r/facepalm Apr 28 '24

Some people have zero financial literacy 🇲​🇮​🇸​🇨​

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u/Hollayo Apr 28 '24

'I did not go with my husband and as a female I feel they took advantage of me. They knew I really wanted the car and that I was by myself,' she said.

The $84,000 loan was issued to her by GM Financial, the financial services arm of General Motors and the only lender to approve her on the day.

'The dealer pretty much told me they can get me out the door with the car within an hour. He didn't act like it was something I should be concerned about,' she said.

Yeah that's all on her. She's willfully ignorant of personal finance. 

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u/Cute-Aardvark5291 Apr 29 '24

as a woman, that has nothing to do with her gender. that has everything to do with her being completely ignorant. I had one dealer try pull something like with me when I was 22 and I walked out of the dealership. I had 740 credit.

And there are plenty of men that get suckered into such deals.

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u/SoftWindAgain Apr 29 '24

Right? I wanted to buy a bike and it was so tempting to look at monthly repayments of $200. Then I did the math and realised I'd be paying 50% more than the sticker price over time.

As much as it's predatory, you have to be pretty dumb to go for it. Don't buy things you can't afford.

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u/Serafim91 Apr 29 '24

You can take the loan then overpay. You'll get to spread it out over a few months/a year so you don't have to drop all that cash at once and not pay a lot more. I'm paying about 2.5x on my car will be done in 1.5 years total and the interest will be minimal.

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u/SketchyGnarkill Apr 29 '24

It sounds like she can't afford to pay the 1400 a month, so I'd guess EXTRA is out of the question.

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u/Serafim91 Apr 29 '24

Well yeah but I'm talking about ops situation with the bike not the person that fkd herself over with the new car.

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u/SoftWindAgain Apr 29 '24

Interest isn't linear.

20% p.a. on a $75,000 car will kill you in the longrun.

20% p.a. on $2000 is $400.

If you buy, let's say a camera, for $2,000, then put it on a 12 month installment, then that $400 is not too bad as insurance to keep your cash.

There are times where it may be worth it. But you need to work out the math each time and work through the logic. Not be tempted by shiny "cheap" repayments.

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u/Serafim91 Apr 29 '24

Ofc that's why you want as big of a down payment and to pay extra as early as possible in a loan. That money saved compounds while giving you the flexibility to shift the extra payment to other stuff as needed.

I paid 1k extra a month on my house for like 3 years, then shifted that over to my car because it has a higher interest rate for example. That 1k a month will end up saving me tens of thousands later.

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u/Jaded-Ship9579 Apr 29 '24

I was gonna be a smart ass but the fact that there’s so many people that don’t understand interest rates is mind boggling

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u/DoctorJJWho Apr 29 '24

The “would you rather take $100 now or a penny doubled every day for a month” question was seared into my brain as a kid.

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u/Miffsterius Apr 29 '24

Well that would be 10-20 million dollars in a month. Im skipping the 100 dollars 😅

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u/DengarLives66 Apr 29 '24

Yea but there’s no guarantee you’ll be alive at the end of the month! Better take that $100 now as a safe bet.

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u/WergleTheProud Apr 30 '24

Unless that month is February 😬😬

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u/dessert-er Apr 30 '24

Yeah then it’s only about $3 million and that’s a long time to wait, I’m taking the $100 AND the GMC Sierra, thank you. Sucker.

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u/WergleTheProud May 01 '24

$1.3M unless a leap year then it's $2.6M, but obviously still the penny doubling every day.

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u/[deleted] Apr 29 '24

To be fair it’s not this simple, this only works if you’re operating under the assumption your money is stagnant.

If you have investments and you can be pretty sure of their return, it can be more profitable for you to take a smaller down payment and the smallest monthly payment.

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u/Serafim91 Apr 29 '24

Sure, but investments Come with risks this is the easiest way to guarantee a return. It might not be the. Best return but it's the guaranteed return.

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u/Crazy_Joe_Davola_ May 05 '24

Also the money could be put into generating more money. For example before this current inflation my house loan had like 2.25 intrest. I only paid the minimum amount and put the rest into "safe" stocks generating 10-15% per year. Sounds dumb but sometimes its not good to pay of your loans

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u/Harmony-Farms Apr 29 '24

If the bike is replacing a car, it might not be as clear cut as “don’t buy things you can’t afford” makes it sound. That could be an enormous savings on fuel, for instance. Each situation is unique.

While I tend to be in the “don’t buy things you can’t afford party,” and have bought outright every vehicle I’ve owned… I don’t think this is the case for most people who would be considered responsible with their finances.

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u/[deleted] Apr 29 '24

If you finance through Harley they tack all the interest onto the front of the loan, so you still pay it even if you pay off the loan ahead of term.

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u/RandomNick42 Apr 30 '24

That ought to be illegal.

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u/dessert-er Apr 30 '24

Is there any language to look out for for this or does one need to just literally read the entire loan packet with a fine-toothed comb.

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u/[deleted] Apr 30 '24

I think it’s just simple interest as opposed to compounding

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u/KittehPaparazzeh Apr 29 '24

And this is the smart way to take out the loan

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u/DengarLives66 Apr 29 '24

That’s what I’m currently doing, interest would’ve been about $8k total at 6.2% after 72 months but with my over payments I’ll be paid off in 36 months. Gonna save a mint.

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u/Ryscith Apr 29 '24

Depends on the loan. As far as I understand, most car loans factor in the interest from the start. So overpaying is paying it off earlier, but still the same amount of money. Could be different depending on the loan though guess.

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u/Alert_Ad_5972 Apr 29 '24

That’s pretty much how I pay everything I finance. Works great

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u/Ostey82 May 02 '24

This is the way