Cash for clunkers will get many people even more indebted
- Thread starter crgarcia
- Start date
All you prove when you pay with cash is that you're solvent. But, a credit score doesn't rank your solvency, it ranks your creditworthiness.
All things being equal, you satisfy the solvency test by qualifying to get the loan. The second half of that, proving your worthy of additional/future credit, can only be achieved by paying the loan back.
exactly right. Only problem is that an aweful lot of important aspects of life are tied to your credit score, not just aspects of obtaining CREDIT. Why do I get disadvantaged when trying to purchase auto insurance, apply for a job, among many other things in life just because I have been paying cash all my life before? Now some companies abuse credit scores even for other purposes. That is the perversion of the current state of affairs.
I agree it is completely retarded for companies to require credit scores for purposes of hiring. Maybe the person was laid off due to no fault of his/her own and got behind in some payments. Now they want to get a job to repay their debts and can't.
I also know that failure is rewarded, but that doesn't give me the right to fail on purpose. However I do keep a certain amount of debt on my sheet (as mentioned above) to avoid being punished as an over achiever.
I also agree that most Americans are credit stupid and I have said for YEARS, that they NEED to teach a class on what credit is and how to manage it (at least the basics) in EVERY American High School as a requirement for graduation. Will that fix everything? Absolutely not but at least more people would start out with a better understanding instead of having to figure it all out on your own.
I also know that failure is rewarded, but that doesn't give me the right to fail on purpose. However I do keep a certain amount of debt on my sheet (as mentioned above) to avoid being punished as an over achiever.
I also agree that most Americans are credit stupid and I have said for YEARS, that they NEED to teach a class on what credit is and how to manage it (at least the basics) in EVERY American High School as a requirement for graduation. Will that fix everything? Absolutely not but at least more people would start out with a better understanding instead of having to figure it all out on your own.
Paying cash is no different than barter, you give something and you get something in return.
Credit is an entirely different animal because it requires one person to trust that another pays them back at a later date for something they're giving to that person now.
Credit even exists in the cash-only world, that "you're good for the money." If you don't have a track record they start you out small so that you can prove yourself. Over time, word gets around and other people can vouch for you.
If you don't, and you happen to be doing business with some pretty shady characters, you just might end up with two broken legs, or worse.
You don't know what you are talking about. You're thinking about GM and their dealerships, as the only way they made money was via financing. Those were paper profits, by the way.
Go to any regular car dealer that is using a 3rd party to provide financing. They are much more interested in getting their cash as you drive off the lot as opposed to waiting for the financing process. My buddy used to aggregate cars for export via offering them 20% below the asking price with cash or cashier's check on hand. I know several people which bought their cars in the same manner.
I was just at the car dealership a month ago and one of our main negotiating point is that we would just come with cash once agreed. That alone got us a 15% drop in the asking price.
The price of a couple of cars is squat in the scheme of things when you compare it to their monthly nut for the building(s), utilities, advertising, payroll, parts and car inventories.
If you want to be closed-minded and continue to believe what you want, fine. But, you really should check out autobytel for yourself and see that there are plenty of financed deals out there that are discounted just as much as a cash-only deal.
Not always, there's always going to be exceptions. But, by and large, there simply aren't as many people walking in to do cash-only deals these days.
Credit is no longer a privilege, it's a way of life.
thanks for your earlier elaborate explanation of the distinction between credit and solvency.
I never said credit is the same than cash, so not sure why you even mention it. The point is that in the past, right now, and in the future it is the basis of wealth and wellbeing to purchase only what I can afford. Credit is backward looking it does not tell me about the credibility in the future, only give me a probability. Cash is something the person I purchase from can use instananeously. So I see ZERO reason why I in fact get disadvantaged when I pay cash over someone who purchases everything on credit. I have zero credit risk the other guy poses credit risk to his counterparty. Thats the difference.
I never said credit is the same than cash, so not sure why you even mention it. The point is that in the past, right now, and in the future it is the basis of wealth and wellbeing to purchase only what I can afford. Credit is backward looking it does not tell me about the credibility in the future, only give me a probability. Cash is something the person I purchase from can use instananeously. So I see ZERO reason why I in fact get disadvantaged when I pay cash over someone who purchases everything on credit. I have zero credit risk the other guy poses credit risk to his counterparty. Thats the difference.
dude, of course there will always be incentives to take on debt as long as people believe they can spend money they dont have.
And guess why people dont walk into dealerships with cash in their hands: Empty pockets and bad education. Turn it around as much as you like it all comes down to this little fact.
And guess why people dont walk into dealerships with cash in their hands: Empty pockets and bad education. Turn it around as much as you like it all comes down to this little fact.