I have to pay taxes on it to use it and it's making more in there than the interest rate of a loan. So, any financial expert will tell you when money is cheap, it's always better to use theirs, not mine.

Now, if you have a piss poor credit rating you'll probably not qualify for a cheap interest rate loan.

I'm getting ready to put up a new shop. I'm borrowing the $dough$ for ten years with no prepayment penalty. Signed the papers this past Wednesday. Turns out my credit rating is better than 99% of the rest of the population. It's someplace over 800. Having good credit opens doors to low financing.

Reinforces the fact that if you have bills, pay them on time. If you borrow money, pay it back on time. Too many forget a loan is just that, a loan, not a gift.

NOW........................

As for building this shop. If you have good credit, go get the $money$ now, even if it's a refinance. Rates are as low as they'll ever be. Money in pocket and saving for your dream only serves one purpose, it deprives you of the enjoyment of your shop now. Building materials will escalate in price faster than you can save. Enjoy now and pay the bank or save and enjoy later. Later may not happen

I don't know if you can do it now, or if they did away with it everywhere, but instead of pulling money out of my 401K, I took a loan out. It was something like 6% interest, but you are paying yourself back, as all the payments go back into your account. You do lose some as you don't have that money in there to make you money, but you're not tossing it away either in just interest payments.

We have borrowed on our a few times. It allowed us to do a few things that we probably wouldn't have been able to do if we tried to save up the cash. Plus we always paid the loan back early. A lot of people advised against doing that and said it would be better to just cut back on the amount going into the 401K, but that is 6 of one and a half a dozen of the other. Cutting back on the amount going in wouldn't make us the money either. But like I said, I don't know if you can take out a loan on 401K's or not now.

If you plan on living in the house for quite a while, and if the garage would add to the value, I really don't see a reason not to borrow as long as it doesn't strap one down to where they are living paycheck to paycheck. You don't want to use up your savings to build one, but what about using a little of it to get things done? Depending on how you plan to build it, maybe leave the high dollar items out of it. Instead of doing everything right now, if affordable and withing your means, maybe stretch it out over a 2 year timespan. Get your foundation put in, get some buddies and frame it up yourself and get it roughed in and dry. Later on, when cash is a little more free, do your electric. Then get some coin saved back up and go for the concrete. Get some more coin saved up and go for finishing it off and insulated. Doing it in steps is about the same timespan as saving up the coin to do it all at once. You just have to be committed to doing it in steps and saving the coin in steps.

 

[rumpity_z28]

I buy every thing with my credit card! I love it, no transaction fees and ya get the rewards points for it. It's a beautiful thing

 

[bdamico]

There is no logic being applied. These are facts. If you save the money, you will have it and if you don't make the payments on a car loan you will lose the car and have nothing for all the payments you made.
The personal attack in the face of facts surprises me.

actually not true.

 

[woodersen]

I buy every thing with my credit card! I love it, no transaction fees and ya get the rewards points for it. It's a beautiful thing

We have a discover card and put everything on there. It avg 3000 a month. We pay it in full monthly and collect reward points = cash. We got over 500 in there right now just by paying on time, 0% interest. Last year we took a 4 day weekend vacation with out reward earnings. Nothing wrong with borrowing. The %rate is the exchange for convenience. If i had 30k and wanted a new truck. I dam sure wouldnt pay it cash. Id keep my 30k, finance it for 0% (ive already been approved for it). And take monthly payment out of that 30k every month. I may put 10k down it to start. May not. Its called OPM. Other peoples money.

 

[woodersen]

0% isnt really that hard to achieve. I think anything over 620 score gets it.. with decent debt to income ratio. No ones buying anything. Low interest is the only way they can sell it. Times have changed its not the 80s anymore where 9% was good on a mortgage.....

 

[Modifieddriver]

There is no logic being applied. These are facts. If you save the money, you will have it and if you don't make the payments on a car loan you will lose the car and have nothing for all the payments you made.

The personal attack in the face of facts surprises me.

That's not a personal attack, it's common sense and facts.

Your logic puzzles me. I already did an explanation.

Exactly who in their right mind enters into a deal with a concept of not paying the money back? Yes, stuff happens to folks. But if they repo your car, ya' should've never bought it to begin with and probably have problems that go deeper than a monthly payment. Or ya' sell the car, use the dough to pay off the loan. If you bought it with no or little money up front, you're probably screwed.

Problem is, financing was too easy with no money down required. Folks bought homes, cars, etc. that should've never been in the market. That's why the economy went bust. There's such a thing as prudent lenders and prudent payers.

Then there's others that don't get it right and never will because they're piss poor money managers. I know some. They'll never have anything to show for a life of hard work.

 

[Modifieddriver]

We have a discover card and put everything on there. It avg 3000 a month. We pay it in full monthly and collect reward points = cash. We got over 500 in there right now just by paying on time, 0% interest. Last year we took a 4 day weekend vacation with out reward earnings. Nothing wrong with borrowing. The %rate is the exchange for convenience. If i had 30k and wanted a new truck. I dam sure wouldnt pay it cash. Id keep my 30k, finance it for 0% (ive already been approved for it). And take monthly payment out of that 30k every month. I may put 10k down it to start. May not. Its called OPM. Other peoples money.

I don't do the card thing, but other than that, you and I are on the same wave length.

 

[kb2tha]

I don't know if you can do it now, or if they did away with it everywhere, but instead of pulling money out of my 401K, I took a loan out. It was something like 6% interest, but you are paying yourself back, as all the payments go back into your account. You do lose some as you don't have that money in there to make you money, but you're not tossing it away either in just interest payments.

This is exactly what I did for my garage. Borrowed against one of my accounts and pay back quarterly. Took $13.5k which got everthing closed in and concrete, then pay as you go the rest. Most all of the interest goes right back into the account.

 

[woodersen]

I don't do the card thing, but other than that, you and I are on the same wave length.

Cool, you should consider 1 card. Discover pays the highest rewards. Trust me my wife researched it. We have everything on there....walmart, car insurance, gas, dinner, fast food, beer, cell phone, daycare, everything except mortgage, taxes and insurance, (only because those 3 dont accept discover. Literally every dollar i spend is on discover card. 3000 a month give or take a hundred.....rack up cash back. Cant go wrong....

 

[Too_Many_Tools]

You won't like my advice and I've got my flame suit on but it sounds like the timing isn't right for you to do this.

If you're trying to start a family and your cash reserves are around $15,000, I would try and build that up more rather than go into debt or spend more. But since I doubt that alternative is all that appealing consider this....

If your new 30 year loan of $141,000 has an interest rate of 4% (I'm guessing) then you have a payment of around $673.

If you take out a 5 year personal loan/line of credit, peer lending, etc. loan at say 8% (again, guessing) you'll have a payment of $304.

If you took that $304 and put it toward paying down your existing loan balance you would take 13-1/2 years and almost $50,000 off in payments. In fairness this does include making the additional $304 in payments for an additional 11-1/2 years beyond the 5 year loan.

You can play with the real numbers but I will tell you that my wife and I used this approach and paid off a 30 year loan in 9 years. We took 2 trips and had 3 kids during that time period. We almost never went out to eat or to the movies, rarely bought new clothes and basically cut discretionary spending to a minimum. The savings in interest more than paid for the shop, even if I add in the tax break. For us, it was well worth the sacrifice.

I would agree with waiting.

Starting a family can be an ENORMOUS money sink.

If the birth does not go well, your $15,000 can be gone in less tha a day.

I would wait and see things work out with the new kid before committing any money to construction.

FWIW...a garage adds little value to a house (I know...I disagree with that too but that is what the average bank thinks)

Good luck with the new family.

 

[mikec35]

If you have a credit card you can see if you can get checks to pay for garage build. You might be able to get a 0% deal for 12-18mos. on your charge card if you check with them. It'll cost you 3 or 4% to get the money on a check but you won't have any interest to pay if you pay it off early.

 

[6768rogues]

Try the bank of Mom and Dad. I just loaned my son another $50k, added to the $97k he already owes me. He never misses a payment, so I upped the amount.

 

[Ray916MN]

Whats the difference between saving 60 months to buy a car or financing 0% for 60 months...?

There is no logic being applied. These are facts. If you save the money, you will have it and if you don't make the payments on a car loan you will lose the car and have nothing for all the payments you made.

The personal attack in the face of facts surprises me.

That's not a personal attack, it's common sense and facts.

Your logic puzzles me. I already did an explanation.

There is no logic. Just a statement of facts. Did I write it was a good idea, a bad idea? Did I write that if you get a loan you won't be able to pay it back? Did I write that loans are bad ideas? What logic was there?

Answer the following 2 questions with a simple yes or no answer.

If you save money for 60 months, will you have your savings no matter what?

If you don't make your car payments will you lose your car?

Exactly who in their right mind enters into a deal with a concept of not paying the money back? Yes, stuff happens to folks. But if they repo your car, ya' should've never bought it to begin with and probably have problems that go deeper than a monthly payment. Or ya' sell the car, use the dough to pay off the loan. If you bought it with no or little money up front, you're probably screwed.

Problem is, financing was too easy with no money down required. Folks bought homes, cars, etc. that should've never been in the market. That's why the economy went bust. There's such a thing as prudent lenders and prudent payers.

Then there's others that don't get it right and never will because they're piss poor money managers. I know some. They'll never have anything to show for a life of hard work.

None of what you wrote immediately preceding is in conflict with what I wrote. I agree with most of it, except I don't believe financing has ever been too easy. I believe people underestimate the fact, that the risk to financing is if you don't make your payments you lose car and they over estimate their ability to make their payment. The difference between saving to buy a car and borrowing at 0% to buy a car, is the risk that you can't make the payments and the car gets repossessed.

Since you seem so hell bent on criticizing my "logic", I'll give you some logic to criticize. Since the difference between saving for a car and borrowing for at 0% interest is the risk of losing the car if you don't make the payments, if you take out a loan on a car, make damn sure you can make the payments.

 

[Too_Many_Tools]

A thought...in good times it is STRONGLY suggested that one has 6 months of income saved as a rainy day fund. In the times that we are in now, it is recommended 9 -12 months of income saved for the emergency fund. The fund is just that...for an emergency...not a slush fund to dip into when one gets the itch.

Another point...it is said to never borrow money except for education for a better job, transportation to a job or tools for a job. In other words if the expenditure will not help you make more money, one should not borrow the money.

 

[woodersen]

A thought...in good times it is STRONGLY suggested that one has 6 months of income saved as a rainy day fund. In the times that we are in now, it is recommended 9 -12 months of income saved for the emergency fund. The fund is just that...for an emergency...not a slush fund to dip into when one gets the itch.

Another point...it is said to never borrow money except for education for a better job, transportation to a job or tools for a job. In other words if the expenditure will not help you make more money, one should not borrow the money.

I somehwat agree but......student loans arent at 0% interest.....

 

[Modifieddriver]

There is no logic. Just a statement of facts. Did I write it was a good idea, a bad idea? Did I write that if you get a loan you won't be able to pay it back? Did I write that loans are bad ideas? What logic was there?

Answer the following 2 questions with a simple yes or no answer.

If you save money for 60 months, will you have your savings no matter what?

If you don't make your car payments will you lose your car?



None of what you wrote immediately preceding is in conflict with what I wrote. I agree with most of it, except I don't believe financing has ever been too easy. I believe people underestimate the fact, that the risk to financing is if you don't make your payments you lose car and they over estimate their ability to make their payment. The difference between saving to buy a car and borrowing at 0% to buy a car, is the risk that you can't make the payments and the car gets repossessed.

Since you seem so hell bent on criticizing my "logic", I'll give you some logic to criticize. Since the difference between saving for a car and borrowing for at 0% interest is the risk of losing the car if you don't make the payments, if you take out a loan on a car, make damn sure you can make the payments.

Make sure you can make the payments? Isn't that what you're supposed to do when you borrow money? That's why there's loan officers. To protect non money management morons from getting in over their head. Last time I checked, ya' borrow, you pay back. That's the way it's always worked. That's why my credit rating is better than 99% of the folks in this country. You have bills, you pay them on time. You have loans, you pay the bank what you owe them when it's due. Novel concept that many folks should try.


Financing hasn't been too easy?????????? Hello, McFly, is there anyone home up there? What the hell do you think caused the economy to implode? Are you in an economic information vacuum chamber? Take that as an insult if you want, because it's intended to be one.

Government has a brainstorm that everyone in the country needs to own a home. What's wrong with this picture? There's too many in the picture frame that don't need to be there. So there's a mortgage borrowing scheme with Fanny and Freddie allowing folks to buy a house with $100 or even $0 as a down payment. Same thing holds true for vehicles. Please read about the reasons for the economic collapse a few years ago.


I don't think you and I are talking about the same group of people.

Ones you refer to are prudent savers and stash $dough$ away to buy a car and pay cash, which I personally think at today's interest rates makes no sense.

Then there's the other group that I refer to that are morons when it comes to money management. Now only a ***** or a piss poor money manager would borrow money on a car and plan to not make the payments, or be stretched so thin that it's a struggle to do so. Here the borrower defaults on the loan and the bank repos the car. If they had a significant down payment (as in, skin in the game) they'd do what they can do to keep the car OR, sell the car and the bank gets paid first with the proceeds and the borrower gets what's left.


The other group, I'll call prudent money managers have the $dough$ to pay for the car or place down a sizeable down payment, frequently a trade-in. They have good credit an can finance the car if they want. If they're smart, they keep their money in a place making money for them, and if bad luck sets in, that stash could pay off the car loan so it's stays with them and not the bank.

The other person (*****) ain't never gonna' save up the $dough$ for a car, can only get one with a no money down or almost no money down deal. This is the type of person that walks into the showroom and the salesman asks them how much a month can you afford. Buyer never has the brains to ask what the interest rate is. They're just happy to be riding. Salesman puts them with a minimum of five years of payments. That car will be close to being worn out before the payment book is dog eared. They still have nothing at the end of five years, but a worn out car because they have no skin in the game.

Meanwhile the prudent saver is stashing $dough$ to pay cash for his car. Problem is he's loosing his *** 'cause savings aren't paying squat for interest right now. The cost of vehicles is escalating faster every year than the rate most can save.

I'd rather have a slush fund in the bank for an emergency and a monthly payment rather than no slush fund and a paid off vehicle. Your way if an emergency happens and he needs cash what happens. You sell something of value for less than it's worth to help get through the crisis. What gets sold, the very car you said he'd lose if he didn't make the payments.

Both ways work. So I guess we agree that we disagree.

Oh yeah, I think you overestimate the intelligence of the buying public.

 

[JakeKohl]

...
Government has a brainstorm that everyone in the country needs to own a home. What's wrong with this picture? There's too many in the picture frame that don't need to be there. So there's a mortgage borrowing scheme with Fanny and Freddie allowing folks to buy a house with $100 or even $0 as a down payment. Same thing holds true for vehicles. Please read about the reasons for the economic collapse a few years ago.
....

Well, almost. It had more to do with the big banks finding more and more creative ways to package and trade mortgages (specifically, the bad mortgages) for profit such that it made packets of mortgages overvalued. They became more overvalued each time they were traded and on every trade some bank turned a profit. The banks had actually figured out a way to turn a profit on bad mortgages through creative packaging...and the incentive to lend more was not driven by the government but from the greed of the big banks. It didn't matter if the borrower was going to make good on the loan - the bank was going to make money on it regardless. It finally got to the point where this bubble of artificial profit collapsed when the actual (very low) value of these mortgage packages was realized in a very short time frame. This left the big guys with no cash flow and us in an economic crisis. Hence the term "bubble". pop.

While it's easy to assume government lending/incentive programs were involved with the economic collapse, it's not what caused it and, if anything, had an exceptionally minor roll. It was unregulated gigantic capitalism, operating on a scale never seen before, that caused it.

 

[Too_Many_Tools]

I somehwat agree but......student loans arent at 0% interest.....

The point is one only borrows money that allows you to make more money.

All other expenditures are money sinks...the money is borrowed and spent with no economic return. Borrowing money to add a garage results in a more expensive house which is less likely to resell and one will not recover the initial investment in the foreseeable future in this housing market..if ever.

The OP has not said that he is planning on any income producing venture that will result because of the garage additiion. In my past before getting garage space, I spent many years working on my vehicles in the driveway...with no cost of a garage.

As I said earlier...knowing that a new baby is on the way is cause for being very conservative with money..ask anyone where a birth did not go as planned. In addition, any baby represents additional cost to the family...and there are always expenses one never thinks of that arise.

A story..a true story...

Years ago on a small acreage that I drove by daily I watched a sad story of a family play out.

First a prefab house went up...cheap, fast and one that a newly married couple could get a loan for...with no garage.

Next I see a prefab shop go up..again, cheap, fast and againg one that a newly wedded couple could get a loan for...the husband got his garage.

About a year later I see vehicles change...from the hot cars that kids drive to a pickup and minivan...usually means a baby arrived.

About year later, the toys of a small child show up on the lawn...yeah..they have a kid.

About a year later....the minivan is gone..the pickup remains...fewer toys on the lawn...damn..I bet a divorce happened..and the father gets the kid on every other weekend.

About a year later...the toys are gone...the pickup disappears...someone just lost the house.

About six months later...the prefab shop is taken down and removed...leaving the concrete slab...someone just lost his garage.

Over the next two years...the yard becomes overgrown, no one is living there...the bank is holding a house they can't sell.

Last winter....someone's meth lab burns the house down...happens a lot in vacant houses.

This last summer...a bulldozer finally removed the remains of the house...but the slab of the garage remains as silent testament as to what past dreams had been there.

I still drive by that small empty acreage....and pass dreams that have died of a family that I never knew.

A very sad lesson of life if one wants learn what bad things can happen to a family living on the edge....

 

[Ray916MN]

Make sure you can make the payments? Isn't that what you're supposed to do when you borrow money? That's why there's loan officers. To protect non money management morons from getting in over their head. Last time I checked, ya' borrow, you pay back. That's the way it's always worked. That's why my credit rating is better than 99% of the folks in this country. You have bills, you pay them on time. You have loans, you pay the bank what you owe them when it's due. Novel concept that many folks should try.

Loan officers are sales people. They are paid to make loans. They are not paid to protect non money management morons from getting in over their heads. If your credit rating is better than 99% of the folks in the country it is because you managed your money properly, it is not because a loan officer protected you from making poor financial decisions.

I believe many people are in poor financial condition because when a loan officer said they could borrow $X they believed it and borrowed $X or if they wanted more, they shopped around till they found a loan officer that would loan them more. If any loan officer protects anyone, they protect their employers from making bad loans.

The business of making loans is making loans, not protecting people from poor decisions. Only a fool would believe that loan officers are there to protect people from getting in over their heads.

Financing hasn't been too easy?????????? Hello, McFly, is there anyone home up there? What the hell do you think caused the economy to implode? Are you in an economic information vacuum chamber? Take that as an insult if you want, because it's intended to be one.

People making poor financial decisions caused the economy to implode. As you stated, "You have loans, you pay the bank what you owe them when it's due. Novel concept that many folks should try." and as I stated, if you take out a loan on a car, make damn sure you can make the payments. If you can't understand the loan, then you have no business signing for the loan. Many people didn't do this, right?

Government has a brainstorm that everyone in the country needs to own a home. What's wrong with this picture? There's too many in the picture frame that don't need to be there. So there's a mortgage borrowing scheme with Fanny and Freddie allowing folks to buy a house with $100 or even $0 as a down payment. Same thing holds true for vehicles. Please read about the reasons for the economic collapse a few years ago.

Ahhh the government is to blame for people taking on debt that they ultimately couldn't pay back. So what the government did, somehow rendered what you wrote: "You have bills, you pay them on time. You have loans, you pay the bank what you owe them when it's due. Novel concept that many folks should try." untrue?

I don't think you and I are talking about the same group of people.

Ones you refer to are prudent savers and stash $dough$ away to buy a car and pay cash, which I personally think at today's interest rates makes no sense.

Then there's the other group that I refer to that are morons when it comes to money management. Now only a ***** or a piss poor money manager would borrow money on a car and plan to not make the payments, or be stretched so thin that it's a struggle to do so. Here the borrower defaults on the loan and the bank repos the car. If they had a significant down payment (as in, skin in the game) they'd do what they can do to keep the car OR, sell the car and the bank gets paid first with the proceeds and the borrower gets what's left.

The other group, I'll call prudent money managers have the $dough$ to pay for the car or place down a sizeable down payment, frequently a trade-in. They have good credit an can finance the car if they want. If they're smart, they keep their money in a place making money for them, and if bad luck sets in, that stash could pay off the car loan so it's stays with them and not the bank.

The other person (*****) ain't never gonna' save up the $dough$ for a car, can only get one with a no money down or almost no money down deal. This is the type of person that walks into the showroom and the salesman asks them how much a month can you afford. Buyer never has the brains to ask what the interest rate is. They're just happy to be riding. Salesman puts them with a minimum of five years of payments. That car will be close to being worn out before the payment book is dog eared. They still have nothing at the end of five years, but a worn out car because they have no skin in the game.

Meanwhile the prudent saver is stashing $dough$ to pay cash for his car. Problem is he's loosing his *** 'cause savings aren't paying squat for interest right now. The cost of vehicles is escalating faster every year than the rate most can save.

I'd rather have a slush fund in the bank for an emergency and a monthly payment rather than no slush fund and a paid off vehicle. Your way if an emergency happens and he needs cash what happens. You sell something of value for less than it's worth to help get through the crisis. What gets sold, the very car you said he'd lose if he didn't make the payments.

Both ways work. So I guess we agree that we disagree.

Oh yeah, I think you overestimate the intelligence of the buying public.

I think you over estimate the intelligence of the buying public. You think they can accurately assess their ability to repay the debt they take on. The financial crisis proved that many many people could not do this.

The basis of capitalism is everyone and every business operates in their own self interest. There is no one except maybe your trusted friends and family members who I would rely on to operate in my self interest. Don't look to the government, don't look to loan officers, make damn sure if you can take out a loan you can make the payments.

If you are absolutely sure you can make the payments take out a loan by all means. Spend your money any way you see fit. If you turn out to be wrong, don't blame anyone else.

I retired over a decade ago in my early 40s. I've been an active investor since I retired. I see the world as risk versus return. Financial crisis had zero impact on how I live. I get more than $2K cash back a year doing the Discover card deal. The difference between borrowing at 0% to pay for something versus paying cash is fundamentally a matter of taking on risk.

 

[Too_Many_Tools]

LOL...I can tell that this is going to be a good topic...mods..please do not lock it.

Bottom line on borrowing money folks....

Lenders do not lend unless it makes them money...guaranteed.

Borrowers should not borrow unless it will make them money..better job, better education that results in a better job, BASIC transportation to get to a job...a very short unsexy list of what one should borrow for.

It really is that simple.

There are millions and millions of companies waiting for you to forget that simple fact and burden you with needless debt.

Any parent should educate their kids on this and will if they love them.

 

[Ray916MN]

Well, almost. It had more to do with the big banks finding more and more creative ways to package and trade mortgages (specifically, the bad mortgages) for profit such that it made packets of mortgages overvalued. They became more overvalued each time they were traded and on every trade some bank turned a profit. The banks had actually figured out a way to turn a profit on bad mortgages through creative packaging...and the incentive to lend more was not driven by the government but from the greed of the big banks. It didn't matter if the borrower was going to make good on the loan - the bank was going to make money on it regardless. It finally got to the point where this bubble of artificial profit collapsed when the actual (very low) value of these mortgage packages was realized in a very short time frame. This left the big guys with no cash flow and us in an economic crisis. Hence the term "bubble". pop.

While it's easy to assume government lending/incentive programs were involved with the economic collapse, it's not what caused it and, if anything, had an exceptionally minor roll. It was unregulated gigantic capitalism, operating on a scale never seen before, that caused it.

This was the root cause. Everything else was a by product.

What is bad is one of the basics of business is the downside is always limited to zero (the worst that can happen is bankruptcy or going out of business), while the upside is infinite. This leads to the idea that taking risk is more of a priority and growth Credit Default swaps became such a big business with so much growth that concerns about risk were thrown by the way side.

 

[Modifieddriver]

Loan officers are sales people. They are paid to make loans. They are not paid to protect non money management morons from getting in over their heads. If your credit rating is better than 99% of the folks in the country it is because you managed your money properly, it is not because a loan officer protected you from making poor financial decisions.

When a loan officer makes a loan they look at the borrowers net assets and ability to repay a loan. You would like me to believe they sit in a chair and hand out money to anyone that meets the minimal qualifications to repay the bank. Not so. They are working as a representative of a lending institution with one overall purpose. To make a profit on loan and other banking activities for the company they work for. When a loan officer writes too many bad loans and violates that trust, they'll find themselves looking for another job. Banks don't want to be in the business of repossessing vehicles or foreclosing on property. That's not the business they're in. It's a consequence of the business they're in.

Where did I say the loan officer protected me from making bad financial decisions? I'm in that position because I'm personally responsible with money. No loan officer ever twisted my arm to get in financial trouble just so they could write a loan. Remember, a loan officer only approves a loan based upon the assumed valid information provided my the borrower. That same loan officer doesn't hold a gun to the borrowers head and make them pay it back on time. That's an individual responsibility.

I believe many people are in poor financial condition because when a loan officer said they could borrow $X they believed it and borrowed $X or if they wanted more, they shopped around till they found a loan officer that would loan them more. If any loan officer protects anyone, they protect their employers from making bad loans.

The business of making loans is making loans, not protecting people from poor decisions. Only a fool would believe that loan officers are there to protect people from getting in over their heads.

I agree that loan officers protect the lending institution. That's their job

The fools you reference that get in over their head are usually the ones that make bad financial decisions. The loan officer is there to approve or disapprove. The same loan officer can not control customers from running up huge credit card bills, or control them going to retail store that offers a buy now, no payment due until 2014 scheme.



People making poor financial decisions caused the economy to implode. As you stated, "You have loans, you pay the bank what you owe them when it's due. Novel concept that many folks should try." and as I stated, if you take out a loan on a car, make damn sure you can make the payments. If you can't understand the loan, then you have no business signing for the loan. Many people didn't do this, right?

I already said that some folks sign the loan papers and don't even look to see what the interest rate is. That tells the story right there about personal responsibility



Ahhh the government is to blame for people taking on debt that they ultimately couldn't pay back. So what the government did, somehow rendered what you wrote: "You have bills, you pay them on time. You have loans, you pay the bank what you owe them when it's due. Novel concept that many folks should try." untrue?

You lost me here. The government let the lending industry, which Fannie and Freddie are part of, go wild. Ask any mortgage lending official how many different schemes and plans were available to get someone qualified for a mortgage. It will make your head hurt. Regardless of the plan, you're still supposed to repay the money. But if I'm underwater in a property because the real estate market went bust, I can walk away from it like a rental property because I have no skin in the game.



I think you over estimate the intelligence of the buying public. You think they can accurately assess their ability to repay the debt they take on. The financial crisis proved that many many people could not do this.

I told you that. Most folks are pretty STOOBID when it comes to money management. Why do you think the government wants to control every facet of your life?

The basis of capitalism is everyone and every business operates in their own self interest. There is no one except maybe your trusted friends and family members who I would rely on to operate in my self interest. Don't look to the government, don't look to loan officers, make damn sure if you can take out a loan you can make the payments.

No disagreement here. As I said several times before, a person has to be responsible for the consequences of their actions.

If you are absolutely sure you can make the payments take out a loan by all means. Spend your money any way you see fit. If you turn out to be wrong, don't blame anyone else.

What the hell do ya' think I've been telling you for a half dozen posts????

I retired over a decade ago in my early 40s. I've been an active investor since I retired. I see the world as risk versus return. Financial crisis had zero impact on how I live. I get more than $2K cash back a year doing the Discover card deal. The difference between borrowing at 0% to pay for something versus paying cash is fundamentally a matter of taking on risk.

I retired at age 56 and planned well enough to provide for my future. I spend the hell outa' money on things of value that I normally can always make a return on my investment. I'm not a big spender on frivolous stupid things. I don't hoard my money, but it is invested. I don't go without because I'm scared to take a chance. I have good credit and enough tangible assets to cover the cost of anything I want to do, including a 3,600 sq. ft. shop that will be going up in my back yard in a month or two. But I made the decision to borrow the money, not pay off the hip. Yes, I plan on paying the bank back, it's the way it's supposed to be done.

So what about that car ya' paid cash for that ya' have to sell to cover an emergency? Ya' want to talk about that?