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Throatwarbler posted:I guess Alberta isn't such a terrible place when you consider that it pay for the rest of the country's healthcare. I can appreciate that Alberta is powering Canada's economy right now, but be honest. The place is a loving shithole.
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Nov 22, 2013 16:11
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http://o.canada.com/news/national/finance-minister-jim-flaherty-keeps-close-eye-on-long-term-car-financing/quote:OTTAWA — Finance Minister Jim Flaherty, who has repeatedly warned consumers about compiling too much household debt, has been closely monitoring the huge growth in popularity of long-term vehicle financing in Canada, show federal documents. A lot of people are flapping their lips about the negative effects of a decline in the housing market. With financial irresponsibility like this, I'm having absolutely no trouble not giving a poo poo.
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Nov 22, 2013 16:23
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63 per cent of car buyers in 2013 who borrow to finance their new vehicle purchases are taking out loans of six years or longer Crazytown. Between this, housing, Fordnation, Harper, Charbonneau, etc... I'm definitely ready for the old Canada to come back. (it's long gone).
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Nov 22, 2013 17:03
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If someone wants me to take a 6 year car finance at 0% I'll take it. And I could afford to pay in cash.
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Nov 22, 2013 21:13
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cowofwar posted:If someone wants me to take a 6 year car finance at 0% I'll take it. And I could afford to pay in cash. If someone offers you 6 year financing at 0%, they've very likely accounted for that in the cost of the vehicle they are selling you. Financing always has a cost, and I have trouble imagining a dealership/manufacturer simply swallowing the cost of financing $20-$30k over 6 years.
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Nov 22, 2013 21:22
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I recently stopped working at company that actually provides creditor insurance for auto loans for car buyers, so I have some really good data and insight into the auto marketplace. The 63% figure is a shocking new industry norm, but that doesn't tell the whole story. A third of customers walking into the dealership to purchase a new or used vehicle are currently in a negative equity position on their trade-in. The average negative equity being rolled into these deals is over $4,200 in Canada. In the last 36 months, OEM captive finance arms have moved from 60, to 72, to 84, to now 96 month financing terms forcing my former company to redevelop their line of products for the new actuarial realities of these loan terms. The scary part for the auto industry is that we're taking people out of their current cars and burying them in a long term loan with negative equity that they won't be able to climb out for a decade. For OEMs and dealers, they're shooting themselves in the head long-term. These customers will simply not be in a financial position to purchase a new vehicle in 5-8 years, because not only have they not paid off their current vehicle, they won't have paid off their newly depreciated one either. When interest rates go up, the auto industry is hosed. These loans, and the banks who finance them, are going to be ruining a lot of Canadian's financial lives. If you've buried $4,200 in negative equity in your new vehicle, and you get into an accident where you write it off - the insurance company will only pay the cash value of the current vehicle. I saw customers with write-offs which had negative equity rolled in to the new deal be $10,000 or more out of pocket after a total loss.
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Nov 22, 2013 21:45
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Lexicon posted:If someone offers you 6 year financing at 0%, they've very likely accounted for that in the cost of the vehicle they are selling you. Financing always has a cost, and I have trouble imagining a dealership/manufacturer simply swallowing the cost of financing $20-$30k over 6 years. When I got my car there was .99 financing for 1 year and the interest went up from there. If you paid cash there was a small cash-back bonus but after we ran the numbers the .99 was the better deal as even using conservative numbers the interest was way lower than our investment returns and the investment returns were also way higher than the cash-back. We also did all our price negotiations assuming payment in cash and only switched to 1y finance at the last moment. The only downside is of course remembering to have $900 sitting in my savings at the end of every month for the automatic payment...
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Nov 22, 2013 22:05
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ocrumsprug posted:I watched it last night, and got much happier that I don't own a condo in the GTA. Yeah it's the other nature of the problem since due to a lack of good oversight from city government you have lots of problems such as buildings sneaking by with shoddy quality materials/workmanship and also the bigger problem in which the lack of good central planning will lead to future traffic jams/isolated poorly integrated condo developments. One of the articles on the documentary linked condo guide buyer's guide: https://www.daniels.utoronto.ca/sites/daniels.utoronto.ca/files/kesik-buythatcondo.pdf
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Nov 22, 2013 22:11
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Baronjutter posted:When I got my car there was .99 financing for 1 year and the interest went up from there. If you paid cash there was a small cash-back bonus but after we ran the numbers the .99 was the better deal as even using conservative numbers the interest was way lower than our investment returns and the investment returns were also way higher than the cash-back. We also did all our price negotiations assuming payment in cash and only switched to 1y finance at the last moment. Oh sure, I understand there are sometimes good deals like this out there, including ones that don't give a commensurate discount for an all-cash purchase. I'm just making the broader point that it's practically an immutable law of the world that financing is never free. Someone pays for it.
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Nov 22, 2013 22:20
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Rhobot Mk. II posted:In the last 36 months, OEM captive finance arms have moved from 60, to 72, to 84, to now 96 month financing terms forcing my former company to redevelop their line of products for the new actuarial realities of these loan terms. Why the transition to longer terms? People's personal finances are hosed (largely due to housing / stagnant incomes) I'm guessing? Has this same trend played out elsewhere, in the USA, Western Europe, etc?
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Nov 22, 2013 22:21
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etalian posted:Yeah it's the other nature of the problem since due to a lack of good oversight from city government you have lots of problems such as buildings sneaking by with shoddy quality materials/workmanship and also the bigger problem in which the lack of good central planning will lead to future traffic jams/isolated poorly integrated condo developments. The leaky condo crisis in Vancouver was a slow motion disaster for a really long time, and cost some people their life savings. I think some people are still suffering from it too, or at least that is the assumption when I see green meshed scaffolding go up around a building. It was just a bunch of three story wood (mostly) frames, and it cost billions to fix. If a sizable percentage of those 50+ floor concrete hab blocks are shoddy, it is going to cost some big dollars to fix.
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Nov 22, 2013 22:32
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ocrumsprug posted:The leaky condo crisis in Vancouver was a slow motion disaster for a really long time, and cost some people their life savings. I think some people are still suffering from it too, or at least that is the assumption when I see green meshed scaffolding go up around a building. The documentary also made the point that Vancouver already had a painful condo boom and bust cycle back in the 80s. But somehow once again the city seems to think a condo boomtown makes more sense economically than having a good rental housing supply of well constructed buildings.
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Nov 22, 2013 22:40
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Lexicon posted:Oh sure, I understand there are sometimes good deals like this out there, including ones that don't give a commensurate discount for an all-cash purchase. I'm just making the broader point that it's practically an immutable law of the world that financing is never free. Someone pays for it. My understanding is that some car dealerships hope to make it up on high-margin products like regular maintenance.
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Nov 22, 2013 22:41
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etalian posted:The documentary also made the point that Vancouver already had a painful condo boom and bust cycle back in the 80s. Yeah, basically there was a housing boom in Vancouver in the 80's and the result of it was a whole lot of bankrupt home owners, and 5-15 years later having your condo rot out from underneath you. I think it has been mostly cleaned up now, but it took 20 years and the government needed to front a lot of interest free loans to stratas to do it. In not shocking news, none of the developers will be available to fix or get sued for the upcoming Toronto housing problems.
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Nov 22, 2013 22:51
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ocrumsprug posted:In not shocking news, none of the developers will be available to fix or get sued for the upcoming Toronto housing problems. Yeah because on the fundamental levels condos are a take the money and run type money making deal. New rentals on the other hand(assuming you have good building codes/inspection) have lots of incentives to be practical and have higher construction quality since the management company doesn't want to spend piles of money on negative cash items. The whole 80s meltdown apparently cost Vancouver billions of dollars due to having to bail out all the bad condo investments and also help finance repairs on poorly constructed buildings.
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Nov 22, 2013 22:55
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Anyone familiar with the Atlantic Canadian market? I'm moving back to Charlottetown in a few months and would probably want to buy a house in 2 years: housing starts forecast looks low and vacancy is 3x the national average so I'm guessing it's perpetually a buyer's market. After looking at what my friends have gotten here in Montreal for 500k and in Toronto for 600k (answer: nothing much), I'm drooling at the prospect of "only" having to pay 350k for a 0.5-1 acre waterview 2500ft3 house. Risk of bubble seems pretty low when the average house price is under 200k.
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Nov 22, 2013 22:55
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mik posted:Anyone familiar with the Atlantic Canadian market? I'm moving back to Charlottetown in a few months and would probably want to buy a house in 2 years: housing starts forecast looks low and vacancy is 3x the national average so I'm guessing it's perpetually a buyer's market. After looking at what my friends have gotten here in Montreal for 500k and in Toronto for 600k (answer: nothing much), I'm drooling at the prospect of "only" having to pay 350k for a 0.5-1 acre waterview 2500ft3 house. Risk of bubble seems pretty low when the average house price is under 200k. Check the free canadian royal bank reports since they have lots of nice graphics. The atlantic region isn't seeing horrible GTA/Vancouver bubble like conditions for markets such as Halifax. http://www.rbc.com/economics/economic-reports/canadian-housing-forecast.html https://www.youtube.com/watch?v=vaE9vlrhX-k
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Nov 22, 2013 23:00
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Lexicon posted:Why the transition to longer terms? People's personal finances are hosed (largely due to housing / stagnant incomes) I'm guessing? EFFORT POST incoming. The trend started in the US, as an alternative to leasing after the finance companies blew up in 2008. (A lot of the reason they blew up is because the leasing companies were loving around with the residual values of the vehicles to drive the payments down to capture marketshare from other manufacturers, and when they repossessed vehicles, they couldn't make enough back on the wholesale of the car to cover enough of their losses.) Here's why leasing was important. In the industry it's called "automotive share of wallet" - the amount of money the average consumer can afford to pay in a given month for their transportation costs. ASOW has continued to shrink with the decline in real incomes, decline in household savings (due to a variety of factors) and an overall increase in the costs of living across both countries. Leasing was the 'low payment' option for people who had tight wallets for whatever reason. Forget about the total cost of borrowing - the type of people leasing did not have the cash flow to support a full loan, they needed to get into a car to get to work, and the payments could be manipulated by the manufacturer through screwing with the residual value of the vehicles on lease return. (The OEM would essentially gamble that they'd make more on the financing, and be able to re-market the vehicle at a profit through a dealership to make up for the losses on the paper residual value. If the plan backfired, the OEM would just screw its dealers, who would be forced to re-market the vehicle at an unreasonable price through a Certified Pre-Owned program, and the OEM escaped the risk.) Once leasing was gone, the solution for auto lenders of all stripes was to stretch the terms to take up that market demand for low payment customers with poo poo credit and no money down. They also started stretching the terms to lower payments to also encourage buyers in the recession, pulling demand forward. When one OEM makes a move to stretch their term, or one bank makes a move like this, the others will follow in a herd mentality - regardless of the long-term risk. The car business operates on a very short sighted mentality. Thus started a race to the bottom for interest rates, a spiral upwards for loan terms to keep the advertised payments lower and lower. Then came the big retail banks in Canada. They were making poo poo money in the retail lending space, mortgage regs were getting a little too onerous for their bankster minds, and there was a healthy profit in sub-prime auto lending. Boy did the big five roll in. ScotiaBank set up Scotia Dealer Advantage to compete in the non-prime space. TD bought VFC (another sub-prime company) and re-named it TD Auto Finance. BMO ratcheted up its Airmiles reward program for dealers. Now, in Canada if you have a pulse and a job, you can qualify for financing. At 8.99% for 128 months. No problem! 10 years ago, if you couldn't pay off your vehicle in 36 months, then you couldn't afford to drive. Oh how the world has changed. On dealerships and zero percent financing Since I'm now working in digital marketing for dealerships, I can shed light on this a bit. Dealerships make good money selling cars. We usually make about a grand a vehicle in gross profit on each sale to the customer, receive a cut from the OEM for each vehicle sold (2-3%), called the holdback, plus volume incentives from the OEM. We also make money on F&I - extended warranties, rims, tint, life insurance, tire and rim warranties, rust proofing, etc. We also make money, as mentioned on what's called 'fixed ops' - the service department. In fact, service department is what keeps the lights on in most dealerships. When it comes to 0% financing, or low rates, these aren't the dealers problem. The business manager in the dealership who arranges the financing gets to broker it with either the OEM's captive finance arm, a retail bank, or a financial institution. The business manager is a commissioned sales person - he gets paid out of the extra stuff we sell. The banks will actually pay the dealer, and the business manager a fee for originating a loan on their paper that gets approved. The higher the interest rate, or the better quality the paper, the more they make. In fact, I've seen bank and financial reps and others offer 'undies' - under the table bribes to send business their way. The manufacturers will arrange 0% financing or other low rate offers through whats called a subvented loan. They're loans offered by a captive finance company, or a bank partnered with the OEM with artificially low interest rates. The low rates are used as incentives to entice buyers into dealer showrooms. The manufacturer supports the lower rates with a subsidy paid to the captive finance company enabling rates that are below the normal lending market values. The manufacturers are making enough on the gross profit of the vehicle itself to support the subvented rate. If they aren't making enough - then they start bleeding money. Then they go bankrupt, like always. Then they get bailed out, like always. Welcome to the car business. It makes the housing finance industry look like it's built on a solid foundation. 
Rhobot Mk. II fucked around with this message at 23:49 on Nov 22, 2013 |
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Nov 22, 2013 23:40
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Thanks for posting this Rhobot. I had no idea how this worked until now. Shout outs to the dumb rear end Business Manager at Docksteader to go shoot herself. Do I understand you correctly with respect to residuals, that is, the OEM will sell the leased vehicle at an unreasonably high price by calling it 'certified pre-owned'? Or are we talking about actual accounting alchemy of the scale of Enron?
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Nov 23, 2013 00:14
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mik posted:Anyone familiar with the Atlantic Canadian market? I'm moving back to Charlottetown in a few months and would probably want to buy a house in 2 years: housing starts forecast looks low and vacancy is 3x the national average so I'm guessing it's perpetually a buyer's market. After looking at what my friends have gotten here in Montreal for 500k and in Toronto for 600k (answer: nothing much), I'm drooling at the prospect of "only" having to pay 350k for a 0.5-1 acre waterview 2500ft3 house. Risk of bubble seems pretty low when the average house price is under 200k. Unless you are talking about Charlottetown specifically.
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Nov 23, 2013 01:03
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Cultural Imperial posted:Thanks for posting this Rhobot. I had no idea how this worked until now. Shout outs to the dumb rear end Business Manager at Docksteader to go shoot herself. CPO is just any trade-in that fits their criterea (usually meaning it's the same brand as the dealer - BMW in a BMW dealer, etc, certain mileage and exterior condition) that they will take instead of sending to auction and sell with an OEM-type warranty. They'll just sell for the same as a car with an equivalent aftermarket warranty will. There isn't really any "accounting alchemy" in the sense that something fraudulent is going on, I mean other than the fact that companies like Ally Financial, formerly known as GMAC, were simply bailed out in full by the US and Canadian governments as part of the GM rescue. Others like the captive financing/leasing arms for foreign carmakers like Toyota/BMW are technically "local financial institutions" e.g. "BMW financing North America" and received whatever local American banks received, such as access to TARP during the height of the financial crisis. So basically if you lease a car you got bailed out by the taxpayer one way or the other.
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Nov 23, 2013 01:42
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Icemakor posted:Isn't the average house price in PEI like 160K? Yeah my numbers were Charlottetown only. CMHC has Charlottetown at 200k and PEI in general 160k. Not sure if the Charlottetown numbers include Stratford and Cornwall and whatnot. Surprisingly the Charlottetown numbers were higher than Moncton, but who really wants to live in Moncton I guess.
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Nov 23, 2013 02:30
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Cultural Imperial posted:Thanks for posting this Rhobot. I had no idea how this worked until now. Shout outs to the dumb rear end Business Manager at Docksteader to go shoot herself. Not alchemy, nor fraud, just creative calculations to leave the dealers holding the bag. In the car business, it's always about leaving someone else holding the bag. Car dealers are often given just as much of a shafting as the consumers are. Leasing is a great example. When calculating a lease payment, the leasing institution has to make a future prediction of the vehicle value at retail. (i.e. calculated depreciation of the asset due to wear and tear, with consideration of the popularity of the vehicle, its reputation, its style, market demand, etc.) What they were doing is giving polyanna predictions of how well the vehicles would hold their value. An equally priced KIA will tend to depreciate faster than an equally matched Honda, for instance. When you have a captive leasing arm, they'll give an overly optimistic projection of the future market value of the car. Because the depreciation factors into the lease calculation, you can effectively lower the consumer payment by inflating its future value. Throatwarbler posted:CPO is just any trade-in that fits their criterea (usually meaning it's the same brand as the dealer - BMW in a BMW dealer, etc, certain mileage and exterior condition) that they will take instead of sending to auction and sell with an OEM-type warranty. They'll just sell for the same as a car with an equivalent aftermarket warranty will. Not exactly true. While many CPO programs are just setting a minimum standard for a vehicle's condition before it can wear that badge at retail, many more are in fact captive lease-return vehicle programs. OEMs & Captives are loathe to dump a huge glut of leased vehicles onto the wholesale market, especially if the vehicles are well below their predicted wholesale value. If they deliver a huge glut of these vehicles to the wholesale market, the price they command drops commensurately and magnifies their losses. So they make someone buy them at a better price. The dealers. Many OEMs mandate through their franchise agreements that dealers must buy back from the OEM captive a certain percentage of the vehicles they have leased through their dealership. In return, the OEM pays a flat fee to cover the cost of reconditioning the vehicle to CPO standards. Here's where dealers get screwed though. The reconditioning fee may be far less than the actual cost to recondition the vehicles that are arriving on their lots to the standards set by the OEM. Also, if the vehicle is coming back with the OEM & Captive saying the residual value is $20,000 (when in reality the wholesale value is closer to $18,000), they're going to take a loss on it just bringing the vehicle into their inventory. Then they have to recondition it. Then they have to pay interest on their inventory financing (floorplan), and then they have to pay the staff to sell the vehicle. The dealers will have to mark the vehicle up commensurately, but the market will only bear so much, especially for certain models which are affectionately known in the car industry as turds (we're a creative bunch). The OEM will provide a bit of lube for the dealers by providing CPO extended warranties to help move the cars. These are just insurance products, which are in themselves another actuarial gamble on the part of another insurance company to try and make a little bit of money. The captive will pay the insurance fee, and the insurance company better hope they're charging enough premium, and denying enough claims to make a profit. The whole industry is a house of cards, really. But then again, many other industries play the same games. It's just that cars are the second largest consumer purchases next to real estate - and unless they're exotic cars, they're an asset class that never appreciates in value. The systemic damage to the overall economy can be huge when the house of cards comes crashing down, hence the bailouts in '08. The business model won't change so long as the taxpayer continues to backstop the risk on these tactics, which is why the whole 'socialize risk, privatize profit' gets brought up often.
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Nov 23, 2013 03:01
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Man, I'm a little confused about the 0% financing thing. I myself am in a 6 year 0% financing loan for my car. My simplistic reasoning was that instead of paying it all up front, I pay it out at 0% interest over 6 years, then I can dump the money I could've spent on a downpayment/the whole thing on an investment that actually has returns (got in on AAPL at $300!). I'm not really planning to upgrade my car in that 6 year time span so I don't really see any personal downside. Am I somehow contributing to the collapse of the Canadian economy or something?
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Nov 23, 2013 04:33
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Eej, I think the problem is that if you had financed the car over a period of 6 years, the assertion is that you would end up with an asset, no matter how much it has depreciated. The alternative with leasing is that you end up with nothing. If you sold your 6 year old car, you'd end up way ahead of the person who leased the car. Am I right or wrong Rhobot? Another question Rhobot, if the car industry in the US hadn't been bailed out, presumably the entire house of car financial cards would have collapsed. Would the resultant chaos have been worth the cleansing of bullshit business practices, in your opinion? Given what you know about the auto finance, how do car (and motorcycle) dealers make so much money? Brian Jessel, Jimmy Pattison, Trev Deely...what the gently caress are these guys doing right? namaste friends fucked around with this message at 04:53 on Nov 23, 2013 |
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Nov 23, 2013 04:48
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Eej posted:Man, I'm a little confused about the 0% financing thing. I myself am in a 6 year 0% financing loan for my car. My simplistic reasoning was that instead of paying it all up front, I pay it out at 0% interest over 6 years, then I can dump the money I could've spent on a downpayment/the whole thing on an investment that actually has returns (got in on AAPL at $300!). I'm not really planning to upgrade my car in that 6 year time span so I don't really see any personal downside. Am I somehow contributing to the collapse of the Canadian economy or something? Not to be flippant, but you're not contributing to the demise of the Canadian economy. You're helping me have a job  I can't tell you whether it was a bad decision for you personally without a spreadsheet and crystal ball. However, you probably could have paid thousands less for your vehicle if you had the access to capital to pay cash. The OEM has incorporated the cost of borrowing into the price of the vehicle, and effectively hidden it along the retail supply chain through the tactics I've listed. Whether they priced it correctly will determine whether they're bankrupt in five years or not. Dealers will sell their cars for, in some cases thousands less, than their 'best financing price'. If you bought the right car, drive it until the wheels fall off from rust, and don't get the urge to trade it in for the latest hot model or get into a catastrophic accident, you'll be fine. Unfortunately, most people don't have the fiscal and self-discipline to make that happen. Also, accidents and life tend to get in the way too. Cultural Imperial posted:Eej, I think the problem is that if you had financed the car over a period of 6 years, the assertion is that you would end up with an asset, no matter how much it has depreciated. The alternative with leasing is that you end up with nothing. If you sold your 6 year old car, you'd end up way ahead of the person who leased the car. Leasing can be advantageous, just like renting. It's all about being savvy. Donald Trump's aphorism about leasing depreciating assets and owning appreciating assets holds true here. However, you just need to be aware that the guys offering the leasing, offering the vehicle, and setting up the deal are all in cahoots. It's all up to the consumer to run the spreadsheet and make their own informed decision. Unfortunately, financial savvy and the time to do that research and thinking is lacking these days. To your third question, dealers make their money like every other retailer - on the margin. You have to realize the assets they're selling are of significantly larger value than the $4 bag of milk at the corner store. It's just like how financial institutions use leverage to deliver huge returns. The profit level scales with the the magnitude of the assets being exchanged. Let's take an extremely simple example. They sell 40 cars a month (new and used), at a fixed price of $23,000 per vehicle (Canadian Average). Total sales revenue is $920,000 a month. If their total profit margin, after all business expenses, is 5%, that's $46,000 in their jeans a month as a business owner, or $552,000 a year on pure sales alone. That ignores sales in value-added products, incremental revenue from fixed ops, and other profit sources. I don't need to tell you that's a fair chunk of coin. Guys like Pattison and other dealers just snowballed their money, buying more dealerships, and more profit. Once these dealer operations conglomerate, they can either stay private like Pattison, or become publicly traded, like Auto Canada (TSX: ACQ !!!) To your second question - If the US/CAN auto industry hadn't been bailed out, it would have been industrial Armageddon. The amount of jobs, people, and related industry lost would have been catastrophic. We're talking multiple millions of jobs, and the Keynesian spin-offs would have have propelled us into an unimaginable depression. I supported the bailout then, I do now. However, that doesn't mean we shouldn't have taken the opportunity to regulate the poo poo out of the market with respect to the financial services side of the auto industry. The FIRE sector and the automotive industry are so tied up in each other, that it poses a systemic risk to national and global economies. If that doesn't call for strict government oversight, I don't know what does.
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Nov 23, 2013 06:00
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Thanks Rhobot. Great info.
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Nov 23, 2013 06:40
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http://business.financialpost.com/2013/11/21/condo-payments-eat-up-over-half-of-this-womans-income-should-she-sell/ So today in appalling personal financial advice: quote:Situation: Condo debt has left a woman technically insolvent, though she has ample income 1) This 38 year old woman has negative net worth and an annual income of about 60k/year and a mortgage that costs 2/3rds of her take home income. Lady what the gently caress are you doing? 2) She recognizes her financial situation is risky. 3) Financial advisor knows that selling her condo now is the best outcome BUT a condo is a good investment! Besides, selling now, with realtors fees she'd have lost money! Obviously financial advisor understands that the housing market has declined. 4) FA thinks she should stop paying into her rrsp and tfsa to pay down her mortgage. Oh and reduce eating out by $100/month. Net increase in mortgage paydown - $500/month 5) FA thinks that the $350k condo is going to be worth $595k in 29 years.  6) FA recognizes that 100% of your money in one asset class is a bad idea. At age 49, she can then start diversifying her assets. 7) FA thinks that said diversified portfolio will net 3%. http://www.linkedin.com/in/graemeegan How much do you think Graeme make a year, giving out information like this to his clients?
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Nov 23, 2013 07:03
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Rhobot Mk. II posted:I can't tell you whether it was a bad decision for you personally without a spreadsheet and crystal ball. However, you probably could have paid thousands less for your vehicle if you had the access to capital to pay cash. The OEM has incorporated the cost of borrowing into the price of the vehicle, and effectively hidden it along the retail supply chain through the tactics I've listed. Whether they priced it correctly will determine whether they're bankrupt in five years or not. Dealers will sell their cars for, in some cases thousands less, than their 'best financing price'. I always suspected they did this - thanks for confirming!
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Nov 23, 2013 15:42
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Rhobot Mk. II posted:I can't tell you whether it was a bad decision for you personally without a spreadsheet and crystal ball. However, you probably could have paid thousands less for your vehicle if you had the access to capital to pay cash. The OEM has incorporated the cost of borrowing into the price of the vehicle, and effectively hidden it along the retail supply chain through the tactics I've listed. Whether they priced it correctly will determine whether they're bankrupt in five years or not. Dealers will sell their cars for, in some cases thousands less, than their 'best financing price'. I found this out first hand. There was a 0% finance offer ongoing and the dealer was refusing to meet my price or even get anywhere near it. I then said "what if I just pay cash?" and the paperwork was in my hands in moments. The change in the negotiations was crazy.
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Nov 23, 2013 15:43
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If it were up to me, this wouldn't be legally permitted. Cost of financing and asset cost should be entirely distinct.
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Nov 23, 2013 15:47
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Wait a minute. Am I missing something here? Nothing about this "advice" makes any sense. Am I going insane? What the gently caress is going on? Then again, what could you possibly say to your client. "You bought your assets when the prices were at an all time high and they will inevitably crash within a few years and you'll be ladden with debt and hold depreciated assets in a market with almost no liquidity"?
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Nov 23, 2013 16:57
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OhYeah posted:Wait a minute. Am I missing something here? Nothing about this "advice" makes any sense. Am I going insane? What the gently caress is going on? It's funny: the advisor gets dangerously close to admitting she'd be better off renting, and be mobile, liquid and diversified... But can not quite bring himself to say it. Oh, Vancouver.
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Nov 23, 2013 17:21
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Lexicon posted:If it were up to me, this wouldn't be legally permitted. Cost of financing and asset cost should be entirely distinct. In the US at least the hint that perhaps auto dealers wouldn't be able to gently caress over their customers via financing was almost enough to scuttle the crap finance reform we got and the foundation of the Consumer Financial Protection Bureau.
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Nov 23, 2013 17:36
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The hidden interest in the price of the car added with the fact that we pay a cool 3-4k more for cars here than 100miles south makes the price of a 0% super deal canadian car almost twice that of a cash paid US car on certain models. http://www.cbc.ca/news/business/canadian-car-buyers-blocked-from-cheaper-u-s-prices-1.2435299 edit: hell if you pay cash, not only do you pay less, you can bargain for extras with ease. Want some extra rims? What about the accessories package? They will bend over backward for you to hand them that check. Coylter fucked around with this message at 17:56 on Nov 23, 2013 |
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Nov 23, 2013 17:53
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^ I pretty much live by this maxim: If you buy expensive things in Canada, you're flushing a good portion of your money down the toilet. Others might be willing to shovel money into the pockets of our cabal of retail arbitrageurs, but not me.
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Nov 23, 2013 18:40
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http://www.theglobeandmail.com/news/british-columbia/demand-price-for-bc-bud-dropping-in-wake-of-us-legalization/article15517215/ The price of weed in BC has dropped by 50% according to bride of marc emery. I called this years ago but the legalization of weed in the US is going to be the exogenous shock that kicks off the collapse of the housing market in BC. Can you imagine what's going to happen to the weed market if California legalizes in 2016?
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Nov 23, 2013 21:20
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Cultural Imperial posted:I can appreciate that Alberta is powering Canada's economy right now, but be honest. The place is a loving shithole. Just saw this in a German newspaper, an "interactive documentary game" about Fort McMurray that starts in 2 days and will unfold over a course of 4 weeks. My apologies if this is not news to Canadians. http://www.fortmcmoney.com/en/ http://en.wikipedia.org/wiki/Fort_McMoney
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Nov 23, 2013 21:38
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Cultural Imperial posted:http://www.theglobeandmail.com/news/british-columbia/demand-price-for-bc-bud-dropping-in-wake-of-us-legalization/article15517215/ Is the pot market really large enough to be a driving force in the housing market though? I get that it's big business, but is it that big?
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Nov 23, 2013 22:18
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Lexicon posted:Is the pot market really large enough to be a driving force in the housing market though? One of my favorite Guardian columnists, Douglas Haddow wrote about this: http://www.theguardian.com/commentisfree/cifamerica/2010/aug/05/marijuana-industry-canada http://thethunderbird.ca/2012/11/21/new-study-says-b-c-bud-market-worth-500-million-per-year/ According to that article, some loving scrub at the fraser institute figures weed is worth 4 to 7 billion/year in BC. I can't find it now but I remember the Guardian reporting the figure of 7 billion quite a few years back. That makes weed the second largest contributor to BC's GDP *if* the numbers are accurate.
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Nov 23, 2013 22:29
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