Would having the ability to finance your next pair of High End speakers be a factor in your buying decision?

[Elliot G.]

What do you think?

 

[MJB]

Not likely. I would not get a loan to finance any stereo components. Now, I would consider if I could get terms like 0% and 6 - 12 months to pay in full.

 

[moby2004]

I concur. Nothing specific to Audio but personally I would not buy anything related to an hobby with a loan.

 

[howiebrou]

I think it would help. Of course caveat emptor and all that jazz.

 

[Folsom]

I think for newbies on tighter budgets it would make sense, but I suspect they're already doing it.

 

[Blackmorec]

I’m now retired so my money either comes in monthly from pensions and annuities or is invested in long term cash bonds, fixed interest bonds and equities, so selling investments for a large capital purchase is something I avoid where possible...for example I lease cars where practical.

So would I take a loan for loudspeakers? I definitely would if the interest rate was close to what I get from my investments. That way it gets paid monthly and I don’t see any impact on longer term savings and investments....however I wouldn’t pay more than max. one point above the going rate....no point spending money to obtain funds I already have

 

[Vicov]

Not for me but works for some.
(Not quite as bad s buying groceries on a credit card).

 

[Elliot G.]

How about withe Zero interest? and 12-24 month terms
50 percent down?

 

[Hipper]

I’m now retired so my money either comes in monthly from pensions and annuities or is invested in long term cash bonds, fixed interest bonds and equities, so selling investments for a large capital purchase is something I avoid where possible...for example I lease cars where practical.

So would I take a loan for loudspeakers? I definitely would if the interest rate was close to what I get from my investments. That way it gets paid monthly and I don’t see any impact on longer term savings and investments....however I wouldn’t pay more than max. one point above the going rate....no point spending money to obtain funds I already have

I'm retired too and own my residence and don't have any family. I can do what I like!

For this reason, and as my current set up is some fifteen years old and in the case of the speakers (VMPS RM30M) may be difficult to get good repairs if needed, I'm considering how I would finance replacement.

The answer is Equity Release - borrowing on the value of my property, paying back the loan plus interest when I die.

Unless anyone knows a way of taking the money with you when the time comes?!

 

[Folsom]

Elliot, I would warn you that some Audiophiles are batshit crazy. They have compulsive buying habits that don't always reflect smart spending. Some of them have traded relationships with families for audio. I'm not saying it's a high percentage or anything but think twice if you'd need a repo team.

 

[PeterA]

Interesting idea.

I am philosophically opposed to borrowing money to buy something that loses value over time, or something I can not afford to buy outright, with the exception of primary housing, which I view as an investment in a more secure future. I think it would be bad for the industry long term, as it would encourage dealers and manufacturers to keep raising prices because suddenly buyers with loans might see the purchase as "affordable" because they can afford the monthly hit. This happened with housing and then large ticket items like boats and cars. The result is people wanting to get something now rather than waiting until they can pay outright for it. People reach for things that they can not buy now by borrowing and paying over time.

I suppose it is fine for some people, but I would never do it. I am too fiscally conservative. We are talking about luxuries here, not necessities. I can see the appeal for dealers: less pressure to bargain or offer deals. I suspect that it is already happening, but if so, it is pretty quiet.

 

[ack]

What do you think?

I would never do that

 

[Elliot G.]

Interesting idea.

I am philosophically opposed to borrowing money to buy something that loses value over time, or something I can not afford to buy outright, with the exception of primary housing, which I view as an investment in a more secure future. I think it would be bad for the industry long term, as it would encourage dealers and manufacturers to keep raising prices because suddenly buyers with loans might see the purchase as "affordable" because they can afford the monthly hit. This happened with housing and then large ticket items like boats and cars. The result is people wanting to get something now rather than waiting until they can pay outright for it. People reach for things that they can not buy now by borrowing and paying over time.

I suppose it is fine for some people, but I would never do it. I am too fiscally conservative. We are talking about luxuries here, not necessities. I can see the appeal for dealers: less pressure to bargain or offer deals. I suspect that it is already happening, but if so, it is pretty quiet.

I get your viewpoint but the audio business has ZERO financial tools to enable and help people purchase items they want. All consumer oroducts with very few exceptions are not investments. Watches, Piano's , high end appliances and even most art yet [people want them to enhance their lives.
The auto business for one would do 1/3 or less of the sales they do without finance and leasing. This is also true for Marine, Home improvements and many other Industries. I don't see it having any negative effects on the Industry other then making it grwo with more sales.
No one forces anyone to do what they don't want but in fact allows you to get what you really want up front rather then settling and buying and selling for years after.

 

[Blackmorec]

Personally I’m always happy to use someone else’s money instead of my own as long as it costs me nearly nothing to do so.

Zero% and 50% down is attractive as long as I’m not paying for it by forgoing a good upfront discount offered by competitive dealers.

Typically if I’m buying a big ticket item i negotiate pretty hard. I don’t mind fair profits (dealers have to live) but I don’t like paying too high a margin

 

[ddk]

What do you think?

IME it comes down to what you're selling and how much is getting financed. Financing is great for $10k and below, just go to a Best Buy and hang around the cashiers during holiday seasons and you'll see almost everything is either financed through their credit card with some sort of discount applied or by some other credit entity including PayPal, very little or hardly any cash exchanged. It's quite a different ball game when it comes big ticket items and even more difficult for high end audio where resale value is just as mysterious as the art market, which legit operation is financing that at 0 percent? If a client is qualified enough to get approved for the type of money we're talking about for a high end system they already either have that money or have access to their own finance sources. In this industry I've found that best option is self financing if one can, extending credit to a consumer is no different than extending it to another business as a distributor or manufacturer.

david

 

[Elliot G.]

IME it comes down to what you're selling and how much is getting financed. Financing is great for $10k and below, just go to a Best Buy and hang around the cashiers during holiday seasons and you'll see almost everything is either financed through their credit card with some sort of discount applied or by some other credit entity including PayPal, very little or hardly any cash exchanged. It's quite a different ball game when it comes big ticket items and even more difficult for high end audio where resale value is just as mysterious as the art market, which legit operation is financing that at 0 percent? If a client is qualified enough to get approved for the type of money we're talking about for a high end system they already either have that money or have access to their own finance sources. In this industry I've found that best option is self financing if one can, extending credit to a consumer is no different than extending it to another business as a distributor or manufacturer.

david

I am of course discussing my speakers, don't have insight into other companies and what they do or do not offer.
My speakers are all way above 10k and I am looking at a way to make it easier for potential clients to get a speaker they might really prefer but don't want to write such a large check all at once, By providing them terms with no interest they can get a better speaker and grow into it rather than having to trade or sell in a year because it was not what they desired.
Its really not about resale value its really more about having good credit and a positive credit history

 

[ddk]

I am of course discussing my speakers, don't have insight into other companies and what they do or do not offer.
My speakers are all way above 10k and I am looking at a way to make it easier for potential clients to get a speaker they might really prefer but don't want to write such a large check all at once, By providing them terms with no interest they can get a better speaker and grow into it rather than having to trade or sell in a year because it was not what they desired.
Its really not about resale value its really more about having good credit and a positive credit history

Of course is in your mind, we have no idea what you're thinking of. Great if you found an institution to finance your speakers, it will definitely help sales, before the crash most of the high end theater systems we sold and installed were financed.

david

 

[PeterA]

I get your viewpoint but the audio business has ZERO financial tools to enable and help people purchase items they want. All consumer oroducts with very few exceptions are not investments. Watches, Piano's , high end appliances and even most art yet [people want them to enhance their lives.
The auto business for one would do 1/3 or less of the sales they do without finance and leasing. This is also true for Marine, Home improvements and many other Industries. I don't see it having any negative effects on the Industry other then making it grwo with more sales.
No one forces anyone to do what they don't want but in fact allows you to get what you really want up front rather then settling and buying and selling for years after.

I get that. As I said, it's not for me. Some people like debt, others don't. I guess no one should complain then about student debt, outstanding car loans, or credit card debt, as no one is being forced to take on debt. It's all about free choices. I hope that people behave with a sense of personal responsibility and only do what they feel comfortable doing when it comes to personal finances.

I guess the real issue is the extremely high prices of these luxury speakers and dealers wanting to sell them. It seems that maximizing credit card limits is no longer enough. These purchases are too expensive for that. I suppose people could take out home equity loans to purchase expensive speakers they "really want up front". I hope they can sell them if they change their minds before they are paid off. I also understand that if the tools are made available, people will use them.

I do think that the proliferation of car loans and leasing deals allows the manufacturers and dealers to keep raising prices beyond what people have the ability to pay up front for. That is business, and as you correctly write, no one is being forced to borrow money for cars they can't afford to buy outright. If you want that ability spread to high end audio speaker purchases, or cables for that matter, I understand. You are the seller and want to make it easier for your customers.

I'll be interested to read how this thread develops.

 

[sheppard]

I am of course discussing my speakers, don't have insight into other companies and what they do or do not offer.
My speakers are all way above 10k and I am looking at a way to make it easier for potential clients to get a speaker they might really prefer but don't want to write such a large check all at once, By providing them terms with no interest they can get a better speaker and grow into it rather than having to trade or sell in a year because it was not what they desired.
Its really not about resale value its really more about having good credit and a positive credit history

When considering audio components that are the cost of a luxury car, why not consider the most common financing structure in the US automative luxury industry - leasing? One of the biggest reasons I suspect people don't change equipment more often is the hassle and uncertainty that comes with having to sell the equipment down the line if it doesn't work out. Leasing removes that uncertainty.

Numbers
I ran some numbers to see if this makes sense. I'll include a link at the end to a lease calculator for how I got these numbers.

Say we have an audio component with an MSRP of $50k:
Sale Price: $45k (ie. 10% discount)
Residual value: 45%
Term of lease: 36 months
Monthly payment: $779

Total lease cost: $27,843 (there's an implied 2.4% interest).

At the end of the lease, the customer chooses to either purchase the product at the residual value of $22,500 (45% of $50k) or return it to the dealer.

So the customer in total paid $27,843 (look at the link below for the calculation) to use a $50k product for 3 years. It sounds like a lot but we should compare this to the cost of buying a $50k product and selling it after 3 years. The person who is willing to buy used and resell is not the target customer for leasing.

From the dealer's perspective:
- Need to make sure customers have good credit history
- Need to find good way to move returning, used products.
- Possibly lead to increased sales volume.

Lease calculator reference:
https://leasehackr.com/calculator?m...emo=&zero_driveoff=true&monthlyTax_radio=true

 

[Elliot G.]

When considering audio components that are the cost of a luxury car, why not consider the most common financing structure in the US automative luxury industry - leasing? One of the biggest reasons I suspect people don't change equipment more often is the hassle and uncertainty that comes with having to sell the equipment down the line if it doesn't work out. Leasing removes that uncertainty.

Numbers
I ran some numbers to see if this makes sense. I'll include a link at the end to a lease calculator for how I got these numbers.

Say we have an audio component with an MSRP of $50k:
Sale Price: $45k (ie. 10% discount)
Residual value: 45%
Term of lease: 36 months
Monthly payment: $779

Total lease cost: $27,843 (there's an implied 2.4% interest).

At the end of the lease, the customer chooses to either purchase the product at the residual value of $22,500 (45% of $50k) or return it to the dealer.

So the customer in total paid $27,843 (look at the link below for the calculation) to use a $50k product for 3 years. It sounds like a lot but we should compare this to the cost of buying a $50k product and selling it after 3 years. The person who is willing to buy used and resell is not the target customer for leasing.

From the dealer's perspective:
- Need to make sure customers have good credit history
- Need to find good way to move returning, used products.
- Possibly lead to increased sales volume.

Lease calculator reference:
https://leasehackr.com/calculator?make=Mercedes-Benz&miles=12000&msd=0&msrp=50000&sales_price=45000&months=36&mf=.00100&dp=0&dealer_fee=0&acq_fee=0&taxed_inc=0&untaxed_inc=0&rebate=0&resP=45&reg_fee=0&sales_tax=9&demo_mileage=0&memo=&zero_driveoff=true&monthlyTax_radio=true

I dont have an issue with it however NO ONE will write the paper!!
I tried a long time ago and to do an equipment lease is very different that a car lease. It requires a ton of paperwrok and residuals are always with equipment a dollar. No one wants to take the gear back unless he is in the used gear business and he sets the residuals. Its a gfood ide abut one that will not happen in my lifetime. Thanks for your input.