So a massive down payment is better than keeping that $ while it makes more money for you? With how low interest rates are, and don't forget the 0% deals, it is not the end of the world to do the longer term for those that keep cars that long.Even if vehicles are lasting longer, long-term notes don't make sense when little is put down, and the new owner is instantly upside-down the moment they drive off the lot. One accident (auto or medical that leads to loss of the ability to work) or downturn in economy leading to a job loss puts the owner in a bad financial situation. The probability of something like that happening increases when you're paying on a vehicles for 6-7 years versus 2-4 years.
These long-term financing options are making people think just the way you are stating it. It'd be the same as saying that it would be wise for mortgage lenders to make 45 year notes an option to the public so people can afford more house than they can truly afford.
We saw the pop on the housing market, I feel the same will come with auto loans. If that's the case, I'll be looking for a good deal on repossessed vehicles here in a few years.
New vehicle sales pace...unsustainable?
- Thread starter MFE
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That's why you get GAP insurance. Makes zero sense to put a ton of money down on a depreciating asset. Especially one that can be totaled by a bad driver in an instant.
Holy shit. I haven't seen that anywhere, and I was looking into different lenders 6 months ago.
I agree. I apply the same logic to extending auto loans out to 3/4+ of the time somebody will own a car. According to this, people keep a new car 6.5 years and the average age of a car is only 11.5 years.
https://www.cnbc.com/2015/07/28/americans-holding-onto-their-cars-longer-than-ever.html
I didn't forget the interest deals. We took advantage of one back in 2010. However, I'd rather not carry the debt on an extremely depreciating asset such as a vehicle. Refer to my post above about the length of ownership.
Wow... didn't even know it was a thing. I like how it says, "50 year mortgages come at a cost. Such as higher interest rates and an overall higher interest paid over the life of a loan." Ha... Duh! Just goes to show how gullible people can be.
So, carrying a larger debt on a depreciating asset and spending MORE money to cover your butt in case of a wreck is the smarter way to spend your money? I don't agree. We did it 7 years ago and it wasn't smart. Luckily, we were not heavily burdened by the poor financial choice. In addition, by your logic, paying cash for any vehicle is also a bad financial move? I'd venture to guess that a lot of rich people would disagree with that as well.
What happens if, as I said, you get injured, sick, or are unable to work. You now owe more on a vehicle than it is worth and are no longer able to make a monthly payment that was based on your working income. You now have to sell, and shell out the difference as a loss. Or, beg/borrow/steal to keep up your payment. That's all based on not having an emergency fund capable of carrying on said payment.
I can see banks being comfortable with 6 year auto loans. Average mileage is like 13,500 miles driven per year, which comes out to 81000 miles in a 6 year period. New car warranties last from 60-100k miles. There is a pretty reasonable expectation that the car will still be operating, and worth something after 6 years. Not that it is necessarily the best thing financially, especially with low down payments. Very hard to not be upside down on a loan that way.
Some of these loans going out to 7 or 8 years boggles my mind though.
We tend to keep our cars for a long time. Had our focus for 7.5 years/172k miles. I've had my mustang for 12 years. Just bought a used explorer 18 months ago, but will likely have it for another 5.
borrowing money is simple just remember "If ya pay ya stay and if ya don't ya won't." That's what a lawyer said about all the fancy legal papers ment.
Gap Insurance isn't THAT expensive. It sure as hell beats it vs spending thousands of dollars on a down payment, getting your vehicle destroyed the next day and you losing that big down payment.
What if you get injured, sick or unable to work and you can't pay any of your other bills or mortgage? I mean you're really reaching there trying to single out a car note being the end of the world. Good thing I have other means to make the payment or pay it off. Worst case scenario, if I can't find a buyer, it'll get repoed. Not the end of the world.
ah but what about guys like me that have cars 18-24 months, and get a new one? Do a bigger down payment (so you're not upside down), stretch out loan, dont drive car everywhere (I've put 15k miles on my cobra since I bought it in March 2016), sell for enough to put money down on something else, done deal.
Eventually lenders stop lending money when you have too large of a LTV ratio and you are stuck with that car for a while if you don't have the means to cover depreciation every 24 months on a new car.
I drive way too much to do that right now.
50 year loan vs 30 year loan difference is a few hundred per month on the same interest rate.
But you pay almost double in interest in 50 years vs 30.
But you pay almost double in interest in 50 years vs 30.
Unfortunately a lot of people only look at the monthly.
Yup, my banks said hey you sell cars too often, never miss a payment, pay more than the min, etc & we will not give you another loan! SMH
US News, Matt Rand published a article 5 days ago but got put to the bottom of the news because of Irma, on the 8 best cars to buy because of their sales numbers are down. Ford Mustang was on the list with a sales drop of 30% over last year. Theres a couple new 16's around me. Just can't see the $$ for new and the 18's front cowl IMO suck.
Time is on my side. Just wanted a birthday present next month but should really be happy I got a nice 99 Ford truck last spring
Time is on my side. Just wanted a birthday present next month but should really be happy I got a nice 99 Ford truck last spring
Good reason to never use them again.
I've been rocking penfed for my last couple vehicles and they are stupid easy to work with but a local credit union is offering $200 and 1.5% off of your current rate to refinance, so I'll probably jump.
If you have 0% interest, will they pay you 1.5%?
I wish lol.
Last time I did this, with them even, I was at 1.9% and they said they couldn't give me 1.5% off, but I did get an extra 1%.
I save the down payment and add extra on to my monthly payments so in case something happens im ahead and can work around it. It keeps money in my account in case of an emergency and looks good to the loan company that i pay extra
You don't lose your down payment if you wreck the car the next day. You'll lose whatever the depreciated value is versus what you bought the car for. It's honestly an agree to disagree. However, I never thought I'd have to defend my stance of not taking out a 4+ year car loan with minimal down.
And we're not just talking about you, me, or any other SVTPer in these instances. For the most part, we're all OK. The majority of the people who are making these poor financial decisions can't afford it when the mistake catches up with them.
I mean, this is no financial advice forum, but keeping a separate emergency fund that is never touched unless truly needed could cover those things. Save up the larger down payment outside of e-fund and burden yourself less each month. Just an option.
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