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Old 05-16-2011, 07:04 PM   #1
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Trade in value

OK so I'm driving a 2010 JKU with 28k on the clock. I bought it with about $6k down and am paying $450 a month for a 7 year term with a year gone.

My question is, if I am happy maintaining that payment, every how many years can I trade up to a new model, assuming, of course, that I keep extending the end date of my loan forever .

Maybe I should lease !!

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Old 05-16-2011, 07:26 PM   #2
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You will ALWAYS lose money trading up or getting a newer model and you'll remain in debt forever. You will LOSE money leasing too and never owning. Only trade if you absolutely cannot live without getting a "newer" model or you can wait....pay off your JKU.....get mods....be happy.

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Old 05-16-2011, 07:31 PM   #3
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8 years! $43200.00 is what you're paying for a Wrangler????

Anyway, ESP is right, never trade in unless you have to. Dealers make their money on trade ins. Sell it yourself, and go buy what you can AFFORD.
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Old 05-16-2011, 07:34 PM   #4
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I totally agree...I can't believe how much I am about to sound like my parents, but ESP123 is absolutely right. That is a terrible attitude and you will stay in debt forever. A 7 year term is loco- you should try to pay it off early.

That is one of the reasons I bought a jeep. It will be a fun vehicle many years from now. Just look at all the YJ's and CJ's out there. Jeeps stay cool forever
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Old 05-16-2011, 07:35 PM   #5
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Interest will get you.. truth in lending act will tell you how much you'll pay over the life of the fully amortized loan.

I'd recommend paying more each month, $10.. $20.. whatever you can afford, the money spent now when applied to the principle balance will greatly reduce the amount you will pay over time. If you look at an amortization schedule for your loan & percentage i'd venture to say that you probably have yet to pay anything towards the original balance..
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Old 05-16-2011, 07:57 PM   #6
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Inferno girl, no a 7 year term with 1 year gone. I also have an interest rate of 2.5 % which is pretty good (although I may not get that again). I understand all the reasons but I am OK with a perpetual payment. I earn close to $100k and am a permeant renter by choice so have a chunk of disposable income ..... and I just like new vehicles so shoot me :-)

Was just wondering when my ride would reach the point that it would be worth enough to get a new one just extending the loan buy the same time that this one is old, if that makes any sense !!!

But I also like the idea of just taking the money and buying mods !!
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Old 05-16-2011, 08:02 PM   #7
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Dude pay off the loan.. whats the point of paying interest?
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Old 05-16-2011, 08:08 PM   #8
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Bro...You only live once..cant't take money with you when you die..go for it..be one of the 1st to get a 2012. F@#k it
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Old 05-16-2011, 08:14 PM   #9
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I say buy a cj. The initial cost may be less but it will cost more per month than a payment.

No interest and you spend plenty of money.

J/K - Some people don't like having debt. Some people don't care. Some are in the middle. I like always owing less than something is worth...by a few thousand so I alway pay down when I buy something and never buy new.

Anyway, do what you want to do. Otherwise you will end up trading/selling out of emotion and that gets expensive.
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Old 05-16-2011, 08:38 PM   #10
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I don't know how in the world you got 2.5% for 84 months, but it's a fantastic deal. Generally, the lowest rates we're seeing in our area is 2.5 to 2.9 and that's usually only for excellent credit and no more than 24 months. 84-month loans here are generally going for the 4+ range. And yes, I know, new car deals are like genitalia; lots of people tend to exaggerate. And everybody's heard a story about someone getting the deal that cost the bank money. But the truth is, no bank will lend money that costs them money. And the interest rate is key. The lower your rate, the longer you can amortize that loan (lengthen the term) without hurting yourself too badly.

Someone mentioned the TIL act, and it does allow you to ask for an amortization table (how much you pay on the principle over time) and the total cost of financing (total interest paid at loan maturity). That will tell you how much you are paying to borrow the money.

Call the bank and get a payoff. Compare that to the NADA trade in value (but expect the dealer to offer the far lower end). That's how much you lose. Then compare that to the NADA retail value. That's what you could get if you sold outright. And that's what I would do.
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Old 05-16-2011, 08:41 PM   #11
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Considering prime rate is at 0%, a bank is going to make money charging any interest rate lol..
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Old 05-16-2011, 08:43 PM   #12
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And, yes, if you are going to want to "trade up" every 2-3 years then leasing was made for you. It's not a bad deal in that situation. With a lease you only agree to pay the amount of purchase price expected to depreciate during your term. And, no matter what the dealer tells you, that purchase price is negotiable. Come to an agreement on a price and then ask to lease based on that price.
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Old 05-16-2011, 08:45 PM   #13
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I was surprised by the interest rate but wasn't going to turn it down ! I guess one of my big problems is that I kinda like my ride as it is and don't feel the overwhelming need to mod it out....although once that bug hits I guess I'll be tied to the wagon I have !
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Old 05-16-2011, 08:47 PM   #14
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The absolute stone cold point to even seriously consider a change of rigs for ME, is when the mechanic payments become larger than what the bank payments would be.

I made the ill-advised choice on a couple favorite pick-ups....and held them too long by a couple years, that I could have spent less relative money by buying a new rig.

And unless you are in a bracket that is a REAL advantage with lease write-off expense, you will spend way more leasing than buying. Don't ask how I know this.
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Old 05-16-2011, 08:49 PM   #15
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Considering prime rate is at 0%, a bank is going to make money charging any interest rate lol..
No. Prime rate today is 3.25 but that is only an index used to set consumer rates. You are probably talking about LIBOR which is the inter-bank rate and is about 0.7, I believe. But a bank's actual cost-of-funds varies with many other factors like how many "free" services they're giving away. Those things aren't really free!
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Old 05-16-2011, 08:51 PM   #16
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My best bet is just buy a new one and keep my current. Not for the reason of what I owe vs pay off which most dealers will pay off a loan for the most part. I traded a 2008 car in for my 2010 Jeep and I owed $2000 more then it was worth yet they paid it off anyways to make the deal.

The reason I would never come out though is my mods. Can't afford to trade mine in even 4 years down the road lol
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Old 05-16-2011, 08:55 PM   #17
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No. Prime rate today is 3.25 but that is only an index used to set consumer rates. You are probably talking about LIBOR which is the inter-bank rate and is about 0.7, I believe. But a bank's actual cost-of-funds varies with many other factors like how many "free" services they're giving away. Those things aren't really free!
meh, i was exaggerating, but i meant the federal prime rate, the rate at which banks borrow from the fed.

When i worked at wells fargo, the formula was always fed prime + banks rate depending on loan risk
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Old 05-16-2011, 09:12 PM   #18
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I didn't know you could get a vehicle lone for that long....I try to get the lowest interest possible with the highest payment I can handle that way it's payed off quick and I don't end up paying a SH*T-TON of interest....
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Old 05-17-2011, 02:02 AM   #19
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Hey argyll -
I just went through a depreciation excercise, as I was trying to plan my path forward. I ended up with a sweet deal on a new 2010, which I will trade in in a year or two for a Pentastar. Ran a bunch of options, to figure out what made sense, and ansure the deal was sweet enough. Attached is a quick scenario I threw together for you.

I pulled trade in values from kbb.com for used JKU's. I went back one year at a time, adding 15,000 miles per year to try to get some historical data on JKU depreciation rates. I did this for Sport, Sahara, and Rubicon base trims. You can see the results on the attached chart. Also there, is what you owe in brown. This is a simplified analysis, since I didn't care to take the time to try reverse engineering your sales price, or know how your Jeep is optioned, etc, so this just starts you off at owing $37,800 at year 0, then pays off $5400 per year while adding 15,000 miles to the car each year. (If you have your actual ammortization schedule, you can mark those principal values in instead at each year/15K Miles). You can see that it starts out with you owing much more than the trade in value, but crosses over the Rubicon & Sahara lines at about year 3 & 45000 miles. Sport at year 4 with 60,000 miles. If you hold onto it that long or longer, than you should no longer be upside down on it, and be able to trade it in without it increasing the cost of the vehicle you are buying.

All the usual caveats here - this data for entertainment purposes only, subject to many variables outside my control, your mileage may vary, I'm sure folks will tell me why this is a stupid analysis, etc.

Good luck,
-Sky
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Old 05-17-2011, 02:10 AM   #20
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i had a 2007 sahara 2D. bought it for 20k traded it in for a 2011. i owed 12k and the dealership gave 20k for trade in. so i got what i originally paid, which gave me a nice 8k down for the COD
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Old 05-17-2011, 06:10 AM   #21
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Hey argyll -
I just went through a depreciation excercise, as I was trying to plan my path forward. I ended up with a sweet deal on a new 2010, which I will trade in in a year or two for a Pentastar. Ran a bunch of options, to figure out what made sense, and ansure the deal was sweet enough. Attached is a quick scenario I threw together for you.

I pulled trade in values from kbb.com for used JKU's. I went back one year at a time, adding 15,000 miles per year to try to get some historical data on JKU depreciation rates. I did this for Sport, Sahara, and Rubicon base trims. You can see the results on the attached chart. Also there, is what you owe in brown. This is a simplified analysis, since I didn't care to take the time to try reverse engineering your sales price, or know how your Jeep is optioned, etc, so this just starts you off at owing $37,800 at year 0, then pays off $5400 per year while adding 15,000 miles to the car each year. (If you have your actual ammortization schedule, you can mark those principal values in instead at each year/15K Miles). You can see that it starts out with you owing much more than the trade in value, but crosses over the Rubicon & Sahara lines at about year 3 & 45000 miles. Sport at year 4 with 60,000 miles. If you hold onto it that long or longer, than you should no longer be upside down on it, and be able to trade it in without it increasing the cost of the vehicle you are buying.

All the usual caveats here - this data for entertainment purposes only, subject to many variables outside my control, your mileage may vary, I'm sure folks will tell me why this is a stupid analysis, etc.

Good luck,
-Sky
That's awesome. Thanks !
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Old 05-17-2011, 06:22 AM   #22
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I have never leased a car but it only makes sense if you have a business to write off the payment, but i don't like leasing in general because you are setting up a situation that whenever the lease term is up you are out shopping for a vehicle no matter what economic situation you happen to be in at the time.
As far as a purchase IMHO i would never take out a loan longer than 3-4yrs(i personally like to purchase outright), I dont like being in situation where i ever owe more on a vehicle that what it is worth, and 3-4yrs seems to be that break point depending on how much you put down.

Those statements said, it is always cheaper to own and maintain a vehicle(assuming its in good working order), than to lease or buying a new one.
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Old 05-17-2011, 10:02 AM   #23
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I pay an extra $50 a month towards the principal and that adds up and lowers the amount you pay on interest too.
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Old 05-17-2011, 05:49 PM   #24
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We each buy a new vehicle every 2-3 years. Some will say we waste alot of money on vehicles.

Harleys 2 x 20k = 40k + mods
F150 x 25k = 25k
Jeep x 22k =22k + mods

So right now with mods we are at about 95k on four vehicles and Ive only spent about $300 on the new Jeep.

We dont smoke or drink, no kids in the house, no cc debt, 100k + income.

Cant take it with us.
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Old 05-17-2011, 06:49 PM   #25
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Quote:
Originally Posted by argyll
Inferno girl, no a 7 year term with 1 year gone. I also have an interest rate of 2.5 % which is pretty good (although I may not get that again). I understand all the reasons but I am OK with a perpetual payment. I earn close to $100k and am a permeant renter by choice so have a chunk of disposable income ..... and I just like new vehicles so shoot me :-)

Was just wondering when my ride would reach the point that it would be worth enough to get a new one just extending the loan buy the same time that this one is old, if that makes any sense !!!

But I also like the idea of just taking the money and buying mods !!
Puzzled.... If you make so much money a year and aren't worried about money... Why don't you just pay it all off now? And not worry about 8years down the road. Or 7 or whatever's left. And then if you really feel like it when your good and tired of it. Just trade it away. But you will always lose money buying new cars over maintaining old.


P.s. I refuse to buy a new vehicle
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Old 05-17-2011, 08:05 PM   #26
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Your numbers don't add up. You say you took an 84 month loan at 2.5% with a $450 monthly payment. That means you borrowed $35,000. You also said that you put $6000 down. So.....you paid $41000 for your Jeep. WOW!!!!! What was the sticker price? I didn't realize they got that high. The sticker must have been in the $43,000 range? Is it possible that a loaded Rubi JKU with every option and tons of dealer add on would cost that much?
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Old 05-17-2011, 08:31 PM   #27
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I would bet he is getting 7 from 72 month loan. Actually never heard of a 84 month one but 72 is common and the numbers match a lot better.
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Old 05-17-2011, 08:59 PM   #28
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meh, i was exaggerating, but i meant the federal prime rate, the rate at which banks borrow from the fed.

When i worked at wells fargo, the formula was always fed prime + banks rate depending on loan risk
My bad! How did this ex-cartoonist miss a good dose of sarcasm? Yes, WSJ prime is figured in at some point along with an "adjustment for market conditions" as they used to say. I worked for the "blue" Wachovia which became the "green" Wachovia which recently became Wells Fargo!
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Old 05-17-2011, 09:31 PM   #29
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Lol.. My sarcasm is odd, it's either way over the top and obvious, or subtle
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Old 05-20-2011, 06:18 AM   #30
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What is a decent trade-in value I should get for my car?

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