By on October 12, 2021

While nobody needs to tell you that the economy isn’t in good health, we should at least hip you to the latest automotive trends relating to the financial purgatory we’re currently living through. Ford sent a memo to dealers last week indicating that it would be removing the minimum FICO requirement for 84-month financing, indicating that the industry may soon normalize auto loans that are even longer than the 72-month whoppers that have grown in popularity over the last several years.

Meanwhile, those needing a vehicle intermittently will find that rental rates have not been declining as hoped. Despite analysts previously suggesting that auto pricing may stabilize through the fall, we now look to be going into the holidays facing familiar high-priced troubles — and there’s really no reason to think that’s going to change after 2022 gets here. 

Two decades ago, the average automotive loan was 58 months. By 2021, that figure moved to 64 months with an growing number of subprime customers thinking that they would be able to manage smaller payments over a longer timeline. This can primarily be attributed to average vehicle price going up as consumers gradually lost buying power due to stagnating wages, inflation, or whatever else you want to blame the now-obvious money problem on.

One way to to mitigate rising monthly payments is to spread them out over a longer timeline. This is resulted in an increased number of vehicle repossessions and allowed the financial sector to technically ask for more money by raising the annual percentage rate (APR) of charge as terms lengthened. But most automakers tried to remain competitive by offering juicy incentives ahead of the pandemic and going absolutely bananas with the giveaways that corresponded with the initial period where everyone was buying toilet paper and canned goods instead of cars.

Those days are gone with demand and pricing up on new and used vehicles.

Ford was briefly offering zero-percent APR for 84 months as a way to incentivize purchases at the start of 2020. However production had been ground down by the start of 2021 as working restrictions and geopolitical strife demolished supply chains. Suddenly, everyone realized that the situation might not improve anytime soon and that there were less vehicles available than years past. The end result was a consumer base that’s now willing to pay more for products and a business sector aware that it could make more money by not offering incentives and low APRs.

Ford killed its zero-percent deal just a few months after introducing it. But it retained the 84-month loans to appeal to customers who may not be able to afford a new (or even used) vehicle. CarsDirect has since learned that the automaker has since begun notifying dealers that it would be ditching the minimum standards for 7-year automotive loans:

While a buyer’s credit score plays an important role in getting financed, it’s just one basic car loan requirement. In this case, Ford’s captive financing company has opted to adjust its requirements. That could make being able to afford a new car seem less like a black-or-white matter tied to one’s credit score.

84-month loans often have higher rates that can translate to significant interest costs. While the upside is usually a lower monthly payment, the total cost is another matter. For example, we estimate that Ford’s current rate of 6.9 [percent] on the 2022 Bronco Sport would make a $40,000 SUV cost over $50,000 before taxes [and] fees.

“Our proprietary scoring models do an excellent job of assessing the probability that an applicant will be able to pay. FICO is one input. Eliminating the separate FICO requirement opens the prospect of financing to more customers who would qualify for 84-month financing within our models regardless of their FICO score,” explained Ford Credit spokesperson Margaret Mellott.

Considering that selling less has actually left most automakers with a tidy profit this year, we wouldn’t be surprised to see the trend continue spreading throughout the industry. But is it what’s best for consumers and the broader economy? While credit scores have always seemed somewhat arbitrary and unnecessary, opening up the gates to anyone Ford thinks it can lock into an extended loan feels like it could result in predatory behavior.

The world of rental vehicles doesn’t have the ability to mask increased fees behind annual percentages and longer terms, however. Following the trajectory of vehicle sales, rental prices fell ridiculously low through the first half of 2020. This wreaked havoc throughout numerous agencies, resulting in more than a few bankruptcy scares, shrinking fleets, and periods of mass layoffs. By the start of 2021, the whole industry was in complete chaos and realized it could basically charge whatever it wanted in regions with elevated demand.

The popular rental site Kayak recently reported that searches for rental vehicles for the upcoming holiday season are up 230 percent compared to 2019, which was the last normal year on record. While this could be the same number of people hunting for bargains, vehicle inventories remain lean overall. Most companies have been keeping cars around for much longer than previous years and your author can attest to the last few loaners (used to support my aged gas guzzler) being particularly shitty and expensive. I’ve also arrived at numerous rental locations that were brutally understaffed.

Letting vehicles approach 100,000 miles before they’re dumped is becoming increasingly normal. Rental firms previously wouldn’t have dared offer you a car with more than 50,000 miles on the odometer and more than a few agencies had a hard cutoff of just 25,000 miles. But those old rules are being tossed out the window as businesses cannot buy up enough inventory to keep up with demand.

On the upside, adding vehicles still means rates have stabilized from the insanity we witnessed going into the summer of 2021. For a while, it was nearly impossible to find a car in some cities and those that were available could run over $400 per day. But some regions have since gone back to day rates that are only fifteen bucks higher than they were before the pandemic.

Sadly, the reprieve may not last.

Earlier in the month, the Washington Post spoke with numerous rental agency executives and market analysts to see if the mayhem has truly subsidized. While most agreed that things were better than they were eight months ago, depleted fleets remained common as businesses found demand shifting regions. That’s left the average rental fee at $99 per day — lower than it was just a few months ago but higher than any period over the last two years. Worse yet is the general assumption that things will only worsen going into the winter with everyone uncertain as to how 2022 might shape up.

“We’re expecting these prices to increase going into the holiday season,” Lindsay Schwimer, spokeswoman for the Candian-based Hopper travel site, explained.

From WaPo:

“In terms of predicting the future, I can’t,” [Greg Scott from the American Car Rental Association] said. “I think that what I’m hearing about new cars is that we’re probably talking 2022 before we get a grip on the supply chain. I don’t think anybody is predicting a return to quote-unquote normal in 2021.”

[Deutsche Bank leisure analyst Chris Woronka] said he wouldn’t even expect rental-car inventory to be fully available by next summer, saying it could be until 2023 when the situation is normalized.

Enterprise Holdings spokeswoman Lisa Martini said in a statement that the company, which includes the Enterprise, National and Alamo brands, is seeing increased demand all over the country.

“We anticipate strong demand throughout the next several months, including the holiday season,” she said in the statement. “Our teams continue to work hard to meet the increasing leisure travel demand and support customers’ broader transportation needs.”

These predictions have been mirrored by the minds working for Kelly Blue Book and just about every other market analyst with functional gray matter. It looks like it’s going to be a rough winter if you’re interested in buying or renting a vehicle and neither industry is interested in lowering fees while it knows consumers are desperate. We’re going to have to wait this one out or simply boycott driving (shudder) until it becomes clear that consumers won’t pay increasingly ridiculous prices or inflationary spending subsides in general.

[Image: Gunter Nezhoda/Shutterstock]

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127 Comments on “Car Loans Get Longer, Rental Vehicles Get Older...”


  • avatar
    28-Cars-Later

    I’m generally a fan but none of this is new. We’ve been discussing the absurd payment schedules since about 2018 or earlier, and earlier this year discussed the rental car shortage which I personally have the pleasure to experience in Phoenix. If you want to do some real investigative journalism, go down the rabbit hole of the “chip shortage” and find out what’s actually happening on the ground. State Media has been shown to lie so much from 2016 to now, I don’t believe the simplistic explanation: “Duhhhhh we didn’t order enough of them”.

    • 0 avatar
      Matt Posky

      I’m inclined to believe that the chip shortage makes a convenient excuse for all sorts of unsavory activities. It seems like everyone will signal one way, behave the opposite, and then tell you its down to some x-factor that’s supposedly out of their control. The bottom line is that these shortages and mandates are allowing numerous industries to lay people off and reduce overhead while demanding top-dollar for their goods and services. Why wouldn’t they lean into them?

      I posted an article on allegations that the chip shortage is at least partially manufactured last month:
      https://www.thetruthaboutcars.com/2021/09/automakers-accused-of-chip-hoarding-u-s-considers-defense-production-act/

      • 0 avatar
        bullnuke

        @Matt: I recently read an article on a tech site that stated that the semi-conductor industry technology has moved along while the chips used by the auto industry have not – the chips required by the manufacturer utilize an old sizing/standard that the semi-conductor folks no longer desire to support (New = more chips from a wafer due to much smaller dimensions vs Old = fewer chips per wafer due to larger dimensions of the chips). It would appear that the semi-conductor manufacturers do not wish to expand their facilities to produce what they view are uneconomical old-tech obsolescent products. I’m not saying that this is true but it is a bit of a different view of the situation and may be a part of the shortage issues.

        • 0 avatar
          jalop1991

          “I recently read an article on a tech site that stated that the semi-conductor industry technology has moved along while the chips used by the auto industry have not – the chips required by the manufacturer utilize an old sizing/standard that the semi-conductor folks no longer desire to support”

          …which is exactly the same reasoning as to why the automakers have focused on trucks and large SUVs, and have used this pandemic as an excuse to get rid of cars and cheap vehicles.

          • 0 avatar
            28-Cars-Later

            That shift started a few years ago, perhaps it accelerated the situation since but it in and of itself was not a result of the events of 2020.

        • 0 avatar
          thegamper

          I read that story about the chips and the automakers seem to want to stick with tried and true even thought the industry has moved on long ago. If they wanted to get modern chips, they could have them tomorrow but that probably takes a lot of R&D time to program, etc.

          • 0 avatar
            28-Cars-Later

            This is the sort of thing I would be interested in reading, i.e we use chip ABC bc its cheap and effective but Japan/Korea/Euro marques want chip XYZ and that is what is prevalent. Get down in the weeds on this.

      • 0 avatar
        28-Cars-Later

        I agree, thanks. Some anonymous sources to confirm or deny what they are seeing on the ground would be nice – if any are reading…

      • 0 avatar
        el scotto

        @ Matt Posky Sir, how about finding out if chip production has truly increased or decreased and who bought those chips? Some companies may have just the chips they need while other companies have shortages due to poor relations with their suppliers. Or is there just an all-around chip shortage?

    • 0 avatar
      el scotto

      @ 28 Cars Later Sir, microchips are not vehicle-dependent parts like serpentine belts. A vehicle manufacturer tries to squeeze them, they just sell the chips to someone else. Cut your chip order for three to six months? They’ll just sell them to someone else. Chips are like loaves of bread. A commercial bakery doesn’t have to sell just to Cracker Barrel; Darryl’s restaurant buys loaves of bread too.

    • 0 avatar
      teddyc73

      How’s that Joe Biden vote workin’ out for ya? Wasn’t to long ago we had a booming economy, record low unemployment, more money in our pockets and low gas prices due to energy independence. But who needed all that success? A man with dementia seemed like such a better choice. Just paid my last payment on my 72 month loan two and half years early. What a great relief.

    • 0 avatar
      Oberkanone

      Export millions of used vehicles from USA/Canada year over year depletes affordable transportation. Used vehicle exports are invisible to the general public and apparently to automotive press.

      Manufacturing capacity has been on decline for the past 50 years for the “Big 3”. Import brands have built many assembly plants, though not enough to replace the lost capacity.

      The pendulum has swung.

  • avatar

    With car prices what they are spreading out the term was inevitable. Really the used market is the big issue. I think many people with higher incomes would be shocked at the number of 7-10 year old cars that are getting financed at 3-5 years. Still having a loan due on a 13 year old car with 150k miles on it is very common and not just among the BHPH crowd. The local new car dealers now regularly have 10 year old cars on the lot they will happily finance for 4 years with a 60 day warranty. The BHPH guys are now moving 15-18 year old cars.

    • 0 avatar
      thegamper

      I spent a few months looking for a car for my kid over this past summer. Mostly on dealer lots. Probably saw a few dozen cars. I was shocked at how expense used cars were. Cars with obvious defects and 150k or more miles are now selling at significant premium. I was looking at cars between $8,000 and $10,000 and most of the inventory was just beat up for lack of a better description. I think I lucked out in the end but it was tough to find a reasonably priced car that wasn’t borderline junk.

      I am very thankful that I just so happened to buy two new cars in 2019 for my wife and I that can last me through the price gouging period of limited supply. I will wait it out thank you.

      As for the financing, nothing wrong with long term financing on great terms, provided of course the vehicles are lasting that long without significant repairs. As was always the case, if you are stretching anyway to buy the car and it breaks down, defaults will happen. The longer the term, the further you get from the warranty period, the more opportunity for such a scenario to play out.

      • 0 avatar
        dukeisduke

        It’s insane. The $5000-$6000 cash cars I was buying two years ago (Kia Fortes) are $8000-$9000 now. I’ve got one more daughter to buy for (she’s 17, doesn’t have a license yet), and I couldn’t buy her a car now. I’m hoping that by the time she’s got her license (next spring/summer) used car prices are coming back down.

        My middle daughter sideswiped someone back in May with her 2014 Forte. The damage was about $4500 (it needed a new driver’s door). I was sure they were going to total it – it’s very clean, but had 126k on it, and we paid about $5700+TTL in cash for it in November 2019, at a Toyota dealer. But, the insurance company didn’t total it, and instead it was repaired, and I think it’s because its value is inflated right now. The one instance where higher values helped me.

        • 0 avatar

          Yeah the lack of cars available in my pay cash range is really upsetting, Means I’m keeping my current car going as long as I can unless prices drop. Changing the brakes this weekend and will need to do a Tranny fluid change before the winter.

      • 0 avatar

        Getting in trouble with older cars with big payments is a real issue for the lower middle class. A friend recently messaged that their car needed 4K in work, its a 2011 they bought 2 years ago, they still have 2 more years of payments. In it’s first year (which they luckily bought a extended warranty for) it was in the shop for like 21 days with 5K worth of work. I’m pretty sure the only thing saving them is the current child tax payments.

    • 0 avatar
      SoCalMikester

      and theres enough bling-lovers out there that just NEED to impress their neighbors with that 5 year old rav4

  • avatar
    tankinbeans

    I recently had the displeasure of driving a Cruze for a week while my car got some body damage repaired. While not particularly old the car wasn’t what I would call sound. The front tires were nearly bald, as in barely more tread than the legal minimum; there was a noticeable shimmy the brakes even when lightly I applied – I suspect warped rotors; the rear defroster didn’t work. All at 43k miles.

  • avatar
    Land Ark

    I’m renting a Standard size rental car for a week in New Hampshire next week. The price is the same as a Full size (Malibu vs. standard = Jetta) but I chose the smaller car since I’ll be staying in a downtown hotel with what will likely be less than ideal parking. I still can’t believe I have to pay for parking in downtown Manchester.
    The total cost with Alamo was $752 which seems really expensive. But it has been 5 years since I last rented a car and I can’t find how much it cost then.
    I had thought about renting and driving thinking I might save money, but for $175 round trip on a plane, I couldn’t justify it.

    I am curious to see what I have available on the lot. I’m going to find the most interesting car I can. But I actually think I’ll get there and they’ll tell me they have no cars. I’ll have to do the Seinfeld bit for them – which I’m sure they’ve never heard before.

    “You know how to TAKE the reservation…”

    • 0 avatar
      Land Ark

      Oh, I just found the receipt. I used Costco and for 7/17/17 – 7/25/17 the total cost of renting a Volkswagon Passat was $288.

      • 0 avatar
        28-Cars-Later

        I rented a Town and Country to take my mother and brother to the beach just before summer prices in 2015… whole week I believe was $288 as well maybe $248 even.

    • 0 avatar

      Five years ago a standard car in Hawaii was about $300 for a week. Locally (SF East Bay) I rented day for about $30 at Enterprise.

      • 0 avatar
        theflyersfan

        @Inside – I was helping a family member book a trip to the Bay Area this past Labor Day weekend. Cheapest cars, and this was through a local/non-national company and all at SFO, before fees and taxes was still over $100/day. Needless to say, he learned about ride sharing and BART to keep costs under control!

        Prices in my little corner of the Midwest have dipped a little bit since the insanity of this past Spring and Summer, but I would say are still around 50%+ higher than normal.

    • 0 avatar

      I looked into renting a 12 passenger van recently for an event. It was almost 600 a day, back when I used to rent these for work they were well under a 100 a day.

  • avatar
    redapple

    Car Rental Report.
    IND> DTW. 908 miles over 10 days. 39.3 MPG (miles / gallons in (trip computers lie)). Nissan Altima. Decent car.

    Get this. It had 16,000 miles on it at check out.
    PS- DTW Airport is a F ing nightmare.
    PPS- Car rental return is evil torture.
    GO FLINT and not this s hole DTW.

  • avatar
    Arthur Dailey

    I’ve been haunting the Auto Malls hoping to see an actual Maverick, Santa Cruz and Corolla Cross. The Santa Cruz was the only one that I actually got to see. When is TTAC going to get their hands on a Corolla Cross? The Santa Cruz in the same sort of bronze/burnt orange that was popular on the ‘big’ Mercury Cougars of the mid 1970’s looked very good.

    What struck me the most was the dearth of new cars on many lots. The Subaru dealer had next to none. The Chev and Ford dealers were also very low on stock. The used car lots had tumbleweeds blowing across the empty spaces (just kidding about the tumbleweeds).

    And due to numerous issues, the price of used cars has dramatically escalated. If back in March I had bought out my leased vehicle, instead of returning it (4 years old, 82,000kms, dealer maintained) I could have flipped it for a few thousand over the buy-out.

    In Canada the economy seems to be ramping up. Job rates are back to pre-pandemic levels. Companies are complaining of labour shortages. Workers are switching jobs for more money. Called the Great Resignation.

    Gas prices have doubled since the summer of 2020. Natural gas and electricity prices have increased. Meat, poultry and vegetable prices have increased by about 12%.

    And in much of Canada housing prices of increased by 18% this calendar year.

    Hold onto your hats. There are going to be some big economic winners and some desperate economic losers.

    • 0 avatar
      dal20402

      Dealers in my area are selling almost everything before it shows up on the truck; almost all of them have empty parking lots. New cars are selling for MSRP and more, and used car values are through the roof. It makes me very glad that we have two newer cars (2019 Bolt @ 11k mi, 2016 Highlander @ 62k mi) that are both running well.

    • 0 avatar
      pmirp1

      Biden must own the increase in price of gas. He can blame pandemic for supply chain issues, but in America we had plenty of gas.

      He stopped pipelines from Canada. He has kept talking green this and green that. Fracking business in west Texas has come to a halt. We got plenty of gasoline and gas, but those companies are not going to extract if he is going to tax them and take away tax credits and give to electric companies. Let electric grid handle the pressure. Yeah that should fix it.

      It is all on Biden green policies for increase in gas price.

      • 0 avatar
        thegamper

        Its really not Biden’s fault. America’s shale oil producers have a break even point at around 50-60 per barrel. The closer you get to break even, producers shut down operations, then the price swings upward, production ramps back up and a viscous cycle of boom and bust.

        • 0 avatar
          pmirp1

          It is 100% Biden’s fault. All his actions since becoming president, shutting down Keystone pipeline from Canada day 1, talking about giving tax credit to electric car owners, mandating CAFE standards that are extremely high, and backing stopping ICE vehicle production soon, is all Biden.

          It is ok. In America his approval ratings are in the tank and going lower every day.

          • 0 avatar
            ttacgreg

            Hooray, everything is Biden’s fault. I am guessing that you want Trump re-installed in office, like next week?

        • 0 avatar
          Kendahl

          Fracking’s economic value lies in its existence more than its use. It sets a cap on the price foreign producers can set on the oil they produce. If they raise the price above that, the frackers will start back up again. It will take political interference to prevent that.

          I have no problem with converting the US economy from a petroleum base to an electrical base. I have a big problem with refusing to build generation and transmission capacity to service the new market.

      • 0 avatar
        Lou_BC

        Shutting down a pipeline that wasn’t built doesn’t affect current prices. It does affect where oil will end up long term.

        • 0 avatar
          pmirp1

          Lou_BC, it is all his actions together that have sent a message to American producers or pipeline companies.

          Most recently he is begging OPEC to increase production. Seriously? America was the biggest oil producer. But he put all his chips on non-existent solar and wind mills and pixie dust.

          What he forgets, gasoline and gas costs go into everything. But our Fed Reserve chairman and Biden still thinks inflation is transitory.

          May be gas prices are up because summer season and July 4th holdiay travel. Ooops it is now October………..

      • 0 avatar
        smapdi

        Gas prices cratered in 2020 because of the lack of demand due to shutdowns worldwide. They have gone back up because the world is out of lockdown. We have seen these same prices between 2011 and 2014, and it wasn’t much less in 2018 and some of 2019. I think if adjusted for inflation the prices from 2005 to 2007 would be the same as now. He may have some impact, but prices today shouldn’t be compared to last year.

        • 0 avatar
          pmirp1

          smapdi, difference is Obama never put pressure on frackers to stop fracking.

          Biden thinks we already have a grid that can support electric cars.

          All while California has blackouts as soon as there is a windstorm or fire. OR Texas has state wide outages.

      • 0 avatar
        ttacgreg

        Right, throw any crap at Biden and see what sticks. Invent the negative narrative. May I suggest that you look beyond our borders and see that the whole world is experiencing energy price shocks?

        • 0 avatar
          Lou_BC

          @ttacgreg – agreed. Rising oil prices is global.

          • 0 avatar
            el scotto

            @ Lou_BC Sir, wait! wait! you mean that what Goober charges for gas is somehow related to a bunch of commodity traders in New York City? Somehow their actions affect the world oil markets? I’m shocked, truly shocked, I tell ya!

          • 0 avatar
            theflyersfan

            @Lou – I swear way too many people get their headlines from memes on Facebook and nowhere else… Anyone with an internet connection can see that energy prices worldwide is skyrocketing as use increases, demand increases, and production tries to catch up. It just isn’t the US!!!
            Last time I was in Canada, the gas prices gave me a bit of sticker shock. I feel for what you must be paying now.
            And I love the comparison in gas prices compared to last year. Well, when the price of a barrel of oil is in negative numbers, and no one is driving and the LA freeways look like a scene from a zombie apocalypse movie, yes, gas prices are going to crash. The whole supply vs. demand argument. If I had to suffer through micro- and macroeconomics, everyone should!!!

      • 0 avatar
        Arthur Dailey

        Biden is responsible for the doubling of gas prices in eastern Canada? And the increase in petrol prices in the UK and increase in natural gas prices everywhere?

        Wow you almost got me, before I realized that you were joking.

        • 0 avatar
          mcs

          if anyone knows Biden, ask him how he does it. Apparently, he’s caused both China and India to have coal shortages as well. Maybe he implemented vaccine mandates for Chinese coal miners and they all quit in protest?

    • 0 avatar
      dukeisduke

      We recently went with my mother-in-law to buy her a used ’17 Elantra Limited (55k miles, $17k USD). It was at a Hyundai dealer that’s part of a small ownership group. They had literally *four* new Hyundais to sell – two 2021 Elantras, on 2021 Ioniq Hybrid, and one 2022 Santa Cruz (and it was waiting for a customer to pick it up). The guy told me they’d sold three Santa Cruzes, including the black one on the lot.

  • avatar
    SoCalMikester

    $300 x 84 mos = new maverick!

  • avatar
    pmirp1

    Mostly this is on people.

    When I was young I bought cheap new cars. My life got better when I bought Corollas and Accords and didn’t have to worry about maintenance and they were not that expensive.

    Nowadays, young people want to have Corvette C8s, Germans cars and Teslas, or big SUVs, or even medium sized SUVs or expensive big trucks. RAV-4 and Corollas are still available, but young people want to get expensive vehicles.

    Expensive vehicles should be for few well to do and older generations that have accumulated money. Young people can still buy Corollas. They don’t need to be financed for 84 months. or 72 months.

    • 0 avatar
      Arthur Dailey

      There are very few young people who want to buy a Corvette any more. Corvettes are now associated with a balding guy who is trying to get some of the excitement he did not experience as a young man. They are primarily ‘garage queens’.

      When I was young, Corvettes were ‘cool’. I bought one. Many of my high school teammates did as well. We once lined them up along the end zone of our high school when we went back to watch a football game.

      Now they are ‘toy’ for the near retirement crowd.

      • 0 avatar
        pmirp1

        Arthur Dailey, Get with the times. C8 is not even available because mid-engine Vette are very popular with younger people. You are thinking prior generations.

        You may want to say it is a toy of retirement crowd.

        I say Corvette is a gift for a life of working hard, an aspirational vehicle. I got it at proper older age and enjoy it. After working hard for 40 year. It is a toy sitting next to my other toy Mustang GT. I know when I drive it, I get glares and thumbs up. Admiral blue 2016 with chrome wheels.

        You got to own it, to get it. Otherwise it is just being jealous and not real.

        • 0 avatar
          el scotto

          @ pmirp1 Using your numbers; start of work-life +40 years more or less equals 60 years old. 60-year-olds are near retirment age. Does that mean you don’t to use the lights on your “Vette driving home from the early bird special?

        • 0 avatar
          Margarets Dad

          pmirp1, not sure why you’re happy about attracting glares, but you do you. You certainly beat everyone to McDonald’s for the senior coffee special with that 600-hp engine, and I suppose there’s something in that.

        • 0 avatar
          Arthur Dailey

          @pmrp thanks for demonstrating what I said, when you posted “it is a gift for a life of working hard”. Meaning that those who buy one are at or near retirement age. Much like yourself.

      • 0 avatar
        Greg Hamilton

        Arthur,
        I thought I grew up around some very well heeled young adults, but no one I knew bought a Corvette in high school, let alone multiple students buying them. I think you have a story to share. Maybe they were used Corvettes? It would be interesting to hear.

        • 0 avatar
          Arthur Dailey

          I paid just under $10,700 for mine new (L82 MT). Some bought ones that were a few years old. All C3’s as this was in the early/mid 1970s.

          A significant number left high school and went directly into the police or fire services. So dealers/manufacturers were more than willing to approve their loan applications.

          We were from a distinctly ‘middle class’ part of Toronto.

          And yes getting one was something of a tradition among that team. One guy still owns his!

          • 0 avatar
            Greg Hamilton

            Arthur,
            Thanks for the back story. I think many around the world could only dream of a high school life like that. Glad you enjoyed it.

    • 0 avatar
      Art Vandelay

      When I was young I bought cheap cars as well, but not because I wanted them…but I didn’t want to walk. I don’t know many young folks rocking C8’s today either.

    • 0 avatar
      Margarets Dad

      The young people I know can barely afford to pay their college loans, let alone buy $75,000 cars. Good grief.

      • 0 avatar
        pmirp1

        Margarets Dad, who do you think buys all the expensive SUVs? Whether Lexus RX, BMW X5s, Tahoes, Yukons, Explorers, Tellurides,. Have you priced them? I guarantee average 50,000 transaction price.

        Who do you think buys big trucks? Is it all work people? Is it over 60 crowd? Come on. It is the young people that like to show off their manhood. Be serious.

        Even midsize Taco and Ridgeline cost 40,000. Even Grand Cherokee minimum 40,000. Who buys those?

        Young people are responsible for many of their own misfortunes. When I say young, I am talking any one under 50. If you need a six year or longer term loan, get a Corolla. Why is that hard to understand?

        It is the same young people who spend $10 on coffee in morning, and minimum 50,000 vehicles, and then complain about long term of loans.

        • 0 avatar
          Lou_BC

          Under 50 young?
          LOL
          That by definition is middle-aged.

          I don’t know any young people in expensive vehicles i.e. under 25. My sons are 18 and 20. None of their friends are in anything expensive. The ones with wealthy parents are in new econoboxes instead of used ones. There’s the odd one with a high paying job in the requisite brodozer, that’s rare.

        • 0 avatar

          The average new full size pickup buyer was 55 or 56 last time I checked. Tacoma is also 55 average age. It’s not young people being dumb, There is some of that but most younger people I know drive used or have something like a new Altima or Rogue. There are exceptions like my two first responder neighbors, which both have 40k plus new trucks, but with overtime I doubt they would stretch to pay them off in 3-4 years.
          There are two people looking at these longer terms. People with money who want lower payments to keep their money invested and lower middle income people who feel the need the reliability of a new escape rather then used.

    • 0 avatar
      smapdi

      The RAV4 is a $30k+ medium sized SUV now, it isn’t the same as the 90’s Rav. Young people aren’t interested in Corvettes or big SUVs… hell many don’t even want to drive now! I don’t know where you are coming up with this. What is your definition of young? Your posts just reek of stereotypes. Nobody in their 20’s are buying new luxury, sport cars, loaded pickups, etc.

    • 0 avatar
      ttacgreg

      Agree with you on this. People want ever fancier and more complex vehicles far beyond what they need.

  • avatar
    dukeisduke

    Party like it’s 2008!

  • avatar
    CoastieLenn

    “But is it what’s best for consumers and the broader economy?”

    Has this ever been a concern for any corporation? Sarcasm aside, a company’s main goal is to be profitable in near and long terms. If they’ve found a way to BETTER achieve that while producing LESS goods, then they’ve won the game.

    • 0 avatar
      Margarets Dad

      Indeed. Seems Mr. Posky doesn’t care much for the free enterprise system.

    • 0 avatar
      SCE to AUX

      Beat me to it. They’re not running charities.

      Besides, ‘consumers’ are also shareholders of these mfrs via 401k plans.

      • 0 avatar

        Despite leaning a bit left, I kind of agree. I have an issue with super high interest on some car loans (and most states do regulate this to some point) but I don’t have that much of an issue with the length of terms as long as underwriting is decent.

    • 0 avatar
      CoastieLenn

      People don’t realize that as the consumer, they have the ultimate solution. Stop purchasing. Stop using that 84 month loan to hide the fact that you can’t wholly afford the vehicle that you’re about to purchase. Have some moral responsibility…. oh wait, we’ve lost all sense of that. Christ almighty, it’s like groundhog day with how many times I’ve read about an issue that could be solved with some objective responsibility and society’s overall lack thereof.

      I’ve also been accused recently of subscribing to the “bootstrap mentality”? Well, sure I guess. If more people subscribed to that, people would hold more value to things and themselves and stop with all this easy handout crap. Let just keep kicking the can down the road.

      I’ll be back, there’s a kid on my lawn and there’s a cloud that needs scolding.

      • 0 avatar
        ttacgreg

        I have a word document that is a collection of quotes. Just about 100% of them come from editorials and news stories but…..”how many times I’ve read about an issue that could be solved with some objective responsibility and society’s overall lack thereof.” is a real gem, and I added it to my quotes collection.
        Feels like we have all gone crazy and the 600+ some at the very top in D.C. are indeed true leaders when it comes to dysfunctional insanity.

        • 0 avatar
          CoastieLenn

          @ttacgreg: Unless you meant that sarcastically, I’m honored to appear in your collection.

          • 0 avatar
            el scotto

            @CoastieLem Sir, the only branch of the military that really goes to work every day. Not exercises, work. Another quote for you and ttacgreg: “Too many people are buying things they can’t afford to impress people they don’t know.” Prime example: Dad and I own some rental properties in Myrtle Beach, SC, think spit cups and suntan oil. Just about every time I’m down there some old guy rolls in the bar bragging about how he owns a condo and a new Mercedes, Lexus, Vette, or whatever. They’re always crestfallen when they find out there are six other guys at the bar just like him.

          • 0 avatar
            ttacgreg

            I’m serious.

      • 0 avatar
        jkross22

        Yeah, Separating wants from needs used to be something understood and valued.

        That’s not bootstrap mentality. It’s just common sense.

        • 0 avatar
          Lou_BC

          “Separating wants from needs”

          Advertising has done a great job of conflating the two. Facebook, Instagram et al has made it all worse. That “van life” girl that was found dead is the ultimate example. Everyone wants to pretend that they are living the dream. The populace needs to pay attention to the words of “The Grand Illusion” by Styx.

          “But don’t be fooled by the radio
          The TV or the magazines
          They show you photographs of how your life should be
          But they’re just someone else’s fantasy”

          “America spells competition, join us in our blind ambition
          Get yourself a brand new motor car
          Someday soon we’ll stop to ponder what on earth’s this spell we’re under
          We made the grade and still we wonder who the hell we are”

          • 0 avatar
            jkross22

            Lou, Props for quoting Styx.

            That’s advertising’s job – to create an itch and then sell something to soothe it. Or in social media’s case, make you feel like crap for not having/doing/going.

            We need to stop bs’ing ourselves before we can stop buying the bs others are selling.

          • 0 avatar
            Lou_BC

            @jkross22 – thanks and your point is rather clear, they create the itch and then sell the remedy.

      • 0 avatar
        Art Vandelay

        Let me make it easy for you. My wants and/or needs are completely separate from anything that is remotely your business.

        Worry about your own house.

        • 0 avatar
          jkross22

          Art, why did you think I was targeting you with wants/needs?

          • 0 avatar
            Art Vandelay

            Just the tone of most of these posts in regard to “wants and needs”. The logical conclusion to this line of thought is that nobody “needs” more than a bus pass to get back and forth to whatever factory they “need” to work in.

            But this is TTAC, where the cult of the $#!+box is the one true faith and anyone with more vehicle than whatever the poster has is in debt to his or her eyeballs for it or they cheated to get ahead of said poster. And if you are below that level, you are lazy.

          • 0 avatar
            Lou_BC

            @Art Vandelay – there are plenty on this site that are well off enough to not worry about the difference between a “need” or “want”. You fall into that category.
            Lengthy loans and various sub-prime shenanigans along with most advertising is geared to upselling those at the “needs” end of the scale. My only concern is that sort of behavior eventually causes systemic problems.

  • avatar
    el scotto

    In larger cities, younger people are getting hit with just stupid housing expenses. I live in the western suburbs of D.C. What my condo cost would buy me a nice house in fly-over country. Not bragging, just stating facts. The young people working for me are either saving up for a house or getting their master’s degree or both. Dropping large cash on a vehicle is not their top priority, not at all. The luxe vehicles are mostly being driven by those 40+. Now there are some gearheads like my friend who traded his Evo for a a 427 Vette. The gearhead to rolls on steelies gets me to night classes ratio is about 90/10. One of my guys just got back from overseas; paid cash for a used Camry with steelies. No car payment was his goal. What most people don’t understand, cue four-square Larry and the loud sportscoat, the ultimate goal of a large downpayment in not lower monthly payments but to either not be upside-down on your loan or withing 2 or payments. A lower monthy payment with a large down payment should not be your long term goal. Now if I made what I make now and live in SEC country, I could afford a 90K brodozer and go to NASCAR races. I’d have a large budget for monobrow waxes and extra toe removal too.

  • avatar
    SCE to AUX

    “While credit scores have always seemed somewhat arbitrary and unnecessary, opening up the gates to anyone Ford thinks it can lock into an extended loan feels like it could result in predatory behavior.”

    1. Credit scores are a useful indicator as to whether someone can or will repay a loan. Of course, low FICO people always feel they are the exception.

    2. A loan isn’t predatory if the consumer has a choice. Said consumer doesn’t *have* to buy a brand-new car, optioned with all the toys. They can also shop around for better terms, but poor credit will get you poor terms. Pay off that 72-month loan and keep the car a while, and your credit will improve.

    • 0 avatar
      jack4x

      Haven’t you heard? Anything that creates unequal outcomes (not simply unequal opportunities) is “problematic” now.

      Low FICO Lives Matter

    • 0 avatar

      I think I agree and disagree. I think there needs to be caps on interest rates, and I think you need some decent underwriting to make sure lenders don’t build a house of cards. I also think loan disclosure laws need to be better enforced. When some of my friends and family have bought cars from BHPH they often have no idea the interest rate just the payments and number of weeks or months. One local BHPH is notorious for hiding the info in a pile of paperwork stapled so the buyer signs it without reading the top to see the rate (the guy who owns the place literally says sign here that you agree to the payments) . Years ago I had a coworker who’s other job was detailing cars at a BHPH, he said they were investigated multiple times but never fined as long as there was a signature. People don’t make good decisions when they are desperate. Some is lack of knowledge or just filling a desire to have something. But other times it’s like a friend who needed a car to get to work and haul his family. His old car died he had a couple hundred in the bank and awful credit so he goes to the BHPH they tell him they will take a 100 a week for a 130k mile caravan out of his paycheck and he can drive off today so he does. He had no idea the terms because he needed a car and he got one.

    • 0 avatar
      FreedMike

      Actually, there’s a FAR better move than taking out a high-interest car loan to improve your credit: take out a high-interest loan for something like furniture or home electronics. And then take out some “starter” credit cards (secured, or cards with a high annual fee).

      I speak from experience here – I went through a divorce that ruined my credit. After a few years, I took the steps above and my score improved dramatically in about a year. I’m mid-700s now.

      People thought I was nuts taking out a 23% loan on a $800 TV – “you’re being ripped off,” they’d say. And they were right. But would I rather get ripped off on a $800 TV loan that I can dodge a great deal of interest on by paying off in a matter of months, or a $20,000 car loan that takes four or five years to pay off? The question answers itself. Same for the annual-fee credit cards. In fact, my only goof in the whole process was cancelling the annual-fee cards once I qualified for better plastic – they were actually the oldest trades on my report, and my score went down pretty dramatically after I closed them out. Live and learn.

      Either way, on-time payments will look equally good on a credit report, and it doesn’t matter what interest rate the trade carries. The trick is to minimize the cost of the “rebuilding” trades.

  • avatar
    gasser

    In Los Angeles here. My car lease is up in 6 months and I have been starting to look around. Samples are: Kias are $1500 to $2000 over sticker; Chevy Tahoe is $7500 over sticker; Mercedes are about 5% over sticker. My friend’s wife sold her end of lease Mercedes GLC300 to CarMax for $5K over the “purchase out of lease” price. Dealer inventories are miniscule (2 or 3 cars per model, instead of the 10 or 12 per model last year). Gas is now over $5/gallon for high test. Perhaps someone can explain to me how people will get to a job in 6 months. Rapid price increases like this can only lead to rapid increase in inflation, which will lead to interest rate hikes. Still think 84 month financing is realistic?? I don’t.

  • avatar
    jkross22

    There are A LOT of $25k brand new Camrys, 21k Jettas and 24k Passats listed on cars.com. I’m not saying that’s peanuts. I am saying that if people are struggling to find a good used car, is it maybe that they want something they can’t afford or aren’t being realistic about what the car is for?

    The people with only a few grand to spend on a car are absolutely getting shellacked, though.

    • 0 avatar

      The trouble is you used to be able to get those as a used car with under 50k miles for like 15k or less now you can’t. The most common used car searches are for under 20k and under 10k. Those markets are screwed right now. Lot’s of lower middle income families I know try to keep the car payments under 300 a month, with a new Jetta at 23K that would mean 72 months or longer depending on down payment. This math is pushing a lot of people to leasing, but to make those cheap leases worth it to the banks and automakers used car prices have to stay high so they work much harder on that then they used too. Things like shipping cars around the country to make sure they get the maximum at wholesale for them.

  • avatar
    jalop1991

    I miss Rent-A-Wreck.

  • avatar
    dal20402

    There’s a lot of projection going on in this thread.

    I’m in my mid-40s with a well-paying professional job, but there’s nothing like a C8 or an F-150 Limited in my future, because all my money goes toward housing. I live in a place where pretty much any family-sized dwelling costs $1 million and construction costs can top $400 a square foot. I’m just about to start a $700k+ remodel project on a house for which I paid another $700k+ a few years ago. In that environment, you buy a CR-V, very likely on a cheap long-term loan, and spend the rest on your mortgage.

    • 0 avatar
      CoastieLenn

      You either live in California or here in Hawaii. Real estate prices make the automotive sector look like childs play.

    • 0 avatar

      I’m in a more normal but still high real estate market (Connecticut). And I have noticed as house prices have jumped recently the age of the cars parked in front of recently sold houses seems to be getting much older. I had the thought that with people paying 20% more for a house this year then last year the budget for a new car must be getting eaten up. On the flip side I know some neighbors have been using their houses like piggybanks like 20 years ago to buy toys (RVS and motorcycles)thanks to the fact that they now owe a tiny percentage what their house is now worth.

  • avatar
    Jeff S

    Time for less expensive Asian cars and crossovers from China, Thailand, and Vietnam. Perfect opportunity for another less expensive auto company to enter the market.

  • avatar

    You voted for socialism – get used to shortages. No one wants to go to work, everyone wants to stay at home and get checks.

    • 0 avatar
      Old_WRX

      ILO,

      I suspect things are going to get even more “interesting” than just shortages before too long.

    • 0 avatar
      Lou_BC

      “You voted for socialism”

      It’s happening all over the world. So NO!

      England voted against Brexit. That’s a vote against what most would define as socialism. Kinda backfired. Doncha think?

      BUT…
      I’m assuming you are referring to the USA elections.

      Biden got elected to get the orange chumpanzee out of office. Repubs gained in the House but lost in the senate due to the orange moron. That also shows that the majority did not vote for socialism.

    • 0 avatar
      golden2husky

      Like we have socialism – not. Arguably, the biggest “socialist” programs in America are Social Security and Medicare/Medicaid. ILO, make sure when you retire not to accept any of those “socialist” benefits. A good, hardworking ‘Merican don’t need no handouts, right? After all, only hard work is needed, nothing else matters /s.

      While there are plenty of areas to be disappointed with Biden, the shortages we are experiencing have nothing to do with him. Yet unsupported comments like ILO’s are the (incorrect) bedrock of right-wing media. Lie loud enough, long enough, and deny the truth as much as possible and you will get enough people to believe it. It’s why the Orange Idiot will be re-elected. And when that happens, kiss our Constitution goodby.

      • 0 avatar
        Art Vandelay

        Sweet @Golden2husky. So in turning down these “Handouts’ am I to assume I am also turning down the rather large chunk of cash taken from each of my paychecks? As it is not really news to me that one day I was going to be old, I’ve taken care of both healthcare and income in those years so getting to do something more productive with it would be great!

        Alas, I assume you just meant opt out of the receiving end while continuing to pay for people that somehow missed the fact that one day they’d be old…8f they were lucky of course.

        • 0 avatar

          Vote with your paycheck if you don’t like the programs don’t use them even if they cost you money. It’s like the same argument as why do billionaires like Buffet say raise taxes why don;t they just donate more. Same.

      • 0 avatar

        “Lie loud enough, long enough, and deny the truth as much as possible and you will get enough people to believe it.”

        Pretty much whichever party occupies the White House does this. The details of how you were raised, the folks you hang with, and the rest determines how you view ALL information. We can claim to approach things without bias, but none of us truly do so. We are all preconditioned in the way we consider ALL info.

        Another thing: I’ve never understood how ANY president controls gas prices. I do get how that person’s leadership is viewed can affect the economy in general, but isn’t that really someone else ‘pulling the trigger’ which has the true effect? Common sense equals a good ability to think critically. I’m working on mine (as you can see).

      • 0 avatar
        Daniel J

        @golden2Husky,

        Social Security is NOT a social program in the traditional sense because it is paid for, and the amount one gets in return is related to what they put in. It’s only become like a traditional social program because it’s losing money every year.

        Medicare/Medicaid in most instances are income contingent. Many people however also put lots of money into both programs over the years.

    • 0 avatar
      SCE to AUX

      Special pandemic checks were being cashed in early 2020, using insane rules.

      That’s arguably ‘socialist’, but it was well before the last election that I assume you’re referring to.

      Anyway, the US form of socialism began a century ago, and every politician since then tells people what he will give them.

      • 0 avatar

        Yeah I learned along time ago when it comes to things like increasing debt the party in power never really seems to care. They just buy votes in different ways, it’s all giveaways just to different groups.

        • 0 avatar
          Old_WRX

          “it’s all giveaways just to different groups.”,

          I would have said “thievery” instead of “giveaways.” Government is just slang for the biggest gang in a geographic region.

          The US has been in a tailspin heading towards authoritarianism for decades. Patriot Act, Dept. of Homeland Security (beware when they start using emotionally evocative words like “homeland”, “motherland”, “fatherland”), TSA. It’s the same old game: scare the public, offer them a “solution” to keep the public safe and never back off on any power grabbed “temporarily” — like the temporary power granted to the IRS to act without “due process” which was given to them during prohibition to help fight bootlegging.

          I saw something hilarious in a you tube video recently. Someone was complaining about how the US has a system “that is in fact rigged in favor of the powerful.” Sorta like most every other system in power for the last few thousand years…

          People forget that authoritarianism is the norm in human government — anything else is a rare exception which is hard won but very easily lost.

          • 0 avatar
            ttacgreg

            The use of the term “homeland” has always made me uncomfortable. That said “department of defense” is a propaganda title too. It used to be called the War Department. I rather like that actually. Tell it like it is.

          • 0 avatar

            And Department of Truth (Pravda in Russian) a.k.a. Department of Fact Checking a.k.a. Department of Censorship a.k.a. Thought Police. That is some new development in USA. When I came here 20 years ago there still was such a thing as freedom of speech and people were not afraid to say what they think. Last ten years things have changed dramatically. Even movie star like Molly Ringwald is afraid that her own children will cancel her if she says what she thinks.

    • 0 avatar
      Old_WRX

      ILO,

      “there still was such a thing as freedom of speech and people were not afraid to say what they think. Last ten years things have changed dramatically.”

      You got that right. It’s getting to where it feels more and more like it’s best to keep your mouth shut and trust no one.

      I noticed it starting long before the last ten years, tho. When Desert Storm started (1991) I noticed there was a strange lack of anybody saying anything against that war. The difference in what people were saying and what was in the media between that war and the Viet Nam war was eerie.

  • avatar
    Daniel J

    I’d love to actually see a Santa Cruz out on the lot but I’d have to drive 3 hours just to see one. All the while I’m getting tons of offers for my Mazda 6.

  • avatar
    SaulTigh

    I don’t necessarily disagree with an 84 month loan in certain circumstances. If you were say buying a new vehicle with a similarly long warranty and planning to keep it beyond the payoff period, it’s nice to have a low payment that you can pay extra on when times are good, but drop back to the minimum when things are tight.

    My last new auto loan was 1.94% for 75 months, but I paid it off in 50 because I had simply become tired of writing out the check each month. I’m done making payments on a car, and my next purchase will be cash. Currently waiting on the market to turn around both in terms on inventory and incentives. In the meantime, continue to put away money every month as if I did have a car payment, towards my next purchase.

    • 0 avatar
      Luke42

      That’s my rule for new cars: the term of the loan cannot exceed the term of the warranty.

      It’s gotta be able to get me to work as long as I’m making payments on it.

      If it doesn’t come with a warranty, then major repairs are part of the budget for the car.

    • 0 avatar
      3SpeedAutomatic

      My last loan was 60 months, but paid off in 52 months. Like you, got tired of writing a check each month.
      Once the market gets back to normal, may write a check for a low milage SUV with extended warranty.

      As for rentals, my last two cars had 8k miles and 24k miles on the odometer.
      In the past, have had a high of 58k miles (Hertz in Dallas) and as low as 800 miles (Budget in Florida).
      As long as the A/C and radio work, I’m happy!!

  • avatar
    stuki

    “Car Loans Get Longer, Rental Vehicles Get Older”

    That’s what America getting poorer looks like.

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