October 30, 201312 yr 25% of all new car loans over the last year were 73 to 84 months. 42% were 61 to 72 months. Average new car transaction price was $25,700 IN 2002. Now it's $30,500 . Avg new car loan rate is 3.94%.
October 30, 201312 yr I just totaled my 215,000+ mile 2001 Grand Prix. We bought that car cheap (salvage title) & I'd driven all but 2,600 miles of it. Driving a rental (2013 Elantra) right now & everyone is asking me if I'm going to buy something like that. People who ask that know how close we are to complete debt freedom, so I just stare at them like they have twelve heads. Zero percent chance I'm financing anything. I guess I've driven such crappy vehicles for so long that newer models just don't have any allure to me. And while I've never been a fan of debt, car debt is the type I hate the most.
October 30, 201312 yr Author Scary... Scary for dealers as well. They either a)aren't seeing that customer again for a long time or b)will see them in 3 years (average time to trade) and they will owe a lot more than the car is worth. That makes it very difficult to get them in a new car unless the customer comes up with a nice cash downpayment (most do not).
October 30, 201312 yr Scary for dealers as well. They either a)aren't seeing that customer again for a long time or b)will see them in 3 years (average time to trade) and they will owe a lot more than the car is worth. That makes it very difficult to get them in a new car unless the customer comes up with a nice cash downpayment (most do not). Does that make the dealer less likely to come down on price when a new car is being purchased?
October 30, 201312 yr Author Does that make the dealer less likely to come down on price when a new car is being purchased? Depends on how far upside down the customer is. Banks have rules about how much they will finance on a car. You can't get a bank to finance $35k on a $20k car. Ex: Car A has a MSRP of $28,000. It's "invoice" price is $26,000. Look at invoice as cost to the dealer. Banks usually use invoice cost as the basis for how much they will loan on a car. It's usually 110% to 120%. So in our example the bank will loan $28,200 (110% of $26,000) to about $31,400. If you roll in in your hoopty and you owe $10k but it's only worth $5k you're upside down $5k. Goal is to get the customer to come up with as much cash down as possible to cover that $5k. Otherwise it gets added into the loan. So let's say you have $0 to put down. If the dealer sold the car at list price of $28k that leaves him about $200 to $3400 to absorb that $5k. Can't do it so he now has to discount it to get the loan amount down to the acceptable level. Dealer makes no money. Customer goes out in another long-term loan. Not good for either side.
October 30, 201312 yr I do think cars last longer now than they used to. So the thought of owning the same car for 7 years (and paying for it) does not seem as bad to some people I'm guessing. I hate car payments and do not have any. I was always afraid a car with over 100,000 miles on them would break down. I now own two of them. But I also won 2 cars that are 2010 and newer that Mrs. TAC and I drive. The boys get stuck with the 95 and 2008 vehicles. WOW! just as I typed this I realized that If I had a 7 year loan on the 08 I'd still have 2 years left to pay on it????? Can't fathom that!
October 30, 201312 yr So let's say you have $0 to put down. If the dealer sold the car at list price of $28k that leaves him about $200 to $3400 to absorb that $5k. Can't do it so he now has to discount it to get the loan amount down to the acceptable level. Dealer makes no money. Customer goes out in another long-term loan. Not good for either side. Wow.
October 30, 201312 yr The boys get stuck with the 95 and 2008 vehicles. Tell whichever one that's "stuck" with the 2008 that Randy Parker's good car is a 2006 with over 100k miles.
October 30, 201312 yr Terrible. I just recently got the nicest car I've ever had and it's fairly new only because I got a good deal on a car that someone else was leasing. I picked it up as the lease term ended. I can't even fathom what having a car loan with that term might be like. Nice article on all this in the C-J this morning.
October 30, 201312 yr Tell whichever one that's "stuck" with the 2008 that Randy Parker's good car is a 2006 with over 100k miles. Yes, they are a bit spoiled. But you should see the 95 jeep that the other one has to drive. They fight over possession of the 08 when both cars are home. I'm amazed at some of the vehicles kids have to drive to high school. I got my first car when I was a soph in college.
October 30, 201312 yr I have a 2003 Elantra that I bought in 2003 w/ 165,000 in it. I just replace the head gasket for $1700, which, to me made sense b/c I owe nothing on it and that's about 4 months of car payments on a nice car. The head gasket should get me another 40,000 at least, so that's another 3 years that I'll have the car for. People laugh at my piece, but I don't care. We also just paid off our 2011 Sienna, so we are clear for the time being. Saving up for 2017 when the boys will have their licenses. I've let them know that they will be sharing 1 car. They don't both need a car.
October 30, 201312 yr Yes, they are a bit spoiled. But you should see the 95 jeep that the other one has to drive. They fight over possession of the 08 when both cars are home. I'm amazed at some of the vehicles kids have to drive to high school. I got my first car when I was a soph in college. In 2002 I got my first car, a 1992 Volvo that had about 150,000 miles on it. You had to take the gas pedal to the floor when getting onto a major highway and merging was still a bit dicey if it was one of those short ramps in and around downtown Louisville. I still miss that car.
October 30, 201312 yr I have a 2003 Elantra that I bought in 2003 w/ 165,000 in it. I just replace the head gasket for $1700, which, to me made sense b/c I owe nothing on it and that's about 4 months of car payments on a nice car. The head gasket should get me another 40,000 at least, so that's another 3 years that I'll have the car for. People laugh at my piece, but I don't care. We also just paid off our 2011 Sienna, so we are clear for the time being. Saving up for 2017 when the boys will have their licenses. I've let them know that they will be sharing 1 car. They don't both need a car. I had an engine replaced once for $1,400. Got me another 140,000 miles. You & I share the "People laugh, but I don't care" mentality. I laugh at them once a month for 72 or 84 months.
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