A decade ago, the best-selling segment of vehicles was affordable small cars, like the Ford Focus sedan, she said. Today, it’s entry-level crossovers like the Toyota RAV4 and Ford Escape, which carry starting prices of several thousand more dollars.
Another tip: If you can’t afford a midsize SUV, for example, consider a midsize car. The price difference between the average midsize SUV and the average midsize car in January was $38,744 to $25,930, according to Kelley Blue Book.
I've spent the past few minutes discussing my co-workers's situation with her car. She's 37 months into a 48 month lease, and just tripped over the maximum miles. Her monthly payments are about $360, but--if she continues driving at her current rate--she'll add a little over six extra payments over the the next year for those miles. It's difficult for her to make a change to a different car without having a substantial pot of money on-hand.I'm guessing that buying the car at the end of the lease will be her best option.
I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?Not any more. 84-month loans are pretty common nowadays. It's nuts.
And its not like there is a shortage of alternatives to the "very, very expensive" option.
"New-car buyers agreed to pay an average of $551 per month for 69 months in January."
I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?Not any more. 84-month loans are pretty common nowadays. It's nuts.
To compare, I bought my Corolla 16 years and 140k miles ago for $4500. That's less than one year's worth of average payments.
"New-car buyers agreed to pay an average of $551 per month for 69 months in January."
It continually boggles my mind.
That's literally 2 car payments for the most expensive two cars we ever bought. Those were the last new cars we bought and were only for 60 months.
I've bought 3 different rental homes, each for less than one average new car at that price.
Some people buy fancy cars. I buy houses and stock.
I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?Not any more. 84-month loans are pretty common nowadays. It's nuts.
To compare, I bought my Corolla 16 years and 140k miles ago for $4500. That's less than one year's worth of average payments.
In Canada for the last 4 or 5 years now I've stopped seeing any loan for under 84 months advertised, it's the new standard loan (as far as ones being advertised anyway), and I also see the odd 96 month loans popping up.
My car payment was £500, that's about $650
It was only one payment though. I'm quite happy with my 12 year old VW
I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?Not any more. 84-month loans are pretty common nowadays. It's nuts.
To compare, I bought my Corolla 16 years and 140k miles ago for $4500. That's less than one year's worth of average payments.
Thanks! :) But I'm not sure 225k miles (what it has now) qualifies it as "old" yet.I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?Not any more. 84-month loans are pretty common nowadays. It's nuts.
To compare, I bought my Corolla 16 years and 140k miles ago for $4500. That's less than one year's worth of average payments.
I like your choice of car. ;-)
It's just as bad in the UK, I know multiple people paying up to £500pcm for a flashy GTI/GT/SR/*insert high spec stupid tag here* who struggle to pay rent and bills.
I've got a VW Golf GTI that goes like a rocketship… cost me £700 cash and is a mere 18yrs young... will do 70mph+ in 2nd gear!
I don't know anybody in my apartment complex who has paid cash for a vehicle except me. They drive much newer, nicer cars than mine, but are mostly leasing for $300-$400 per month. I think they are just crazy. All that money, and they don't even own their own cars. They think getting a new car means taking out a new lease--then they all ooh and aah over each others new (i.e. leased) cars. I so don't get it.
I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
I feel SOOOOOO much better now about that small amount of debt I took on do buy my dream motorcycle.
This quite caught my eye:
"The good news is the average consumer has 'a very healthy balance sheet' right now, said Lakhbir Lamba, executive vice president of retail lending at PNC."
This is not supported by evidence in the article and is incongruous with that tidbit we have all heard recently about how the average American would not be able to come up with some small amount of cash in the case of an emergency. Maybe Americans have a good amount of equity in their homes right now, but a large portion of that would be offset by the very subject of the piece: vehicle debt. I wouldn't consider my balance sheet healthy unless I had a strong amount of liquidity.
I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?Not any more. 84-month loans are pretty common nowadays. It's nuts.
To compare, I bought my Corolla 16 years and 140k miles ago for $4500. That's less than one year's worth of average payments.
In Canada for the last 4 or 5 years now I've stopped seeing any loan for under 84 months advertised, it's the new standard loan (as far as ones being advertised anyway), and I also see the odd 96 month loans popping up.
8 Years? wow. I've wondered about that before when I drive through Canada. When exchange rates swing and the US Dollar suddenly buys 1.25 Canadian is the price of vehicles really 25% higher in Canada? Or could I get a screaming deal on my next used car buying it BC instead of the Lower 48 and driving it up?
I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?Not any more. 84-month loans are pretty common nowadays. It's nuts.
To compare, I bought my Corolla 16 years and 140k miles ago for $4500. That's less than one year's worth of average payments.
In Canada for the last 4 or 5 years now I've stopped seeing any loan for under 84 months advertised, it's the new standard loan (as far as ones being advertised anyway), and I also see the odd 96 month loans popping up.
8 Years? wow. I've wondered about that before when I drive through Canada. When exchange rates swing and the US Dollar suddenly buys 1.25 Canadian is the price of vehicles really 25% higher in Canada? Or could I get a screaming deal on my next used car buying it BC instead of the Lower 48 and driving it up?
Side note, the exchange rate is currently $1 USD to $1.34 CAD.
Unlikely: car safety regulations in the United States are deliberately tweaked to ensure that any vehicle bought outside the USA has "safety flaws" that require expensive modifications before the vehicle can be legally imported and registered.
Because that 2019 Peugeot or Skoda is certainly more unsafe than a Harley-Davidson... Yep - safety is the reason...
Wonder what the average used car payment is? Yea, $550 is bad but at least you are getting a car that could last awhile and is nicer. Used car payments are usually inflated due to bad credit.
My sister (who makes me look like a free spender) started a conversation this morning about calculating the real price of a vehicle when dealerships are offering a 0% loan. They can't borrow the money somewhere else and then let the buyer use it interest free so the cost of the loan must be built into the price. Does anyone know of a good method or an online calculator for that?
For fun I looked at buying a new car from the same dealer. I was tempted by the 0.5% financing. But they also offer -$1000 for a cash purchase. Looking at the math that 0.5% is more like 4.8% if you took the cash price as your PV. Although the rental car financing seams tempting, always check the fees and actual difference with a cash payment.
I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
Wonder what the average used car payment is? Yea, $550 is bad but at least you are getting a car that could last awhile and is nicer. Used car payments are usually inflated due to bad credit.
About half a year ago the average used car payment was $378.
https://jalopnik.com/the-average-used-car-payment-is-now-378-per-month-1828725332
I think it's important to note the inherent statistical bias in these numbers. The $550/month figure is an average of Americans that buy a new car and finance it. That number doesn't go down when more people buy their cars in cash. Or when fewer people buy new cars (new vehicle sales are up 20% over the last five years so maybe we should ridicule that instead). Because those people are not part of the dataset. It will only go down when the people choosing to finance their new cars choose cheaper cars. And inflation obviously is working against that. Even a new Corolla is $300+/month now.
I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
I'd say about 10 years is when the road salt starts tearing at the frame. cosmetic rust is one thing but stick your fingers through the side wall is another
I know about all of the great 'tech' (blech), and safety BS new cars come with... But a base new RAV4 AWD with steel wheels, plastic hubcaps, no pwr seat anywhere, and a 4 cyl engine is $30k... $30k for that shit? Hey, at least you get a urethane gear shift knob to enjoy for the next 8 years of your loan. Oh well, record number of folks 90 days or more late on their payments, maybe my cash can get spent soon for pennies on the dollar.
Wonder what the average used car payment is? Yea, $550 is bad but at least you are getting a car that could last awhile and is nicer. Used car payments are usually inflated due to bad credit.
About half a year ago the average used car payment was $378.
https://jalopnik.com/the-average-used-car-payment-is-now-378-per-month-1828725332
I think it's important to note the inherent statistical bias in these numbers. The $550/month figure is an average of Americans that buy a new car and finance it. That number doesn't go down when more people buy their cars in cash. Or when fewer people buy new cars (new vehicle sales are up 20% over the last five years so maybe we should ridicule that instead). Because those people are not part of the dataset. It will only go down when the people choosing to finance their new cars choose cheaper cars. And inflation obviously is working against that. Even a new Corolla is $300+/month now.
Ironic, I was just telling someone similar yesterday. Manufacturers keep jacking the cost up at a crazy rate, adding new trim lines to really jack up the cost, and diminish previous trim lines value (looking at you Mazda), and extending the loan term to keep asses in new leatherette seats. "C'mon man, what monthly payment can you swing"... Fucking madness, and cash does nothing for you/no cut for the dealer via their financing/financing provider.
I know about all of the great 'tech' (blech), and safety BS new cars come with... But a base new RAV4 AWD with steel wheels, plastic hubcaps, no pwr seat anywhere, and a 4 cyl engine is $30k... $30k for that shit? Hey, at least you get a urethane gear shift knob to enjoy for the next 8 years of your loan. Oh well, record number of folks 90 days or more late on their payments, maybe my cash can get spent soon for pennies on the dollar.I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
I'd say about 10 years is when the road salt starts tearing at the frame. cosmetic rust is one thing but stick your fingers through the side wall is another
And repairs become far more difficult and expensive due to rust seized parts that break off, rather than unbolt. Oh yeah, ask Toyota about frame rust. I have seen several times behind a Toyota service building, stacks of new frames ready to be installed for their trucks. Literally a frame up replacement, where all parts are stripped from the old truck, and bolted to the new frame. Man, did Toyota eff that one up.
All this talk of $30k cars is insane.
I'll stick with my 2 week rule. Never spend more than 2 weeks (after tax) earnings on a car, and just replace them every 2 years when they get scrapped
Ehhh. Dana (the frame manufacturer) messed that one up. Maybe Toyota could've tested more thoroughly, but the frame rust issue has a specific root cause (inadequate rust proofing from the Dana factory).
https://www.torquenews.com/106/dana-corp-ordered-pay-toyota-25m-frame-rust-issues
https://autoweek.com/article/recalls/toyota-frame-settlement-could-cost-company-34-billion
All this talk made me realize I could buy a base model 3 series every 2-3 years in cash using my passive net rental income (after EBITDA). But why piss that money down the depreciation drain faster at 0.98c when my I could use it to grow my little green army and let it march at a reliable long-term cadence of 7-8%.
I guess not many texans in the bunch lol.. I know of alot of unmustachian freinds that are financing Ford F250 4x4 pickups at the tune of $1200 bucks a month..... Crazynyess
I guess not many texans in the bunch lol.. I know of alot of unmustachian freinds that are financing Ford F250 4x4 pickups at the tune of $1200 bucks a month..... Crazynyess
I bought me an unmustachian pickup recently, but i paid Cash!!!!!!!!!!!!!!!!!!!!!!!!!!
Cash is KING
I guess not many texans in the bunch lol.. I know of alot of unmustachian freinds that are financing Ford F250 4x4 pickups at the tune of $1200 bucks a month..... Crazynyess
I bought me an unmustachian pickup recently, but i paid Cash!!!!!!!!!!!!!!!!!!!!!!!!!!
Cash is KING
Many years ago I worked at a bank and I was really surprised by all of the $400 to $800 car payments on fairly normal sedans or SUVs. I also saw $800 to $1200 car payments, which you immediately think Porsche, but no, that's for a pickup truck.
I also remember a meeting where our manager was teaching the tellers good questions to ask to get customers talking about their car loans, so they could offer refinancing. He made the comment, "everyoune has a car loan." I visibly shuddered, and he said, "well except you."
A co-worker was recently bragging about her new luxury SUV. Since she already had a luxury SUV, I went out to look at her new one. Same color, same model but two years newer than her (2yr) old one. It also came out that she is paying....$1,000 per month in payments for this new ride. It absolutely boggles the mind.
A co-worker was recently bragging about her new luxury SUV. Since she already had a luxury SUV, I went out to look at her new one. Same color, same model but two years newer than her (2yr) old one. It also came out that she is paying....$1,000 per month in payments for this new ride. It absolutely boggles the mind.
I have a coworker who did the very same thing with a certain car. Two years newer, same color, same type. I have to wonder if they lease. I've decided that my neighbor who seems to get a new car every couple of years probably leases too. No facts to go on though, just assumptions. None of my business either but the frugal part of my mind says "yikes!" every time I see a new vehicle there..
I won't lie. I bought a clown car. Big ole truck. I bought it to pull my clown boat, I haul stuff for local parks and recreating activities, hunt with it, and honestly I am accomplishing all of my financial goals with it and am taking on more financial responsibility for my family. God has blessed me with a great job and I would love to not have my family worry about some things since they have supported me for so long.It's not a clown truck/boat because you're using the truck a lot to put the boat in the water several times a year. It's not for show or bragging.
As far as the clown boat....in laws bought a lake house so we bought the boat. We are on it EVERY weekend during late Spring through late Fall and it "buys" us time with our kids now and the future.
Now, with the above said, I think there is a big difference in what people are spending and what people can afford. I could afford multiples of what I purchased but I didn't go and commit that financial bandwidth to a car. My assumption is that the article is alluding to people maxing out their financial bandwidth vs buying needs.
It's not a clown truck/boat because you're using the truck a lot to put the boat in the water several times a year. It's not for show or bragging.
It's a clown when one intends to use it but never does, or does it for show.
Plus if you're doing well financially, it ain't stupid to put money to enjoyment.
I won't lie. I bought a clown car. Big ole truck. I bought it to pull my clown boat, I haul stuff for local parks and recreating activities, hunt with it, and honestly I am accomplishing all of my financial goals with it and am taking on more financial responsibility for my family. God has blessed me with a great job and I would love to not have my family worry about some things since they have supported me for so long.
As far as the clown boat....in laws bought a lake house so we bought the boat. We are on it EVERY weekend during late Spring through late Fall and it "buys" us time with our kids now and the future.
Now, with the above said, I think there is a big difference in what people are spending and what people can afford. I could afford multiples of what I purchased but I didn't go and commit that financial bandwidth to a car. My assumption is that the article is alluding to people maxing out their financial bandwidth vs buying needs.
I guess not many texans in the bunch lol.. I know of alot of unmustachian freinds that are financing Ford F250 4x4 pickups at the tune of $1200 bucks a month..... Crazynyess
I bought me an unmustachian pickup recently, but i paid Cash!!!!!!!!!!!!!!!!!!!!!!!!!!
Cash is KING
That's not uncommon in Alaska either. This forum reminds me the $70k truck pulling 2-4 15K snowmobiles down the road ahead of me is most likely a sign of great debt rather than great wealth... You all help me stay sane.
I have a nice used tacoma I paid cash for and though I'd like a snowmobile the math keeps talking me out of it... My best estimate on a new mountain climbing machine is $200-$300 per day of riding... I can't help thinking that it's like being paid $200 dollars a day for hiking instead of riding... And better for my health too.
Is it really so shocking that someone might be paying more than two hundred bucks for a car payment? If we just focus on new cars for a second, the cheapest cars worth buying (let's ignore the Versa) start around $15k. On a 4 year loan with no interest, that's $310/mo. The Mazda3, Subaru Forester, & Outback, all of which featured on MMM's list of good car model choices (albeit used, I know), start at $21k, $25k, & $27k, quickly bringing you to around $600/mo on a 4 year loan.
Yeah, I know used cars are cheaper, but used cars were once new cars.
Is it really so shocking that someone might be paying more than two hundred bucks for a car payment? If we just focus on new cars for a second, the cheapest cars worth buying (let's ignore the Versa) start around $15k. On a 4 year loan with no interest, that's $310/mo. The Mazda3, Subaru Forester, & Outback, all of which featured on MMM's list of good car model choices (albeit used, I know), start at $21k, $25k, & $27k, quickly bringing you to around $600/mo on a 4 year loan.
Yeah, I know used cars are cheaper, but used cars were once new cars.
I've never heard of a four year loan for a new car. I think the baseline (at least in the US) is five years, but as more and more Americans are buying SUVs, crossovers, and pickups, we're seeing more 6+ year loans, and the average payment in 2018 was $530. Yes, five or more years of $500+ for a car is shocking.
Is it really so shocking that someone might be paying more than two hundred bucks for a car payment? If we just focus on new cars for a second, the cheapest cars worth buying (let's ignore the Versa) start around $15k. On a 4 year loan with no interest, that's $310/mo. The Mazda3, Subaru Forester, & Outback, all of which featured on MMM's list of good car model choices (albeit used, I know), start at $21k, $25k, & $27k, quickly bringing you to around $600/mo on a 4 year loan.
Yeah, I know used cars are cheaper, but used cars were once new cars.
I've never heard of a four year loan for a new car. I think the baseline (at least in the US) is five years, but as more and more Americans are buying SUVs, crossovers, and pickups, we're seeing more 6+ year loans, and the average payment in 2018 was $530. Yes, five or more years of $500+ for a car is shocking.
I remember when I was in 7th grade my teacher taught "Graveyard Lessons" aka important tidbits of information to take to the grave. She recommended you never get more than a three year loan; I quickly saw as an adult that to follow her rule it basically excluded new cars in my price range. Still a great lesson.
Is it really so shocking that someone might be paying more than two hundred bucks for a car payment? If we just focus on new cars for a second, the cheapest cars worth buying (let's ignore the Versa) start around $15k. On a 4 year loan with no interest, that's $310/mo. The Mazda3, Subaru Forester, & Outback, all of which featured on MMM's list of good car model choices (albeit used, I know), start at $21k, $25k, & $27k, quickly bringing you to around $600/mo on a 4 year loan.
Yeah, I know used cars are cheaper, but used cars were once new cars.
I've never heard of a four year loan for a new car. I think the baseline (at least in the US) is five years, but as more and more Americans are buying SUVs, crossovers, and pickups, we're seeing more 6+ year loans, and the average payment in 2018 was $530. Yes, five or more years of $500+ for a car is shocking.
I remember when I was in 7th grade my teacher taught "Graveyard Lessons" aka important tidbits of information to take to the grave. She recommended you never get more than a three year loan; I quickly saw as an adult that to follow her rule it basically excluded new cars in my price range. Still a great lesson.
That was part of the lesson. Don't buy new cars, they're too expensive.
That was part of the lesson. Don't buy new cars, they're too expensive.
What's turning things on their head to me is popular reliable models seem to enjoy essentially straight-line depreciation trending towards 200k or 250k miles. For many of the cars that MMM himself lists as good picks, I've generally found you can multiply the MSRP by the mileage divided by 200k and that's the going market price.
That doesn't necessarily mean buying new is a good idea; you can lose a lot of money on bad financing and it's a big capital outlay. If you drive 5k miles per year, it will take you 40 years to get your worth out of it.
Longer-lasting cars means (a) a reduction in the number of cars that need to be produced and (b) higher new car prices. So fewer people are paying more to buy the new cars, and the rest of the population who cannot afford or do not want a new car have to scramble for a smaller number of used cars spun off by the fewer new car buyers. Thus a bidding war develops over used cars. Junkyards are now in the business of reassembling already-junked cars and selling them.The sad part is that in 5-10 years the market is going to be absolutely flooded with nothing but used crossovers, and there'll be almost no small, efficient sedans available :(
Fortunately (unfortunately?) the desire for status symbols is as strong in the used market as the new market. Given the choice between a ragged out SUV and a low-mileage subcompact, most used car buyers, even those who are financially struggling, will choose the ragged out SUV.Longer-lasting cars means (a) a reduction in the number of cars that need to be produced and (b) higher new car prices. So fewer people are paying more to buy the new cars, and the rest of the population who cannot afford or do not want a new car have to scramble for a smaller number of used cars spun off by the fewer new car buyers. Thus a bidding war develops over used cars. Junkyards are now in the business of reassembling already-junked cars and selling them.The sad part is that in 5-10 years the market is going to be absolutely flooded with nothing but used crossovers, and there'll be almost no small, efficient sedans available :(
I've had a three year loan on a brand new Jeep. Yes, facepunch for the brand new Jeep. I've since downsized to a Fit.
It was 0% interest, so instead of spending cash I had a $900 car payment.
It's just math. If you buy an expensive car on loan, you're either going to have a high payment, a long term, or both.
Only way to win is to not play the game.
I made the same mistake 3 years ago - signed up for a $592/M lease for 6 years... still feeling the impact today. Wish I can go back in time, but now the focus is to pay that car off as fast as I can and never falling into the same pit again.
I've had a three year loan on a brand new Jeep. Yes, facepunch for the brand new Jeep. I've since downsized to a Fit.
It was 0% interest, so instead of spending cash I had a $900 car payment.
It's just math. If you buy an expensive car on loan, you're either going to have a high payment, a long term, or both.
Only way to win is to not play the game.
IMO, all the interest is baked into the price these days... it's just a shell game. It's like when you're on Amazon and you can either get the item for $20.99 with free prime shipping or $15.99 and $5.00 S/H.
A six-year car lease?!? Is this in the U.S? I have never of heard of this before.
A six-year car lease?!? Is this in the U.S? I have never of heard of this before.
Quite the norm for American markets. Lots of naive folks like the old me who would sign up for longer terms just get get into a new car.
A six-year car lease?!? Is this in the U.S? I have never of heard of this before.
Quite the norm for American markets. Lots of naive folks like the old me who would sign up for longer terms just get get into a new car.
Are we conflating leasing with financing here?
A six-year car lease?!? Is this in the U.S? I have never of heard of this before.
Quite the norm for American markets. Lots of naive folks like the old me who would sign up for longer terms just get get into a new car.
Are we conflating leasing with financing here?
I don't think so. Leases are generally 2-3 years, at least in my area. People who insist on starting with a brand new car every time and don't want to worry about mileage limits or a lease down payment every couple of years generally finance a full purchase for as many years as needed to yield a monthly payment that they can "afford." Once that's done, they trade it in and start the process over. These are the people who say in a matter-of-fact tone that "you'll always have a car payment."
A six-year car lease?!? Is this in the U.S? I have never of heard of this before.
Quite the norm for American markets. Lots of naive folks like the old me who would sign up for longer terms just get get into a new car.
Are we conflating leasing with financing here?
A six-year car lease?!? Is this in the U.S? I have never of heard of this before.
Quite the norm for American markets. Lots of naive folks like the old me who would sign up for longer terms just get get into a new car.
Are we conflating leasing with financing here?
I don't think so. Leases are generally 2-3 years, at least in my area. People who insist on starting with a brand new car every time and don't want to worry about mileage limits or a lease down payment every couple of years generally finance a full purchase for as many years as needed to yield a monthly payment that they can "afford." Once that's done, they trade it in and start the process over. These are the people who say in a matter-of-fact tone that "you'll always have a car payment."
That's my point -- some are referring to 6 year leases, which isn't something I've ever seen.
Are we conflating leasing with financing here?
A six-year car lease?!? Is this in the U.S? I have never of heard of this before.
Quite the norm for American markets. Lots of naive folks like the old me who would sign up for longer terms just get get into a new car.
Are we conflating leasing with financing here?
I don't think so. Leases are generally 2-3 years, at least in my area. People who insist on starting with a brand new car every time and don't want to worry about mileage limits or a lease down payment every couple of years generally finance a full purchase for as many years as needed to yield a monthly payment that they can "afford." Once that's done, they trade it in and start the process over. These are the people who say in a matter-of-fact tone that "you'll always have a car payment."
Co-worker just "bought" 2 used snowmobiles from a friend of his, I kept my mouth shut when he was talking about the great "deal" he got paying only $10,000 or $500 a month to his friend. I'm in Michigan he'll take them out 6-10 weekends a year.
The fact that people are now getting such huge car loans pisses me off because it works to raise the price of cars for everyone, mustachians included.
Not really. Used cars are still cheap as ever.Now isn't usually the time to buy even used cars at the moment. Everyone is currently getting their income checks and refunds. Also everyone is buying a car. One of my coworkers bought a brand new RV ($70k) last week. Another bought a brand new SUV for $45k the week prior. I was goofing off looking at car prices through my USAA Auto buying tool and then got smacked with countless emails from dealerships.
The fact that people are now getting such huge car loans pisses me off because it works to raise the price of cars for everyone, mustachians included.
Not really. Used cars are still cheap as ever.
The fact that people are now getting such huge car loans pisses me off because it works to raise the price of cars for everyone, mustachians included.
Not really. Used cars are still cheap as ever.
I don’t know about year over year, but used cars in good condition seem to be much, much more expensive than they were back in the 90s. I remember getting a good used Toyota through a dealer for about $5000 back in the nineties. We paid about $20,000 a few years ago.
The fact that people are now getting such huge car loans pisses me off because it works to raise the price of cars for everyone, mustachians included.
Not really. Used cars are still cheap as ever.
I don’t know about year over year, but used cars in good condition seem to be much, much more expensive than they were back in the 90s. I remember getting a good used Toyota through a dealer for about $5000 back in the nineties. We paid about $20,000 a few years ago.
With equivalent age / mileage / trim level? Due to inflation, $5k in the early 90's is over $9k today, and you can buy a 2007 Yaris (https://www.cargurus.com/Cars/inventorylisting/viewDetailsFilterViewInventoryListing.action?sourceContext=carGurusHomePageModel&entitySelectingHelper.selectedEntity=d827&zip=03748#listing=238847899) for $3k (or $6k for a 2011 with 37k miles (https://www.cargurus.com/Cars/inventorylisting/viewDetailsFilterViewInventoryListing.action?sourceContext=carGurusHomePageModel&newSearchFromOverviewPage=true&inventorySearchWidgetType=AUTO&entitySelectingHelper.selectedEntity=d827&entitySelectingHelper.selectedEntity2=&zip=03748&distance=50000&searchChanged=true&showNegotiable=false&maxMileage=75000&modelChanged=false&filtersModified=true#listing=237949104)).
The fact that people are now getting such huge car loans pisses me off because it works to raise the price of cars for everyone, mustachians included.
Not really. Used cars are still cheap as ever.
I don’t know about year over year, but used cars in good condition seem to be much, much more expensive than they were back in the 90s. I remember getting a good used Toyota through a dealer for about $5000 back in the nineties. We paid about $20,000 a few years ago.
With equivalent age / mileage / trim level? Due to inflation, $5k in the early 90's is over $9k today, and you can buy a 2007 Yaris (https://www.cargurus.com/Cars/inventorylisting/viewDetailsFilterViewInventoryListing.action?sourceContext=carGurusHomePageModel&entitySelectingHelper.selectedEntity=d827&zip=03748#listing=238847899) for $3k (or $6k for a 2011 with 37k miles (https://www.cargurus.com/Cars/inventorylisting/viewDetailsFilterViewInventoryListing.action?sourceContext=carGurusHomePageModel&newSearchFromOverviewPage=true&inventorySearchWidgetType=AUTO&entitySelectingHelper.selectedEntity=d827&entitySelectingHelper.selectedEntity2=&zip=03748&distance=50000&searchChanged=true&showNegotiable=false&maxMileage=75000&modelChanged=false&filtersModified=true#listing=237949104)).
OK, you got me there. We went from getting Toyota Corollas to Prii. Everything else though was comparably although we also moved from Iowa to Florida, so maybe there was also a regional variation in pricing.
Not that I disagree with your statement about surprise, but Average american != Average consumer that PNC approved for a loan. I do expect that the latter has a better financial footprint than the former.I feel SOOOOOO much better now about that small amount of debt I took on do buy my dream motorcycle.
This quite caught my eye:
"The good news is the average consumer has 'a very healthy balance sheet' right now, said Lakhbir Lamba, executive vice president of retail lending at PNC."
This is not supported by evidence in the article and is incongruous with that tidbit we have all heard recently about how the average American would not be able to come up with some small amount of cash in the case of an emergency. Maybe Americans have a good amount of equity in their homes right now, but a large portion of that would be offset by the very subject of the piece: vehicle debt. I wouldn't consider my balance sheet healthy unless I had a strong amount of liquidity.
A lender not seeing a problem with all of the debt consumers take out? Well color me shocked.
Also, when I purchased my used accord, the sales-guy asked "what payment are you looking to stay under?" I confused him when I said "how about $11,000?" Took him a solid minute to quit stammering and understand I was buying it with cash and that was my purchase price, not a monthly figure.
Clearly they are not asking Mustachians... Now I'm legitimately curious what the average credit score is for people who don't have a car payment.
I never financed a car in my entire 60 years on this planet but most people in my circle of friends think it is normal to finance a vehicle and most have 84-month loans or leases. I don't even bother anymore to convince them otherwise in order to avoid frictions. But now close to retirement and living full-time in my truck camper, I am faced with having to either get a newer truck that has the payload I need ($35 to $40K used at a dealership, God only knows how much a new one would cost, I didn't have the guts to ask the sales guy) or repair the blown engine on my no-frills base F350 diesel-guzzler (at least $5K to $6K), a 2007 XL that has only 40,000 original miles. Either option is still a shit-load of money, I have the money but I hate to think about spending that much for a truck. Almost everyone I know (with the exception of MMMers) gives me the typical "common-sense" lecture that it would be ridiculous to spend that much money to fix my old truck, and that I should just do like everyone else and get a brand-new truck financed for $800+ per month. Logical, right?
Saw this follow up article this morning:
https://www.foxbusiness.com/personal-finance/car-credit-score
Clearly they are not asking Mustachians... Now I'm legitimately curious what the average credit score is for people who don't have a car payment.
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
That was part of the lesson. Don't buy new cars, they're too expensive.
What's turning things on their head to me is popular reliable models seem to enjoy essentially straight-line depreciation trending towards 200k or 250k miles. For many of the cars that MMM himself lists as good picks, I've generally found you can multiply the MSRP by the mileage divided by 200k and that's the going market price.
That doesn't necessarily mean buying new is a good idea; you can lose a lot of money on bad financing and it's a big capital outlay. If you drive 5k miles per year, it will take you 40 years to get your worth out of it.
My co-worker said his daughter (who is 21) asked him to co-sign a loan with her for a 2017 Honda Civic (34,000 miles). I told him to do it. Worst case scenario is that she doesn't pay, and he gets a nice, gently used Honda Civic. Could be worse!No, the worst case scenario is they miss their payments without the co-signer knowing. The co-signer does not have ownership rights over the car. The co-signer would be on the hook for any costs remaining at the time of repossession.
If, like me, you're forced to drive and can afford the upfront cost, it can be worth buying a new entry model commodity car and holding for a long time.
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
They want to be in a position where the car and phone are paid off in the next 2 years, so they can have clear credit to buy a townhome ?
MAybe loan- to -income ratio needs to be brought down before applying for a mortgage... money in the bank / CD does not lower this.
Gutpunch for paying an extra $130 a month for an "extended" warranty on a brand new car, now that is money down the drain....
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
They want to be in a position where the car and phone are paid off in the next 2 years, so they can have clear credit to buy a townhome ?
MAybe loan- to -income ratio needs to be brought down before applying for a mortgage... money in the bank / CD does not lower this.
Gutpunch for paying an extra $130 a month for an "extended" warranty on a brand new car, now that is money down the drain....
Well a new CVT is around $3000 including labor. I don’t trust hatch for reliability. The factory warranty on that is only good another 15k. The headlight assembly I ad replaced under warranty already is $450. A pair of wheel bearings installed runs about $900. A new head unit (radio) is $3k. Heck even a new seat if the motor goes is over $1k. It’s a roll of the dice if anything will actually break. I’d rather have peace of mind.
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
They want to be in a position where the car and phone are paid off in the next 2 years, so they can have clear credit to buy a townhome ?
MAybe loan- to -income ratio needs to be brought down before applying for a mortgage... money in the bank / CD does not lower this.
Gutpunch for paying an extra $130 a month for an "extended" warranty on a brand new car, now that is money down the drain....
Well a new CVT is around $3000 including labor. I don’t trust hatch for reliability. The factory warranty on that is only good another 15k. The headlight assembly I ad replaced under warranty already is $450. A pair of wheel bearings installed runs about $900. A new head unit (radio) is $3k. Heck even a new seat if the motor goes is over $1k. It’s a roll of the dice if anything will actually break. I’d rather have peace of mind.
You're paying a guaranteed $7,800 in warranty costs. If everything you just listed someone needs replacement under the extended warranty period (unlikely) that would run only $8,350. I would personally be rolling the dice.
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
It's likely. At what point did you think we were due for a correction, and at what point do you think we will see one?
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
It's likely. At what point did you think we were due for a correction, and at what point do you think we will see one?
For me personally it’s when my 401k hit about a 17% rate of return for the year. I'm still contributing up to the match and added $2k into my Roth before April 15th. I’m not an investing expert but it seems like there is underlying weaknesses in the economy that the market isn’t really reflecting yet. Fake unemployment numbers, student loan default rates, auto loan delinquencies, massive retail store closures. When the drop happens I plan to shift more money back in. Right or wrong my mentality is but hold and never sell until it’s time to retire. 401k is in FSKAX right now and 5% bonds. Roth is with 10 different etfs (mostly vanguard index large mid small cap international) in betterment.
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
It's likely. At what point did you think we were due for a correction, and at what point do you think we will see one?
For me personally it’s when my 401k hit about a 17% rate of return for the year. I'm still contributing up to the match and added $2k into my Roth before April 15th. I’m not an investing expert but it seems like there is underlying weaknesses in the economy that the market isn’t really reflecting yet. Fake unemployment numbers, student loan default rates, auto loan delinquencies, massive retail store closures. When the drop happens I plan to shift more money back in. Right or wrong my mentality is but hold and never sell until it’s time to retire. 401k is in FSKAX right now and 5% bonds. Roth is with 10 different etfs (mostly vanguard index large mid small cap international) in betterment.
Did you shift money into the market on December 24th?
(https://i.imgur.com/6KZyLJ3.png)
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
It's likely. At what point did you think we were due for a correction, and at what point do you think we will see one?
For me personally it’s when my 401k hit about a 17% rate of return for the year. I'm still contributing up to the match and added $2k into my Roth before April 15th. I’m not an investing expert but it seems like there is underlying weaknesses in the economy that the market isn’t really reflecting yet. Fake unemployment numbers, student loan default rates, auto loan delinquencies, massive retail store closures. When the drop happens I plan to shift more money back in. Right or wrong my mentality is but hold and never sell until it’s time to retire. 401k is in FSKAX right now and 5% bonds. Roth is with 10 different etfs (mostly vanguard index large mid small cap international) in betterment.
Did you shift money into the market on December 24th?
Nope I was more focused on getting my credit card balance back down to $0. My 401k contributions are automatic. It was 20% but I dropped it back to 6%. Roth IRA is when I have extra cash on hand, my goal is to max out each year starting with 2019.. I’m a passive investor. I don’t time the market but what goes up will come down at some point. I plan to go back to the 20% rate once the car loan is gone.
LolPay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
It's likely. At what point did you think we were due for a correction, and at what point do you think we will see one?
For me personally it’s when my 401k hit about a 17% rate of return for the year. I'm still contributing up to the match and added $2k into my Roth before April 15th. I’m not an investing expert but it seems like there is underlying weaknesses in the economy that the market isn’t really reflecting yet. Fake unemployment numbers, student loan default rates, auto loan delinquencies, massive retail store closures. When the drop happens I plan to shift more money back in. Right or wrong my mentality is but hold and never sell until it’s time to retire. 401k is in FSKAX right now and 5% bonds. Roth is with 10 different etfs (mostly vanguard index large mid small cap international) in betterment.
Did you shift money into the market on December 24th?
Nope I was more focused on getting my credit card balance back down to $0. My 401k contributions are automatic. It was 20% but I dropped it back to 6%. Roth IRA is when I have extra cash on hand, my goal is to max out each year starting with 2019.. I’m a passive investor. I don’t time the market but what goes up will come down at some point. I plan to go back to the 20% rate once the car loan is gone.
I sense some confusion here ;)
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
Pay extra when I have it. Financed ~$31k, $545/mo at 1.9% for 60 months.Why would you pay extra on a loan that has a rate at or below inflation? Ally offers CDs with rates up to 3% if you want the risk-free approach.
I’d rather not owe money on a vehicle which is depreciating over time. I could invest more into the market but I think we are due for a correction. $9k at 3% vs 1.9% is only a difference of about $130 over the course of a year. Maybe I’m viewing this all wrong?
Yes you are viewing it all wrong. Your vehicle is depreciating regardless if you owe money on it or not. If there were $130 laying on the sidewalk, I'd bend over and pick it up. And if all I had to do was walk back to the same spot next year and pick up the same amount of money, I'd bend over again.
Well a new CVT is around $3000 including labor. I don’t trust Jatco for reliability. The factory warranty on that is only good another 15k. The headlight assembly I ad replaced under warranty already is $450. A pair of wheel bearings installed runs about $900. A new head unit (radio) is $3k. Heck even a new seat if the motor goes is over $1k. It’s a roll of the dice if anything will actually break. I’d rather have peace of mind.
Well a new CVT is around $3000 including labor. I don’t trust Jatco for reliability. The factory warranty on that is only good another 15k. The headlight assembly I ad replaced under warranty already is $450. A pair of wheel bearings installed runs about $900. A new head unit (radio) is $3k. Heck even a new seat if the motor goes is over $1k. It’s a roll of the dice if anything will actually break. I’d rather have peace of mind.
May I suggest you learn how to DIY some of these repairs?
Wheel bearings are about $35 each and you install them. If you have access to a hydraulic press that is (buy a press at Harbor Freight and still be ahead of the $900 price). Or you work up a DIY press using threaded rod.
You might get much lower OEM parts prices if you find an online dealer and then use an import specialist to install them for you. I use a couple different websites for my other brand cars. A headlight CAN be about 20 mins of work depending on the brand.
Lastly there are companies online that specialize in repairing things like vehicle modules (cruise control for example) and entertainment systems.
What you need is an internet search for a brand specific forum where folks are working together to document these vehicles, their parts sources, and so forth. VW Vortex is one such place for VWs.
This is about in line with what I'm paying for my car. About $580x63 for a 2019 Subaru Ascent.
Looks like Maxima wheel bearings are available as an entire hub assembly, so no press required. $65 front / $93 rear for Timken bearings.
or repair the blown engine on my no-frills base F350 diesel-guzzler (at least $5K to $6K), a 2007 XL that has only 40,000 original miles.
or repair the blown engine on my no-frills base F350 diesel-guzzler (at least $5K to $6K), a 2007 XL that has only 40,000 original miles.
I'm not sure I'd opt to repair an engine that failed in only 40,000 miles
My car payment was £500, that's about $650
It was only one payment though. I'm quite happy with my 12 year old VW
Years ago a few months after started my first engineering job after college a coworkers gave me some good natured crap about my old (admittedly junky) car. He told me I was an engineer now and could afford a new car... I
The sad part is that in 5-10 years the market is going to be absolutely flooded with nothing but used crossovers, and there'll be almost no small, efficient sedans available :(
My co-worker said his daughter (who is 21) asked him to co-sign a loan with her for a 2017 Honda Civic (34,000 miles). I told him to do it. Worst case scenario is that she doesn't pay, and he gets a nice, gently used Honda Civic. Could be worse!No, the worst case scenario is they miss their payments without the co-signer knowing. The co-signer does not have ownership rights over the car. The co-signer would be on the hook for any costs remaining at the time of repossession.
"Unfortunately, if the primary borrower defaults on the car loan, you won’t be able to take possession of the vehicle as a cosigner, even though you'll be responsible for any payments."
https://www.autocreditexpress.com/blog/can-a-cosigner-take-possession-of-the-car/
Considering a car as part of your networth, no matter how fancy it is or what the market value is, is stupid.
Sure, you can exchange it for cash (I did with my clown SUV and bought a Honda fit).
But until you do that, it's a depreciating liability and not an asset.
Considering a car as part of your networth, no matter how fancy it is or what the market value is, is stupid.
Sure, you can exchange it for cash (I did with my clown SUV and bought a Honda fit).
But until you do that, it's a depreciating liability and not an asset.
You could largely say the same thing about a house, except sometimes it doesn't depreciate.
I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?
The formula I am using is purchase price/months driven.Heh, that's a fun calculation to run. I bought my car 16 years ago for $4500, which makes my monthly cost a bit under $24/mo!
I’m at $370 for a Subaru I bought new. But it needs pretty serious repairs which will bump this price up if we want to keep driving it.
All this talk of $30k cars is insane.
I'll stick with my 2 week rule. Never spend more than 2 weeks (after tax) earnings on a car, and just replace them every 2 years when they get scrapped
Wonder what the average used car payment is? Yea, $550 is bad but at least you are getting a car that could last awhile and is nicer. Used car payments are usually inflated due to bad credit.
About half a year ago the average used car payment was $378.
https://jalopnik.com/the-average-used-car-payment-is-now-378-per-month-1828725332
I think it's important to note the inherent statistical bias in these numbers. The $550/month figure is an average of Americans that buy a new car and finance it. That number doesn't go down when more people buy their cars in cash. Or when fewer people buy new cars (new vehicle sales are up 20% over the last five years so maybe we should ridicule that instead). Because those people are not part of the dataset. It will only go down when the people choosing to finance their new cars choose cheaper cars. And inflation obviously is working against that. Even a new Corolla is $300+/month now.
Ironic, I was just telling someone similar yesterday. Manufacturers keep jacking the cost up at a crazy rate, adding new trim lines to really jack up the cost, and diminish previous trim lines value (looking at you Mazda), and extending the loan term to keep asses in new leatherette seats. "C'mon man, what monthly payment can you swing"... Fucking madness, and cash does nothing for you/no cut for the dealer via their financing/financing provider.
I know about all of the great 'tech' (blech), and safety BS new cars come with... But a base new RAV4 AWD with steel wheels, plastic hubcaps, no pwr seat anywhere, and a 4 cyl engine is $30k... $30k for that shit? Hey, at least you get a urethane gear shift knob to enjoy for the next 8 years of your loan. Oh well, record number of folks 90 days or more late on their payments, maybe my cash can get spent soon for pennies on the dollar.I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
I'd say about 10 years is when the road salt starts tearing at the frame. cosmetic rust is one thing but stick your fingers through the side wall is another
And repairs become far more difficult and expensive due to rust seized parts that break off, rather than unbolt. Oh yeah, ask Toyota about frame rust. I have seen several times behind a Toyota service building, stacks of new frames ready to be installed for their trucks. Literally a frame up replacement, where all parts are stripped from the old truck, and bolted to the new frame. Man, did Toyota eff that one up.
I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
...Now I have an extra $2,000 per month to spare. I have been driving a 2011 Honda Accord for the last 5 years, that thing is still working flawlessly (mind, just a couple noises here and there), however, I do want to upgrade to something nicer. I really like the Volvo XC40 and the Mercedes Benz GLA 250. My budget can go up to $40k for a new car, however, my main issue is that my credit score is just not the best at the moment...
I just spotted this reader submitted question on the Jalopnik website:
https://jalopnik.com/whats-the-best-way-to-get-a-car-loan-if-i-have-the-inco-1835003025
I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?
I live in a snowy state with lots of salt on the road. We consistently keep our cars 10-15 years. And the dealers happily take them as trades.
We just rinse them off at the end of the season.
I just spotted this reader submitted question on the Jalopnik website:
https://jalopnik.com/whats-the-best-way-to-get-a-car-loan-if-i-have-the-inco-1835003025
All three of those questions could qualify for the wall of shame and comedy. At least the first comment contained technically sound advise on screwing his credit score further...
I'll bite.The formula I am using is purchase price/months driven.Heh, that's a fun calculation to run. I bought my car 16 years ago for $4500, which makes my monthly cost a bit under $24/mo!
I’m at $370 for a Subaru I bought new. But it needs pretty serious repairs which will bump this price up if we want to keep driving it.