Oh before I get into cars, I had to say the weird thing about Mexico was they had a huge tourist trade for medicine. I mean I am sure you hear about it, but mixed in with the shops for sombreros and churros were tons of "pharmacies" with people in white lab coats pushing antibiotics & viagra! You hear about it, you understand it, but it was a little weird all the same.

Anyway, switching gears... I read an article that something like 60% of car loans are over 5 years (61 months?) and 20% are over 6 years. & car loan go up to 8 years (oy vey). So anyway, the car dealers are hurting because people with these huge loans can no longer trade up as soon as they used to. The average car payment 10-20 years ago was $400/month and it still is $400/month today, though the average person is taking almost twice as long to pay it off. Wow! I thought that was interesting. Trying to remember statistics off the top of my head so apologize if I screwed them up. But you certainly get the gist. I laughed out loud when I read it though, they shoot themselves in the foot though, the car dealerships, for the long haul. Reads much like the subprime mortgage stuff. Just short-term thinking.

Anyway I read that and then I talked to my parents yesterday. My mom told me that they had went car shopping. They had come into some money and my mom has been eager to upgrade, so my dad took her shopping over the weekend. Maybe it is from my parents I get my intense disdain from car dealers - but I guess they had a particularly horrible experience. For one they tried to talk them into a trade-in and offered $500 for my mom's insanely nice car. I just about fell off the couch when he told me. $500??????????? I told my mom that was what I got for my old Saturn from a dealer and I think she was extra insulted - LOL. She's got some fancy fully loaded top of the line sports car with less than 100k miles. So anyways, I mean the dealer wants to buy it for $500 and sell it for $10k I am sure. They wouldn't sell a car like that for less than $8k.

Anyway, I guess the dealer just lied and lied about all the features (that obviously weren't there) and when they went to discuss price on a car, they said the best they could offer was $32k. The thing was, the sticker on the car said $31k. LOL. It was at that point I guess they walked out. But that is what I got from my dad - a healthy distrust for a scam. Which basically means I would not go near a car dealer.

Anyway, after having paid cash for cars for many hears and having such horrid experiences at dealers that I personally refused to buy from them (continuing to buy from private parties while for some dumb reason dh always bought crappy cars for too much at dealers). Anyway, I warmed up a little when dh bought his last car. It was a "1 at this price" car they just wanted to get rid of but was really low priced and perfect for us so I warm up to the idea. So when we bought the van we went that route AND we also wanted to finance a little. However, being very naive in that regard when they said 8% was the best rate they offer and that I had to put less than 50% down and finance it for at LEAST 5 years, it was just like, whatever. Because agreeing to all this they agreed to lower the price on a "1 at this price" car. I had never seen anything like it. I paid it off the following month and got a better loan. Being so anti-debt and never seeing anything like it, I decided next time I had to walk into a dang dealer, I was going to finance. The only caveat is read ALL The fine print and make sure there is no pre-payment penalty. BEcause lord knows they will tell you anything, but don't believe it - you have to READ the contract. In our case it worked out. I think there was a minor finance charge for paying less than 3 months or something that they didn't even bother to charge me in the end. But would have been worth paying another $50 for the money we saved all the same.

Anyway, this is the conclusion I came to from our experience. The difference they treated us when we decided to finance was the difference between the night and day when in the past when we offered to pay cash for the same priced car they would pretty much refuse to sell to us.

It is mind boggling and I came to the obvious conclusion that they make much more money from financing.

So anyway, my dad told me he read an article over the weekend that historically car dealerships get to skim 13% off the top on car sales, but these days they only get to keep 3%! They make all of their money from financing, oh yes, and servicing. So my father and I were discussing that. That is one thing I will never get is car warranties, I guess because my parents always showed me what a bad deal they were. You have to take the car in for expensive unnecessary service in order to keep your warranty. Having never had a warranty on a car I have owned, I will just never buy it. I have too many friends who had MAJOR problems that, guess what, weren't covered by warranty - because they were mechanical or something. A warranty may be good if you get stuck with a real lemon, which I guess happens. But really, what are the odds. Anyway, it is the one scam that I see the frugal people fall far overall - willing to pay an extra 25% to buy a brand new car with a warranty! It makes me cringe.

But I digress. My dad said they had been intending to pay cash, and he was wondering if he should say he was going to finance, and then change his mind at the very last minute. I told him frankly, from my experience they would rather not have the sale. They'd probably say fine - deal's off. I told him I really recommend financing for a month and paying it off. I think it bugs him and he will refuse to play the game. But for me it's like, if I am going to save 5-10% off the price of the car because I agree to finance, well then okay. & I really found that the salesman really didn't give a crap that we intended to pay it off right away - as we told him he would. I get the feeling the salesmen get a deal for selling financing, not on how long we use it. & so I find it silly not to use it to my own advantage. Plus financing that car for 1 month bumped my credit score into the 800s - an interesting side effect!

Oh, as far as my parents, they decided they did not want a new car after all. They aren't up to the challenge... Hehe. I think like me they much prefer to buy private party, but once you start talking $15k+ it gets a lot more iffy. It's a lot of cash to risk on a private party deal. So I guess they feel resigned to the dealerships, but they just don't want to deal with it. I encouraged them to try out the financing, my dad is good at the fine print thing, but they just don't want to play the game.

I guess I find it REALLY interesting that my experience and feelings were quantified in the article my dad saw. I will definitely play the game next time we buy a car.