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Is this really that high a number when compared to the average household income?
69 months is a little excessive, based on society's norms. Today, people are keeping their cars an average of 6.5 years (78 months). In 2006, it was 4.5 years (54 months). A recession is part of that, but very long term loans is another big portion - 54 months into a 69 month loan still has a decent chunk of principle left.
The average household makes $60k. Average 32% taxes.
Gross debt ratio, that leaves $1449 for housing and all other debt.
Average US mortgage is $1029. Average US rent is $1419.
i.e. Yes, that's too high. An average rent plus an average car loan leaves the average US household with a debt ratio of 39.6%
That's just cray-cray. I have a rule - payment less than $300, and no longer than 4 years. Every car I have every bought has met that rule.
With the rising cost of cars you will simply need a larger down payment!
Lets say a new Bentley is $300,000 and the sales tax is 5% so you need 315K to drive home.
So to stay in your current formula you just need to put 301,700 down and finance the outstanding taxes due and your payment will be $300 a month for 4 years. So with the right down payment you can drive a brand new Bentley for $300 a month, lets start a thread!
Its just math folks, the cost of the car isn't the issue it seems the lack of the down payment is!
69 months is a little excessive, based on society's norms. Today, people are keeping their cars an average of 6.5 years (78 months). In 2006, it was 4.5 years (54 months). A recession is part of that, but very long term loans is another big portion - 54 months into a 69 month loan still has a decent chunk of principle left.
The average household makes $60k. Average 32% taxes.
Gross debt ratio, that leaves $1449 for housing and all other debt.
Average US mortgage is $1029. Average US rent is $1419.
i.e. Yes, that's too high. An average rent plus an average car loan leaves the average US household with a debt ratio of 39.6%
Your numbers are way off.......up to $78,950 the federal tax rate is 22% for married joint filers so start there. Not sure where you get 1449 for the gross debt ratio.
I just take the longest term loan with the best interest rate I can. If they will give my 120 months @ 0%, i'll take that. If you are going to let me keep my money in my pocket and charge me minimal interest, why should I be in a rush to give it to you?
Now, it doesn't mean I pay the min payment. I usually overpay and pay the car off quickly or find myself so far ahead in payments that I can skip a few months and not pay at all and still be ahead. Just gives me a comfort level. I paid the last car off in less than 24 months.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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You simply buy a vehicle that you can afford. There are plenty of people that have enough income to pay over $500/month for a new car. They might have two good incomes,one great income, or just have bought their home 20+ years ago so their income has outgrown their mortgage. My first payment over $500 was on a new 1990 Bronco, $525/month, that with minimal down payment and high dealer interest rate. Currently I pay about the same on a 2017 F150 after $8,000 down and with great credit union interest rate.
Nope. Car is a 2008 and runs well. Sure, I've put some $$ into it as you would expect, but it's exactly what I need to get around.
Call it what you want, but it’s old and relatively busted compared to a new car. You’ve just accepted that as good enough for you’re needs.
I still have no idea why people feel like they need to justify this to me.
Half the people in my office drive a car worth more than they make in a year. It's the American way. Oh and the majority live in tiny, dumpy apartments in crappy areas, but they drive a BMW/Mercedes/Lexus/Tesla!
This thread is headed nowhere fast. It seems to have run its course and is now closed.
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