With the ever changing economic status of this day and age does age old art of modifying your car still make any sense? This question is one of heated debate, to some it's an irresponsible use of money thrown to the wind on an ever depreciating asset. To others it's an art form, an extention of their creativity (or manhood) that in a certain way brings value to a car. Think about it, if I treat my car as a show car and only put 5k miles on it per year AND pay extra towards the principle amount that I owe per month then I'm able to retain somewhat of the cars value until I'm
A: either ready to trade it in for something better (there's always something better) at Which point I will owe less then the car is worth which equals equity towards the trade in.
B: Be in a better position to refinance the car for a lower monthly payment, freeing up money for mods and or ultimately pay off the loan much sooner provided there is no penalty for doing so with your bank.
The fact of the matter is that in a study conducted in 2010 by, "bankrate" it showed that nearly 40% of Americans are upside down on their vehicle. Meaning that they owe more then the vehicle is worth, to offset that a few options are available.
1. Pay more towards your principal amount monthly. Paying the loan down quicker will get you out of the upside down financial hole.
2. Refinance for a shorter term. Paying low drawn out payments over a long period of time will only add to your upside down status. For instance, talk to your lender about moving from a 7 year to a 4 year term. The payments will be higher but end much sooner. Kind of like ripping off a band aid fast as opposed to slow and painfully.
3. Shop for better interest rates from different lenders other then those that work for dealerships, credit unions offer the best rates in my experience. Better rates will enable your money to work harder for you, paying on less interest and more principal also making your monthly payments much lower.
4. Don't fall victim to, "buy now with no payments until next year" offers. Contact your lender and start making payments right away.
5. Resist the temptation to trade-in the car to a dealership for another car, this is a lose win situation because the dealer will only do it to get you into a more expensive vehicle and still sell your previous vehicle for 10% more then the value they gave you for it. Most often they will add the negative equity on to your newer car putting you further upside down.
Lastly, I don't reccomend financing a car period, take the same money that you would put down on it and purchase a condo, or rental property and then lease your car. Which doesn't coincide with modding at all but if you must mod a car get a relatively inexpensive one that you can see yourself still being content with 5-10 years down the line with ample potential for performance and visual upgrades. Think best bang for the buck and remember your credit is your most important factor, monitor and protect it in anyway possible.
VERY GOOD POST …ALMOST GOT CAUGHT UP WITH #5 THE OTHER DAY...
ReplyDeleteThanks, I appreciate the response and it's tough thinking about these things, this is such an expensive hobby but like anything there are ups and downs. Just set a goal and stick with it, I remember saving for my gtr and then when I saw the evo 10 in person for the first time... I had to have it now what, either ride out with the 10 or make my moves strategically and pop up with the gtr. Can't go wrong either way but... Financially/ logically I know what the right choice should be.
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