The average car loan today is $48,000

[MCompact]

Since the late ‘90s my car buying strategy has been to buy a CPO car on a 60 month note but pay it off in under 24 months. I then keep the car for 6-10 years. The only exceptions have been my Club Sport, which I bought new in 1995 and still own, the 2007 Mazdaspeed 3 I bought new and traded in 2016 and the 1999 Wrangler I bought in 2002 and kept until 2023.
Right now, for the first time in recorded history, I’m perfectly content with my fleet.

 

[MCompact]

When I worked at BMW I didn’t see any buyers being taken advantage of. I do remember we had a 440i coupe that the NCM ordered just before he left; it had every BMW Individual option he could get so it stickered for more than an M4 (it was a final middle finger to the GM before the NCM resigned). The consensus was that it would take a pound of C-4 to move the 4er off the showroom floor, but as it happened a guy came in one Saturday to look at our Protonic Red I8. He decided to buy it and, walking past the 440i, he said, “My wife would love that color- write that up too.”
He paid in cash.

 

[02SE]

When I worked at BMW I didn’t see any buyers being taken advantage of. I do remember we had a 440i coupe that the NCM ordered just before he left; it had every BMW Individual option he could get so it stickered for more than an M4 (it was a final middle finger to the GM before the NCM resigned). The consensus was that it would take a pound of C-4 to move the 4er off the showroom floor, but as it happened a guy came in one Saturday to look at our Protonic Red I8. He decided to buy it and, walking past the 440i, he said, “My wife would love that color- write that up too.”
He paid in cash.

I have a friend who worked as a salesman at a BMW dealer. He said that over half of his customers paid cash. When I was getting my wife's latest vehicle, it would have been cash, but it qualified for the Section 179 deduction, so I did that instead.

 

[Dave Hess]

When I worked at BMW I didn’t see any buyers being taken advantage of. I do remember we had a 440i coupe that the NCM ordered just before he left; it had every BMW Individual option he could get so it stickered for more than an M4 (it was a final middle finger to the GM before the NCM resigned). The consensus was that it would take a pound of C-4 to move the 4er off the showroom floor, but as it happened a guy came in one Saturday to look at our Protonic Red I8. He decided to buy it and, walking past the 440i, he said, “My wife would love that color- write that up too.”
He paid in cash.

Nice BMW dealership story.

There’s very, very, very, very few folks in the USA that can pay cash for 2 brand new BMWs.

Extremely rare….

 

[brages]

Nice BMW dealership story.

There’s very, very, very, very few folks in the USA that can pay cash for 2 brand new BMWs.

Extremely rare….

There are 24.5 million millionaires (people with at least 1 million net worth) in the US. I'm sure there are people who responded to this thread who could buy two new BMWs.

 

[brages]

Pretty easy to beat 5-10%.

Not without risk

 

[Kurtatron]

There are 24.5 million millionaires (people with at least 1 million net worth) in the US. I'm sure there are people who responded to this thread who could buy two new BMWs.

Wow, had no idea there were that many. Makes me feel bad I’m more broke than I thought.

 

[javacontour]

Not without risk

Even the so-called "no risk" options have risk.


Keeping your principal doesn't protect one from inflation risk.

There is no risk free choice. One's choices are what risks are you comfortable taking?

 

[SC Maintenance]

Wow, had no idea there were that many. Makes me feel bad I’m more broke than I thought.

I believe he is referring to the fed survey. It includes your house (less mortgage) which is most people's biggest asset and I don't think should be used. You can't sell your primary residence and live in a BMW. Its also a survey so?

Still, if you buy a house and pay it off while also paying into a 401K - hopefully company matched (less likely these days) then you can get there if you want to.

 

[tbm5690]

Still, if you buy a house and pay it off while also paying into a 401K - hopefully company matched (less likely these days) then you can get there if you want to.

I wouldn't say less likely on a match...most seem to be 3% or less but I haven't heard of anyone with a 401 that doesn't have at least some sort of match. What's more common is employees not taking advantage of the match, even if it's small.

 

[wander2039]

These threads are intriguing... Guess we should of paid cash for our BMW but it was used, not $48k at least! Almost did but writing a check for that amount in Oct before the holidays made me nervous. Decided to take the loan interest penalty until March. We paid more for that the BMW than our RV 11 years ago. House paid for and fully funded 401k and Roth's.. lol.

 

[wtd]

For that being true, you sure like to participate.

He does it on every one of these threads. He can't stand that some people don't want to buy the newest thing out there and wants to talk down to the ones that like driving older vehicles to save money or that just don't want something new.

 

[wlk]

The 80s' and 90s' had high auto loan rates . I purchased a new light blue 1990(?) PLYMOUTH Colt ( 1.5 Ltr. w/ 5 speed manual ) base model 2 door hatch and the rate was around 20% . Was in my late 20s' .

View attachment 254438

I loved this car; I had the same, but the Eagle Summit version 5SPD and all. What a great fun little car.

And nope, I'm not buying a new car anytime soon as $48k is more than my first home loan in 1997, and I vowed never to buy a car for more than that. I don't mind used at all.

 

[odie]

That’s an insane rate! But what was the payment? And how did that payment compare to your income?

Don't remember the payment . Sold it not long after buying it for not much less than owed . I think it was under $7,000 new .

 

[odie]

I loved this car; I had the same, but the Eagle Summit version 5SPD and all. What a great fun little car.

And nope, I'm not buying a new car anytime soon as $48k is more than my first home loan in 1997, and I vowed never to buy a car for more than that. I don't mind used at all.

Had the light blue ( same as the COLT above ) '92 EAGLE Summit 4 door sedan with the 5 speed manual . Had plenty of leg and head room . Large trunk as well . Not long after the purchase the dealer had to to replace the passenger side strut under warranty . Some of them were defective .

 

[Jetronic]

My last car loan had a 4.6% interest on it, and If I hadn't gotten a dealer discount matching the total interest I would pay over 4 years, I wouldn't have bought.

 

[edyvw]

When I worked at BMW I didn’t see any buyers being taken advantage of. I do remember we had a 440i coupe that the NCM ordered just before he left; it had every BMW Individual option he could get so it stickered for more than an M4 (it was a final middle finger to the GM before the NCM resigned). The consensus was that it would take a pound of C-4 to move the 4er off the showroom floor, but as it happened a guy came in one Saturday to look at our Protonic Red I8. He decided to buy it and, walking past the 440i, he said, “My wife would love that color- write that up too.”
He paid in cash.

Any BMW dealership I walked in was very, very subtle in the push to sell. Appliance dealerships are a completely different story.

 

[RAVL]

I don’t like debt either but some people have too much fear of it. My wife and I have good net worth for our age and a good income. When she needed a car a few years ago, we traded her old one at carmax for the cash down payment and financed the balance at our credit union at 3.9 percent in early 2023. After factoring in actual inflation on the cost of the debt and opportunity cost of tying up cash in a car versus leaving it working, financing it was an easy call. I don’t like tying up liquidity in a depreciating asset if our income is secure and the debt is reasonable / conservative relative to income and assets. Now my wife is an adult - she bought a 40k car which is no more than a modest percentage of the revenue she generates from her business. So whether she pays it off early is largely irrelevant. And when you are at a point in life when you need reliable no stories transportation - the phone rings and an elderly parent 250 miles away has a health emergency - it is not the time you want to think about a car other than as reliable transport. People standing around judging other people’s use of money is usually some sort of insecurity manifesting itself, with all due respect. Yes, I think they should bring back basic home finance into the schools but at the same time sometimes people just lack discipline around spending - it is a personality type as much as anything else. At the end of the day, money is just a tool. Different people use tools differently.

Merry Christmas, Happy Hanukkah, and Happy New Year!

 

[joekingcorvette]

I pay cash for all my vehicles and would never borrow money for a depreciating asset. Many people get upside down from buying too much car or truck and they turn around and do it again and again. They can afford the payments but have a decreased lifestyle because their priority has 4 wheels. My dad had an old saying "some people just cannot stand prosperity."

 

[PandaBear]

This is very true. In the early 1990's I had a friend who made the deals at a Chevrolet dealership in Menlo Park (big bucks there) that sold mostly loaded PUs, big Blazers and Corvettes. He knew all the pro football, baseball and basketball players. Ed made A TON of money.

I asked him one day how he felt when he got way too much money for a so-so vehicle for buyers who could not really afford it. I expected some remorse, whatever. Ed replied, "I thrive on that" while pumping his fist.

The dealership is not your friend.

It is the central bank's job to manage consumption and production via interest rate. One's consumption is another person's income, and once frugality is another person's unemployment / layoff. You can't have it both ways. These days we all want just the sainthoods and benefits but none of the consequences and casualties. Humanity doesn't work that way.