Despite good economy, many still in trouble with car loans.
02-13-19, 04:31 PM
#61
Lexus Champion
"Average mortgage" is a term with no meaning.
02-13-19, 04:34 PM
#62
Pole Position
I was not trying to argue the finance vs lease or pay off early or use debt to your advantage. I was just trying to illustrate what one could get get at $1000 per month for two cars using the 8% rule earlier mentioned. I just chose $1000 out of thin air and I used 36mo as the term as that was the warranty.
I believe in ownership and paying things off ASAP. IMO it’s the best way. If someone else thinks a different way, good for them, I am not trying to change their opinion. All the power to them.
Jill: "The sooner you free up cash flow, the sooner you can put it to work for you"
4TehNguyen: "Uh no. Why would you sink more money than necessary into a depreciating asset. So you're telling me if I have a 0% 72m car loan I should pay it off faster so I can use this freed up money to invest elsewhere? Think about it."
Jill: "100%. Why do you disagree?"
02-13-19, 04:35 PM
#63
Lexus Fanatic
So, what is the average monthly mortgage payment? My guess, it’s a $1000 a month. To buy a Camry, and pay it off during the warranty period, it’s pretty costly for what you get, if you hit the average selling price. So the moral is, cars are very very expensive and people are willing to allocate a lot of their funds towards there car.
02-13-19, 06:18 PM
#65
Super Moderator
02-13-19, 06:56 PM
#66
Lexus Fanatic
Join Date: May 2003
Location: Massachusetts
Posts: 7,864
Likes: 0
Received 0 Likes
on
0 Posts
That is an excellent guess. I've seen a couple of sources that peg it at $1,030 or so. Here's one: https://www.lendingtree.com/home/mor...tgage-payment/
02-13-19, 07:07 PM
#67
Super Moderator
On average, first-time homebuyers face higher monthly payments than the national average. According to research from the Urban Institute, in early 2018, first-time homebuyers bought houses worth $245,320 with an average down payment of $22,561, and an interest rate of 4.43%. Given these figures, first-time borrowers faced a mortgage payment of $1,235 — 21% more than the average homeowner.
02-14-19, 07:21 AM
#68
Lexus Fanatic
Join Date: May 2003
Location: Massachusetts
Posts: 7,864
Likes: 0
Received 0 Likes
on
0 Posts
It must also be talking about mortgage and interest alone. Most people have property tax and insurance lumped into their mortgage payment. This adds hundreds a month. A typical mortgage payment for a $400-$500K house (that's typical up in New England where I am) is about $2500-$3000/mo even with a good chunk down. That's with taxes and insurance. Sure there's many properties for a good amount less but they are small houses and/or in undesirable areas.
02-14-19, 08:06 AM
#69
Lexus Champion
It must also be talking about mortgage and interest alone. Most people have property tax and insurance lumped into their mortgage payment. This adds hundreds a month. A typical mortgage payment for a $400-$500K house (that's typical up in New England where I am) is about $2500-$3000/mo even with a good chunk down. That's with taxes and insurance. Sure there's many properties for a good amount less but they are small houses and/or in undesirable areas.
02-14-19, 08:20 AM
#70
Lexus Fanatic
Thread Starter
Remember, though, one major difference between the (thread-topic) car loans and mortgages/property-taxes....One cannot usually deduct the interest on car-loans on Schedule A, unless one has taken out a home-equity-loan (or mortgage) for the car itself. That is a practice that, while legal, I generally do not recommend, simply for its risk. Yes, you might save a little on the tax bill (or get a bigger refund)...but you are putting your home up as collateral. A car, IMO, is not worth the risk of one's home.
02-14-19, 08:32 AM
#71
Dysfunctional Veteran
I didn't go through and read this entire thread because, well, who has time for that? 
However, I can say a few things with absolute certainty:
1. If you are buying a car based off how much payment you can afford, you're doing it wrong.
2. If you need a loan term longer than 3 years to afford the car, you can't afford the car. I was driving past a Kia dealer the other day and they were advertising 96 month loans on the new stinger. That is a recipe for financial disaster.
3. If you can't afford to put any money down, you can't afford the car (there is a difference between not being able to afford to, and just not wanting to).
4. If your credit score is below 600, you can't afford a new-to-you used car, with a loan.
5. If your credit score is below 700, you can't afford a brand-new car, with a loan.
6. If you have to roll over negative equity AT ALL, you can't afford the car.
Now those are solely based on my opinion, take it for what its worth. There are exceptions to these but for the most part I find them to be true. If your credit is below 600, your credit sucks. That is a fact. You are going to pay far more in interest for a depreciating asset than you would just saving and buying outright. That doesn't fix your credit, but there are other ways to do that that are MUCH less expensive and risky. Chances are, with a score that low, you haven't been meeting your other financial responsibilities and so...here you are. Exception: Medical debt. It can hit your credit hard and can be exorbitantly costly.
There should be ZERO reason to ever take a car loan longer than 75 months, on the most expensive cars. On your average Honda, Kia, Toyota, Ford, etc, nobody should be taking loans longer than 36 months, or 48 if 0% interest.
There should be ZERO reason to roll over negative equity. If you are in that kind of hole, keep driving what you got until its paid down or paid off. Odds are the car will still be worth SOMETHING at the end of the loan, and you can then sell it and use the money to put down on your new ride, which will likely be a better one than you could get today.
Buy your cars off the final price, NOT THE PAYMENT. Also, be sure to incorporate total cost of ownership (insurance, maintenance, things like this). My Ram costs much more to ensure and maintain than my 2002 Lexus that I paid >5k for.
However, I can say a few things with absolute certainty:
1. If you are buying a car based off how much payment you can afford, you're doing it wrong.
2. If you need a loan term longer than 3 years to afford the car, you can't afford the car. I was driving past a Kia dealer the other day and they were advertising 96 month loans on the new stinger. That is a recipe for financial disaster.
3. If you can't afford to put any money down, you can't afford the car (there is a difference between not being able to afford to, and just not wanting to).
4. If your credit score is below 600, you can't afford a new-to-you used car, with a loan.
5. If your credit score is below 700, you can't afford a brand-new car, with a loan.
6. If you have to roll over negative equity AT ALL, you can't afford the car.
Now those are solely based on my opinion, take it for what its worth. There are exceptions to these but for the most part I find them to be true. If your credit is below 600, your credit sucks. That is a fact. You are going to pay far more in interest for a depreciating asset than you would just saving and buying outright. That doesn't fix your credit, but there are other ways to do that that are MUCH less expensive and risky. Chances are, with a score that low, you haven't been meeting your other financial responsibilities and so...here you are. Exception: Medical debt. It can hit your credit hard and can be exorbitantly costly.
There should be ZERO reason to ever take a car loan longer than 75 months, on the most expensive cars. On your average Honda, Kia, Toyota, Ford, etc, nobody should be taking loans longer than 36 months, or 48 if 0% interest.
There should be ZERO reason to roll over negative equity. If you are in that kind of hole, keep driving what you got until its paid down or paid off. Odds are the car will still be worth SOMETHING at the end of the loan, and you can then sell it and use the money to put down on your new ride, which will likely be a better one than you could get today.
Buy your cars off the final price, NOT THE PAYMENT. Also, be sure to incorporate total cost of ownership (insurance, maintenance, things like this). My Ram costs much more to ensure and maintain than my 2002 Lexus that I paid >5k for.
02-14-19, 10:04 AM
#72
Lexus Fanatic
Tax and Insurance escrows should not count toward "mortgage payment". Those are sums that you have to pay whether or not you have a mortgage; your lender just holds onto them for you until taxes or insurance bills are due, because they don't trust you'll pay them, and failure to pay could impact their collateral. And not every lender requires them--mine waived the requirement, and I pay direct--because I don't trust them.
In PA, we have 3 payments, one due 3/31, one 4/1, one 8/31. The big one is due 8/31 i.e. school taxes. I look at it this way, when I did trade stocks, I never once got the bid or ask that was showing on the screen. Someone else made that relatively small margin multiplied across however many shares. Why let a mortgage co. skim like that?
02-14-19, 10:11 AM
#73
Lexus Fanatic
I didn't go through and read this entire thread because, well, who has time for that?
However, I can say a few things with absolute certainty:
1. If you are buying a car based off how much payment you can afford, you're doing it wrong.
2. If you need a loan term longer than 3 years to afford the car, you can't afford the car. I was driving past a Kia dealer the other day and they were advertising 96 month loans on the new stinger. That is a recipe for financial disaster.
3. If you can't afford to put any money down, you can't afford the car (there is a difference between not being able to afford to, and just not wanting to).
4. If your credit score is below 600, you can't afford a new-to-you used car, with a loan.
5. If your credit score is below 700, you can't afford a brand-new car, with a loan.
6. If you have to roll over negative equity AT ALL, you can't afford the car.
Now those are solely based on my opinion, take it for what its worth. There are exceptions to these but for the most part I find them to be true. If your credit is below 600, your credit sucks. That is a fact. You are going to pay far more in interest for a depreciating asset than you would just saving and buying outright. That doesn't fix your credit, but there are other ways to do that that are MUCH less expensive and risky. Chances are, with a score that low, you haven't been meeting your other financial responsibilities and so...here you are. Exception: Medical debt. It can hit your credit hard and can be exorbitantly costly.
There should be ZERO reason to ever take a car loan longer than 75 months, on the most expensive cars. On your average Honda, Kia, Toyota, Ford, etc, nobody should be taking loans longer than 36 months, or 48 if 0% interest.
There should be ZERO reason to roll over negative equity. If you are in that kind of hole, keep driving what you got until its paid down or paid off. Odds are the car will still be worth SOMETHING at the end of the loan, and you can then sell it and use the money to put down on your new ride, which will likely be a better one than you could get today.
Buy your cars off the final price, NOT THE PAYMENT. Also, be sure to incorporate total cost of ownership (insurance, maintenance, things like this). My Ram costs much more to ensure and maintain than my 2002 Lexus that I paid >5k for.
However, I can say a few things with absolute certainty:
1. If you are buying a car based off how much payment you can afford, you're doing it wrong.
2. If you need a loan term longer than 3 years to afford the car, you can't afford the car. I was driving past a Kia dealer the other day and they were advertising 96 month loans on the new stinger. That is a recipe for financial disaster.
3. If you can't afford to put any money down, you can't afford the car (there is a difference between not being able to afford to, and just not wanting to).
4. If your credit score is below 600, you can't afford a new-to-you used car, with a loan.
5. If your credit score is below 700, you can't afford a brand-new car, with a loan.
6. If you have to roll over negative equity AT ALL, you can't afford the car.
Now those are solely based on my opinion, take it for what its worth. There are exceptions to these but for the most part I find them to be true. If your credit is below 600, your credit sucks. That is a fact. You are going to pay far more in interest for a depreciating asset than you would just saving and buying outright. That doesn't fix your credit, but there are other ways to do that that are MUCH less expensive and risky. Chances are, with a score that low, you haven't been meeting your other financial responsibilities and so...here you are. Exception: Medical debt. It can hit your credit hard and can be exorbitantly costly.
There should be ZERO reason to ever take a car loan longer than 75 months, on the most expensive cars. On your average Honda, Kia, Toyota, Ford, etc, nobody should be taking loans longer than 36 months, or 48 if 0% interest.
There should be ZERO reason to roll over negative equity. If you are in that kind of hole, keep driving what you got until its paid down or paid off. Odds are the car will still be worth SOMETHING at the end of the loan, and you can then sell it and use the money to put down on your new ride, which will likely be a better one than you could get today.
Buy your cars off the final price, NOT THE PAYMENT. Also, be sure to incorporate total cost of ownership (insurance, maintenance, things like this). My Ram costs much more to ensure and maintain than my 2002 Lexus that I paid >5k for.
I still highly doubt that that many comprehend what happened in 2018 with respect to 1--exemptions 2--salt 3--interest deductions One would hope that generally speaking, the way they looked at life in 2017, is different 2018+. If not, oh well.
02-14-19, 10:33 AM
#74
Lexus Fanatic
Join Date: May 2003
Location: Massachusetts
Posts: 7,864
Likes: 0
Received 0 Likes
on
0 Posts
I didn't go through and read this entire thread because, well, who has time for that?
However, I can say a few things with absolute certainty:
1. If you are buying a car based off how much payment you can afford, you're doing it wrong.
2. If you need a loan term longer than 3 years to afford the car, you can't afford the car. I was driving past a Kia dealer the other day and they were advertising 96 month loans on the new stinger. That is a recipe for financial disaster.
3. If you can't afford to put any money down, you can't afford the car (there is a difference between not being able to afford to, and just not wanting to).
4. If your credit score is below 600, you can't afford a new-to-you used car, with a loan.
5. If your credit score is below 700, you can't afford a brand-new car, with a loan.
6. If you have to roll over negative equity AT ALL, you can't afford the car.
Now those are solely based on my opinion, take it for what its worth. There are exceptions to these but for the most part I find them to be true. If your credit is below 600, your credit sucks. That is a fact. You are going to pay far more in interest for a depreciating asset than you would just saving and buying outright. That doesn't fix your credit, but there are other ways to do that that are MUCH less expensive and risky. Chances are, with a score that low, you haven't been meeting your other financial responsibilities and so...here you are. Exception: Medical debt. It can hit your credit hard and can be exorbitantly costly.
There should be ZERO reason to ever take a car loan longer than 75 months, on the most expensive cars. On your average Honda, Kia, Toyota, Ford, etc, nobody should be taking loans longer than 36 months, or 48 if 0% interest.
There should be ZERO reason to roll over negative equity. If you are in that kind of hole, keep driving what you got until its paid down or paid off. Odds are the car will still be worth SOMETHING at the end of the loan, and you can then sell it and use the money to put down on your new ride, which will likely be a better one than you could get today.
Buy your cars off the final price, NOT THE PAYMENT. Also, be sure to incorporate total cost of ownership (insurance, maintenance, things like this). My Ram costs much more to ensure and maintain than my 2002 Lexus that I paid >5k for.
However, I can say a few things with absolute certainty:
1. If you are buying a car based off how much payment you can afford, you're doing it wrong.
2. If you need a loan term longer than 3 years to afford the car, you can't afford the car. I was driving past a Kia dealer the other day and they were advertising 96 month loans on the new stinger. That is a recipe for financial disaster.
3. If you can't afford to put any money down, you can't afford the car (there is a difference between not being able to afford to, and just not wanting to).
4. If your credit score is below 600, you can't afford a new-to-you used car, with a loan.
5. If your credit score is below 700, you can't afford a brand-new car, with a loan.
6. If you have to roll over negative equity AT ALL, you can't afford the car.
Now those are solely based on my opinion, take it for what its worth. There are exceptions to these but for the most part I find them to be true. If your credit is below 600, your credit sucks. That is a fact. You are going to pay far more in interest for a depreciating asset than you would just saving and buying outright. That doesn't fix your credit, but there are other ways to do that that are MUCH less expensive and risky. Chances are, with a score that low, you haven't been meeting your other financial responsibilities and so...here you are. Exception: Medical debt. It can hit your credit hard and can be exorbitantly costly.
There should be ZERO reason to ever take a car loan longer than 75 months, on the most expensive cars. On your average Honda, Kia, Toyota, Ford, etc, nobody should be taking loans longer than 36 months, or 48 if 0% interest.
There should be ZERO reason to roll over negative equity. If you are in that kind of hole, keep driving what you got until its paid down or paid off. Odds are the car will still be worth SOMETHING at the end of the loan, and you can then sell it and use the money to put down on your new ride, which will likely be a better one than you could get today.
Buy your cars off the final price, NOT THE PAYMENT. Also, be sure to incorporate total cost of ownership (insurance, maintenance, things like this). My Ram costs much more to ensure and maintain than my 2002 Lexus that I paid >5k for.
For a majority of people, it's easier said than done. A new mainstream Civic can be $600/mo if you only go 36/mo. An economy car! The average car is now about $37K.
Sure, it would then be recommended to go used. But that also means more repairs, less safety, less piece of mind, etc. I think a 60 mo term is OK with low interest and decent money down. Especially if you are going to own the car beyond that and not start another loan after the 5 years.
02-14-19, 11:33 AM
#75
Lexus Champion
My uncle told me never let the mortgage co. hold taxes in escrow, so I followed his advice since I purchased my house in 2002. The part that stinks is having the discipline to have it when due. It isn't even what I said verbatim, meaning, it's coming out of savings like it or not, it isn't as if we don't have it. But that doesn't mean it doesn't sting big time when the check is written. Maybe the though part is replacing what just came out of savings, or, rather, seeing that savings grew year over year as planned (it often does not).
In PA, we have 3 payments, one due 3/31, one 4/1, one 8/31. The big one is due 8/31 i.e. school taxes. I look at it this way, when I did trade stocks, I never once got the bid or ask that was showing on the screen. Someone else made that relatively small margin multiplied across however many shares. Why let a mortgage co. skim like that?
In PA, we have 3 payments, one due 3/31, one 4/1, one 8/31. The big one is due 8/31 i.e. school taxes. I look at it this way, when I did trade stocks, I never once got the bid or ask that was showing on the screen. Someone else made that relatively small margin multiplied across however many shares. Why let a mortgage co. skim like that?