Author Topic: Average New Car Loan Length - 67 months  (Read 2175 times)

Fuzzy Buttons

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Average New Car Loan Length - 67 months
« on: November 10, 2014, 08:24:59 AM »
This from a financial column in the Washington Post - When it comes to car loans, it pays to stay in the fast lane.

After talking about all the problems you can have with a long car loan, she passes on this money-savvy tip:

Quote
Hereís my rule of thumb when it comes to auto loans. If you canít afford the monthly payment under the traditional 48-month financing, you canít afford the vehicle.

I read that and thought, Way to set the bar high.

It's amazing how different that looks to me today.  My last car was bought with a 4 year loan, and I thought nothing of it.  But after reading here and putting together a plan for how I want to spend my money, the idea of doing anything other than paying cash for my next vehicle seems the height of irresponsibility.  Its all about perspective.

ChiVolter

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Re: Average New Car Loan Length - 67 months
« Reply #1 on: November 10, 2014, 11:36:43 AM »
In May of this year I took the plunge and bought a 2014 Chevrolet Volt at $37k and financed it. A few weeks later I received my non-taxable cash rebate form the State of Illinois for about $3,500. Now waiting to file taxes for the federal rebate because of our unique tax situation the credit and rebates would help us alleviate some tax debt. I know in the end it ended up just being a way to shuffle debt from the IRS to this depreciating asset.

I took the loan for 72 months!!! Longest car loan I have ever had. My reasoning was the rate did not change between 60-72 months so I took the longer repay for a lower minimum payment in case of a small additional financial crisis. I always pay more because I will not take this loan for the full term.

I was astonished that they even offered 84 months on slightly cheaper vehicles! When I was in banking we would not offer an 84 month term unless the vehicle cost $60k or more.

As I am new to the MMM school of thought I am starting with a heap of debt... that will turn to savings over the next few years. And then expect never to finance another car again.

One Noisy Cat

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Re: Average New Car Loan Length - 67 months
« Reply #2 on: November 10, 2014, 04:27:39 PM »
    Reminds me that when I was a kid, I once read the owners manual to our 1967 Ford station wagon.  There were a couple of paragraphs on the merits of 2 year vs 3 year financing, with buying a new car once it was paid for (natch). Surprisingly they recommended the 2 year plan. My father messed up by keeping the car for 7 years-he did splurge on getting a/c and an AM radio.