By on July 29, 2014

new couple old tricks auto lending

Six years after the dark days of the Great Recession, automotive lending is back on the rise, while delinquencies on those loans remain grounded.

Ward’s Auto reports the total balance of the loans after the first half of 2014, according to a report by credit reporting agency Equifax, is a record $902.2 billion. Equifax economist Dennis Carlson adds that auto lending accounts for more than half of all new non-mortgage lending during the first four months of the year, with delinquencies making up less than 1 percent of the total balance:

Lenders are responding to record low delinquencies by offering great rates and terms, while consumers are responding to the improving economic conditions by making the decision to purchase newer vehicles.

For those first months of 2014, the total balance of new auto loans is $163.5 billion, with 8.1 million loans out and about. Further, 2.6 million of those loans went to subprime consumers, while the total balance of the loans is $46.2 billion, making up 28.2 percent of the overall new loan balance.

Get the latest TTAC e-Newsletter!

84 Comments on “Equifax: Auto Lending At Record Highs, Delinquencies At Record Lows...”


  • avatar
    VoGo

    That is one scary looking stock photo.

  • avatar

    One of the new “tricks” is to offer people a 0.5% interest reduction if they agree to direct withdrawal of their car note from their bank account.

    It’s actually a very fair practice – so long as you actually have a job with decent income.

    It ensures you won’t be late on a payment and simultaneously gives you a better rate.

    Because the money is taken out biweekly rather than month’s end, it retrains you to balance your budget a little better.

    The banks are doing this with mortgages as well.

    • 0 avatar
      FormerFF

      I wish someone had offered me that. But, at a 2.24% interest rate, I guess I shouldn’t expect any reductions.

    • 0 avatar
      bball40dtw

      You have to be careful with biweekly payment programs. Sometimes the bank, or the 3rd party vendor they use, has set up fees or monthly costs for doing such a loan. Some banks do it for free, Chase was one of them, but some charge up to $300 per year.

      Its better to just add an extra payment per year or an extra 8%-10% per month. We round our car payments up to the next hundred. I add a payment to the mortgage come yearly bonus time too.

      • 0 avatar

        bball – I agree that “paying an extra payment or adding to the monthly payment” to reduce the principal is effective. However, many people shop based on the “monthly payment” rather than the interest rate simply because they don’t understand how they are getting screwed by the % on the backend.

        Only an experienced shopper understands how important the lowest rate possible is.

        What we are seeing now is many people who owe way more than their car’s worth because their interest rate kept the cost of the vehicle high while its depreciation made its value drop fast.

        Just ask the average Mercedes, BMW or Audi buyer who finances rather than leases. They know.

        Not a single one of their mass-produced cars holds its value.

        That’s what sickened me when I had a W221. New it was $110,000 with tax. After just 30,000 miles, it’s value is now less than $60,000???

        No more German for me…

        Many American $55,000 cars lose value, but when you buy a special edition vehicle – like SRT or HELLCAT – they don’t depreciate very quickly. A Jeep SRT with the 6.1 used still fetches way more than $30,000.

        • 0 avatar
          bball40dtw

          You are right. Many people have no clue what they are doing.

          Example: I had a co-worker that had a mid-level Jetta lease. She was leasing it for 36 months, put money down, and was paying more per month than we were on my wife’s GTI that was a purchase. She had no negative roll from another car, and had an above 700 credit score. We also put zero down on the GTI.

          Maybe this person is subsidizing my cheaper automotive purchase, but I still feel bad.

        • 0 avatar
          VoGo

          BTSR,
          You persist in thinking of FCA as American. They aren’t: British based; Italian controlled.

          • 0 avatar
            krhodes1

            @VoGo

            While they will be tax-domiciled in the UK, they will be incorporated in The Netherlands and continue to be “based” from an administration and engineering perspective in Turin and Auburn Hills. I fail to see how this makes them in any way “British based”. GM is incorporated in Delaware – does that make them “Delaware based”?

        • 0 avatar
          CapVandal

          If delinquencies are at record low levels, there are no problems.

          “delinquencies making up less than 1 percent ”

          About 1% of the population is also in prison.

          People buy stuff they can’t afford all the time. If I HAD to worry about someone doing something stupid, I would look at people buying boats and motorcycles.

          But, otherwise, 1% is too low. We need more lending to get more delinquencies.

          Should be at least 2 or 3%.

          • 0 avatar
            highdesertcat

            CapVandal, everything is cool for now, but that can change of course.

            But this is still a great time to buy a new car. Money is cheap, easy to get if you are young, and the political environment in the US is currently calm, so people are getting hired.

            And if things don’t work, well, there’s always money for nothing and foodstamps for free.

            Millions have been riding that gravy train.

          • 0 avatar
            CapVandal

            FWIW, any concerns about a repeat of 2008 are remote for another generation.

            Bubbles usually take a generation to repeat. For those old enough to remember, it took 20 years for gold and silver to rebound from the 1980′s boom.

            As long as people still remember and consistently talk about a repeat of 2008, it can’t happen. It isn’t exactly an iron law of economic history, but waiting for a cycle to reverse can go on more or less forever.

          • 0 avatar
            RogerB34

            “FWIW, any concerns about a repeat of 2008 are remote for another generation.
            Bubbles usually take a generation to repeat.”
            Fed is tapering Print to $35B end of July and $0 end of Oct. You can thank Ben for the housing bubble high priced areas and for the stock market bubble. To avoid another 2008 crash. BUT it means the economy will be without Fed training wheels. Weak economy and cold turkey means withdrawal pain.

        • 0 avatar
          krhodes1

          @BTRS

          Nearly ALL high-end cars depreciate rapidly. It is more a reflection of the market for them than anything intrinsic to the car. People who can afford high-end cars prefer to buy new. The only way to sell the car used is at a massive discount, otherwise known as depreciation.

          As one who purchased, not leased, a new BMW I am quite happy with the value it has retained. I paid $39K for my wagon three years ago this month. Currently, per my agreed value insurance policy if it was written off I will receive $33,400. I could probably sell it privately for a similar amount, with some patience. Trade-ins are for lazy suckers. I owe $11K on it as of my last payment. No complaints here.

    • 0 avatar
      LeMansteve

      Re: direct withdrawal / interest rate reduction

      Yes, this is an excellent “trick”. I got the same offer on one of my college loans.

      • 0 avatar

        Re: direct withdrawal / interest rate reduction

        I think it’s a decent incentive to offer.
        #1 A lower interest rate is better than higher.
        #2 It ensures your payments will be on time.
        #3 It forces you to balance your budget so that your “$1500″ biweekly paycheck is now “$1250″ meaning you have to balance your budget.

        Some people are fortunate enough to be able to “pay down” interest points as well. The lower your interest, the better your monthly payment and the better the residual value will be by the time the loan is paid (in many cases).

    • 0 avatar

      They did that with me when I bought my TDI SportWagen on Saturday. I was perfectly fine with it. I’m the type of person that will have the money sitting in my account, but forget to pay the bill…so direct withdrawal is excellent for me. My bank doesn’t charge a fee for that, though.

    • 0 avatar
      segfault

      I had autopay on my car loan (no interest rate reduction), and turned it off because I wanted to pay more than the minimum each month. It’s easier to write one check for the payment + X amount extra than it is to enter the automatic payment, then write a separate check for the extra amount. Unfortunately, the credit union doesn’t offer manual online payments.

  • avatar
    Zackman

    The trick is to buy according to your income, if any…

    However, many TTACers can disregard that info, as they don’t buy new – by their own admission – anyway!

    • 0 avatar

      But I don’t want one of those stupid BRAND NEW American cars I can actually afford…

      I want a used Acura TL with 73,431 miles or a BMW 5 series with 59,998 miles.

      This way, everyone will know “I’ve arrived”…

      O_o

    • 0 avatar
      LeMansteve

      “Buy according to your income”

      It really is that easy.

      One way of budgeting is to count your expenses as a % of net income and set limits. For example, you could limit transportation expenses to 15% of your net income. This 15% includes insurance, maintenance, fuel, depreciation and oh yeah, any monthly payment being made on the car.

  • avatar
    7402

    Do those figures take into account the age on the loan (months already paid and months pending)? One problem with longer loans is the increased chance of job loss or economic recession during the loan’s term is greater simply due to the longer time frame.

    • 0 avatar

      The biggest problem with a long loan is that – if you care about residual value – yours will be considerably less by the time the loan is paid.

      There are some cars however that are long-term ownership machines. Cars that you don’t expect to trade or upgrade from for a very long time.

      Some cars you’d expect to pay-off an keep.

      Honda Civic, Accord, Toyota Camry, Corolla, etc…

      For the most part, these are basic cars that have a track-record of long-term reliability. For people in poor financial straights (students new to the market) a 144-month car loan doesn’t sound that bad – especially if the monthly payment is around $200 they don’t really care what the interest is.

      If you are worried about long-term loans because you want residual value, you have more to worry about from accidents and unforeseen damage that ends up on the Carfax.

    • 0 avatar
      319583076

      Here comes Captain Risk…your claim is technically true, a longer loan term is subject to increased risk due to job loss or economic recession. However, making decisions based on that sort of statement is poor decision making. You really have to do some analysis.

      The risk of losing your job in an 8-year window as opposed to a 5-year window may be a negligible, or even an acceptable increase. Similar logic holds for the risk of recession although it’s less obvious how that risk correlates to your car payment.

      Based on data I found for the year 2010 – the US labor force size was 155 million, the net jobs lost in that year were 881,000. If those numbers are assumed constant for the year and each individual represents one job kept or lost and jobs lost are a random variable, the risk of losing your job in 2010 was 881,000/155,000,000=0.6%. Accordingly, if that rate holds over the life of the auto loan your risk of losing a job in 5 years is about 3% and in 8 years about 5%. Is 3% an acceptable risk and 5% unacceptable? Is there a meaningful difference between those risks?

      The point I’m trying to make is – even with the simplifying assumptions that I’ve made in order to do the math, the magnitude of the risk is conservatively less than 10% for both the 5 and 8 year loan. Depending on an individual’s circumstances, I could easily say that the magnitude of risk is less than 5% for either term.

  • avatar
    JohnnyFirebird

    Coming from both as a used car manager and someone who has had a terrible subprime car loan, don’t take loans on cars you can’t afford. Always think of your exit strategy from the vehicle. The sooner you’re right side up on the car, the better – you can ditch it for something else, or sell it and get out of the monthly payments.

    Subprime loans are billed as a way to rebuild your credit, but being upside-down on a deteriorating asset, which also is locking up money to pay off other bills and clean up your credit rating, isn’t a path to having better credit.

    I’m not saying only pay in cash every time. But keep your loan terms short. If you can’t pay for a used car in two years, or a new car in four, then you can’t afford the car.

    • 0 avatar
      28-Cars-Later

      +1

    • 0 avatar

      “I’m not saying only pay in cash every time. But keep your loan terms short. If you can’t pay for a used car in two years, or a new car in four, then you can’t afford the car.”

      Many would argue that if you can’t pay for the entire value of the car up front in cash then “you can’t afford the car”.

      The current car market has a big problem: the banks don’t want to make subprime loans on used cars. They want to put subprime loans on NEW cars. This way, if you default, they can take back the car and sell it with high residual value – rather than repo’in a used car and already being “underwater” on it while it’s rapidly depreciating month-over-month.

      People who can actually afford better, newer cars, aren’t buying used cars because they are educated enough to know they are sh!tty deals without long-term warranties. Many of these people with cash and credit are LEASING instead. This is leaving huge used inventories.

      Another problem is that most people’s main goal in building their credit is in buying a house – which once again opens up the same can of worms the car loan opened: Can you actually afford this house???

      One of my clients got married. He and his wife make less than $5000 a month and $1800 of his monthly cash is going to child support. Yet she’s trying to buy her “house in the hills” with $11,000 a year property taxes. I’m like: you make less than $55,000 a year YOU CAN’T AFFORD THAT.

      Someone else came to me for help. “I’m a teacha and my husbands a fyaman and we make around $110,000 a year and we wanna howse in Middle village”

      I go to look up the prices of those houses.

      Average house is $600,000 or higher.

      Ummmm… You can’t afford that!!!

      People have no idea what they’re doing. They see what they want and they go after it thinking some form of welfare will make up the difference.

      I blame the BANKS and the Dealerships for not being upfront with these people. I’m extremely painfully honest because I don’t like surprises and I want my clients to have as much control over situations as possible.

      I could EASILY let you buy something I know you can’t afford…or I can have you buy something I know you can afford – even if my fees are lower.

      FORGET than used BMW m6. Buy a brand new Malibu with an extended warranty and fully loaded!!!

      “Hell no- that’s not cool”.

      Lol – the used W221′s around here are less than $35,000.

      and don’t get me started on the used Bentley Continentals sitting on Hillside Avenue.

      • 0 avatar
        JohnnyFirebird

        I don’t think car nerds / buffs are exempt from getting terrible loans on vehicles they can’t afford, though. You get wrapped up in the Car & Driver / Top Gear culture of perfect driving cars and feel like you *should* be driving a top of the line 335i or FR-S or Mustang or body on frame pickup or whatever. Especially in your twenties you don’t realize that a crappy financial decision will have repercussions ten years down the line.

        To young TTACers who are thinking about taking out a huge loan on a dream machine:

        You’ll have 90% of the fun of an FR-S in a crappy 1999 Buick Century that you can afford, guys. I swear!

        Old beaters are their own kind of hilarious entertainment.

      • 0 avatar
        JohnnyFirebird

        I’m terrified of a home loan. I’m saving for the next ten years and hoping to get a nice place in the middle of nowhere.

        • 0 avatar
          segfault

          Home loan? You will probably be fine if you put 20% down, buy what you can afford, have a stable job, and don’t take out another loan to strip out the equity every time you can get it appraised higher.

          • 0 avatar
            28-Cars-Later

            That’s tough to do when 75K houses go for 150K with 3-5K in taxes, and this in in the “cheap” part of the country.

          • 0 avatar
            bball40dtw

            28-

            Has the Pittsburgh real estate market really gotten that out of whack?

          • 0 avatar
            28-Cars-Later

            Parts of it have, yes. Taxes have been going up in the past few years as well which necessitates people having to fight the reassessments.

          • 0 avatar
            DeadWeight

            20% down on a home?

            Surely you jest.

            At least in the new home market, 86% of all loans/mortgages are FHA backed (aka taxpayer subsidized), and the down payment ranges from 3.5% to 5%.

            Maybe 1 out of 96 purchasers does (or more likely, is able to) put more than 5% down.

          • 0 avatar
            bball40dtw

            Plus, most FHA loans require MIP/PMI to be paid for the life of the loan. MIP goes away after 11 years if you start at 90% LTV or less. Horrible.

        • 0 avatar

          You are better off buying a starter home then you are paying rent. At least you will be putting equity into yourself and appreciating the value of the home through upgrades

          That house is an investment. Unlike a car loan, a home loan is usually an appreciating investment.
          The trick is: not buying a house that you can’t really afford. Eyeing a house that’s more than 10% lower than the budget that you originally planned is even better.

          • 0 avatar
            28-Cars-Later

            You know far more about this than I, but everything I have ever read states your primary residence is not an investment.

          • 0 avatar
            danio3834

            Depends how cheap the rent is. A bachelor lawyer buddy of mine rents a basement apartment for $550 a month inclusive. He’s saving to buy the house he wants outright so he doesn’t have to pay the bank so much in interest. The interest payments alone on the house he wants would be more than $550 a month for a long time into the mortgage, so he figures he can live well beneath his means for the time being and buy the house when he’s got the cash. Of course, most up and coming lawyers aren’t content living in basement apartments, even if they’re nicely appointed.

          • 0 avatar
            319583076

            It depends on how you look at it. When I bought my first home, I realized I wasn’t planning to live there until I died. Ergo, I didn’t shop for a home that was “just right” for me, I shopped for a home that would be easy to sell and that would retain it’s value or appreciate. Circumstances led me to sell the home home 3 years after I bought it, which was much sooner than I planned, but I was still able to sell in about 60 days and didn’t lose a dime.

            Home buying may not be an “investment” like securities, but like car-buying, you will pay for emotional decision-making.

          • 0 avatar
            krhodes1

            @BTSR

            This one I agree with you on 100% – at least the “don’t buy more than you need part”. When I went house shopping 13 years ago I was pre-approved for $150K. I was making $40K at the time. I found a great 6-car garage with a detached 3br house for $127K. AND I had two roommates to help. Still have one roommate. I did take some money out over the years for improvements, but in the end refi’d for 15 years at 2.75%. My actual mortgage payment (less taxes and ins) is now less than my car payment on the BMW, which is a mighty nice place to be. I will admit, I am putting some real money into fixing up the place now, about $50K over 4 years, but it will all be in cash. And the house appraises at $250K now, so I would call it a solid investment.

            I LOVE watching the house porn channel on TV and seeing all the young couples house hunting for 4br 3 bath mcmansions with “2-story foyers” and granite countertops! For $400-500K, and they are always stretching their budgets. Hilarious.

      • 0 avatar
        racer-esq.

        “One of my clients got married. He and his wife make less than $5000 a month and $1800 of his monthly cash is going to child support.”

        Jeez, three luxury car payments, or one good house payment being taken out of a couple making $60,000 a year, likely because some b_tch lied about the pill.

        Number one tip to millennial men. Get a vasectomy. Or maybe look into RISUG, which Parsemus Foundation is funding in the US. Donate here:

        https://www.parsemusfoundation.org/donate/

        Regardless of whatever is different with the millennials, millennial women being desperate to trap men probably has not changed from any previous generation. But job opportunities have gotten worse and child support much more draconian. So don’t get trapped.

        • 0 avatar

          Well – actually he was STUPID.

          He got a girl pregnant. then later on had a second baby with her. When he realized she was a “slacker” and not willing to work harder for herself he left her for another career-oriented chick (who was shameless enough to marry him) and got married.

          I warned him. But no one listens…

          • 0 avatar
            racer-esq.

            Ok, at least it’s $1,800 for two kids, although as a lawyer I frequently see judgments that high out of not well-off guys for just one kid.

            But yeah, not a lot of sympathy in this particular case: “Fool me once, shame on you; fool me twice, shame on me.”

          • 0 avatar
            Zackman

            Increasingly, guys let the wrong head do their thinking for them.

          • 0 avatar
            krhodes1

            @Zackman

            Increasingly? This has been an issue since evolution split the sexes!

  • avatar
    hreardon

    One of my clients’ lines of business is automotive bankruptcies, representing the finance arms. Of their bankruptcy and foreclosure practice, the autobk side is the slowest by a factor of a million (exaggerated).

    People will go into foreclosure before they default on an auto loan: no transport = no job.

    So long as people can float the payments there’s nothing to worry about here. As I’ve said before: as with anything in economics, the trend is your friend…until it’s not.

  • avatar
    Arthur Dailey

    1) I can buy a new car with a warranty for $25k and 0% interest for up to 8 years. If I want I can always pay off the loan early. But I will probably drive the car for 7 or 8 years and then depending on its reliability and condition have the choice to keep it, give it to one of my kids or sell it. It will be a 7 or 8 year old one owner car with about 200k.

    2) I can buy a good used car for about $15k with an interest rate of around 6%. After 4 years I will have a car that is 6 or 7 years old and has probably about 150 – 170k.

    The cost including depreciation, interest payments and maintenance favours the used car. However the new car will cost me about $90 less per month to carry.

    So what is the better choice?

    • 0 avatar
      JohnnyFirebird

      Even at 0% interest there are pitfalls to a loan of this term. If you lose your job or otherwise can no longer afford the vehicle you’re borked for about the first six years. To me this is a major problem.

      Also without some expensive F&I products you may run into problems if your vehicle is destroyed, a write-off, or stolen, and your insured amount is much less than the loan.

      • 0 avatar
        Hillman

        Assuming you can’t get any better deal why not get the maximum term. Put the money in a Roth or savings account with some low risk investments and if worse comes to worse pay it off when needed. I know a lot of people who are doing that with the 4% 30 year fixed mortgages they have.

      • 0 avatar
        S2k Chris

        Meh, how far upside down can you REALLY get on a $25k car at 0%, unless you do something like trash it or drive 30k miles a year or roll in negative equity? One would hope that if you’re considering a $25k new car, you’ve got at least a couple grand in the bank, which probably covers the upside down issue or makes the payments for 6 months if you have to. My opinion is that being a little upside down on a car loan is not a big deal because in order to be in the new car market in the first place, you should have some cash reserves, so you can buy your way out of it if you have to. And if it worries you that much, that’s what Gap insurance is for. It’s one of those problems that the internet makes a much bigger deal out of than it is in reality, unless you’re doing something monumentally stupid or buying a depreciation king.

        • 0 avatar
          highdesertcat

          ” how far upside down can you REALLY get on a $25k car at 0%”

          Pretty far the moment you drive it off the dealer lot.

          • 0 avatar
            JohnnyFirebird

            That’s a good question! Let me show you. (That’s my car dealership talk right there.)

            Let’s say you bought a brand-new 2011 Malibu LTZ three years ago at 0% financing for 84 months. I’m going to use MSRP, yeah, you could get one with like four grand off, but this is for demonstration purposes.

            MSRP: $32,750
            Usual F&I add-ons: $875
            Total loan with tax: $38660.34

            (And this is *without* an extended warranty to match your loan terms)

            Monthly payment: $460.24
            Amount owing today (36 months in): $22,092
            Approximate value of the vehicle with 80,000 kilometers (pretty average for three years): $12,500

            So you’re upside down almost ten grand on this car.

            But if you have the discipline to take a long term loan and then put the money aside to cover any shortfall, you’re good, especially if you have it in a revenue generating bond or low-risk investment.

            I ran the numbers on an LT as well, about the same – $8000 upside down.

      • 0 avatar
        krhodes1

        The trick is to put enough money down such that you NEVER have to worry about being underwater. Otherwise, for both my BMW and my FIAT, gap insurance was offered (and declined) for $500.

        Personally, I took the maximum term that still gave me sub 1% interest on both cars. Which was 60 months. Both cars will be paid off well short of that term, but it is nice to have the flexibility to make a lower payment on occasion, for example the month that registration is due on both of them. Painful, March is for me.

    • 0 avatar
      05lgt

      Join a CU. Mine is advertising used (3-5 yrs old)at rates of 2.74% for 60 months or 3.24% for 60 – 72 months. If you qualify for the 0% new, you should be able to get a competitive used rate too.

      • 0 avatar
        JohnnyFirebird

        A five year loan on a five year old car is a bad, bad idea.

      • 0 avatar
        S2k Chris

        Derp, I asked about a $25k car and you showed me financing $38k on a depreciation king of a Malibu.

        Do the same calc with an Accord or Civic or Camry or Corolla. Or even a $25k Cruze.

        It’s absurd to think anyone anywhere ever paid $38k for a 2011 Malibu, and if they did they aren’t worthy of being a subject of a serious discussion on new car financing.

        • 0 avatar
          S2k Chris

          Heck, just did my own car. 2011 TSX. Total cost inc. taxes and interest is $32,100 ($535 x 60) at (I think) 1.9%. IIRC, I paid around $28.5k for the car, and tax in IL is 7%, so my OTD price was around $31k.

          Car has 60k miles.

          Making only the regular payment, my payoff right now is $14,100. Edmunds says my car is worth $16.3k as a trade in in “clean” condition (1 step below excellent), so call that $15.3k. I’m still good by a grand, and I have high mileage.

          • 0 avatar
            JohnnyFirebird

            That’s because a 60 month loan is a much better idea than an 84 month loan.

            Also assume a high mileage car will be judged as rough-to-average. I’ve never known a wholesaler to pay “clean” on any car.

          • 0 avatar
            JohnnyFirebird

            …that’s kinda my point? That an 84 month loan, even at 0% interest, can be a bad idea of you have any kind of financial insecurity in your life.

        • 0 avatar
          JohnnyFirebird

          As I said, I made the same calculation on a $26000 LT – the vehicle in question is somewhat academic. You’re also more likely to get that long of a 0% loan on an American car versus Japanese, but here goes:

          Honda Accord, 4cyl, 4 door, automatic. I’ll factor in $1000 off of MSRP. And this is with no down-payment.

          MSRP: $27490
          Discount: $1000
          F&I: $875

          Approximate trade-in value with 80,000 kilometers: $13,500

          Amount owing: $17,979

          So you’re still upside down, but only $3400 versus $9800.

          If you’d got an aggressively discounted LTZ you’d realistically be looking at a shortfall of $6000.

          Downpayments *are* a good thing, but especially when in the $25000 range more people are rolling in previous balances, so they’re becoming less common.

          • 0 avatar
            S2k Chris

            WTF is a “kill o meter”? Are you using Canadian math? GTFO with that.

            Also, 84 months is a stupid-long term. 48-60 you aren’t going to see this BS.

    • 0 avatar

      “If I want I can always pay off the loan early.”

      It’s worth noting that many people finance on the upper-end of their budget, and so don’t leave themselves the option to do this (like my buddy that’s got an $800/mo payment on a 2013 Challenger (and not even the HEMI). I signed up for 48 mos. on my new car, but plan to pay it off in less than half of that time by making equivalent payments on the principal each month. I think you should always leave yourself enough room that you can always afford your payment, or that you can temporarily stretch your loan term if you hit hard times.

  • avatar
    RogerB34

    Last new car we purchased was a 64 Bug for $1500 picked up in Paris.
    We did not buy new cars. Only used and cash. Our best value was an 89 Mazda 626, low mileage and salvage repaired. On retirement wife insisted on a senior citizen hauler. 05 Sable premium 25k miles and out the door for $11.5k. Unnecessary car but life is compromises.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributing Writers

  • Jack Baruth, United States
  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Vojta Dobes, Czech Republic
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Cameron Aubernon, United States
  • J Emerson, United States