Jalopnik: finance

Spanish Bank Giving Away Free Citroen With New Account

Wes Siler — Fri, 26 Sep 2008 14:20:00 EDT

Open a saving account with Spanish bank Banesto and they’ll give you a brand new, all-expenses-paid car. To qualify for a vehicle, a customer needs to lock between $26,400 and $235,000 into an account for at least 24 months, with the type of vehicle offered depending on how much one invests. For $235,000 and 36 months, you receive a Citroen C4 diesel, $175,000 a Citroen C3 and $145,000 a C2. Of course, there’s a catch.

Bank customers opting for the cars do so in lieu of interest. So you’re locking up to $235,000 away for three years with no growth. We’re also presuming the cars are leased, and need to be returned at the end of the two- or three-year period. So we’re not actually sure if this is a good deal.

Let’s assume you can earn 3.5% interest a year on your money. On $235,000, that’s $685 a month. A C4 diesel can be leased from $300-400 a month, we’ll assume another $200 for insurance, which still brings us in a little under that $685. Of course, the bank is probably getting some kind of bulk discount and doing the financing itself, so won’t be paying interest on its own vehicle loan. In other words, Banesto is making a healthy profit by offering cars instead of interest. Don’t have $235,000 to invest? Piaggio scooters are available to customers stashing away fewer Euros. [via Money.co.uk]

Repo Man Strikes: Late Car Payments Hit a 17-Year High

Ray Wert — Thu, 01 May 2008 15:35:08 EDT

Not that we need another sign that Americans are tapped out, but delinquency rates for car loans hit a 17-year highnbsp; in the final quarter of 2007. Worse, it's estimated that about one-fourth of all car loans are quot;upside down,quot; meaning that the owner owes more than the vehicle is worth.

This isn't entirely surprising, given how quickly cars depreciate. Still, it's clear that Americans have been buying more car than they can afford. And as with the housing bust, many people have been victims of predatory lending.

There's yet another parallel with the housing meltdown: real wage growth in America has been stagnant for nearly a decade, while the price of automobiles continues to climb, especially in the ways that you can add many thousands of dollar in options to your typical ride. The lending arms of car manufacturers are struggling to get people into new cars by extending the terms of the loan. The average today is nearly 64 months.

Is this a class war? After all, it's May Day. Read after the jump.

Europeans are feeling the same squeeze, if less dramatically. Bread riots sparked the French revolution. You have to wonder whether threatening phone calls about late payments on your Ford F150 could spark one here. As has been reported in this blog already, politicians are feeling the heat from drivers, and are shamelessly pandering to them.

Today's quot;New York Timesquot; reports the little-known fact that tax payers pick up the costs for putting wheels under the U.S. House of Representatives. There are few limitations on the cars members can drive—or how much they can spend—and gas, registration fees, insurance and excess mileage charges are included in the benefit. Are you feeling like marching in the streets?

Suck it up and get back to work. The payment on your Yaris is due.

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Photo: stevec77, licensed through Creative Commons

Price of Cars Relative to Income Higher, It's The Economy Stupid

Matt Hardigree — Fri, 09 Nov 2007 12:30:00 EST

The Auto Affordability Index found that it's getting more expensive to buy a new car, as if we needed another reason to consider buying a vintage RWD import instead of something from a dealer's lot. In the third quarter of 2007, it took 24.8 weeks of median family income to buy an average-priced car or truck, compared to just 24.4 weeks in the same quarter of 2006.

Including financing charges, the cost of buying an average-priced light vehicle was $29,024 for the quarter, up about $500 from 3Q06. Over the same period, the estimated median family income increased by only 4.6%. [Freep]

Costs Face Slashings As VW Forwards Plan to Reverse Misfortunes

Mike Spinelli — Fri, 15 Jul 2005 16:36:54 EDT

According to the AIADA newsletter, Volkswagen is prepared to carry out an epic reduction in its cost structure. Company officials are planning to cut billions of dollars in costs, with "no sacred cows" spared. Engineers have reportedly reduced the production costs of the VW Golf by $1000 and the company will soon start squeezing suppliers until they cry "onkel," and instuting more component-sharing among models. The plan is to increase earnings by 4 billion euros ($4.9 billion) by 2008, including a "pretax improvement" of 7 billion euros ($8.6 billion) at the VW brand.

VW Plans Billions in Cuts to Halt Slide [AIADA]