Archive for December 9th, 2008

I am a sucker. Or at least I have been. And may be sometime again in the future. You probably have been, too. Let me explain…

Let’s say you’re in the market for a car. You lust after a new one. Doesn’t matter what brand or what model. You buy it. As you drive it off the lot, it automagically loses about 20% of it’s value, simply by moving from the “new” to “currently owned/technically used” column. Say your new vehicle costs $30K, not an unusual amount for a new whip. You’ve put down 20% of the cost of the vehicle, either by trade in, down payment, or both. You plan to finance $24K. Fair enough, but when you drove it off the lot, it lost 20% of it’s value. At this point, you’ve paid $6K for the privilege of driving some new wheels. Hope you’re happy. If you’re not, let me acquaint you with a new term to add to your lexicon: under water. This is the phrase lenders use when you owe more than the item you financed is worth. If you go to trade it in on something you like better, you’ll pay for that mistake for, oh, let’s say the next ten years or so. Read the rest of this entry »