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It has nothing to do with cars lasting longer. All manufacturers care is the car lasting through the warranty period with minimal or no repairs. After that they could give a crap. It has to do with the price of the vehicles. They are too expensive for lots of buyers and the only way to make them affordable is lengthening the loan to drop payment to the level that's affordable to the majority of buyers.
Exactly, I can see base model Toyota Corollas pushing $40K within the next 15 years.
If people on average are still making like $20/hr. they're going to need 84 month financing.
It isn't necessarily bad. In some circumstances it's a decent plan too.
In the world of 7-8 percent loans it was not a great idea but rates are currently silly-low for those with good credit and the latest cars tend to last longer with fewer problems in general. Even I got 2.7% on my 7 year auto loan and my auto has a very high resale value and I'm not upside down (nor will I ever be during the loan term).
On the other hand, if you are seriously underwater and/or making a vanity purchase on a shiny new ride that is gonna be worthless in 7 years, are paying high interest and/or are stretching your budget as it is (using a long term, higher interest loan to get you into something unaffordable), you are essentially doing the happy dance in a financial minefield.
What magical car do you have? It might have a high resale value now. But in 2-3 years it may not. Consumer demand is fickle. What's hot now in 3-4 years might be a proverbial albatross. And who knows what's in demand in 7 years. Very very few times does a car loan for 9 years make sense. Truthfully very few if any cars maintain their value over that time period especially when you're starting to stretch to 9 years territory. Unless you put a good amount of money down most people are upside down for pretty much 1/2-2/3 of their loan length maybe more. Most people trade those shiny rides at 4-5 years and usually get screwed on the trade in. By the time 7-9 years rolls around the average buyer is tired of the car and with today's instant gratification society those cars will be dumped. The balance will roll in the new loan.
Let's face it people shop on monthly budget. I make x I owe a monthly amount of z I have y leftover so i can afford y car payment. A dealer will tailor the length of loan to get the payment in your budget range.
The guy that I guess "wins" in a long car loan term is the guy who buys new and keeps the car for 15-18 years. Which very few do. Long term car loans are not good for most consumers IMO.
Get a very low interest rate, and why not? I have a 2.6% rate on a 78mo loan.
Want out early?
Throw a tax return at it for the first 2 years.
Want to keep it? Well, do so. It's not costing you much.
Argue that you should pay cash instead? Well then pay cash whenever it suits you. It's not like you're losing a whole lot on interest. I'm paying a total of $2500 to not have to mess with saving up the $25K or so to buy it. Or, if I get out of the loan early, that much less.
So, why not? It's paying for convenience, and before you knock it, let me ask how many of you cook from raw ingredients to avoid paying the mark-up on prepped food? Exactly how much do you think that costs you every year? Mayhap you're not so much against paying for convenience...
I'm definitely not the Dave Ramsey pay cash for all type, but what you are saying is you would rather pay interest on the car loan and then use money the government is giving you back after you gave them an interest free loan all year to pay it down? That is not the best use of debt.
There's no discussion. It is a product that the banks and captive finance arms of automakers have decided to provide because there is a demand for it. Supply. Demand. Capitalism. Consumerism. That's it.
The twisted up part is when people like you decide that everyone who does it is being silly with their money, making a bad decision, being fooled into making a bad decision, or won't have enough money to retire on when the time comes. Sounds like you do "care" enough about them to look down on them with faux pity based on your contrived circumstances.
Just because its available and the market has spoken, doesn't mean its a great idea/good deal. Time shares, whole life insurance, extended warranties, credit cards, are all examples of what isn't necessarily a good deal, but people buy them.
Quote:
Originally Posted by Electrician4you
What magical car do you have? It might have a high resale value now. But in 2-3 years it may not. Consumer demand is fickle. What's hot now in 3-4 years might be a proverbial albatross.
I would guess there is no magic, rather substantial trade equity/cash down. If you put $10K down on a $30K car, looking at the amortization charts, I don't see anywhere that the borrower would be upside down on a typical car (Camry, Accord, etc...)
Location: IN>Germany>ND>OH>TX>CA>Currently NoVa and a Vacation Lake House in PA
3,259 posts, read 4,332,943 times
Reputation: 13476
Quote:
Originally Posted by f5fstop
Yea, the troll BS does not make it since we both have a similar number of threads...so try something else.
BUT; just maybe you want to reread my post; where does it imply I really care? I just thought it was interesting since I had no idea car loans were stretched out to 84 months. And I noted I have paid cash just so people knew why I probably had no idea loans were that long!
Nothing sinister about my post, but then again, in small minds it might be!
And if you think it is so sinister; why reply? (Rhetorical, I understand why some people reply with worthless information!)
You create threads and reply to threads on subjects you know nothing about to get people stirred up. That's the definition of a troll. Evidently you do care, because you took the time to create a thread about the the fact that people do this. Here's a fact, I could care less how long people need to stretch their payments out to afford transportation. Notice I haven't created a thread about the subject, because what people do is their own business. I'm pretty sure you created this thread to simply to brag about your ability to pay cash for cars for the last 10 years. I guarantee it that you look down on people that finance autos. Again, to point this out on this forum is trollish behavior.
Calling me "small minded" does nothing to prove your point. I reply, because I can see through your BS and elitist attitude and don't mind calling you out on it. You create posts like this to put others down, which again, is the definition of trollish behavior. Here's another quote of yours:
Quote:
Originally Posted by f5fstop
I'm one of those people who love dogs, and HATE most humans I have ever met.
Simply put, you don't like people. You're absolutely positive that you are above all of us, and you spend a great deal of time creating posts on here that have you looking down on people in general. You sir, are a troll.
Here's another of your quotes that I will be heeding in this discussion:
Quote:
Originally Posted by f5fstop
I made my statements, you didn't like them...fine with me, since I really could care less about anything you say or do, including waking up in the AM.
No, it's called me having an opinion on a discussion board. Nothing more.
I'm sorry it's not the same as yours. If that upsets you, I apologize.
No, I just asked how you know all these people are making bad decisions and are going to wish they hadn't come retirement and you have no answer. But now you think your crystal ball mental abilities are working on me in that you think it upsets me. You're wrong. No need for the passive aggressive BS apology.
Just because its available and the market has spoken, doesn't mean its a great idea/good deal. Time shares, whole life insurance, extended warranties, credit cards, are all examples of what isn't necessarily a good deal, but people buy them.
So have you surveyed everyone's 84 month loan on every vehicle it is available on to come to this conclusion? At what point do you step in to other people's lives and situations to let them know what is good and what isn't?
You haven't. So you can't make the judgment that anything above 60 mo, or wherever your line is, is a bad idea.
Wealthy people didn't get wealthy by making payments forever. Quite the contrary.
What a specious statement. I consider the 1% to be wealthy. I don't know or care how you define them. If you work for a living and you think you are going to become wealthy simply by choosing to pay cash or never going above 48 mo on some Camry or whatever you are deeply deluding yourself.
I don't know about everyone else but I'm on year 3 of a 6-yr 0% APR car loan even though I've got lots of cash in my savings.
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