Good Lord, 97 month car loans introduced

[tvguy]

A generation ago 10 year HOME loans were the norm, now 8 year auto loans. No thanks, I'll walk.


http://online.wsj.com/article/SB10001424127887323646604578403191117526644.html

 

[phorsenuf]

A generation ago 10 year HOME loans were the norm, now 8 year auto loans. No thanks, I'll walk.


http://online.wsj.com/article/SB10001424127887323646604578403191117526644.html

Well, if it makes the loan affordable for folks so they can have a way to get to work or school then it could certainly help many people. Sometimes the loan payment will price people out and then they are stuck. Yes 8 years is a long time and you will pay more I'm sure in the longrun, but I also see the benefits to it.

 

[NYCDiane]

Cars also cost a lot more now and many people cannot afford the payments on a 3 or 5 year auto loan. If the 8 year loan will help them to have a means of transportation, then so be it.

 

[wiigirl]

Cars also cost a lot more now and many people cannot afford the payments on a 3 or 5 year auto loan. If the 8 year loan will help them to have a means of transportation, then so be it.

True...but 8 years...I hope the car survives 8 years.

 

[NYCDiane]

True...but 8 years...I hope the car survives 8 years.

A good car can last 15 years or more. The car I had before the one I currently have was 15 years old and was running perfectly. The only reason I had to get rid of it was because some moron ran a stop sign and hit me in the front quarterpanel and destroyed the engine block and radiator. Had that not happened, I would probably STILL have that car!!!

 

[yoopermom]

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?

Reminds me of my DFIL (who has no financial common sense) buying a truck the minute he retired at 65 with a 6 year loan. Of course he couldn't afford to put gas in it to drive it anywhere by the time he got done making his loan payment and insurance payment every month....

Terri

 

[mistysue]

I think the sad part about this is most people who would take an 8 year loan will be the same people "needing" a new car a few years later when they want a newer model.

I hope it helps some people out who really need it, but I am going to be sad for my kids when they are getting 20 year auto loans in a decade.

 

[pocomom]

A generation ago 10 year HOME loans were the norm, now 8 year auto loans. No thanks, I'll walk.


http://online.wsj.com/article/SB10001424127887323646604578403191117526644.html

Sad and scary.

 

[TheShea's]

Sounds like the makings of another bubble that will eventually burst. Good luck with that 8 year note when your 4 or 5 year warranty runs out.

 

[EMAW_KSU]

Wouldn't buying a reliable used car be more sensible?

Yes. But there are a lot of people that are not sensible with their transportation purchases.

 

[Halbleib1]

Actually they have offered 10 year loans for years. They use to only be offered when buying a very expensive car. Such as those in the 6 digit range. 5 years was pushing it to be paying on a car for me. I would much rather buy a house for that kind of money. But there are people that finance cars that expensive.

 

[ceemys]

wow. I was amazed when it went to 6 years. I hope and pray my daughter will learn to buy good used cars versus a brand new one so she won't have to have that long of a loan. My next car will be a good used one when my daughter is old enough to drive my current 2004 Alero.

 

[angierae]

As someone who is driving a car that is five years old and hasn't needed anything but oil changes, tires and one belt, anyone who drives a car that doesn't survive 8 years is either driving a LOT more than me, or isn't taking care of it

that said, I still wouldn't want an 8 year loan.

 

[HippieChickadee]

Perfect for families or individuals struggling needing a way to work/school/grocery store...

Sadly though, I'm sure it's made so people can afford the nonsense gigantic cars. You know the ones I'm talking about. The tanks, the limited edition gold striped, the ones that you practically need a step laddar to get up into it.

That's why the longer loans.

 

[NYCDiane]

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?

Reminds me of my DFIL (who has no financial common sense) buying a truck the minute he retired at 65 with a 6 year loan. Of course he couldn't afford to put gas in it to drive it anywhere by the time he got done making his loan payment and insurance payment every month....

Terri

Just an FYI, you are upside-down on a car loan the minute you drive off the lot unless you put a substantial down payment (probably more than half the cost of the car)

All the financial "gurus" say to never have a car loan. It's bad debt since you will never, ever recoup what you paid for the car.

 

[yoopermom]

Just an FYI, you are upside-down on a car loan the minute you drive off the lot unless you put a substantial down payment (probably more than half the cost of the car)

All the financial "gurus" say to never have a car loan. It's bad debt since you will never, ever recoup what you paid for the car.

You're right, of course. I'm thinking of people like my cousin who *never* finish paying off one vehicle and end up just rolling the leftover debt into the loan on the next vehicle (sigh).

And I do live in a very poor area of the country, but you could easily buy a home up here for what many people are paying for a car, and have something to show for it in the end (30-50K).

Terri

 

[NotUrsula]

All the financial "gurus" say to never have a car loan. It's bad debt since you will never, ever recoup what you paid for the car.

In terms of earning interest on the money that you would have otherwise spent for the car, absolutely true.

In context of remaining unemployed or underemployed because you need a reliable form of transportation to get to where the jobs are, absolutely false. If having a vehicle is a condition of employment, then yes, you will recoup the cost in a sense, because having the vehicle will enable you to increase your earnings, even if you have to pay some interest to get the vehicle.

PS: I was born during the Kennedy administration, and don't ever remember a time when 10 yr. mortgages were the norm. When I was a kid, the average working-class family in my part of the country normally paid for a home over 20 years.

 

[Pooh2]

Sounds like the makings of another bubble that will eventually burst. Good luck with that 8 year note when your 4 or 5 year warranty runs out.

Agreed!
Guess the banks have not yet figured out that giving loans to people who cannot afford them is not a good idea?

 

[tvguy]

True...but 8 years...I hope the car survives 8 years.

I expect 10 years out of a car with no repairs, so far, that has been a pretty good assumption. Do all the fluid changes the owners manual says to do when it says to do them, a car will last a long time. After 10 years I just plan on spending what would add up to one months car payment a year in repairs.

I bought my family car new in 1987, and it is still my family car almost 26 years later.

 

[EMAW_KSU]

In context of remaining unemployed or underemployed because you need a reliable form of transportation to get to where the jobs are, absolutely false. If having a vehicle is a condition of employment, then yes, you will recoup the cost in a sense, because having the vehicle will enable you to increase your earnings, even if you have to pay some interest to get the vehicle.

But just the cost of a reliable form of transportation.