The truth about financing
We've been reading a lot lately about financing. I'll start by summarizing the truth: Financing is for people who don't need it. And now, if you'll indulge me, I'll quantify that statement.
When I was a young adult, I bought into the myth that financing was to help a person get started in life. You know the old story; you need a car to get the job, but you need a job to get the car, so you get the job and finance the car so you can keep the job. Unaware that the Micra existed, I settled on a very base model Mazda 323. A rather ugly looking hatchback, it was stick shift and no air (nor any other option for that matter). I had a job with a promise of full time hours if I had reliable transportation. Unfortunately, as some members have already discovered, I did not qualify for the regular finance rate. This was the reason why I bought my Micra, a 1990 model, in 1995; I could manage to buy a car worth $2500, and, for that money, the Micra was a safe bet for something that was reliable, not worn out, and inexpensive to run.
Fast forward almost two decades. Thanks to that Micra, I had been able to build a career, get married, buy a house, have a kid...you know, live the Canadian dream. I'm in a position where I could, if I wanted to, buy the new sub-$10k Micra for cash. In fact, my credit limit on one of my credit cards would buy a base model Micra, with taxes, delivery, and PDI, two times over. I would never be so foolish as to indebt myself to an evil credit card company that much, so as a rule, I never carry a balance. I use my cards like cash, and reap the benefits of points and cashback at no additional expense to me, but probably at the expense of poor suckers who do carry a balance. I digress.
1.9% is very cheap money. So cheap, I was suspicious at first, so I walked in with my chequebook, and I asked what the cash purchase price of a Micra SV, with convenience package and brilliant silver paint, would be. When I learned that the price at 1.9% was the cash purchase price, I immediately understood its true purpose: If a person has a good enough credit rating to qualify for a Micra SV at 1.9%, that person could afford a more expensive (and more profitable to Nissan) vehicle.
And that, my friends, is the true purpose of the 1.9% financing on the Micra. It's set up so you need to be able to afford the payments over a period of, at most, 4 years; after that, it goes up. Such payments could be used to sell more profitable vehicles for longer terms; after all, what's another two more years of payments for a "Nicer" car? Thing is, for the same reason credit card companies have to award points or cashback to people who never pay a cent in interest charges nor a dime for the use of their card, so does a car company that offers a low purchase price or low finance rate have to make good on their promise designed to fleece customers for more.
You want to know what's funny? Midway Nissan sold two Micras. One was a base model for cash, the other was mine. Do you think it's coincidence that they only got one Micra, and not one that was sold? I'll bet that the base model and mine will be last on the train from Mexico.
That 0% financing on Hyundai's? The financing is rolled into the price of the car, so you're spending more on the car than what it's actually worth. Again, it may still be a good deal on a bottom end car (like Nissan's 1.9%), for the purposes of luring buyers to upsell them to more profitable vehicles or, for a desparate car company, just to get market share.
It's an insane game, but once you've figured out the rules, you can make it work in your favour. At the end of the day, the Micra SV is a very good car for its price at 1.9%. Then again, a 2009 Hyundai Accent is also very good car for its price. Back when I bought my Micra, it was the car people loved to hate because of its apparent cheapness. Today, the Hyundai Accent is the car people love to hate for the same reason. The difference today is the fact that even a modern Hyundai Accent is many times the car my Micra was for the same price, accounting for inflation.
Nostalgia is a powerful thing. While I might justify my purchase by reasons of price and economy, the real reason why I must have a silver Micra is the same reason why I still own a Commodore 64. I am a self-confessed Micra nut, as well as a Commodore nut. It's also probably the reason why I own a Pentax DSLR, as I started photography with a metal K1000 at around the same time I got my first Commodore 64.
You need to do what's right for you, and if you don't qualify for the great financing offers, it's because it's not meant for you; it's meant to try to fleece sheep with a thicker coat. Look out for number one.
In our culture obsessed with absurd excess, the Nissan Micra is my counterculture car of choice.
Be sure to visit my blog at
mymicra.com!
__________________________________________
View my fuel log 2015 Micra SV manual: 6.4 L/100 km ... 44.3 mpg (Imp) ... 15.7 km/L ... 36.9 mpg (US) ...