Despite good economy, many still in trouble with car loans.
#226
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This is patently false. The average length of a car loan is 69.5 months. Source: Edmonds. Since the longest terms available are generally 84 months, this also means that that median is above 60 also. If I were a betting man, I would bet that the median is exactly 72.
If you're able to get 0% financing, I see no issue doing a 60 month term (usually the longest available at 60 mo). In fact, it's smarter as you have more liquid cash along the way to invest or put to other better use.
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#227
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My current understanding of auto leases may be incorrect. Is it the case that, at the end of the lease period, the driver has the right to buy the car for a given price that does not necessarily reflect actual market value, and if that market value is higher then he can turn around and sell it and pocket the difference? If so, then what if market value is lower than the price indicated in the lease documentation? My understanding is that there is a penalty for excess mileage, but what about other factors, such as the model being discontinued by the manufacturer?
I would have assumed that the writer of the lease would put in language about the Bluebook value at the end of the lease but perhaps that's not how it's done.
I would have assumed that the writer of the lease would put in language about the Bluebook value at the end of the lease but perhaps that's not how it's done.
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#228
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That’s what happened with my GS. The actual/resale value was less than my buyout, set 3 years prior. That buyout is not negotiable with Lexus Financial. I wanted to buy it and keep it but didn’t want to pay more than it was worth, so I just returned it. I picked up a 19 GS as a replacement, but this one I bought/financed.
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#229
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And it's no wonder. "Cheap" cars like the Corolla now start at $20K for a base model. That means if you did the recommended 36 month term, it would be $625/mo. How many people buying economy cars can afford $625/mo?
If you're able to get 0% financing, I see no issue doing a 60 month term (usually the longest available at 60 mo). In fact, it's smarter as you have more liquid cash along the way to invest or put to other better use.
If you're able to get 0% financing, I see no issue doing a 60 month term (usually the longest available at 60 mo). In fact, it's smarter as you have more liquid cash along the way to invest or put to other better use.
The one thing from friends that I've always found offensive about leasing, is being responsible for taxes, and maintenance, and you don't own this asset. I've never heard of an apartment where the renter pays the maintenance and taxes, that would be insanity unbridled. Unless I am wrong, you can't even replace your registration/license plate yourself, when you lease a car, you need involvement by the owner.
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#231
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I am always looking for a deal. Brother texts me, Bens has a 2012 E63 AMG he is selling, 90k miles, it's in Houston. He's getting a new one. I reply I am interested, sight unseen he says he's original owner, no accidents. My offer, I'll pay whatever kbb shows as wholesale, minus 10%. Crickets. If I had to worry about leasing or financing, I couldn't make an instant decision like that. Don't get me wrong I'm still going to check if accidents, service history, etc. But I am ready on a whim, because I always wanted a E63. imho I would rather decide where my cash goes, rather than the other way around, let me see what $350/mo. can get me, where the finance co. makes the decision on what I can get.
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#232
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This is why I think times have changed. When you ask how many people buy a Corolla for $625/mo., I would guess < 1%. They would put a 50% downpayment and likely get it into the low $300's. 36 mos. later they own the vehicle, and being a Corolla, they might be set for another 17 years.
I've never heard of an apartment where the renter pays the maintenance and taxes, that would be insanity unbridled.
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as far as leasing, i'm in my first experience with it with the g90... and for me it's nice to know what i pay and that i couldn't care less about depreciation or trade-in value down the road. all maintenance is included and the valet for service means i never set foot in the dealer. i guess those last 2 things would be the same with buying, but as i have no interest in owning any vehicle long term, i think leasing's going to be my go forward way of having transportation until a self-driving car just shows up when i need it and i can see good riddance to any buying or leasing.
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#233
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This is patently false. The average length of a car loan is 69.5 months. Source: Edmonds. Since the longest terms available are generally 84 months, this also means that that median is above 60 also. If I were a betting man, I would bet that the median is exactly 72.
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#234
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holy out of touch, batman... while you're right that almost no one would have/want a $625 payment on a corolla (and not sure what calculation you're doing, looks like 36 mos 20K and $625 would mean over 7% interest!), almost no one considering a corolla is going to put half down. they might have a trade-in so i guess that would be part of it, but most people don't want to take any money out of their own pocket to add as down payment. especially with very low interest rates, there's no point. so probably a more realistic scenario is the $5-7K trade-in, and financing for 48-60 months. $13k financed at 4% for 3 years is a $384 payment.
one way or another, they are, just not explicitly.![Peep](https://www.clublexus.com/forums/images/smilies/peep.gif)
as far as leasing, i'm in my first experience with it with the g90... and for me it's nice to know what i pay and that i couldn't care less about depreciation or trade-in value down the road. all maintenance is included and the valet for service means i never set foot in the dealer. i guess those last 2 things would be the same with buying, but as i have no interest in owning any vehicle long term, i think leasing's going to be my go forward way of having transportation until a self-driving car just shows up when i need it and i can see good riddance to any buying or leasing.![Big Grin](https://www.clublexus.com/forums/images/smilies/biggrin.gif)
one way or another, they are, just not explicitly.
![Peep](https://www.clublexus.com/forums/images/smilies/peep.gif)
as far as leasing, i'm in my first experience with it with the g90... and for me it's nice to know what i pay and that i couldn't care less about depreciation or trade-in value down the road. all maintenance is included and the valet for service means i never set foot in the dealer. i guess those last 2 things would be the same with buying, but as i have no interest in owning any vehicle long term, i think leasing's going to be my go forward way of having transportation until a self-driving car just shows up when i need it and i can see good riddance to any buying or leasing.
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#235
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Besides, Edmunds says that the most common loan term (and probably, the median) is 72 months. Edmunds cites the need for down payments as a reason why these loans are popular. Rather than make a down payment, people opt to just stretch the term instead so that their monthly budget is less-affected by the car purchase.
https://www.edmunds.com/car-loan/how...r-loan-be.html
The most common term currently is for 72 months, with an 84-month loan not too far behind. It's been creeping up: 10 years ago, the most common new-car loan term was 60 months, followed closely by 72 months.
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#236
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Considering the default loan length suggested by most loan providers as well as car dealership personnel is 60, I am sure that the average is at least 60.
Besides, Edmunds says that the most common loan term (and probably, the median) is 72 months. Edmunds cites the need for down payments as a reason why these loans are popular. Rather than make a down payment, people opt to just stretch the term instead so that their monthly budget is less-affected by the car purchase.
https://www.edmunds.com/car-loan/how...r-loan-be.html
Besides, Edmunds says that the most common loan term (and probably, the median) is 72 months. Edmunds cites the need for down payments as a reason why these loans are popular. Rather than make a down payment, people opt to just stretch the term instead so that their monthly budget is less-affected by the car purchase.
https://www.edmunds.com/car-loan/how...r-loan-be.html
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#237
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And it turns out I was exactly right: https://www.edmunds.com/car-loan/how...r-loan-be.html
The most common term currently is for 72 months, with an 84-month loan not too far behind. It's been creeping up: 10 years ago, the most common new-car loan term was 60 months, followed closely by 72 months.
Experian breaks it down even further
76.2% of new loans are for a term of 61 months or longer. This is broken down into 41.3% 61-72 months; 33.6% 73-84 months, and 1.3% 85-96 months.
Just 6.2% of new loans are 4 years or less.
They also break it down by borrower risk. The shortest average loan length is in the "super prime" category, and even that is over 5 years, at 63.7 months. They have the overall average pegged at 69.03 months, pretty close to the Edmunds figures.
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#238
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This is why I think times have changed. When you ask how many people buy a Corolla for $625/mo., I would guess < 1%. They would put a 50% downpayment and likely get it into the low $300's. 36 mos. later they own the vehicle, and being a Corolla, they might be set for another 17 years.
The one thing from friends that I've always found offensive about leasing, is being responsible for taxes, and maintenance, and you don't own this asset. I've never heard of an apartment where the renter pays the maintenance and taxes, that would be insanity unbridled. Unless I am wrong, you can't even replace your registration/license plate yourself, when you lease a car, you need involvement by the owner.
The one thing from friends that I've always found offensive about leasing, is being responsible for taxes, and maintenance, and you don't own this asset. I've never heard of an apartment where the renter pays the maintenance and taxes, that would be insanity unbridled. Unless I am wrong, you can't even replace your registration/license plate yourself, when you lease a car, you need involvement by the owner.
As far as comparing to apartment rental. Taxes and maintenance is built into your rent payment. The owner doesn't take a loss when it's time to pay taxes. The owner prices the rent at a level that considers all costs (to pay mortgage, maintenance, taxes, etc. and still come out ahead).
When you rent a car, you pay taxes. In a lease, I'm almost certain you only pay the tax on the depreciation portion that you're paying for the car. Why would you get out of taxes through leasing? Maintenance for 3 years is primarily just oil changes and tire rotations. Again, it's totally reasonable that the lessee would be responsible for this. Although companies like Toyota are giving free maintenance for 2 years.
holy out of touch, batman... while you're right that almost no one would have/want a $625 payment on a corolla (and not sure what calculation you're doing, looks like 36 mos 20K and $625 would mean over 7% interest!), almost no one considering a corolla is going to put half down. they might have a trade-in so i guess that would be part of it, but most people don't want to take any money out of their own pocket to add as down payment. especially with very low interest rates, there's no point. so probably a more realistic scenario is the $5-7K trade-in, and financing for 48-60 months. $13k financed at 4% for 3 years is a $384 payment.
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#239
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If you are familiar with Dave Ramsey (syndicated radio talk show host) who is a multi multi millionaire and pretty smart guy, he says the total value of all your vehicles—things with a motor in them—should not be more than half of your annual income. He also states unless you are a millionaire you pay cash only for a car. To confirm this 90% of his callers in financial stress are upside down on their vehicles. Never get a loan on a depreciating asset.
The average car loan payment is $550 and term is 66 months. If a 25 year old decided to invest that same amount over the same time period in the S&P Index Fund then left it alone growing in the same fund at 65 years old they would have over $2,000,000. The power of compounding. That car would be a recycled park bench 40 years later.
The average car loan payment is $550 and term is 66 months. If a 25 year old decided to invest that same amount over the same time period in the S&P Index Fund then left it alone growing in the same fund at 65 years old they would have over $2,000,000. The power of compounding. That car would be a recycled park bench 40 years later.
I haven't read through the rest of the responses but I disagree that a car loan is the priority bill. Seems more like cell phone bill, which can be hundreds a month for some folks, is the first bill people will make sure to pay. Even if your car gets repossessed, if you have a cell phone you can dial Uber (which could be cheaper than $550 per month).
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#240
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OMG, the average car loan is that much, even at over five-year term?!?! Geez, we've never had a car loan that high, and never longer than 48-month. Even at 48-month term we paid it off early.
I haven't read through the rest of the responses but I disagree that a car loan is the priority bill. Seems more like cell phone bill, which can be hundreds a month for some folks, is the first bill people will make sure to pay. Even if your car gets repossessed, if you have a cell phone you can dial Uber (which could be cheaper than $550 per month).
I haven't read through the rest of the responses but I disagree that a car loan is the priority bill. Seems more like cell phone bill, which can be hundreds a month for some folks, is the first bill people will make sure to pay. Even if your car gets repossessed, if you have a cell phone you can dial Uber (which could be cheaper than $550 per month).
The one where I am weak is cable tv, I admit it. Because I want to watch every Phila. Flyers game, I don't cut the da** cord or fiber. Even with a discount through work it ends up being $149/mo. And my wife says cut it, we don't need it, but I don't do it. To your cell phone analogy.
The main gist of this thread, imho, is that there is nothing wrong with having a car payment forever. I think that is a fundamental change over the way our grandparents looked at it. That beautiful no older than 35 mo. old vehicle, that saves us from embarrassment, is worth way more than the sacrifice on making payments.
What dawned on me today is that stock market play portfolios still potentially make more in a day than we do at work--that hasn't changed. I looked at VMW today and thought it's like shooting fish in a barrel. That co. paid out a special dividend of over $26/share earlier this year, and the stock is again at a historical high (my experience is that Wall St. is so efficient that dividends are accounted for by share price and esp. noticeable when a share goes ex-div). Once in a while life throws us a bone. I'm gonna keep chugging without a car payment as long as I can, and again, that's me. Doesn't make it right, doesn't make it wrong. Just all observations. And when one day I get a corvette, if I do, again, has to be 50% or more down, and would want to get the payment down to $400/mo. at 36 mos., and only if rates are low.
edit: because you mentioned cell phone, I just thought of this. My employer pays us a stipend for our "cell" phone which really is a smart phone tether the employee deal. This means, you can call me 24/7/365. But, practically speaking, that does not happen and it really means that based on today's pricing, the employee and spouse has free cell service. Now, what if said employee loses their phone, it stops working, and they simply don't feel like getting another one. Now they are not reachable and they are getting reimbursed for the recurring cost but not the cost of the device. I used to prefer having a co. phone but not anymore since that gives full access to the usage, call record, data records, etc. If I were given a co. phone, that means I'd have to carry 2 and would now have increased expenses since no more stipend...
Last edited by Johnhav430; 03-01-19 at 08:10 AM.
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