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Old 04-09-2013, 10:54 PM
 
4,794 posts, read 12,336,115 times
Reputation: 8397

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This woman actually had a 97 months car loan:

Introducing the 97-month car loan - Yahoo! Autos

FTA:
In the final quarter of 2012, the average term of a new car note stretched out to 65 months, the longest ever

Experian said that 17% of all new car loans in the past quarter were between 73 and 84 months

Based on recent economic history, I am just really opposed to this trend. These people getting loans on an asset that will be worth less than 25% of the original price when the loan is paid off.
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Old 04-09-2013, 11:09 PM
 
24,488 posts, read 41,023,198 times
Reputation: 12919
I looked at the rates being offered at my credit union. They offer 4.49% for up to 96 months. That's a little high for my taste but not horrible. Given the rate table below, 72 months [on a new car] seems to be the best option. It'll be tough to do worse than that in the market.

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Old 04-10-2013, 12:43 AM
 
Location: Carmichael, CA
2,409 posts, read 4,426,772 times
Reputation: 4379
Still having a car payment by the time you start needing tires, brakes, repairs, etc. is a recipe for financial disaster. The first thing the person will do is skip the car payment and justify it by saying they need the repairs to get to work.
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Old 04-10-2013, 12:50 AM
 
4,794 posts, read 12,336,115 times
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I didn't see this was already a thread in the Economics forum. Great minds think alike.
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Old 04-10-2013, 12:55 AM
 
24,488 posts, read 41,023,198 times
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Quote:
Originally Posted by cb73 View Post
Still having a car payment by the time you start needing tires, brakes, repairs, etc. is a recipe for financial disaster. The first thing the person will do is skip the car payment and justify it by saying they need the repairs to get to work.
Only a financially irresponsible person would do that.
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Old 04-10-2013, 01:01 AM
 
15,633 posts, read 26,146,554 times
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Quote:
Originally Posted by kanhawk View Post
This woman actually had a 97 months car loan:

Introducing the 97-month car loan - Yahoo! Autos

FTA:
In the final quarter of 2012, the average term of a new car note stretched out to 65 months, the longest ever

Experian said that 17% of all new car loans in the past quarter were between 73 and 84 months

Based on recent economic history, I am just really opposed to this trend. These people getting loans on an asset that will be worth less than 25% of the original price when the loan is paid off.
By the way -- it's NOT seven years. It's EIGHT. and EIGHT MONTHS.

Just insane... but people will do it. I know plenty of people that have decided they will always have a car payment.
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Old 04-10-2013, 01:09 AM
 
Location: Long Neck,De
4,792 posts, read 8,157,321 times
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Quote:
Originally Posted by NJBest View Post
Only a financially irresponsible person would do that.
Maybe they just don't stop and think. Seems you would forever be upside down i that loan.
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Old 04-10-2013, 01:30 AM
 
24,488 posts, read 41,023,198 times
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Quote:
Originally Posted by longnecker View Post
Maybe they just don't stop and think. Seems you would forever be upside down i that loan.
You would only likely be upside down the first year at a rate of 4.99%.

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Old 04-10-2013, 03:11 AM
 
Location: Long Neck,De
4,792 posts, read 8,157,321 times
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Quote:
Originally Posted by NJBest View Post
You would only likely be upside down the first year at a rate of 4.99%.
I guess we read that graph diffrently Sure looks like 3 years to me.
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Old 04-10-2013, 05:17 AM
 
Location: Vallejo
21,678 posts, read 24,855,074 times
Reputation: 18910
Quote:
Originally Posted by cb73 View Post
Still having a car payment by the time you start needing tires, brakes, repairs, etc. is a recipe for financial disaster. The first thing the person will do is skip the car payment and justify it by saying they need the repairs to get to work.
I needed tires when my car was less than two years old... some how I survived. I also did a two-year note which drastically exasperated the disaster quotient since my payments were 3x or more what these longer notes woud have been. On the flipside, I've been payment free for over two years now, which is quite nice. That was intentional. I bought the car knowing I intended on going back to graduate school in two years and wanted something that would be reliable and paid off. That didn't end up occurring, but I spend 15 months in abroad and nine months retraining and getting licensed when I came back to the States.

Partly, the longer loan terms are just a reflection of the fact that cars last longer and hold their value better. In the '50s when the average car just wasn't 11+ years old as it is today. Average new cars are likewise held longer, nearly six years now.

longnecker,

You're assuming 0 down and no trade-in. That's not the case for most people. On my first new vehicle purchase, I put $8,000 down, nearly 50%. On my next one, I'll probably get at least $6,000 as a trade-in (not planning on it for a year or two, could be longer) and then down payment would depend on interest. At 2-3%, I wouldn't bother putting anymore than that necessary down. At 5% I'd just pay cash.
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