By on January 28, 2014

Insane People at the Stock Photo Dealership

Younger buyers and subprime consumers are expected to drive auto sales in 2014, though some banks are already stepping off the accelerator with auto loans due to heavier competition and a desire to protect their margins.

Sales in 2014 are predicted to hit 16.2 million according to J.D. Power & Associates, with millennial buyers and subprime buyers contributing 3.3 million and 2.1 million units, respectively. Both surges in these categories are welcome with automakers, especially younger consumers who would love to be in a car were it not for the Great Recession keeping their wallets at bay.

The growth in sales comes against rising auto prices, which are expected to average $29,700 in 2014. One result: long-term financing in the form financing options that can be amortized over 100 months.

Those seeking loans for their new or used vehicle may need to shop around for financing, however, as some banks — such as Huntington and BB&T — are more interested in protecting their margins than chasing after more market share.

Among the big winners in Q4 2013, Wells Fargo originated $6.8 billion in auto loans, followed by Chase with $6.4 billion, and Capital One with $4.3 billion. Wells Fargo is the industry leader in used-car financing, but does well with new-car loans, as well, particularly in their relationship with General Motors.

A lot of the success comes from tightened lending standards that came as a result of the Great Recession, bringing a number of banks into the low-risk lending party. As economic conditions return to the surface, however, some banks are opting out of expansion into murkier waters for the time being as others cast their nets into the unknown, bringing gradual increases in credit losses as underwriting standards are relaxed to attract more subprime customers and younger buyers.

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109 Comments on “Auto Sales Expected To Grow In 2014 Thanks To 100 Month Financing...”


  • avatar

    Ummm, pretty sure she wouldn’t be laughing so hard if she got one of those 100 month deals!

    • 0 avatar
      bball40dtw

      She’s laughing at her husband/boyfriend because he’s wearing a white Hanes t-shirt with a coat. Terrible.

      Maybe she’s not on the 100 month loan?

    • 0 avatar
      mikey

      @ Marcelo de Vasconcellos….By the time she gets the car paid off she will be 8 years older. Those guys will be working on beer bellys, and have receding hair lines.

      Put it down to age, but , I just can’t get my head around making payments on the same car for over 8 years. A hundred payments means your “upside down” for 6 or 7 years.

      • 0 avatar
        DeadWeight

        That salesman is under the tutelage of Ruggles, and that woman is laughing her arse off because he just told her the only financing available is a 100 month loan on the used 2007 Kia Rondo with 68,000 miles that she was considering, taking it’s total cost of purchase to $53,800.

        • 0 avatar
          Pch101

          Let the photo caption contest begin:

          “I can’t believe that I convinced my boyfriend to cosign my car loan!”

          “Fabulous! I just LOVE undercoating!”

        • 0 avatar
          highdesertcat

          DeadWeight, it’s all about clinching the deal, making the sale, parting the customer with as much of their money as a salesman can.

          And some people….. salespeople, dealers, finance companies, consultants, advisors, analysts….., make their living from it.

          • 0 avatar
            TW5

            Great way to get repeat business.

          • 0 avatar
            DeadWeight

            Now that I have thought about it, that woman isn’t laughing. She’s grimacing in pain.

            Ruggles has stealthily snuck up behind her on all fours and inserted a 20″ dildo into her anus.

          • 0 avatar
            28-Cars-Later

            @DW

            LOL

          • 0 avatar
            Idemmu

            @tw5 This is a great way to get repeat business, and more money. People will get tired of their cars way before they are done paying for them, and trade them in for newer cars, and end up paying more for said newer car for this reason. Its genius actually. Statistics (that i do not have right now) suggest that people default less on car payments than any other type of credit (sub prime people included). In the end, the manufacturer will get more money, and perhaps a person with less than stellar credit will have the opportunity to rebuild their credit somewhat. Win Win Win.

          • 0 avatar
            TW5

            @Idemmu

            What happened in 2008? Oh yes, the auto manufacturers went belly up after their customers could no longer afford to put gasoline in their trucks and SUVs. The US economy couldn’t handle $300B in consumptive oil imports.

            The game you are describing is a Ponzi scheme for dumb executives. They can’t rob their customers forever, no matter what the market demands. They will have to steer customer demand towards new segments, the same way they steered everyone towards trucks and SUVs after CAFE killed the full size sedan.

      • 0 avatar
        krhodes1

        You are only upside down if you don’t put enough down in the first place. Am I the only person on the planet who finances with a reasonably substantial down payment?? Both my BMW and FIAT are worth substantially more than I owe on them, even in a fire-sale scenario.

        But ultimately, I will make payments on a car, or pay for repairs on a car, but never, ever both at the same time. So that puts a natural limit on my financing at 48-60 months. And I don’t do extended warranties, Vegas has better odds of paying off.

    • 0 avatar
      28-Cars-Later

      I’m pretty sure this is the same couple from a previous picture where the man and the salesman were having a moment. I can’t decide if shes laughing because the car her man wants to drive is such a joke or because she’s in denial about her man and the salesman…

    • 0 avatar
      69firebird

      Salesman:Here is your key.It cost 400$ to replace it plus a programming charge.I recommend our “Key-fob” insurance for 10$ a month.

      Woman:Brays like a donkey.

  • avatar
    86er

    It’s Photo Caption Time, once again!

    *This one takes place before the image we saw back in December. In this one the lady is laughing at her guy for throwing a sport jacket over his undershirt and thinking he’s dressed up*.

  • avatar
    skor

    “Among the big winners in Q4 2013, Wells Fargo originated $6.8 billion”

    My home equity line was acquired by Wells Fargo when Wachovia went Tango Uniform. My dealings with Wells Fargo have been, um…”interesting”. Despite never having been in default, or even late with a payment, in over 10 years, Wells Fargo reps harassed me repeatedly on the phone and by mail in an attempt to get me to refinance my home equity line of credit. Lies and threats that only stopped after I, threatened to call a lawyer and produced my original credit agreement with Wachovia that was filed at the county court house.

    Wells Fargo is an openly criminal operation of the “To big to jail” type. For the sake of your sanity and bank account, avoid Wells Fargo like fish from a Fukushima shashimi restaurant.

  • avatar
    Beerboy12

    100 month loans for a car, just so you can continue to drive a large fully loaded automatic vehicle.
    Seriously, time to put your pride away and look for a cheaper car.
    Oh! And yes, there should be a law that limits loan periods, 5 years MAX, OK!!!

    • 0 avatar
      Toad

      “And yes, there should be a law that limits loan periods, 5 years MAX”

      If consenting adults want to make decisions that you and I think are stupid they should be free to do so. Many financing decisions are stupid (as is the original purchase itself); virtually any financial adviser will tell you that most consumer auto leases are stupid decisions (but business leases can make a lot of sense). Adjustable rate and interest only mortgages are stupid for a lot of people (but very useful for more financially literate buyers in the right circumstances.)

      In short, making blanket laws can have unintended consequences. If we outlawed all stupid decisions among other things our birth rate would drop by at least half.

      • 0 avatar
        JuniperBug

        When you get a whole bunch of people getting themselves into debt trouble that they can’t get out of, it becomes everyone’s problem, because when they declare bankruptcy or otherwise welsh on the debt, somehow or other, that unpaid debt comes out of the pockets of responsible people who did pay their bills.

        You’ll have trouble convincing me that a car that takes 100 months to pay off is one that a responsible person can afford to buy.

    • 0 avatar
      Chicago Dude

      “there should be a law that limits loan periods, 5 years MAX”

      Speak for yourself. When VW gets so desperate that they offer 0.9% financing for 100 months, I’ll… Well, I’ll at least check out their website before ignoring them for another few years.

  • avatar
    Kyree S. Williams

    Who laughs as someone hands her husband the keys to a new car? “Oh my God, honey…we’re being scammed for an arm and a leg…how funny!”

    Seriously, though…what kind of interest would the banks have to charge in order to make a 10.33-year loan worthwhile? And wouldn’t it make the payments still prohibitively high, unless the car was prohibitively cheap? Also, what kind of customer would qualify for such a loan? Obviously it wouldn’t be a deep-subprime customer, since the bank would have a high chance of that customer defaulting on the loan and causing said bank a loss. And would GAP insurance be mandatory, since most of the customer’s monthly payment would go toward interest and not toward paying back the principle?

    Here’s the longest I’d finance a car:

    -New—60 mos.
    -1-3 years old—48 mos.
    -4-6 years old—24 mos.
    -7+ years old—no financing; pay cash

    • 0 avatar
      Toad

      Using a simple interest payment calculator with a $30,000 loan:

      At 5%
      36 mo: $899.13/mo; $2368.51 interest
      60 mo: $566.14/mo; $3968.22 interest
      100 mo: $365.09/mo; $6801.26 interest

      At 10%
      36 mo: $968.02/mo; $4848.56 interest
      60 mo: $637.41/mo; $8244.68 interest
      100 mo: $441.08/mo; $14,461.37 interest

      I can see where a payment shopper would be tempted, as would the bank making the loan. Not a loan I’d want to take, but I can see why some people would. Not only a lot of money to be made in interest, but rolling over a lot of negative equity into the NEXT loan could really juice the profits. After a couple of trade in/refinance cycles a buyer could be beyond buried in a loan.

      • 0 avatar
        April

        Correct me if I’m wrong but doesn’t a simple interest loan keep principle and interest the same for the entire length of the loan?

        I was thinking most new car loans are front loaded.

  • avatar
    OneAlpha

    So we’re doing 100-month auto loans now?

    Seriously?

    Look, if you’re paying something off for more than three years, and you’re not either living in it or listing on your resume, you deserve to be trapped in debt because you have no fucking idea how to manage money.

    There’s all this talk about “predatory” lenders, but “predatory” lenders can’t exist without dumbasses to feed on.

    Yeah, they cheated you, but you let ‘em. Call it a learning experience and don’t do that no more.

    • 0 avatar
      Kyree S. Williams

      If you wanted to pay a new car off in three years and you’re of a low or average socioeconomic-class, your outlay would be a significant sum of your yearly income, and maybe that money could be put to better use (like savings or living expenses). This is especially the case if you have a particularly-low interest rate. So I think three years to pay off a car is a bit harsh. Five or even six years’ worth of financing is acceptable for a new car; ten years is absolutely absurd.

      • 0 avatar
        ellomdian

        Was going to say this same thing. I love how much of the “PAY CASH!” brigade is sitting on a traditional 30-year mortgage and scoffs at financing a car for 3-5 years.

        Having said that, the concept of 100-month car loans just gave me vertigo.

        • 0 avatar
          abdoozy

          There’s a huge difference between a 30 year mortgage on a home — generally considered an appreciating asset, the housing bubble being an aberration — and a long-term loan on a depreciating asset like a car. If the asset is depreciating it makes sense to minimize the term, not maximize (well, it makes sense for the buyer, the opposite for the lender).

          If people had to purchase the cars they could actually afford, the auto industry would go straight into the tank. Which is pretty much what happened around 2008.

          Anybody considering financing a vehicle for 10 years should just go with a lease instead, because they’re going to be making payments forever, unless they’re financially savvy enough to figure out how to pay it off sooner, in which case they’re probably smart enough not to finance over 10 years in the first place.

          I’ve never financed a car for longer than 4 years, and even that creeped me out and I wound up paying it off within 3 anyway. I can’t imagine being in a situation where I thought 120 car payments was a good idea.

          • 0 avatar
            jmo

            “generally considered an appreciating asset,”

            If you ignore a certain global economic calamity. Other than that Mrs. Lincoln, how was the play?

    • 0 avatar
      sirwired

      Three years, max, or you have no idea how to manage money? Seriously? Even the most trouble-prone penalty box on the market is pretty much certain to last much longer than that.

      I think 100 months is too long, but saying car loans should be no longer than 36 months is more than a bit extreme. If the interest rate for a loan longer than three years is still low, and the car is likely to last far longer, why not?

      Did I have no *bleeping* clue when I financed a used ’98 Corolla in ’99 w/ 24k on the clock? Fifteen years later, my parents still use that car for short-trip duty.

  • avatar
    cargogh

    I bought a ’90 Accord EX 5 speed in ’98 for $2250. It wasn’t what I wanted, but it was a great deal. It seemed like I drove it forever, and I did longer than any other vehicle I’ve owned. That was nearly 7 years. I can’t imagine making payments for this long.

  • avatar
    SCE to AUX

    Rather than finance for 100 months, you’d be better off leasing a new car every three years.

    You’d have no out-of-warranty expenses, and at the 8.33-year mark you’d be driving a 2.33-year-old car, not something with 100k miles on it.

  • avatar
    jmo

    In round numbers going from 72 months to 100 months on a 3$30,000 loan drops the payments by $100. If $100/month is going to break you, you have no business in a $30k car.

    • 0 avatar
      badcoffee

      at this point, the average car deal is $30k

      • 0 avatar
        jmo

        Average price paid for a Kia Forte is $14,580 and it’s a fine car.

      • 0 avatar
        Kyree S. Williams

        I’d be kind of uncomfortable buying any car and not having *any* positive equity in it. If I was going to get a $30K car, unless I had an insanely-low interest rate, I would be putting down at least $4-$6K on it, and maybe making some extra payments toward the principal amount. And I would steer clear of cars that undergo steeper-than-average first-year depreciation. If I couldn’t do that, I’d just buy a pre-owned car or a cheaper car that didn’t require such a steep initial investment.

  • avatar
    Pch101

    At this rate, we’ll have interest-only car loans in no time.

  • avatar
    johnny ringo

    This reminds me of the line from the old Cheech & Chong comedy album: “$50 dollars and $50 a month for the next 50 years.” I won’t finance an automobile for longer than 3 years–just about anything else and you’re upside down in the equity on your auto loan.

    • 0 avatar
      Kyree S. Williams

      Again, not true. You can finance a car for a longer term than three years and still have positive equity, and people often do, because 36-month loans have very expensive monthly payments that not everyone can afford. Now if the thought of owing money to anyone at all makes you uncomfortable, then, yes, pay it off ASAP…

    • 0 avatar
      thunderjet

      When I bought my brand new car three years ago the dealer offered me 0% for either 3,4, or 5 years. Well I could afford the 3 year payments but hell if they want to give me free money for 5 years why not?

    • 0 avatar
      Lorenzo

      That 50/50/50 is pretty close to a parody of Lee Iacocca’s sales gimmick in the 1950s. That was a ’56 Ford for $56 a month, and it sold a lot of Fords. Hmm. Maybe they know what they’re doing?

  • avatar
    prndlol

    “So take back the keys to your shitebox and get the f out!”

  • avatar
    Chocolatedeath

    So many opinions so little time.

  • avatar
    JK43123

    “taking it’s total cost of purchase to $53,800.”

    But the average dummy says “wow, the payment is 9 bucks a month less!”

    John

  • avatar
    fredtal

    Am I the only one besides drug dealers who will pay cash for a new car?

    • 0 avatar
      jmo

      If you want to throw your money away vs. taking that 0% interest – that’s up to you.

      • 0 avatar
        fredtal

        The only 0% loan I’ve seen was for 2 years and they had a $100 orgination fee and I had to put down 25% And bend over if you didn’t pay it off in 2 years.

      • 0 avatar
        Kyree S. Williams

        Not everyone qualifies for zero-percent financing. There are people with very healthy incomes who can and do pay cash for big-ticket items; yet these people may have horrible credit ratings because they have little or no loan history as a result of their cash-only lifestyles. Two, zero-percent financing isn’t the only situation in which financing is more ideal for the would-be-cash customer. If you have some kind of surefire pot that you can put your car money into that will earn you interest money faster than you can lose money from the non-zero interest on the car loan, that’s a reason to finance, too.

    • 0 avatar
      JK43123

      I do!

    • 0 avatar
      Syke

      You’re possibly the only one besides a drug dealer who CAN pay cash for a new car.

    • 0 avatar
      highdesertcat

      fredtal, I’m with you. Haven’t had to finance a new car or truck since my wife’s 1992 Towncar. Been saving and paying cash for everything I can along the way, ever since. If I don’t have the money for it, I can’t afford it!

      (Except direct, deductible, traceable Business Expenses which go on the company credit card, of course.)

      • 0 avatar
        hreardon

        I agree with the principle of paying cash – but if someone is giving me a 0% – 2% loan, it’s virtually free money. I’d rather use someone else’s capital than my own.

        My rule of thumb is generally to make sure I’ve got the cash in the bank to back the loan in case of emergency, but otherwise…..

        • 0 avatar
          highdesertcat

          hreardon, people have to do what works best for their own situation. Because I live on a fixed income I have to do what works best for me.

          Financing anything brings about other unintended consequences such as Full Coverage Insurance in the case of a car. On each of my vehicles I carry only the minimum absolute mandatory insurance coverage required by New Mexico law, and that saves me at least six hundred dollars per car, twice per year.

          • 0 avatar
            krhodes1

            You need to move to Maine – the difference between full coverage and liability only for me is $200/yr. No way am I risking a $40K car to save $200/yr. I don’t even pay $600/yr per car for the three moderns. The Rover is just over that much, the BMW just under, and the Fiat is well under $500. Why is NM so expensive? Seems like an older, established sort like HDC would get really cheap rates. I’m just a 44yo single guy with a clean record.

            Ultimately, I hate paying interest. But if I can earn more with my money than it is costing me to borrow, I will borrow within reason. Both of my financed cars are on 60mo .9% loans. I’ve averaged 5X+ that in the market over the past 4-5 years. To me that is a no brainer. I would also much rather put my cash flow towards paying off my mortgage – that is a 3X better rate of return than paying cash for the car.

            At the moment, assuming solid-gold credit, paying cash for a car seems like being penny-wise and pound-foolish. But we have had this discussion on here about 50 times now. :-)

    • 0 avatar
      TW5

      Cash-only. There is no such thing as an interest-free loan. Companies must recognize interest-revenue because vehicles with corrected-MSRP exist somewhere in the marketplace.

      Smart money only borrows for assets that produce marginal income or marginal cost savings. Consumers pay financing charges for overpriced utility.

    • 0 avatar
      thunderjet

      When you have good credit and can get between 0%-2% on a loan for 60 months why bother? Take the 60 month loan at 0%, pay it off, and keep the car till the wheels fall off.

  • avatar
    Syke

    This “$30,000.00 is an average car” is getting real scary.

    I’m seriously car hunting this year due partially to my personal situation. I’m 64 and scheduled to retire in three years. Having owned nothing but used cars for the past 14 years, I’m really in the market for a new car. Y’know, new technology, gadgets, warranty, etc.

    Given that I’ve got three years of about as steady a job as one can have in this day and age, I’m limiting myself to a three year loan – for obvious reasons. There’s an outside possibility that (out of necessity) I may be buying my last car and running it to death over the next 15-20 years. Thus my insistence on a new car.

    The way prices are going, I’m going to be seriously unable to look at anything fancier than a Cruze LT, or a Focus SE(S?), or something along those lines. Even a new Prius is out of the equation, although a Prius C may be workable. And while I love little cars (my trade in will be a first generation Toaster), I’d really hoped for something a bit larger and more luxurious to take me into my twilight years.

    So much for the fiction that the seniors are the only ones able to afford cars anymore.

    • 0 avatar
      highdesertcat

      Syke, you’re not alone in this. Many people of our vintage (I’m 67) seek assistance from AARP, USAA, TROA, NCOA or their local or national Credit Union to benefit from no-haggle deals that car dealers have with them.

      One older lady we know purchased her new 2012 Jeep Grand Cherokee Limited 5.7 from a dealership that had an agreement with her financial institution, and her total out-the-door cost was below MSRP without trade, and something she could write a check for. I don’t know all the details but she said it was the best car buying experience she ever had. No pressure, no pain, all gain.

    • 0 avatar
      Kyree S. Williams

      It sure isn’t a nice situation to be in, especially if you’ve worked hard and paid into the system all these years. On one hand, you can have a brand-new Cruze LT…but—as nice as the Cruze is—I can’t imagine anyone wanting to spend the last 15-20 years of his life in an economy car. So you could get a pre-owned car, but in order to get an appreciably-nicer one, you may have to accept one that has 40,000 miles or more, which is a significant chunk off of the vehicle’s useful life. And then there are the snobs among you—some of whom are reading this right now—who’ll stop and think “Now, what did *you* do wrong that you can’t just automatically afford a nice car at your age?”…but it doesn’t work that way.

      Really, though, it’s kind of debatable as to whether any of today’s modern cars will be usable in 15 or 20 years. Sure, they’ll probably still run, but they’ll be rolling timepieces with dead interfaces that can’t be replaced or repaired.

      • 0 avatar
        Syke

        “What did I do wrong?” In my case it was buying a larger home than I already owned (no mortgage) to keep my wife happy. Where I loved cars, she loved houses. And she felt that a 30 year mortgage was normal.

        In modern terms it wasn’t a mistake, and I did pay off the mortgage in ten years, but . . . . . my plans before the house arrived were to retire from my business at 50 (made it for about four months), continue to buy a new, modest car every three years, and live off my investment income for the remainder of my life. I was definitely living small in the living quarters and moderately playful in the transportation (2 cars, 10 motorcycles, mostly vintage) department.

        Her priorities trashed mine. Now that she’s gone, I’m seriously looking into downsizing the house. Unfortunately, to do that, you have to move – and I’ve already moved one more time that I’ve ever planned to.

        • 0 avatar
          krhodes1

          This is why I intend to leave my 1200sq/ft shack (with 3000sq/ft garage) feet first on a stretcher, the same way the last owner did. She lived in this house for *70* years, and died in it. I bought it in ’01, before the bubble, and before people discovered that my town isn’t a stinky paper mill town anymore. And even aside from the relatively tiny mortgage, I have always had at least one roommate to share the costs. At one point I had three.

          If some future partner of mine wants to live somewhere grander than this, he had best be willing and able to foot the bill, because I am NOT. Of course this is probably why I am still mostly single.

          • 0 avatar
            Syke

            Your thinking was my original attitude. Women have an ability to change that, though. Staying single is probably the best option, because marriage is always a compromise.

    • 0 avatar
      JuniperBug

      “The way prices are going?” As far as I can tell, prices have stayed constant or even reduced compared to inflation, while safety, content, performance, reliability and durability have all gone up.

      This may be a case of “in my day, everything was better.”

      • 0 avatar
        TW5

        Capitalism doesn’t produce increasingly luxurious goods at constant inflation-adjusted prices. Politically-protected, differentiated, interdependent oligopolies produce that kind of pricing.

        In a competitive marketplace with low barriers to entry, prices fall, especially if real wages are falling, and features generally tend to improve over time.

        • 0 avatar
          Lorenzo

          Except quality (materials and workmanship) tend to fall with prices. We saw that with VCRs (those of us old enough to remember the expensive metal frame early ones). They got both cheaper and cheaper, and flimsier and flimsier, until they were throwaways as soon as a major repair was needed.

          We’ve seen it with computers, we’ve seen that with DVDs, and we’re beginning to see that with flat screen TVs, although the shakedown with LCD/LED/plasma is taking longer than VHS/Betamax. We may reach that point with cars, eventually.

          • 0 avatar
            TW5

            Quality and workmanship fall when manufacturers pursue extreme weight reduction and size reduction to contain trans-oceanic shipping costs. Desire to contain shipping costs is less related to the market price of goods, and more related to corporate America’s desire to take advantage of artificially-cheap labor in Asian countries. When artificially-cheap foreign labor is part of a business model, repairs in the market-of-sale are rarely part of the equation, which necessitates disposable consumer goods.

            For the record, the cheap plastic VCRs of last decade, were more reliable, required less maintenance, and had better picture quality than the 40lb wood-paneled tape-eater we had in the early 1980s. Granted, the plastic fantastic were not as aesthetically pleasing, but, if you’re honest, they were much better at their job.

          • 0 avatar
            krhodes1

            But there comes a point where the item is so cheap that it doesn’t matter that it is a throw away. I am not going to pay to repair a $50 DVD player. If you get a few years out of it, you more than got your money’s worth. Cars are not nearly to that point yet, not even remotely.

          • 0 avatar
            Toad

            TW5, a couple corrections:

            Manufacturers don’t reduce weight in order to reduce shipping costs on an item as light consumer electronics. Shippers generally pay a flat rate to move a shipping container on a boat, train, or truck. The only exception is if it is unusually heavy.

            Quality and workmanship fall when consumers are not willing to pay more for higher quality goods. Furniture is a great example: you can buy really cheap furniture or really high end stuff, and a lot in between. The market has products to serve all budgets and desires. Electronics are the same.

            Foreign labor is not artificially cheap. A Vietnamese worker makes far more money and has much better working conditions in the shoe factory than she does hunched over in a rice paddy hand planting crops in the rain. That’s why people world wide are running from rural farms to urban centers, just like they did in America for the past 150 years.

            Most consumer goods are far less expensive in real dollars than they were 30 years ago. That brings the vast majority of people a higher quality of life.

    • 0 avatar
      Pch101

      The fact that the average car is selling around for $31,000 is skewed by the fact that the average full-size pickup is selling for about $40,000.

      The data is also skewed by the desire among many to have a lot of extra toys that they don’t really need.

      You can get a perfectly decent vehicle for something less than $30k if you can live with a car that doesn’t have every available option or a large bed attached to the back.

    • 0 avatar
      TW5

      The only way I know to get a midsize car for decent money is to go Korean. You can ask for $3,000 discount with a straight face at a Kia or Hyundai dealership. Just check the internet pricing.

      It won’t be the nicest vehicle you’ve ever seen, but you will get 110″ of wheelbase and a long warranty.

      • 0 avatar
        28-Cars-Later

        “110″ of wheelbase and a long warranty.”

        Ted Nelson, Customer: But why do they put a guarantee on the box?

        Tommy: Because they know all they sold ya was a guaranteed piece of sh*t. That’s all it is, isn’t it? Hey, if you want me to take a dump in a box and mark it guaranteed, I will. I got spare time. But for now, for your customer’s sake, for your daughter’s sake, ya might wanna think about buying a quality product from me.

    • 0 avatar
      krhodes1

      $30,000 is just a number. Per the CPI, $30K in 2013 was:
      $23,700 in 2003
      $18,600 in 1993
      $12,800 in 1983
      $5,700 in 1973 (the 70’s really sucked – 18% mortgages, anyone??)
      $3,900 in 1963
      $3,400 in 1953

      Which of those numbers makes you more comfortable? You certainly get a LOT more for your money today. Buy what you like and can afford, and KEEP the thing for a decade or more. It will likely be painless, as long as you like the car in the first place.

  • avatar
    hreardon

    I’ll take a 100 month loan…if it’s at 2% and the manufacturer will warranty the vehicle, bumper to bumper for at least 75% of the loan period.

    Any factories want to sign up? Anyone?
    Buehler?

  • avatar
    jkross22

    Know why this will work? Because here in the US, the only ‘disease’ more prevalent than obesity is financial illiteracy.

    • 0 avatar
      fredtal

      It will work because there is nothing a dealer want’s to hear more than “I can afford “$X dollars per month” Longer term, lower payments, fancier car, more profit.

  • avatar
    jkross22

    …. Oh, and she looks like she’s getting an under-the-table-pickle-tickle. Or is that her hand?

  • avatar
    BMWnut

    Most modern cars will be falling apart long before the 100 month mark is reached. German cars especially are built to last for 5 years or 100 000 miles, whichever comes first. You are supposed to get another one then. Everything about the car seems to be designed with that goal in mind, including the “free” servicing included in the price. Singning for that flashy 528i on a 100 month term will result in tears after about month 65. Even then the loan might still be under water resulting in the double whammy of a car payment plus frequent out-of-warranty repairs!

    • 0 avatar
      Kyree S. Williams

      I can’t see BMW offering a 10-year loan on the 5-Series. Maybe they would on the 3-Series, but that runs the risk of being so “successful” that it winds up driving the brand’s cachet down. I see it happening more on loaded trucks or SUVs that aren’t from premium brands. In the low forty-thousands , a Jeep Grand Cherokee Overland or GMC Sierra SLT is unattainable to a lot of people…but less so if it’s an 100-month term.

  • avatar
    April

    A ten-year loan will come with another big expense. The loan holder will more than likely require the buyer to maintain full-coverage insurance the whole length of the loan.

  • avatar
    Big Al from Oz

    Not wise. I think if you can’t pay off a vehicle within several years you can’t afford it.

    This will negatively impact the manufacturing industry overall. Short term gain?

  • avatar
    myheadhertz

    So,four years down the road and tired of the car, they see a dealer’s ad on TV. “We’ll pay off your current loan and put you in the new car of your dreams!” 100 month loan with no payments for 60 days. They can’t believe they found a deal this good. NEW CAR!

  • avatar
    myheadhertz

    She may have had one of these programed to work with that new key.
    From the look on her face, I kinda think she did!

    Slightly NSFW

    ***ttp://www.ec21.com/offer_detail/Sell_Car_key_wireless_remote–19028031.html

  • avatar
    Jimbowie

    Just too long a time to finance any car, even the short list of those that will last beyond the 10-year term.

    • 0 avatar
      krhodes1

      Given the AVERAGE age of a car in the US is 11.4 years and climbing like a moonshot, it sure seems likely most cars will make it the 8 years and 4 months of a 100 month loan without major dilemmas.

  • avatar
    SCE to AUX

    Seems like a way to kick the can down the road, re: the problem of extending credit to people who should not receive it (see Carmageddon 2009). Problem is, the sort of customer taking this loan will be the most likely to default on it.

    This drug is good for the dealers, but bad for the users.

  • avatar
    cartunez

    100 months at zero interest? Where do I sign up? I miss the GM 72 month 0% deals..nothing like getting a excellent deal on the front end and 0% note

  • avatar
    Silence

    I don’t know how subprime lending works, but this could be an alternative to those corner lots that charge huge interest rates for tired old junk.

    Would someone that can’t qualify for a 60 month loan get qualified for the 100 month loan? If then, get a new car and pay it off early.

  • avatar
    Boxerman

    From my experience a mercedes will need a5-7K input at 45-50Kmiles. In 8 years car may well go 100K miles. If its a german car and something like the transmission goes, or any number of other bits you are in for 5-10K more. So lest say over the 100k miles you are ptting 20K into repairs, Whereas at 45k on a lease you can jus return it, or it you own it trade it. I would say owning an expensive car out of warrantly especilay a german one is sure financial suicide. Now a new Gm car or Ford truck may well go the diatnce, as would somethig n from Korea or Japan, but aeuro lux car forget ot..

    • 0 avatar
      krhodes1

      Unless you have your car serviced at Mercedes of Manhattan, I think your prices are a tad exaggerated. Or you are buying loaded S-class and driving it like Big Truck Series. Maintenance on a $120K car IS expensive, but the depreciation is even more so.

      No matter how you slice it, the depreciation on a new car is more expensive than fixing a middle aged one. Even a German car. Let’s assume a 3-year lease on a mid-level 3-series, your classic $499/mo lease special (which is a subvented price besides). Usually at least $3K down to get that rate, 3 year lease. That is $21,000 NOT including tax and any license fees. In my state, those first three years of excise tax alone will cost you another $3500 or so, then there is 5.5% sales tax on the $21000, plus let’s say another $400 in dealership fees. So that three year lease will cost you better than $25000 in cash. At the end of that period, you have nothing, and in fact there are usually fees associated with turning the car back in. Do you honestly think that car is going to cost anywhere NEAR $25000 in repairs and maintenance in the next 3 years? 6 years?

      Buying one works out a little better, but not much. Let’s say $50K over 4 years at a low interest rate. Still going to be nearly $60K by the time taxes, fees, interest, and tires are paid for. It’s a BMW so maintenance is free other than tires for the first 4/50K. At the end of four years you have a paid for car with no car payment that is worth $20K +/-. So it cost you net $40K to get to that point roughly, if you sell it when the warranty runs out. Do you honestly think you are going to spend anywhere near that in the next 4 years? Seriously? Because I am on an awful lot of forums and nobody has ever spent anywhere NEAR that in maintenance. That is MULTIPLE engines and transmissions. You MIGHT get those kind of running costs out of a Ferrari, but not a normal German sedan.

      There is a guy on the BMW forum who has run an ’06 325i to well over 200K miles keeping meticulous records along the way. He hasn’t spent $25K including gas and insurance on that car!

      People miss the forest for the trees with this stuff. Those easy $500/mo payments add up to REAL money over a few months, month in and month out. Sure it sucks to get hit with a few thousand dollar bill for a car repair (not that I ever have in decades of owning well-aged European cars), but it is still better than paying for depreciation those first few years. Buy the car you want, and keep the thing for a good long time to amortize that depreciation and other upfront costs over many years. TRADING cars is financial suicide, not keeping them out of warranty.

  • avatar
    mcarr

    I’m not going to make a blanket statement against a 100 month loan, because there’s so many variables that factor into purchasing a vehicle. I’ve made some pretty bad financial mistakes with car purchases, but I’d like to think I’ve learned a lot since then.

    For instance, if you’re going to give me a 0% 72 month loan, hell yes I’ll take that, and have. The last instance was on a 2009 Silverado, and given the purchase price I negotiated I was above water on the loan in two years, and when I traded it after three years I had $4,000 in equity on it. The factors working for me in this instance were a vehicle that holds it’s value well, and a good purchase price.

    I wouldn’t actively seek a 100 month loan, but if they were going to give me one at 0-2%, I might consider it.

    The other point is this whole $30k average for a new car thing. There are these thing called “used cars” and they can be had at any price point between $0 and that $30k. I honestly believe I will not buy new again.


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