I can't see how the person won't end up upside down on the loan, and having to make repair payments and loan payments on it at the same time, eventually. Wouldn't buying a reliable used car be more sensible?
So take a person who needs a car and also needs this sort of loan. this sort of much lower monthly payment.
Now take that person and try to get them a loan on a USED car.
When DH's credit was "neutral" since he hadn't used it in nearly 10 years, it was MUCH easier to get a loan on a NEW car than a USED. The problem was that the new cars were not what we wanted, because they were just too expensive for us at that time.
We wanted a used Subaru. The ONE bank that would work with us said nope. They would not give us a loan on that Subaru. The only other car on the lot they would give us a loan on was a Grand Marquis. It was "younger" and I guess would keep value longer (which is weird, since Legacys seem to last a long time, but whatever), and so we got the Grand Marquis.
At 25% interest. On a USED car.
I had JUST turned in my leased car (I had leased for 12 years, 3 cars in that time, and I was finally tired of leasing) and we had one car. That was a total beater. And then it lost its brakes while DH was going down a hill, we didn't have the available cash to fix it, and it scared me. I wouldn't have ever sat in that car again, which yep is an emotional thing but my son was little and I was rightfully very emotional at that time.
DH worked over an hour's drive from home; taking the bus involved THREE buses and 2 hours of commute, each way. A car was needed. A loan was needed (many of our family members were busy having their homes foreclosed on b/c of their own errors and there was no one to ask). The only loan we could afford was for a used car, and the only loan on a used car we could get was at nearly predatory interest.
We were the kind of person who might have looked at that 8 year, simply because the monthly costs would have been lower and we might have gotten a nicer car.
Then again, the Grand Marquis has been no trouble at all, it runs great, it's quiet, it's comfy, it's basically been a dream, even though I don't *like* it still. (paid it off in 2? 3? years once I got angry enough at the loan to start throwing money at it, LOL, and it's 8 years old this year) In the end I'm glad we got the Marquis instead of the Subaru or the new cars we had been looking at, but having more options would have been nice.
It's bad debt since you will never, ever recoup what you paid for the car.
Why do we focus so much on getting "back" what we paid? On cars, on houses, etc. Why don't we put any value into our USE, our enjoyment, of something we purchased?
No one "NEEDS" to finance a car over 8 yrs to get to work. If you find yourself "NEEDING" to do this, then you CANNOT AFFORD THE CAR.
That's my public service message for the day.
Unless you actually NEED the car. If you don't have the chunk of cash to buy a used car, if you can't get a used car loan, if you need that car for work, then you need that car. Even if you can't properly afford it.
It's lovely that there are so many people who have never been in such a position, and apparently don't know or like anyone who has been in that position, but I would recommend thanking your continued good decisions AND your large amount of luck throughout your life.
No need for an extreme loan for these.
