
The Average New Car Loan Is Now over 70 Months - luu
https://jalopnik.com/the-average-new-car-loan-is-now-over-70-months-because-1842624210
======
GaryNumanVevo
I'm a few months away from paying off a car loan $86k, 36 month, APR was
negligible at %1.2. The term sheet easily could have been extended to 70
months, however, I wanted the option to resell the car before any long term
(and expensive) issues popped up.

Sure the monthly would have been MUCH cheaper, but the hidden cost of
additional out-of-warranty maintenance / hassle of trying to transfer an auto
loan is a PITA. Honestly, if I had to do it again, I would just lease hack a
nice BMW just so I can hand it back to the dealer no questions asked.

~~~
bsder
> I would just lease hack a nice BMW just so I can hand it back to the dealer
> no questions asked.

At least in the US, the lease terms seem to be uniformly terrible.

Mileage allowances are absymal. And you're completely hosed if you get an
accident that totals the car out. If the car doesn't come back at the value
expected in the lease, you're on the hook for the difference.

Given that kind of risk, you might as well buy the car and keep the residual
value for yourself.

I haven't seen a car lease with terms that didn't suck in years.

~~~
GaryNumanVevo
Highly recommend you check out "LEASEHACKR", I've seen some very very
affordable and decent mileage allowances on nice cars. Unfortunately lease
hacking has a pretty steep learning curve.

[[https://leasehackr.com/](https://leasehackr.com/)]

~~~
rdtwo
Looks like it’s dead and hasn’t been updated since april

~~~
GaryNumanVevo
my bad, the forum is definitely the place to go:
[https://forum.leasehackr.com/](https://forum.leasehackr.com/)

------
AtlasBarfed
The average selling price of cars, uh, I mean SUV/CUVs is getting higher and
higher. Pickup trucks average selling prices are practically in luxury sedan
ranges.

As stated in comments, cheap financing definitely helps this, as does the fact
that current cars really are so much better than cars 20 years ago, to say
nothing of cars from the 80s or (shudder) 70s.

A lot is the luxury feature set, but a lot is just people buying very gaudy
horsepower drivetrains.

EV drivetrains will rapidly eclipse ICE drivetrains in price, and they are
almost trivial to design for very good acceleration (which really is all that
gets used daily for "sporty" cars). The joke is Americans buy horsepower but
drive torque is very apropos. A simple EV drivetrain can deliver very high
torque at the low end, while equivalent torque is really expensive for an
engine.

So that will leave software (which commoditizes quickly as well) and luxury
features. But I think the average price will come back.

~~~
runamok
I read recently there are less than 20 cars for sale in the US under 20k.

[https://jalopnik.com/heres-all-17-cars-available-in-the-
u-s-...](https://jalopnik.com/heres-all-17-cars-available-in-the-u-s-right-
now-for-l-1844641724)

~~~
brianwawok
Very low for sure. If you bump it to 3-year old used cars under 20k, I think
you can get a much bigger chunk of vehicles. In a car that will last 15 years,
3 years old is not a huge deal.

------
cwhiz
Bigger takeaway for me is that the average APR is 5.8%. That’s high in the era
of free money. Another huge detail, just casually mentioned at the bottom is
that 12.8% of buyers are financing at rates above 10%. That’s insane.

~~~
naikrovek
I've _never_ gotten a car loan for less than 12% even once.

My real name is the same as a fictional title character from one movie made in
1972, so I am considered high risk no matter what my credit rating is. That's
what they told me, anyway.

You people getting low interest on things ... I hate all of you. (Tongue in
cheek hate of course)

~~~
mey
That sounds like a lawsuit

~~~
cwhiz
There is no way it is true. Credit reporting agencies don’t consider your name
when assessing your credit.

The only way it could be true is if it is such a peculiar name that he is
constantly the victim of identity theft.

------
javagram
Article is from April 1, 2020, the headline should be tagged to reflect it was
from a very specific economic moment this year...

Moreover the article itself is questionable as it spins a change from 69.6 in
March 2019 to 70.6 in March 2020 as “mad” despite the fact that interest rates
changed from 6.4% to 5.8%.

------
2Gkashmiri
Why? I mean someone from India where cars start from 300k inr or us$4000. Why
do Americans need to buy cars pricing so much, $40k and then not afford them
outright meaning leasing and interest? If you cant afford a "big car"
outright, why not buy a cheaper one ?

~~~
tonyedgecombe
It didn't happen by accident. It takes a huge amount of marketing and PR to
convince people. People are told they can't be a good father without the
latest SUV or if they buy this sleek saloon their wife will suddenly loose 100
pounds or a new sports car is going to make them ten years younger.

Governments are easily coerced into supporting this through road building
programs or wars to keep the cost of oil down.

You might think someone able to accumulate a reasonable amount of money is
more rational but then I just read that Aston Martin sales are suffering
because the latest James Bond film is late.

I doubt India will be any different, you will be catching up soon enough.

------
bjoli
Who is surprised? I have with the inequalities of Western society only
growing, and interests being reidiculously low, a large part of the population
is financing their consuming with loaned money.

We have spent the last 30 years making the rich richer (and boy are they good
at piling that money up), and the people who are supposed to have the
purchasing power to drive demand have seen an ever shrinking part of the
created wealth, and thus have to use loans.

I am scared of what normalized interest rates will do.

------
awinder
I had a real psychological aversion when doing this with my wife’s new car,
but at a certain point why would you not extend the loan at free money rates?

~~~
davidgh
It seems to me people spend a whole lot more on cars when they are allowed to
shop based on “monthly price” rather than “purchase price”. When the dealer is
offering that comfort, convenience or sport package, it’s sure a lot easier to
say yes to $20 a month than $2,000 today. Stretching the loan term makes it
that much easier to overspend.

At least in the United States, one of the best things that the average middle
class person could do to improve their long term financial situation would be
to buy cars with a lower purchase price and keep them longer.

~~~
Teknoman117
That's why I'm still driving my '04 Expedition. Parents bought it in 2008 and
I've been taking good care of it since I bought it off them. Still runs great
even though it's now a 17 year old vehicle with 250k miles.

Can I afford to drive a nice new car? sure, but why would I (other than
getting way better gas mileage...)? Practically worthless for trade-in, so
might as well keep driving it until something really expensive breaks.

It's not like SUV design has changed much. Modern ones just have silver front-
ends versus body color.

~~~
steve_adams_86
I thought new cars are just new versions of the same old thing, but after
extensive shopping around I bought a (very new to me) 2017 Toyota Highlander
Limited. Somehow it seats more, fits more, pulls more, drives so much nicer,
has heaps of safety features I actually use, and uses less fuel than my
previous vehicle. It does everything I want better than anything I’ve had
could.

It’s very much a ‘have your cake and eat it’ thing for me. I had no idea cars
could be this nice. I’ve limped older vehicles along for nearly 20 years now,
and... I feel weird saying it, but I love this thing, and I would buy new(ish)
again. Cars have changed.

~~~
mgkimsal
and... they keep changing, somewhat. it's incremental year to year - most
2015-2016 changes weren't noticeable. But comparing a 2000 to a 2014, for
example, you'll notice a lot of differences. most of my used car purchases
have been 'newish' (like... 3-4 years old), and I had them for a few years. I
got 2004 (new) and had it for 13 years - a lot changed in that time period! As
you say, safety, fuel economy, gadgets (rear camera, etc).

~~~
steve_adams_86
I felt like a monkey in a spaceship driving the Highlander for the first time.
The 3d view of your surroundings, rear camera you mentioned, cruise with
following distances and adjustable speed, blind spot sensors, automated
throttle to improve fuel economy, etc. I know a lot of people reading this
will think "Yeah but your 'spaceship' has nothing on a tesla and sounds like
any car I've been driving for years", but... Like I said, I was limping cars
along. My last two vehicles were a '98 and an '03.

I was such a "point a to point b, what else could you need?" person, haha.
Unknown unknowns and all that, I guess.

You're right though, I probably won't be wowed by a new car for another 10 or
15 years. I'm perfectly alright with that!

------
room505
I always share and discuss this link with friends and family
[https://www.financialsamurai.com/the-110th-rule-for-car-
buyi...](https://www.financialsamurai.com/the-110th-rule-for-car-buying-
everyone-must-follow/)

I bought a one year old used Mazda 3 from Hertz for 11k out the door. It had a
few scratches and 40k miles. It still had that new car smell.

------
Gunax
There's no such thing as a 0% loan. That just means the interest is built into
the price.

Anyway, if you have poor credit and need a car, I don't think there is
anything wrong with paying 10% interest... but please don't buy a 35k vehicle
then. There are plenty of used, reliable cars less than 10k.

------
happyjack
Am I the only one here that drives a 19 year old truck?

~~~
effingwewt
Not at all. I've always paid cash for my vehicles and my favorite vehicles
I've owned were a 1972 chevy shortbed truck with three on the floor, and a
1986 camaro rs. I could work on both no matter the issue, both had more than
enough room under the hood to work on damn near everything.

Now I own a 2009 bmw 328i, again paid cash. However I can't change my oil,
heaven forbid something big breaks, ac goes out, etc. I will have to take it
to a specialist or a dealership to keep service records up to date etc.

I'd pay what I paid my bmw to have either my truck or camaro back. I've had
several vehicles throughout my life, and as much as I love driving my bmw I'd
make a straight trade right now.

As an aside- I blew the engine out on my camaro (original owner had done a
home bore-job and left pits which cause structural weakeness in my engine
block and one day while driving normally a piston slammed through the
sidewall.

A 'new' v8 350 engine installed was about 1.5k, this was about 1998, and on a
car I'd bought for 1k cash.

That's cheaper than replacing all 4 brake/rotor on my bmw by a good bit.

My drive shaft on my truck broke when a geo metro t-boned me in my work
parking lot. No body damage. 200 for the shaft 100 for installation. I cant
imagine what would happen to my bmw if tboned, much less the cost of repairs.

I miss the old days :(

~~~
happyjack
I always pay cash, too! I don't have a commute (walk or bike to work) and live
in a small town. I use my truck to go to the mountains or drive to the
airport. I have a Gen 1 Tacoma.

I used to be a big fan of German engineering, but I'm afraid it is too
stringent on maintenance records and specialty systems. If you don't change
the oil at 3241 miles and check the wiper fluid at every 1001 mile interval,
the car is going to blow up. And Jurgen will not care; you must read ze
manual! We write ze manual for a reason!

