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Would You Like to Buy a $75,000 Ford Expedition?

I work in an office job that sometimes requires me to see the actual deals that are worked out at some of the car dealerships that use our product. Yesterday I nearly gagged when I realized someone out there is paying $74,400 for a Ford Expedition.

Here is how you make a cruddy car deal:

Step 1

– Buy a 2009 Chevy Tahoe for a “reasonable” amount in 2008.

Step 2

– Make the minimum payments on that Tahoe.

Step 3

– Decide you rather have a 2011 Ford Expedition.

Step 4

– Ignore the fact that your Tahoe is upside down (isn’t worth as much as you owe) by $13,000.

Step 5

– Roll that $13,000 debt into your new Expedition deal at 5.5% interest for 5 years.

End Result

– a $50,000 Expedition plus $13,000 of leftover debt spread over 5 years at 5.5% equals a

$1240 monthly car payment and that’s not even including the auto insurance rates tacked on top of that which could easily put it over $1500

!

That is almost $75,000 over 5 years!

Unless that Ford freaking flies, I have no idea why this buyer signed on the dotted lines!

I have seen bad deals and good deals and serviceable deals. I’ve even seen deals where they’ll at least throw in some cheap car tires to sweeten the deal.Β  I constantly roll my eyes when I see an service contract added on that cost a third of what a buyer paid.Β  I have not seen a deal that looked like this before.

It wasn’t hidden.Β  All the costs were fully disclosed.Β  The buyer signed right next to the $63,000 total and again on the contract that listed the loan terms and the $74,400 total after payments.Β 

It was all legit.

And people wonder why they are barely making ends meetΒ on $250,000 a year…

What do you think?Β  Does a $75,000 SUV sound like a great idea to you?

Feel free to check out my staff writer post at My Retirement Blog today too,
5 Ways to Ruin Your Retirement.Β  πŸ™‚

33 thoughts on “Would You Like to Buy a $75,000 Ford Expedition?”

  1. 101 Centavos

    $75K for an SUV sounds like a ridiculous notion. It’s a bankruptcy-in-waiting.

  2. LifeAndMyFinances

    That sort of thing happens around here all the time in South Florida. Everyone at my work either owns a Mercedes, BMW, Lexus, or Porsche, and they aren’t paying cash for them! That means big payments and big insurance costs.

    These are the people that also complain about not having any money. It takes everything in me not to tell them why their broke… Since I’m at work though, I keep my mouth shut.

  3. Jaymus (RealizedReturns)

    Sadly, this is typical. Usually not to this extreme, but people seem to view their vehicles as a monthly payment. Trading up without a thought to the real cost over the term of the financing.

  4. Bogey

    What is it about Chevy Tahoe’s and Ford Expeditions? Where I live (near you, BIFS) those are the vehicles of choice for people who want to remain poor forever!

    I have a sort of “mental block” right around $15,000 when it comes to purchasing vehicles. The most I have ever paid is $19,000 and that was for the Toyota truck that I currently have. My goal is to drive os 300k miles though, so it should be well worth it if I get close to my goal.

    Basically, every penny you spend on vehicles is flushed down the tubes. Anyone who has ever traded in a vehicle at the dealership when purchasing a new one knows that you are going to get basically nothing.

    I don’t know why it is, but when people purchase things with debt, they never consider the actual price – only the payment.

  5. Jonathan

    What a complete idiot! Seriously, when people end up going bankrupt because of stuff like this, it hurts us all eventually. That’s not even on top of the fuel costs for that monster. According to Ford it gets “up to 20mpg highway, 14 city”. An average of 17 mpg? Come on people.

  6. MikeS

    As the old saying goes, “A fool and their money are soon parted”.

  7. Kevin @ Thousandaire.com

    I wouldn’t do it, but I can’t say this guy shouldn’t do it. If that’s what makes him happy, and he’s worked hard for his money, then he deserves to buy what he wants.

    He could be pulling in $1,000,000 a year and bought this car for his 16 year old daughter because he read it is the safest vehicle on the planet.

    He might have a handicapped family member and this is the best car to customize for wheelchair accessibility.

    He might just absolutely love Ford Expeditions, and he is fulfilling a dream.

    I wouldn’t buy a lot of stuff other people buy, but if they have the money and they want it, who am I to judge?

  8. Crystal @ BFS

    @101 Centavos, that’s what I was thinking pretty much…

    @LifeAndMyFinances, see, I see buying a $75,000 MBW or Lexus differently than a Ford Expedition. I personally would not ever spend that much for a vehicle, but if I ever lost my mind, I’d rather buy a Corvette or something for that price…

    @Jaymus, I was thinking that too, but I had never met someone with a $1240 car payment before…even my uncle bought his expensive BMW with cash…

    @Bogey, my mental block is very similar to yours. I hope the $21,000 used Prius we bought a few years ago is the most money we ever lay down on a car…

    @Jonathan, I was expecting more people to have your reaction, lol. πŸ™‚

    @MikeS, yep.

    @Kevin, it’s not buying the vehicle that made me think they are bonkers. It’s the fact that they rolled over $13,000 of debt into the purchase price of a vehicle almost identical to the vehicle they didn’t want anymore. If they make millions, why not buy it in cash? If it’s for a handicapped person, why not trick out the Tahoe? If it’s just for love, why not wait until you’re not upside down on a very similar vehicle? Nope, I just can’t see this making sense…

  9. David Hunter

    Wow, Crystal! What a steal. Where do I sign? Ha

    @Bogey: I’m with you on driving my Toyota 300,000 miles. I was lucky enough to buy a 2007 Toyota Camry with 3,400 miles on it, in May 2010 (this is not a typo) for $12,000. Looked like it was just driven off the showroom floor. I consider that an investment! I do drive a lot, have 21,000 miles on it now. My goal is to be on one of those Toyota commercials. πŸ™‚

    Also @Bogey, when I’ve been at dealerships, they all say the same thing “what do you want your monthly payments to be?” They never ask how much do you want the total amount owed over the life of your loan.

    I’m always more concerned about how much I’ll actually spend for the life of the loan than my monthly payments.

  10. First Gen American

    That’s double my mom’s mortgage payment. Yikes..not to mention I’d never consider getting such a gas guzzler. I wonder at what point this guy will stop trading in his 2 year old cars, when the balance hits $100K?

  11. MoneyCone

    I feel sorry for the lender, not the buyer!

  12. Aloysa

    The payment on the care more than my mortgage!!! Insane!!! What is wrong with people???

  13. krantcents

    Was it a business? If so, all the expenses are deductible. If not, this is indicative of someone who is financially irresponsible. I find it interesting that he/she could get credit. This is very similar to what occurred in the housing market.

  14. retireby40

    $1240 a month for a car payment? Is he/she living in that car? Jeez, people are nuts. I guess the good times are back!
    He must be making pretty good money to get that loan though.

  15. Evan

    Wow! It isn’t even a Benz or BMW?!

    I am with Kevn though…without knowing their situation it is hard to judge. Maybe they make 15%/yr with their business and it is a business asset so they look at the loan as “cheap.” Obviously it is an extreme example, but I understand how it could make you go nutty.

    What do you do in real life? Before 2012?

  16. Crystal @ BFS

    @David, LOL. Right after you wrap up this deal, let me show you some ocean front property in Arizona… πŸ™‚

    @First Gen, I think this guy is a prime example of someone who should lease…

    @Aloysa, I completely understand. Our mortgage is $740…this payment would scare the living bejeezus out of me…

    @krantcents, no, this was an individual – I don’t know if it was a business expense though. Even if it’s deductible, it still seems silly to me.

    @retireby40, yes, they must make a lot of moolah…I just wish they wouldn’t completely waste it on interest…

    @Evan, I use my company’s software to build car dealership forms (like programming a retail installment contract to print). 6 months to understand the process, 2 years to master it, and then it’s mindless tediousness from there on out, lol. πŸ™‚

  17. Money Reasons

    lol, I’m more apt to buy an used SUV for $7,500. That $75,000 is way to expensive for me, even if I did make $250,000 a year…

  18. jim

    I’d want to see all their financial details before I pass judgement. But seems unlikely to be a good move.

    They probably have a pretty large income to even qualify for such a loan. SO they may be able to afford it in that sense.
    It doesn’t seem smart to roll the $13k into another loan though. So it seems likely that they are probably not saving money and spending everything they earn. But its hard to know for sure.

    Maybe they are treating this as a short term loan. Maybe they’re due a very large bonus from work in a month and plan to pay off the loan in full when they get that. Ya never know.

    5.5% interest on a car loan isn’t bad really. The cost is what it is. $50k is what a new Expedition with options can cost. Big SUV’s are expensive.

    I agree with Kevin that if they had the money to spend and this is something they really want then its up to them to spend their money how they desire. But it seems unlikely that they are really in that situation.

  19. MyMoneyMess

    While I have to agree with Kevin and Jim when they say that if they have the money to spend, then it’s fine for them to make a deal like this. For all we know the buyer could have the $63,000 in an account somewhere that’s earning 7% or something more. If that’s the case this deal makes perfect sense. That’s the problem with trying to judge something like this without knowing all of details.

    If I were in that kind of position I’d definitely do a deal like this and I’d consider it a good deal. I’m using OPM to buy the vehicle I want and making 1.5% net by leaving my money where it is.

    Sure, it could be just the opposite. This could be someone with a huge mortgage and tens of thousands of dollars in credit card debt and no savings.

    That’s my point though. How can I sit here and say it’s good, bad or indifferent when I don’t have all the information? I can’t.

  20. ODWO

    Unless one is going to pay cash for a vehicle, all this sounds a lot like the subprime mortgages that brought the house down (lack of better words).

    There’s a movie out there, “For richer or Poorer” with Tim Allen et al. They had everything – cars, home, Country Club memberships (plural) and all the friends money could buy. But it was all on credit. They really didn’t own a thing.

    Despite the $75K Expedition being a high price, if they had the money, why not just pay cash?

    Well, a couple of things come to mind about write-offs and depreciation if it was a company vehicle, but I’m not a tax person. But I’m guessing this wasn’t the case for the person buying the Exped. (I wonder if it had leather? LOL)

    I’m with the others … buy a car that is the price you want to pay … buy quality ’cause it lasts! … and then drive it until either the odometer reads 300K+ or you find another deal … Or … win the lottery and can just buy whatever you want anyway. HA! (I’m a fan of Toyota’s too! We got a great deal on a Matrix. Love it!)

    Of course, the Z06 Corvette will never be “on special” will it?
    πŸ™‚

  21. Squirrelers

    It seems remarkable to me that people do those types of “deals”…though it’s unfortunately not uncommon for some really bad decisions to be made.

    It would be interesting to know exactly what that person’s rationale was.

    Of course I once drove a car 220,000 miles before selling it, so my thought process is different than that buyer’s.

  22. Everyday Tips

    Yikes, that monthly payment would give me palpitations every time I had to deduct it from my checking account!

  23. Bargaineering

    That’s absolutely absurd… and hilarious. πŸ™‚

  24. Crystal @ BFS

    @Money Reasons, me too. πŸ™‚

    @jim, I agree that it is their money and they can do what they want, but that would make for a really boring post. πŸ˜‰

    @MyMoneyMess, okay, so it’s bad to jump to conclusions. But it’s an interesting scenario, right? I don’t write these posts to be mean, I just see a crazy scenario and think you all would like to know about it too.

    @ODWO, I was wondering why they wouldn’t pay in cash too. I was also dreaming of a Corvette in that price range… πŸ™‚

    @Squirrelers, I would be extremely lucky if my Aveo can make it 100,000 miles much less 200,000 plus! Congrats!

    @Everyday Tips, I know, right?!

    @Bargaineering, glad you agree!

  25. Henway

    Horrible horrible idea. I dun get why people like to splurge on cars. Unless you make a million dollar salary, it ain’t worth it. People like to look sexy and powerful but the fact of the matter is NOONE is envying you, and thinking about how cool you are. It’s the opposite in fact

  26. Crystal @ BFS

    @Henway, well, I envy some cars…like ones that don’t fall apart after 3 years like mine… πŸ˜‰

  27. Len Penzo

    No, but it looks like I need to look into getting a Ford franchise!

    All the best,

    Len
    Len Penzo dot Com

  28. Merceedes @ My Financial Trek

    A $1240 car payment! That is as much as my mortgage payment! (granted, that is stretched over 30 years, but still!) This is why I am thankful I’ve never bought into the notion of a large vehicle. They price is insane, payments are even more crazy, and it is SO easy to end up upside down on the loan by only paying the minimums. YIKES!

  29. Well, every penny you spend on vehicles is flushed down the tubes. Anyone who has ever traded in a vehicle at the dealership when purchasing a new one knows that you are going to get basically nothing. That really means big payments and big insurance costs. These are the people that also complain about not having any money. It takes everything in me not to tell them why their broke… Thank’s for posting

  30. Nathan Pole

    Very interesting! I also see buying a $75,000 MBW or Lexus differently than a Ford Expedition. I personally would not ever spend that much for a vehicle. Thanks you so much dude!

  31. expedition freak

    The initial Ford Expedition was released to fill the gap left by Bronco from Ford. Since the Expedition has never looked back and has been my absolute fav too.

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