Is Demand softening?

[Dingbat]

It's simple math, the post implied that at a higher interest rate of 6% more the monthly payment would be $75 more per month would equal $4,500 over 60 payments. For a 6% higher rate to be be a $75 increase in payment the original monthly payment would have to be $1,250.

NOTE: that example was simple interest, NOT APR, which would make it even less. My simple math is NOT real life because of you don't pay simple interest on a loan. But since he used simple interest $4,500 at $75 for 60 month, I did too. APR and the length of loan make it anything but simple.

My point was he was really exaggerating the cost of a few percentage points (10 times to 20 times and more) to force a point that was wrong.

I was going off the post I quoted at “less than $100”. I figured $75 was a fair number for that. And yes, if the example given was based on a difference on monthly payment, it’s a simple calculation. Difference in payment x number of months = the total difference in price.
Hard to figure differences in APR when an amount financed isn’t given.

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[AZ_Liberty]

Something seems messed up with the 2-doors, not sure what's going in inside Ford regarding those.

It's the roofs. Ford expects the demand for 2-Doors to drop off after the initial "enthusiast buyers". The bean counters don't want to spend the money on additional tooling to actually meet demand for the 2-door roofs.

I was going off the post I quoted at “less than $100”. I figured $75 was a fair number for that.

It's more than fair. 3% vs 6% on a $45k loan over 72 months is $62. over which time one will pay approximately $4300 in additional interest.

 

[Arrowbear Rider]

It's more than fair. 3% vs 6% on a $45k loan over 72 months is $62. over which time one will pay approximately $4300 in additional interest.

Now it's 72 months? I'm glad my loan will be only be 48 months (those extra 2 years add a lot of interest) and my loan amount will be only be $30K.

 

[SGXIX]

By the time we get the My23 orders, country will be in recession, most order holders won't be able to afford it anymore and at that point, the others still waiting on their order will be able to get a lower price by negotiating with the dealer.

 

[AZ_Liberty]

Now it's 72 months? I'm glad my loan will be only be 48 months (those extra 2 years add a lot of interest) and my loan amount will be only be $30K.

Average loan length hit 69 months a couple years ago.

I pulled out the $30k for mine 18 months ago, way back when people thought Ford could at least build a Base model.

Should have pulled it all out, my investments are down enough to buy four Broncos with the losses.

 

[JBlanco]

Should have pulled it all out, my investments are down enough to buy four Broncos with the losses.

Dude, same here... I fell for the "just a little more" mentality and as soon as the war was announced, my investments nosedived...

 

[hemiblas]

Dude, same here... I fell for the "just a little more" mentality and as soon as the war was announced, my investments nosedived...

Yep same here. My personal investment account was down about 3k at that time. I said if I can just break even I'll get out. Nope. Down 58k as of yesterday. My heloc payment has also doubled over the past 6 months. My 401k is down 33 percent from the high.

Bronco sales will slow down. The dealers will sell the last few they have as not everyone is affected, but by next summer everyone will be affected.

 

[Dingbat]

What kind of payment at a 6% rate increase is going up by $75? $75 at 6% equals a $1,250 monthly payment! Maybe you shouldn't be buying a Bronco if your payment is over $1,000 and you can't afford and increase in interest rates. Or you exaggerating the math to force your point!

$500 to $600 payment at 3% equals $15- $18, if less than $20 is going to stop you from being able to buy you may be too "skinny" to be buying in the first place. That was his point, but you take it and double the worst case of 6%?

With great credit, my interest (so far from bank, checked when I did COVP) is aprox 1.5% higher a $7.50 difference per month. People spend that much at Starbucks on one drink.

Another thing to consider is that just because someone could buy one outright doesn’t mean that it is in their best finanvial interest to do so.

If they are in the situation that they could either pull $40 to $80 grand out of a position where it is earning 8%-11% or finance the entire amount at 3%, it’s better to leave the money where it is earning more than what the loan is costing. The extreme example of this is when auto makers offer 0%. Even a run of the mill savings account is going to make you more money than paying for the car up front. As the market turns down, and the interest rate on the loan goes up, things start to look less and less attractive. At some point it’ll hit a wall for a certain percentage of people that are approaching it from the perspective of buying a toy. Also, the opportunity to spend that same money on investing when things are low gets more and more appealing.

All I’m saying is that just because someone walks away over a 3% increase in APR, it doesn’t necessarily mean they were already in a position of overextending themselves or that they couldn’t still afford it with ease.

 

[Snacktime]

Interest rate increases are not the same for all levels of credit, big thing is lower credit scores see a larger increase in lending costs. This also doesn't mean bad credit, more like younger without established credit or recently purchased/refinanced some form of credit. Lots of people buying Bronco are moving up from Mid Size SUVs, they would fall in young family area.

Market has softened $3-4k on broncos in the last 90 days. I would say they are still worth $5k over MSRP with low mileage. Also the market is softening on Badlands, Wildtraks & First Editions as the new Raptors become the have to have model.

Market will stay strong for a while, its been 6 months since someone could place a bronco order. These are the people chomping at the bit for the flippers and used broncos.

 

[Mainerunr]

It's simple math, the post implied that at a higher interest rate of 6% more the monthly payment would be $75 more per month would equal $4,500 over 60 payments. For a 6% higher rate to be be a $75 increase in payment the original monthly payment would have to be $1,250.

NOTE: that example was simple interest, NOT APR, which would make it even less. My simple math is NOT real life because of you don't pay simple interest on a loan. But since he used simple interest $4,500 at $75 for 60 month, I did too. APR and the length of loan make it anything but simple.

My point was he was really exaggerating the cost of a few percentage points (10 times to 20 times and more) to force a point that was wrong.

No, the post stated that the interest rate changed from 3% to 6%, not an increase of 6% (because someone else posted about rising interest rates). It is simple math but you have to read the problem correctly in order to apply the correct math.

$60k at 3% for 60 months is a payment of $1079 (rounded up), at 6% it is $1160...less than $100 increase.

The guy who responded that at $75 a month, over 60 months that's $4500 was not exaggerating at all, he was right, it is.

 

[Arrowbear Rider]

No, the post stated that the interest rate changed from 3% to 6%, not an increase of 6% (because someone else posted about rising interest rates). It is simple math but you have to read the problem correctly in order to apply the correct math.

$60k at 3% for 60 months is a payment of $1079 (rounded up), at 6% it is $1160...less than $100 increase.

The guy who responded that at $75 a month, over 60 months that's $4500 was not exaggerating at all, he was right, it is.

I screwed up using his simple math, I admit that. How many people admit when they are wrong? I rushed to get the post out before leaving and made a mistake using simple interest, the wrong formula was [payment=75/.03] which doesn't work for APR.

But the original premise (the post before his) still is true, it was if your payment is already so high that an increase in payment $75 per month blows your budget, maybe you're buying more than you can afford. Call me old fashion, but the reason I have a credit score in the 800s is because I don't over extend myself.

If $75 (the original amount posted) makes it hard for you to make the payment then what happens if you get a sidewall flat and have to replace a tire at $300 OTD? If you're too skinny on your budget to afford an increase of $75 on $1,100, are you making a sound financial decision?

I jumped on this because most of the abandon orders that my dealer is marking up with ADM are folks who either had something change where they can't afford anymore, but many others got too happy with their build and ordered beyond their means to buy.

The dealer held one buyers Bronco for 3 weeks to wait for him to get financing before it became clear he couldn't afford the Bronco. Nothing had changed, he just "bit off more than he could chew".

It's irritating to hear how we are waiting for our Bronco while someone couldn't complete their order wasted a place in line a head of us just to give the dealership a loaded Bronco to sale. Having just had this conversation when I COVP had me acting too hasty.

 

[VIRUS]

I screwed up using his simple math, I admit that. How many people admit when they are wrong? I rushed to get the post out before leaving and made a mistake using simple interest, the wrong formula was [payment=75/.03] which doesn't work for APR.

But the original premise (the post before his) still is true, it was if your payment is already so high that an increase in payment $75 per month blows your budget, maybe you're buying more than you can afford. Call me old fashion, but the reason I have a credit score in the 800s is because I don't over extend myself.

If $75 (the original amount posted) makes it hard for you to make the payment then what happens if you get a sidewall flat and have to replace a tire at $300 OTD? If you're too skinny on your budget to afford an increase of $75 on $1,100, are you making a sound financial decision?

I jumped on this because most of the abandon orders that my dealer is marking up with ADM are folks who either had something change where they can't afford anymore, but many others got too happy with their build and ordered beyond their means to buy.

The dealer held one buyers Bronco for 3 weeks to wait for him to get financing before it became clear he couldn't afford the Bronco. Nothing had changed, he just "bit off more than he could chew".

It's irritating to hear how we are waiting for our Bronco while someone couldn't complete their order wasted a place in line a head of us just to give the dealership a loaded Bronco to sale. Having just had this conversation when I COVP had me acting too hasty.

Where the hell are you finding a tire at $300 otd? We all know this make believe vehicle has Micky Thompson baja boss at's 37x12.5 17.

 

[lapazleo]

Another thing to consider is that just because someone could buy one outright doesn’t mean that it is in their best finanvial interest to do so.

If they are in the situation that they could either pull $40 to $80 grand out of a position where it is earning 8%-11% or finance the entire amount at 3%, it’s better to leave the money where it is earning more than what the loan is costing. The extreme example of this is when auto makers offer 0%. Even a run of the mill savings account is going to make you more money than paying for the car up front. As the market turns down, and the interest rate on the loan goes up, things start to look less and less attractive. At some point it’ll hit a wall for a certain percentage of people that are approaching it from the perspective of buying a toy. Also, the opportunity to spend that same money on investing when things are low gets more and more appealing.

All I’m saying is that just because someone walks away over a 3% increase in APR, it doesn’t necessarily mean they were already in a position of overextending themselves or that they couldn’t still afford it with ease.

It's always best to pay cash if you can afford to. Out right owning something is far better than playing with financial snakes that can and will bite you eventually.

 

[M4Madness]

Now it's 72 months? I'm glad my loan will be only be 48 months (those extra 2 years add a lot of interest) and my loan amount will be only be $30K.

I'm hoping to pay mine off in 18 months.

 

[JerryC]

Is not just $75 month on the Bronco. It's more on everything. Utility bills, fuel, groceries, medicine.
So what do cut off the list? The necessities or the Bronco?

Even the people that in theory have the money may look at the added cost and just say "nope". That might be how they have so much money, they know when to walk away.

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