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      10-03-2019, 09:05 PM   #1
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The average car loan length is 69 months

Interesting article regarding American consumers and their auto loans

https://www.caranddriver.com/news/a2...ensive-longer/
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      10-03-2019, 09:50 PM   #2
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Exploding costs, stagnant wages, and the never ending lust for expensive items. Something's gotta give.

My favorite doom article this week put the average family cost for health insurance now at $20k per year.

All of this is absolutely sustainable by the way, debt is awesome.
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      10-03-2019, 09:59 PM   #3
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Doesn't surprise me considering all I ever see during my commute is new(or newer) cars on the road every day. We all know most of these people shouldn't be in new(er) cars. Everyone's gotta have the newest car, and be the first to have their butt touch that seat. How dare anyone drive a car that someone else first farted in lol.
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      10-03-2019, 10:22 PM   #4
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Well, when you have threads where people are begging for great lease rates for bloated, $120k SUVs that will be worth half that value in 18 months after titling what do you expect? Leave the matrix.
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      10-03-2019, 11:02 PM   #5
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69...nice.
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      10-03-2019, 11:25 PM   #6
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      10-03-2019, 11:36 PM   #7
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If they wouldn't offer 7+ year loans....I bet car prices would go down. Lots of people out there have no money sense at all.....as long as they can afford the payment, they don't care what the total cost is.
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      10-04-2019, 12:14 AM   #8
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Not everyone buying a new car is being fiscally irresponsible. If one holds on to the car long term, this discussion about car depreciation doesn't really enter the picture.

For me I've purchased mostly new cars. I have purchased one used car. I know how I am. i don't change cars as I would my underwear. I make sure the vehicle I purchase is something I can live with long term. I've never dumped a car shortly after purchasing it because I can't stand driving it. One of the reasons I buy new is to eliminate the uncertainty of how the previous owner treated the car. There are no guarantees even with a PPI (although a PPI can minimize the risk.)
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      10-04-2019, 12:37 AM   #9
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Quote:
Originally Posted by zx10guy View Post
Not everyone buying a new car is being fiscally irresponsible. If one holds on to the car long term, this discussion about car depreciation doesn't really enter the picture.

For me I've purchased mostly new cars. I have purchased one used car. I know how I am. i don't change cars as I would my underwear. I make sure the vehicle I purchase is something I can live with long term. I've never dumped a car shortly after purchasing it because I can't stand driving it. One of the reasons I buy new is to eliminate the uncertainty of how the previous owner treated the car. There are no guarantees even with a PPI (although a PPI can minimize the risk.)
That's a nice story, but you're the outlier, by far. I shake my head at Dodge Journeys with paper plates and wonder what the rate and term are. The American auto makers are particularly bad - anyone above a 500 score can drive away with an Impala financed for 80 months at 22%.
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      10-04-2019, 01:40 AM   #10
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Will be interesting to see whether those getting those extended loans actually drive them until payoff or whether theyíre selling at year 5 or less. I usually finance for up to 5 but tend to pay off around year 3. 5yr loan is more about limiting impact to monthly expenses/lower payment. Combine with a good finance rate and itís a pretty good play. Drive them until 100k plus/8-10 yrs and then sell to private party since they usually arenít worth much for trade in. Makes a new car sale so much easier not haggling over trade in value :
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      10-04-2019, 02:36 AM   #11
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Originally Posted by AlpineWhite_SJ View Post
Will be interesting to see whether those getting those extended loans actually drive them until payoff or whether theyíre selling at year 5 or less. I usually finance for up to 5 but tend to pay off around year 3. 5yr loan is more about limiting impact to monthly expenses/lower payment. Combine with a good finance rate and itís a pretty good play. Drive them until 100k plus/8-10 yrs and then sell to private party since they usually arenít worth much for trade in. Makes a new car sale so much easier not haggling over trade in value :
I would guess less than 5% drive them until payoff and even less than that pay off early. The extended loan term exists to get people into cars that can't otherwise afford them.
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      10-04-2019, 02:46 AM   #12
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Suprised its not higher. When we got the wifes highlander in May the dealer asked if we would like a 96 month loan term and when I responded with "I didnt even know that was an option" His response was "we do it all the time"
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      10-04-2019, 03:11 AM   #13
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This is why you can never tell how much someone makes by just looking at their car. I saw places offering 144 month loans on mclarens lol. Call wheels boutique and you can finance a set of HREs.
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      10-04-2019, 03:19 AM   #14
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And here I thought my 48 month loan was long. Couldíve done 36 but didnít want my after gas monthly to be higher than what I paid for the Chrysler 200 I had.

Holy cow though...70+ months? What do they do if theyíre out of warranty and something major gives out while still paying a high monthly.
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      10-04-2019, 08:16 AM   #15
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I think some folks are forgetting how low interest rates on new cars are. Throw 1.9% at $30,000 into some loan calculators. The difference between 48/60/72 months isn't that significant. Some places are offering even lower rates depending on the car.

My truck loan after down payment was about $30,000 and I did a 72 month loan because at my interest rate, it was a difference of a few hundred dollars over the life of the loan. (assuming I take the full loan term to pay it off, which is atypical) It makes me a lot more flexible with my money.
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      10-04-2019, 08:26 AM   #16
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Quote:
Originally Posted by Soterios View Post
I think some folks are forgetting how low interest rates on new cars are. Throw 1.9% at $30,000 into some loan calculators. The difference between 48/60/72 months isn't that significant. Some places are offering even lower rates depending on the car.

My truck loan after down payment was about $30,000 and I did a 72 month loan because at my interest rate, it was a difference of a few hundred dollars over the life of the loan. (assuming I take the full loan term to pay it off, which is atypical) It makes me a lot more flexible with my money.
Yes, I did the same on the money I financed for my M3. I think the difference is that for most people buying a brand new car, they arenít coming in with any money down and quick depreciation means theyíre upside down on the car instantly as their payments donít keep up with that. Then when they come back to trade the car in, they roll the negative equity into the next car. Eventually gotta pay the piper.
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      10-04-2019, 09:19 AM   #17
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Quote:
Originally Posted by Deebo View Post
Yes, I did the same on the money I financed for my M3. I think the difference is that for most people buying a brand new car, they arenít coming in with any money down and quick depreciation means theyíre upside down on the car instantly as their payments donít keep up with that. Then when they come back to trade the car in, they roll the negative equity into the next car. Eventually gotta pay the piper.
I'm sure there's quite a bit of that, too, yeah. It just felt like this thread was quickly throwing the baby out with the bath water. Long loans aren't a bad decision be default. I'm car shopping for the wife. If someone offered me a 96 month loan at sub 1%, I'd probably take it.
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      10-04-2019, 09:22 AM   #18
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So long as the rate is low, use your liquidity for something else.
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      10-04-2019, 09:48 AM   #19
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Quote:
Originally Posted by mgmarsh39 View Post
So long as the rate is low, use your liquidity for something else.
The problem is that the majority of the people financing very expensive vehicles for 7+ years..... barely make enough money to make the payments, and they sure don't have any money put away in the back, or in any investments.

People who are making $40k a year should not be financing $60k+ vehicles.....and it happens all the time.
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      10-04-2019, 10:19 AM   #20
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Maybe folks like sign up for 72 month loans in case something goes belly up, but in reality, pay it off much quicker.
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      10-04-2019, 10:28 AM   #21
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Maybe folks like sign up for 72 month loans in case something goes belly up, but in reality, pay it off much quicker.
I doubt it......

And if you don't have enough in savings to cover unexpected emergencies....you don't need to be buying a new car that you can't afford anyways....
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      10-04-2019, 10:39 AM   #22
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I'd rather make low monthly payments on a highly depreciable asset rather than having $30k-$50k of cash tied up into it.

Let the bank take that risk...
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