30% of car loans are 6 to 7 years/ avg is $28,711

[Joe1]

http://time.com/3906094/car-payments/


I am amazed that the average car loan is over 5 years in length and almost 30K. One takeaway I got from the article is that when consumers of these loans "get tired" of the car at 5 years and trade them in, many find that they are underwater and roll the negative equity into a new car purchase.
Also alarming is that consumers are buying "off lease" cars with 6 and 7 year loans and there is a high probability of excessive maintenance and repairs in the later years while they are paying off a beater automobile.

This is not behavior I would engage in, but I agree that individuals are free to manage their finances as they see fit.

 

[CT8]

Cars are expensive and over priced. the consumers buy/live beyond their means. so there are the long life loans.

 

[Nederlander75]

Originally Posted By: Joe1
http://time.com/3906094/car-payments/


I am amazed that the average car loan is over 5 years in length and almost 30K. One takeaway I got from the article is that when consumers of these loans "get tired" of the car at 5 years and trade them in, many find that they are underwater and roll the negative equity into a new car purchase.
Also alarming is that consumers are buying "off lease" cars with 6 and 7 year loans and there is a high probability of excessive maintenance and repairs in the later years while they are paying off a beater automobile.

This is not behavior I would engage in, but I agree that individuals are free to manage their finances as they see fit.

Why when you can get a car loan for 0% interest and invest the money you'd put down? Makes much more sense that way.

 

[4D-56]

This is why I have a 15 yr old car that's in great shape with a 5MT (no tranny rebuilds to pay for)

Its paid for. I have zero debt.

 

[OtisBlkR1]

I never go more than 3 years on a auto loan. I tend to dress cars up a bit while I own them (wheels, tint, vent shades ) etc and when im ready I will sell the paid off auto for a fair Private party price (sometimes a bit more) and parlay those funds into the down on the new(er) 2-3 year old auto im buying and start over.. pay it off in 3 years, keep it 5-7 years.. repeat.. Its rare that I have cars that are older than 10-12 years at the max.. or more than 100,000 to 130,000 miles on them.

 

[threeputtpar]

Originally Posted By: Joe1
This is not behavior I would engage in, but I agree that individuals are free to mangle their finances as they see fit.




There, I fixed it for you!

Unless the interest rate is ridiculously low, I try to stay away from anything past a 4 year loan. Really, I aim for a 3 year note with a very manageable payment, and then find a car that suits my needs within that criteria.

 

[WiskyBadger]

Vehicle prices are going up faster then wages like everything else. Some people live beater to beater some buy expensive new cars they cant afford. Also the used market prices have gone up considerably, around here anyways. It almost makes more sense to buy new and take more debt with better interest rates then to save a couple bucks on price with higher interest rates.

 

[HerrStig]

Originally Posted By: CT8
Cars are expensive and over priced. the consumers buy/live beyond their means. so there are the long life loans.
And they will continue to increase in price so long as "we" demand more expensive gee gaws and allow the safety nazis to mandate "electronic assists" in place of driving skills.

 

[Pop_Rivit]

We made the decision many years ago to make the payments to ourselves while driving vehicles that were paid for. It allowed us to create and keep a vehicle fund that we use for purchases and repairs, and when it grows too large we roll some of it into longer term investments. It took about 4 years to really put ourselves ahead of the curve-that sacrifice and self discipline has paid off handsomely.

We're currently in the process of looking for/buying a newer vehicle, and it's nice to be able to do it without financing (or even dumber, leasing). It gives us the ability to pick and choose exactly what we want, from either a private owner or dealership. It's also nice knowing that if something were to need a major repair we don't have to fret over how to pay for it (or worse yet, put it on a credit card). The cash is there when we need it, and when we don't it's still earning some interest.

I can't imagine having that amount of debt for that long on a depreciating asset. However, it's clear that the majority of people apparently only shop by payment from the dealer ads I've been hearing on the radio. I think a tremendous amount of people don't have any idea how important it is to manage their finances and save for the future. Especially people in their 20's or 30's-retirement happens far sooner than you think, and costs much more than many understand.

 

[CourierDriver]

If it rides runs ok, rides ok, and has air,,I am good to go,,,put you male ego in a jar, no one cares what you drive....there are 54,000 members in here and no one cares what I drive, now I'm losing sleep..............

 

[wallyuwl]

New cars are more expensive than they need to be. Much of it has to do with government regulated safety and fuel efficiency standards. Much of it is to do with legacy costs for retirees and health care for both former and current workers.

The bottom line is, as has been said already, costs of both new and used cars are increasing faster than wages. So people need to take out longer loans to keep the monthly payment manageable. The big issue comes when you take out a long loan on a used car.

Another point to consider: with how low interest rates are now, along with how high "real" inflation is, a person is wise to take out a longer loan even if they can afford a shorter one. $400 can buy a lot more now than it will be able to in 2021, but yet in 2021 you'll still be paying the same $400 at the end of that loan.

 

[Donald]

Or people could make do with a little less car. My 2015 Subaru for around $26K has almost everything one could need (not want) in a nice car (except leather and a fancy NAV system). Its not a BMW or MB, but a nice vehicle. As long as it has a sunroof and radio my wife is happy. And this has 4WD which is needed around here on many winter days.

Its been treated with Carwell within the 6 month time period, so its covered for rust.

Could this be my last car? I am 62 and in good health. Keeping it 15 years would bring me to 77. So who knows?

 

[Nate1979]

Originally Posted By: Donald
Or people could make do with a little less car. My 2015 Subaru for around $26K has almost everything one could need (not want) in a nice car (except leather and a fancy NAV system). Its not a BMW or MB, but a nice vehicle. As long as it has a sunroof and radio my wife is happy. And this has 4WD which is needed around here on many winter days.

Its been treated with Carwell within the 6 month time period, so its covered for rust.

Could this be my last car? I am 62 and in good health. Keeping it 15 years would bring me to 77. So who knows?


Subaru's are great deals. Their price has barely increased in the last 15 years. In 2000, a base model Subie with automatic was $20,895. In 2015, a base auto is $23,195. This is well below the inflation rate.

 

[Triple_Se7en]

Originally Posted By: CT8
Cars are expensive and over priced. the consumers buy/live beyond their means. so there are the long life loans.


Not really!
If automakers would produce vehicles with the only options being automatic, air and stereo, like in the 1970-80s, the average price would drop 5-7K from 28K and less maintenance and repairs.

I don't need cruise control, power windows, 200 watt stereo, inside/outside auto lighting, rear cameras, GPS, power seats, internet/device-ready equipment....etc....etc.

 

[Mr Nice]

Many Americans are impulsive and don't consider $480+ for 6 years harmful to their financial future.

 

[Cujet]

Originally Posted By: Mr Nice
Many Americans are impulsive and don't consider $480+ for 6 years harmful to their financial future.


Of course, there are people who actually can afford it. Those folks have excellent retirement packages, pensions, large incomes and so on.

I'm not in that category.... So, I don't make any car payments. I purchase what I can afford, cash, and drive 'em till they are done. I get my money's worth out of cars. Even with added turbo's and so on.

 

[WiskyBadger]

Originally Posted By: Triple_Se7en
Originally Posted By: CT8
Cars are expensive and over priced. the consumers buy/live beyond their means. so there are the long life loans.


Not really!
If automakers would produce vehicles with the only options being automatic, air and stereo, like in the 1970-80s, the average price would drop 5-7K from 28K and less maintenance and repairs.

I don't need cruise control, power windows, 200 watt stereo, inside/outside auto lighting, rear cameras, GPS, power seats, internet/device-ready equipment....etc....etc.
I feel the same way, I usually buy base models or base models with options. I dont need 300 gadgets that will break or work incorrectly.

 

[BMWTurboDzl]

Even some manufacturers realize that these longer term loans are a problem because it decreases turn over.

 

[KitaCam]

Originally Posted By: Donald
Or people could make do with a little less car. My 2015 Subaru for around $26K has almost everything one could need .....

Could this be my last car? I am 62 and in good health. Keeping it 15 years would bring me to 77. So who knows?


Felt the same when buying Kitacam....had a stick...my only priority when so few cars available nowadays with an MT...it had 97k when I got it with a new clutch and I figure it'll last 15 years @ 10k per year, taking me to 250k miles by the time I'm 82....

 

[GiveMeAVowel]

Originally Posted By: BMWTurboDzl
Even some manufacturers realize that these longer term loans are a problem because it decreases turn over.


Yep. Just being discussed amongst the executives at major auto makers in the Automotive News.