98 replies to this topic

[Cloud9]

QUOTE (Terry @ Jul 8 2004, 08:51 AM)

Just so you know: Lexus is the luxury division of Toyota Corporation. Acura is the luxury division of Honda Corporation. They want a piece of ALL the action.  And I'm a Lexus fan - they are beautiful, reliable vehicles, someday I'll have enough money to own one!

Terry,

I'm aware that is the case in terms of the luxury divisions (Acura/Lexus) for Honda/Toyota. But their divisions compete with one another. Just go tell a Honda dealer that you're considering a TL and hear what they say or vice versa. Likewise with Toyota.

BTW, you don't need a lot of money to be a Lexus owner. Just buy a used one and do what many other owners do, put it on a 84 month loan....

When I was in discussions with Lexus on the ES330 I was talking with their folks explaining that I intended to either pay cash or take a small portion in the form of a 24 month loan (if they provided favorable financing ie. 1.9% or better).

In those discussions, they stated that it had been 'years' since they've seen a 24 month loan for a car that most often they saw 48 month loans and some as far out as 84 months (7yrs!).

As my wife can attest, I gave serious consideration to the ES330. I liked the following:

Comfortable ride, relaxed

Didn't like:

The 1 second or so delay between the time I hit the accelerator and the time the car responded.

The lack of a telescoping wheel,
The lack of horsepower ES330 was 225hp vs. 240hp of Accord and 270hp TL
Position of the LATCH anchors (we have 2 kids) - harder to get at than other vehicles

When you begin to add the options that we wanted (and have in the Accord) you quickly approach $40k on the Lexus. We could have gone for it, but given the other 'annoyances' that I mentioned, we wouldn't have been happy with the choice.

There's no doubt that Toyota makes (Lexus) reliable and dependable cars - anyone can reference the latest J.D. Powers magazine to see that (they'll also see Honda right behind Toyota/Lexus - though Honda's luxury line (Acura) is much further down that list).

You may say, hey, if you want horsepower just check their GS line. Well, we did, and their side curtain airbags only protect driver/passenger (I guess rich folks aren't supposed to care if the kids get knocked off)


It may not sound it, but I'm a fan of Lexus as well, the ES330 is an improvement over the ES300 that also fell short. I'll wait on a future model and buy it when they get it right. After all, it is a Lexus, it should meet all of my expectations, not just some of them. Maybe when the kids get old enough not to mess up the car..... by then they'll be hybrid versions getting excellent gas mileage as well...

[bishmasterb]

QUOTE (Cloud9 @ Jul 8 2004, 02:25 PM)

BTW, you don't need a lot of money to be a Lexus owner.  Just buy a used one and do what many other owners do, put it on a 84 month loan....

Please, please, tell me your joking!? If you've got to finance a car for 84 months (is 7 years even an option from any lender!?) you're definitely buying more car than you can afford.

[cybertrano]

QUOTE (Cloud9 @ Jul 8 2004, 02:25 PM)

BTW, you don't need a lot of money to be a Lexus owner. Just buy a used one and do what many other owners do, put it on a 84 month loan....

Depend on how used it's. I went to Roseville Automall to take a look at a Lexus SUV for 2001. The price $50,000.00 .

[Cloud9]

QUOTE (bishmasterb @ Jul 8 2004, 07:56 PM)

QUOTE (Cloud9 @ Jul 8 2004, 02:25 PM) BTW, you don't need a lot of money to be a Lexus owner.  Just buy a used one and do what many other owners do, put it on a 84 month loan.... Please, please, tell me your joking!? If you've got to finance a car for 84 months (is 7 years even an option from any lender!?) you're definitely buying more car than you can afford.

Bish,

We didn't say we'd take that approach, but many people do, just check out these facts (Source: February 2004 Money magazine, pg 145):

- In California 40% of car buyers are upside down by an average of $4,700 on their car loans.

- Nearly 40% of new car buyers took loans longer than 60 months (up from 24% in the previous year)

- The average car loan term is up to 63 months, but almost 30% of buyers opt for 72 months.

- Some banks are now floating 96 month loans

And obviously this doesn't include the folks out there leasing vehicles, many of which can't afford to buy the vehicle that they're leasing....

I agree, that folks with loans that far out can't afford what they're driving, but such is life....

[On a separate note, when we moved out here and heard we can get 125% loans on our home we couldn't believe it, the lowest we'd ever encountered outside California was 10% down, on average, banks have always asked 20% down and if you didn't have it, oh well, go buy a less expensive place]

I believe if I'm not mistaken (can't recall the source) that California has the highest personal bankruptcy rate in the nation. I suppose that's why you see so many fancy cars on California's roads....

[bishmasterb]

cloud,

Wow! Thanks for the stats, I knew it was bad, but I had no idea that it was that bad.

I've never even heard of a car loan longer than 72 months!? Here are my own rules to live by:

- I won't finance for longer than 48 months, and to take advantage of the low interest deals (0-3%) you usually have to go for 24 or 36 (although I know that's been more flexible lately).

- Don't finance more than about 20-30% of your gross annual pay.

- Remember that the price of the car is only a fraction of the ownership cost. Insurance, registration, repair and gas expenses are usually proportional to the cost of the vehicle, and combined will normally exceed the cost of the vehicle.

Thanks again for the info.

-bish

[Cloud9]

I guess we're more extreme in that regards as we don't finance longer than 24months.... got 1.9% on the 24mo, and for us 10-15% of gross is pretty much the limit on all outstanding non-mortgage debt....

[Cloud9]

I just saw a commercial for La Mesa RVs.... offering a 240 month loan! 20yrs....


240 month loan - La Mesa R.V.

[bishmasterb]

QUOTE (Cloud9 @ Jul 10 2004, 02:40 PM)

I guess we're more extreme in that regards as we don't finance longer than 24months....  got 1.9% on the 24mo, and for us 10-15% of gross is pretty much the limit on all outstanding non-mortgage debt....

cloud9,

Cool, very disciplined of you.

I too live more disciplined than the rules I stated, I think those should be viewed as the maximum, not the norm. I took a look at my non-mortgage debt to income ratio, it's 3%, and I actually think that's too high. There just really aren't many good reasons for financing things that depreciate.

So, did you decide on a car?

[Hilscher1]

I was looking in my new Dupont Registry and theyll give you 15 years loans on luxury cars i.e Maybachs and Rolls I mean if your gonna buy one of those it seems like you would pay cash. Kinda ridiculous. I bought my car on a 4 year note and now i almost regret it but i bought it at the end of its 5 year depreciation so im not losing much if any money.

[Cloud9]

QUOTE (bishmasterb @ Jul 10 2004, 06:10 PM)

So, did you decide on a car?

Sure did....

Our next 10yr plus car is the Honda Accord EX V6 Sedan....

By then we figure there will be a lengthy track record on the Toyota/Honda hybrids.

All the bugs should be worked out by then, and there will be much more consumer feedback on hybrids, total cost of ownership information, etc.

[Cloud9]

QUOTE (Hilscher1 @ Jul 10 2004, 10:07 PM)

I was looking in my new Dupont Registry and theyll give you 15 years loans on luxury cars i.e Maybachs and Rolls I mean if your gonna buy one of those it seems like you would pay cash. Kinda ridiculous. I bought my car on a 4 year note and now i almost regret it but i bought it at the end of its 5 year depreciation so im not losing much if any money.

You'd think that the type of folks buying Maybachs and Rolls would pay cash, but then again, they probably write off the use of those vehicles as business/entertainment expenses.

So what do you guys think about the oncoming onslaught of Japanese hybrids in the American marketplace?

2005 Honda Accord Hybrid
2005 Toyota Highlander Hybrid
2005 Lexus RX400h Hybrid

Less fuel consumption, but we'll have to wait and see if other costs offset the advantages of low fuel consumption. Thoughts/comments?

[Cloud9]

QUOTE (bishmasterb @ Jul 10 2004, 06:10 PM)

I too live more disciplined than the rules I stated, I think those should be viewed as the maximum, not the norm. I took a look at my non-mortgage debt to income ratio, it's 3%, and I actually think that's too high. There just really aren't many good reasons for financing things that depreciate.

Nowadays the term 'non-mortgage' debt doesn't mean as much as it used to once upon a time since folks take their credit card, car loans, boats loans, etc and refinance it into their mortgages.

I know folks that bought their houses for $200k and appreciated to over $450k and all they walk away with was $100k. They spent, maxed out their cards, got cars, refinanced, cleared the credit cards/loans then maxed them out all over again. Lets see how they'll do in an environment with rising interest rates....

[bishmasterb]

regarding hybrid vehicles...

For example, I just looked up the Civic Hybrid versus the Civic LX. It's difficult to get an exact apples-to-apples comparison of features, but these two cars are pretty close.

The hybrid retails for $19,975 and the LX retails for $14,967, a difference of $5,008. The hybrid gets 51 MPG freeway, the LX gets 38MPG.

If you drive 20,000 miles per year, your fuel cost each year in the hybrid will be $882.35 (20,000 mile / 51MPG * $2.25 per gallon), your fuel cost in the LX will be $526.31 (20,000 miles / 38MPG * $2.25 per gallon). The fuel cost savings each year for the hybrid is $356.04.

At an annual savings of $356.04, it will take you just over 14 years to recoup the cost difference of $5008 between the two vehicles.

Additionally, if you factor in the higher insurance, registration and sales tax costs involved in purchasing the more expensive hybrid vehicle, the return on investment becomes even longer.

To be fair, you'd have to calculate street versus highway mileage, the residual value of the vehicle, interest on the loan, etc. But you get the picture.

[bishmasterb]

QUOTE (Cloud9 @ Jul 11 2004, 08:34 AM)

Nowadays the term 'non-mortgage' debt doesn't mean as much as it used to once upon a time since folks take their credit card, car loans, boats loans, etc and refinance it into their mortgages. I know folks that bought their houses for $200k and appreciated to over $450k and all they walk away with was $100k.  They spent, maxed out their cards, got cars, refinanced, cleared the credit cards/loans then maxed them out all over again.  Lets see how they'll do in an environment with rising interest rates....

Good point. Some famous economist said a few years back, that the greatest harm to the wealth of US citizens was the home equity loan, because it ate into the #1 place where people have their wealth, their house.

I'm worried as well about what the over extension of credit is going to do to the market. Conceivably in five years, the market could be down 20-30%, interest rates could be at 9% and all those 5 year adjustable mortgages start adjusting up and mortgage payments start doubling... You've then got a bunch of people that are in houses that are twice as expensive as they can afford, and can't sell them because they owe $100,000 more than the house is worth. Lots of foreclosures...

[bishmasterb]

QUOTE (Cloud9 @ Jul 11 2004, 08:10 AM)

QUOTE (bishmasterb @ Jul 10 2004, 06:10 PM) So, did you decide on a car? Sure did.... Our next 10yr plus car is the Honda Accord EX V6 Sedan.... By then we figure there will be a lengthy track record on the Toyota/Honda hybrids. All the bugs should be worked out by then, and there will be much more consumer feedback on hybrids, total cost of ownership information, etc.

Good for you. Honda builds good cars, and as much as I like Acura (I own one) I can't imagine that the "A" on the front of the Accord (eg Acura TL) is really worth the premium.