Will Car Loans Be The Next Credit Meltdown?

The LA Times has an article about car loans that caused our jaw to drop. As someone who bought both the cars she has owned with cash, (from friendly human beings who had cars but didn’t want them anymore), the staggering amount of debt that people are willing to sign up for just to drive a slightly newer car made us feel sort of ill.

Gone are the days of the three-year car loan. The length of the average automobile loan hit five years, four months in October, up more than six months from 2002, according to the Federal Reserve. And nearly 45% of loans written today are for longer than six years. Even some staid lenders owned by the carmakers, such as Toyota Financial Services and Ford Credit, are offering seven-year financing. And a few credit unions, particularly in the West, are tinkering with the eight-year note.

At the same time, the amount of money drivers owe on their cars is soaring. In October, the average amount financed hit $30,738, up $3,500 in just a year and nearly 40% in the last decade, according to the Fed. More troubling, today’s average car owner owes $4,221 more than the vehicle is worth at the time it’s sold — up from $3,529 in 2002, according to industry analyst Edmunds.

The longer loans are directly related to the higher balances. By extending the length of loans, lenders keep monthly payments down. But because these loans take longer to pay off, a much larger piece of the principal remains unpaid at the time the car is traded in.

Meet Cindy, a compulsive car purchaser:

Cindy Gerhardt has rolled over so much debt on successive vehicle purchases — five in three years — that she now owes almost $43,000 on two trucks worth no more than $29,000 and, she says, perhaps as little as $22,000.

Faced with car payments that exceed her monthly mortgage, she tried to trade in the pair for a single vehicle. But with so much unpaid principal on the vehicle loans, the only offer she got from the dealer was to trade in one truck on yet another new vehicle — and increase her debt by another $25,000.

“It’s our own fault that we traded in vehicles so many times, but we never thought it would get to this,” said Gerhardt, a secretary who lives with her husband and two children in Clinton, Okla. She recently tried to refinance her mortgage, she said, but was declined because her car payments were too high. “Not one dealer ever said this was a problem. Ever. I never had a dealership say no.”

Yes. This will end well. The article goes on to note that delinquencies on car loans issued this year are up 20%.

New cars that are fully loaded — with debt [LA Times](Thanks, Arthur!)
(Photo:Ken Hurst/Associated Press)

Comments

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  1. mantari says:

    Wow, and here I was feeling guilty for taking a five year loan instead of a three.

  2. toddr4fun says:

    “Not one dealer ever said this was a problem. Ever. I never had a dealership say no.”

    The dealer has a vested interest in getting you financed, by any means necessary. The auto manufacturer’s financing arms want to move cars. If she should have gone to her local bank or credit union as she was walking down this trade-in path.

  3. MrEvil says:

    I never could understand why people would fork over so much money in interest on a new car. Yeah, there’s that “oooh I’m the only owner of this whip” but unless you paid cash, the bank is really the owner until you pay it off. All the money you paid to the bank in interest and on high-priced gap and collision coverage could have paid for a BOATLOAD of work at the mechanic.

    I’m glad I’m out from under the payment booklet. I will probably never do it again.

    The bright side is, for cheap SOBs like me that LOVE the auction house, there’ll be a chance to score a low mileage ride for an extremely small amount of cash.

  4. MsClear says:

    I wasn’t sure that fixing up my hubby’s beater after a fender bender was worth it, as we spent just over $2K. This does make me feel just a little bit better. Yikes.

  5. etinterrapax says:

    I never did see how people could afford $30K or more on a car. I used to assume they were just better-off than we are, but that clearly isn’t the case. We have a five-year for a two-year-old car at about a third of that, and we still feel it’s extravagant. Being the only owner is an out-of-reach luxury for us, and probably should be for more people, I suspect.

  6. youbastid says:

    Gee, maybe she could just sell them at blue book value in the want ads instead of going to a dealer. But why would we expect that when she’s rolled over $21,000 in debt with nothing to show for it?

  7. logie-al says:

    There is a silver lining, if you can call it that, car manufacturers are lengthening warranty periods. 3/36 used to be the norm. It closely coincided with the lease period. Now standard warranty is 5/100, with upwards of 10 years on the horizon. Dodge even offers a lifetime powertrain warranty now. So, if anything, with lease periods taking longer, the manufacturers are trying to at least make sure their vehicles last as long as people have to pay them off.

  8. howie_in_az says:

    I’ve never understood buying new. Why take the huge hit on depreciation when you can find some other sucker to do it for you, then buy his car after it comes off of a lease or whatever?

    I’m currently in the process of doing exactly that for a BMW M3 coupe. I could afford one new but there’s no sense in doing so; wait a few years or for the next model (the V8-powered one is nice but sucks down gas). Now the E46s are $15,000-$20,000 less than they were originally, and I’ve been drooling over one for years.

  9. goller321 says:

    My generation is screwed for our future. People are complete idiots because they spend money in this manor. Screw the 401K I need a new BMW…
    And the stupid moronic woman in the story above talks about how “no one warned her…” People like that make me want to turn back into a republican…

    I have never bought an “new” vehicle, and I doubt I ever will. That multi-thousand dollar immediate depreciation upon driving off the lot keeps me far far away…

  10. goller321 says:

    @howie_in_az: That wasn’t aimed at you, just to clarify… :)

  11. goller321 says:

    @youbastid: She doesn’t have a clean title. There’s no way for her to sell it without paying off the bank.

  12. darkened says:

    I bought a brand new sports car in my first year of career outside of college. My insurance isn’t cheap but it’s not blistering mostly because I went through an agent that really worked to find me my rate. It beat all the web insurances that i was pricing with $1000 deductible by 30-40% and his was with a $500 deductible and much better coverage than my quotes online.

    Right after the second payment was made this woman drove head on into me while i was in the left turn lane in an intersection and totaled my car. Surprisingly the insurance was hassleless in paying out for my brand new car’s entire loan.

    I ended up looking around and found almost the exactly the same car slightly less loaded but got an incredible deal on it as it was 3 months later into the model year as the store was just starting to receive their 2008s. I ended up financing a deal that even if i pay the full 6 years, I’d pay less in interest than the amount i financed on the other car at the day of signing.

    I pay more than min. payments and it goes straight to my principle (thank you simple interest for auto loans laws PA), my current insurance is even less now than when i got my first car. And that expensive gap coverage i pay is about $5-10/month on my car insurance. NEVER get gap coverage through the dealer or lender. That’s a scam.

    I plan to keep it for my daily driver for the foreseeable future, the only possible reason I would consider trading the car in (or selling it private market and buying another) in the next 3 years is if the 2009 or 2010 Mitsubishi eclipse is a 200HP+ diesel turbo. I’d much rather a sports car that gets me 60 miles to the gallon and not 19~/30~ averages.

  13. howie_in_az says:

    @goller321: It’s ok, I max out my 401k every year :)

  14. dirtleg says:

    Most folks are trying to keep the monthly cost (payment) as low as possible so that they can then run out and buy a big screen HD LCD TV to load into their brand new gas hog SUV to haul home. (I apologize for all the damn initials, but isn’t that the language of today?) And then make the monthly on that, along with the monthly on HD TV service from the dish or cable.
    I find so many people have to have a new car after a couple of years. I don’t understand the logic of financing for 4, 5 or 6 years, only to be shopping for a new car in two years. We are going to be in the market for a “new” car in a couple of years and we are already shopping models for gas mileage, repair costs, insurance cost and all the other additional items that come with keeping a car on the road. It is frightening to learn the costs of buying a car these days. We haven’t bought a new car in seven years, and the older of the two is 11 years old in January.
    Cars used to be such fun to shop for and drive, at least I thought so. My first car was a VW Beetle, brand new in 1973. Had a two year loan that my old man co-signed for, and I thought that was a long term deal at the time.

  15. humphrmi says:

    Just to be clear here, the core problem that is affecting “Cindy” is the ability for car financiers to “roll over” existing loans into new loans. There is still the concept of LTV in car loans, but that only applies before the rollover loans, and there is no LTV requirement on the rolled-over (e.g. final) loan.

    It’s crazy. It’s been a problem for over 30 years. And yes, it’s a meltdown waiting to happen.

  16. youbastid says:

    @darkened: So your car got totaled and your insurance premiums went DOWN? Can I have the name of your insurance company?

  17. warf0x0r says:

    I bought my first car this year at 4.9% for 5 years on 20k. My payments are 350 a month and I can afford that plus keep up with investments, and it uses less gas than my old car by about 30%.

    I consider it a good investment and would do it again… although I might have haggled a little more on the price :)

  18. OminousG says:

    I just bought my first new car. After giving away a 13 year old Honda delSol, I got a 2007 Saturn Ion. $21,600 out the door. 6 years at 0%, $300 monthly car payment (including GAP).
    I do not plan on trading it in, like ever. The delSol went 13 years, I’m hoping this car does the same.

    Rolling over car payments into a new model is something I never understood.

  19. traezer says:

    Ugh, I really wish I didn’t get my car brand new sometimes! However, I was forced to, its a very strange catch-22. After the beater I bought from my parents broke down, I started the process of getting a used car, but because of my age and short credit history (I was 22 at the time) my bank would not give me a loan over $9,000, unless I bought brand new, then there was no limit. I was in desperate need for something was extremely reliabe, so I ended up getting a $15,000 brand new car, which I love, but I know Im being screwed out of a couple thousand dollars or more in the end. I do try to make as big payments as possible every month, so Im 6 months ahead on my loan, but still, I want the damn thing payed off! It sucks that even though Im a responsible person with excellent credit, I couldnt get a decent car unless it was brand new. Sigh. Stupid banks…. (I know that there are decent cars to be found for under $9,000, but I only had a week to get a new car so I could drive myself to work, so I was screwed there as well)

  20. meadandale says:

    They traded in 5 cars in 3 years?!?!

    If this is the benchmark for financial literacy in this country, we are definitely doomed.

  21. Rando says:

    The price of EVERYTHING is going up and salaries aren’t compensating for it. If our salaries went up, we’d be able to afford the 3 year car loan.

  22. darkened says:

    @youbastid: I left Travelers insurance after 6 months and am now a member of Encompass insurance. My agent saved me another $100/month on my current policy. So those commercials about geico saving them $400, that’s nothing on $1200 less on a rate geico couldn’t even match in the first place.

  23. Starkicker says:

    Is basic money management not taught in school or at home? My parent’s taught me the value of a dollar (back in the early 90’s when the USD was $1.40 CAD I might add). I may be a cheap bastard, but I sleep soundly at night knowing that I can pay off my credit card statements every month and have enough saved up to cover my ass should anything happen.

  24. B says:

    And I was thinking of getting a new car in the next 3-6 months. Still need to save up some fake car payments to make sure I can handle the expense and have a good down-payment.

  25. youbastid says:

    @darkened: Just submitted a quote. Progressive has long been the cheapest option available at $175 a month. Hope they can beat it!
    Geico’s rates suck, always.

  26. Sudonum says:

    Like another poster stated, my wife and I start shopping early. Researching models, features, and resale values. Then when we decide what we want we just start watching the local dealers looking for a low mileage certified used version of the car we’re looking for at a decent price. We have the ability to pay cash so it makes the negotiation quick and easy. Last time we bought a year old luxury SUV with 3k (yep 3000) miles on it that stickers new for $60. We paid $38k for it. Clean Carfax and 100,000 mile bumper-to-bumper factory warranty.

  27. Milstar says:

    Working in the mtg industry for a number of years I was always surprised at the number of people who did have auto loan balances greater than 20K with payments near 500 a month. Of course those were always the stated income deals too…

    To this day I still drive my car I bought 9 yrs ago with cash, a few extra dents and bangs along with it. A 99 Saturn that gets 37mpg under normal use- for which I was laughed at in the days of 1.50 a gallon of gasoline.

  28. BrockBrockman says:

    But new cars are so shiny and pretty!

    I can’t understand the “need” to buy new cars – a buddy of mine wants to upgrade his 3-Series for a brand new Porshe because of the “status.”

    We’re both in the same industry and make roughly the same amount of money, and I really think my 8-year old Honda that gets 30+ mpg, never breaks down, is completely paid off, and has no body damage is the real status symbol.

  29. traezer says:

    @BrockBrockman:

    AMEN!

  30. skinjob1 says:

    I had fun buying my new car. I used a buying service and got the car new for 3 percent over dealer cost. Never finance with a car dealer, goto your credit union and get the loan with them. I got a rate of 4.59 percent on a 3 year car loan and put down 23k on a 30k car. Also, avoid the dealer insurance. They offered me a 6yr/60k bumper to bumper at the dealer for 2700 and I got a 7yr/100k policy for 590. It was fun when they realized I got a great deal, was financing w/o their help and they couldn’t rip me off on an extended warranty. The finance guy kept asking me how I got the price I did and why I wanted an extended warranty with a 100 deductible. I told him I could make 22 claims before I reached the price of his policy. Car dealer are crooks, get educated or get ripped off.

  31. Buran says:

    @goller321: Why not? Can’t you sell a vehicle with the lien still on it as long as the buyer is willing to accept the lien being there? I know I’ve seen un-paid-off vehicles in classifieds before.

  32. Buran says:

    I have a long loan but overpay so that it will be paid off in the old-school “typical” time period. The lower payment is a cushion in case something comes up in a particular month and I ned to direct money elsewhere (I don’t have any credit-card debt, and the car is my only debt). The car itself was bought with a 40% down payment, the amount financed is nowhere near today’s “average”, and it’s the exact car I wanted (not available used, either), custom-ordered with the exact options I wanted and is now irreplaceable due to some of the features having been decontented on the next/current model year.

    This one’s getting driven into the ground. I love it — performance, great mileage, practicality, and lots of features.

    It’s possible to get a new car under decent terms and pay it off without being in debt for a long time, if you plan ahead. Sadly, too many people see a new shiny and don’t plan ahead.

  33. sleze69 says:

    I bought my 05 TDI Passat Wagon with 1.9% interest rate special from VW. Free-est money I’ve ever been given.

    Also the resale value of my car went UP the year after I bought it(for about 6 or 7 months). Overall, I am happy with my investment.

  34. hwyengr says:

    @howie_in_az: and @ the rest, I’m insanely anal about my cars, though. I’ve logged every drop of gas that’s gone into the tank. I know that the oil has been changed every 5k miles (even though the computer tells me it’s not time yet.) I know the brand and weight of each drop of oil that’s gone into the engine. I let the engine warm up before exceeding a certain RPM, and I never drop the clutch for quick accelerations.

    I guess it’s not the same when you’re buying a Camry, Civic, or other appliance automobile, but if you buy anything with any sporting character it’s pretty likely that the previous owner abused it.

    I bought my car new, but I’ll also drive it until it’s dead.

  35. howie_in_az says:

    @BrockBrockman: Perhaps he finds joy in taking his 3-Series or Porsche to local track meets?

    Then again if he’s buying things for status symbols he’s probably not the kind of person to track his car, which is a shame — you could mock him for weeks after he screws up a turn due to all the weight in the rear-engined Porsche, especially if it damages the car :)

  36. Alexander says:

    It’s the same story over and over again. If it’s not mortgages it’s credit cards and if it’s not that then it’s cars. How the hell do people survive?

  37. Pylon83 says:

    @Buran:
    Most states won’t transfer a title that isn’t clean. I know in Kansas the state holds the title if there is a lien on it, and won’t release it to the car owner until the lien is cleared. However, I doubt this is the case in all states.

  38. Schwartz says:

    25% of my income goes to cars, because I love cars. I currently drive a VW GTI MKV (purchased March of ’06) and early next year I’m going to trade it in on something new. It’s part of my lifestyle, and I know that I’ll always have that $400-700 car payment, but that’s the price of fun for me.

    Now, I just have to decide if I want a used Lotus, Cayman S, or a new STI or R32. Decisions decisions.

  39. chili_dog says:

    I personally don;t see why people would roll over an auto loan.

    But then again I;m driving a 1999 Buick Century I bought 4 years old for $4999 with 44K miles.

    I will say though I am now in a fit state. Since Buick has discontinued the Century I don’t know what I will buy in another 4 years.

  40. Pylon83 says:

    While I don’t currently own a car, I used to trade every year or so. I always did zero down and 5 year loans. However, I always made sure I bought used cars that retained their value well, and was always able to get enough in trade to pay off the loan balance. I would never consider trading a car and letting some of the old loan roll over to the new loan. So it is possible to trade frequently and not end up screwed in the end.

  41. officeboy says:

    Funny how the CPI shows that cars (new and used) are only about $36 more expensive per $100 then in 1982. Where the CPI shows inflation for that $100 in 1982 as being worth $217 now.

    So it should be cheaper to buy a car now.

    I would really love to see a list of what cars they are tracking, and if these cars are weighted by amount sold. If 50% of the index is made up of off brand subcompacts and no one is buying these i doubt they make a very good data set for something trying to be passed off as a “consumer” price index.

  42. Manok says:

    Car payments aren’t bad. Who wants to drive a 10 year old buick anyway? You get jobs to buy things such as cars and houses. As long as you do it responsibly and stay within your means.

  43. EnderVR46 says:

    I’m on my fifth car in 5 years myself. Only, instead of buying new, I buy used. I research and look for a good deal on whatever car I want. Figure out how much it’s really worth and buy it at that price or less. If it’s more than that price, don’t buy it.

    I finance it, drive it for about a year, then sell it when what I owe is less than what it’s worth. I sell it to a person, don’t trade it in. If I can’t sell it for more than what I owe, I keep it until I can.

    I never have and never will buy new. I just like cars and experience as many as I can. I’ve never spent more than $14k on one, and have always been able to make a little bit of money when I sell them.

    OTOH, my wife’s car is almost paid off, and now we’re in a house I’ll be keeping my car until it’s paid off as well. That’s my only regret. Had I kept the car I had 5 years ago, it’d be mine now. But at least I was never dumb enough to lose money, or worse, roll it into a new loan.

  44. traezer says:

    @Schwartz:

    Your joking, right?

  45. danic101 says:

    Got to love the Dealer ads that Say ” We will payoff your Trade No matter how much you owe” What a crock, Most people don’t realize what that means. I am one of those people who realize that it is a Good Thing When people make a profit So I don’t go too nuts when negotiating.

  46. Schwartz says:

    @traezer:

    Why would I be joking? I also own a house, have no trouble with my car payments, and driving is the most fun you can have with clothes on (although, taking a drop down blind left hander at 65 in 2nd gear with your wheel at opposite lock is close.)

  47. traezer says:

    I dunno, it seems like a lot of money to have fun. But I guess if its completely affordable for you, then go for it.

  48. hn333 says:

    I’m still driving a 92 Buick regal, the paint is falling off and there is a big dent on one of the doors. But at least I own it.

  49. tadowguy says:

    Please bring back debtors prison! These people are retards and should have their licenses revoked.

  50. yg17 says:

    @Buran: Ahhh yes, irreplaceable, discontinued features. Damn you 2007 GTI owners and your fancy dual zone climate control :D

  51. TechnoDestructo says:

    Safety and emissions features, and things that used to be luxury options becoming standard. And the choice between a 4 year old mid-sized-would-have-been-luxury-20-years-ago car, or a brand new subcompact shrinking the market for the latter.

    On the plus side, there are a lot fewer cars out there that won’t last the length of the loan, even 8 years, without much trouble.

  52. Manok says:

    I bought an 04 Infiniti M45 for 24,000. Sticker was over 50K when it sold for new three years ago.

  53. Manok says:

    @traezer: You can get starburry shoes for 14 bucks. i bet you go through alot.

  54. HRHKingFriday says:

    Um, duh?

    And this is one area I feel no sympathy for the borrowers. You have the option of a 14K Honda Fit (or similar) or a 30K Lexus. If money is even approaching tight, and you’re dead set on a new car, isn’t this a no brainer? I do understand the new car thing, old cars can be total money pits (my boyfriend’s dodge intrepid, for example). Don’t even get me started on the piggy back trade-in loans. Why would you buy another car if you don’t have the first one paid off???

  55. Buran says:

    @Pylon83: Hmm. I know I have the title to my car, with the bank listed as the lienholder since I provided that lien info to the dealership (you get the info from the bank when you sign the loan, and agree to put them on the title as the lienholder), but last time the title went directly to the bank and I didn’t get it in the mail til the loan was over. I prefer actually holding the title, so I can just go to the bank (it’s a national one) and get them to sign off on it when the loan is over instead of have to wait for it in the mail.

    This is in MO.

  56. Buran says:

    @Schwartz: Why not keep the GTI? I love mine. Great car. It’s a ton of fun, has lots of features (I got package 2 in a four-door) is practical, gets great mileage, and looks great too. You could get the R32 but the mileage is a LOT worse and they’re 2-door only.

  57. quail says:

    Isn’t that the reason for leasing instead of buying? If you’re the type who needs a new car every 1 to 2 years, then you lease.

    But I never understood people who had to lease or buy a vehicle again and again. In the last 20 years I’ve owned 2 cars. First lasted 11 yrs. The second is going strong with over 200K miles. Sure there’s been the year or two where I’ve put several grand in repairs into the vehicles. But that’s a hell of a lot cheaper than buying a new car.

  58. ARP says:

    I think car loans will become the next subprime. It’s seems so simple- buy what you can afford, don’t owe more than the vehicle is worth, etc. But in every economic instance (mortgages, credit cards, cars, etc.), we don’t follow that rule. REAL (not the BS version the goverment uses) inflation continues to outpace salary growth and people are reluctant to “downgrade” their lifestyle. Perhaps because they don’t want to face the fact that they aren’t doing as well as they were 7-8 years ago (or not as good as they think) when you factor everything. Maybe its what we need though- enough people to “sink” and realize that they’re not doing better and then ask the hard question. Why?

  59. Buran says:

    @traezer: On the bright side, you probably have a safer vehicle that will now not require replacement for years after the older car would have.

    I don’t get the limit thing either though — why are the interest rates lower for new cars than used, too?

  60. Buran says:

    @yg17: I like my dual zone climate control. :) Honestly, I actually use it. My bf grew up in Florida and still lives there (I will move down there soon). He thinks 63F is “freezing cold” *cough* and complains if I set the temp to what I think is comfortable.

    So I let him set it the way he likes it … on his side. No arguing!

  61. Buran says:

    @yg17: Oh, by the way, will you come to the next Saturday night GTG at Schneithorst’s? would be nice to say hi! (see stlvw.org, in case you forgot what the url was).

  62. @Buran: LOL. I’m married to a Floridian and I transplanted him to Illinois. Dual climate zones is like the ONE extra I would actually pay for! If it’s hot enough for him in the car, my fucking eyeballs are drying out!

  63. badgerette says:

    We bought our first new car in 2006, when Ford had their big no interest loan sale. So, even though I am a “no new cars” person, the lack of interest means we are now about 2k above the depreciation on my husband’s car. I’m not thrilled with the payment, but it’s a good car, and with our credit, it was an incredible opportunity.

    Myself, I plan on driving my 1992 Toyota Previa until it’s a sputtering carcass – hopefully another 20 years.

  64. Schwartz says:

    @Buran:

    Because as much as I love the car, the interior is driving me crazy (scratches too easily, rattles a ton, etc.) it will always be FWD (which isn’t a bad thing, but the driving I’ve been doing recently lends itself to AWD or RWD more) and I’ve got the new car bug after test driving stuff all last weekend for fun.

    The good news is that I’ve got about $5K equity into the car as trade in value right now. So, basically I’ve got to decide if I want to drop money on mods for the GTI so that it can start to hang with the other cars around here (all exotics and supercars) or get something a lot faster. =)

  65. B says:

    @Schwartz: Just out of curiosity, what are you looking at for a R/AWD replacement? I’m in the same boat.

  66. sir_eccles says:

    @ARP: I find it hard to directly compare these car loans to the sub prime mortgage issue.

    When buying a house you’re generally “happy” to pay interest on the loan because historically over the long term, the average house value has risen to more than the total cost of the loan. Minor short term fluctuations and idiots cashing out the equity excepted of course.

    When buying a car, everyone knows (or ought to know) that with very few exceptions the value of the car depreciates as soon as you leave the showroom and apart from vintage and classics doesn’t go up again. In fact if you hang on to it as long as you do your house, you probably have to pay someone to take it away as scrap values have plummeted too. Meanwhile the interest of the loan sends that in the opposite direction.

    I believe this car loan issue is simply people living beyond their means.

  67. Schwartz says:

    @B: Check your messages…didn’t want to clutter the thread too much with unrelated stuff.

  68. Buran says:

    @Eyebrows McGee: I imagine! How does he take REAL freezing temperatures? I told mine “if you want freezing, get your ass up here!” when he complained about 63 being “freezing”.

  69. Buran says:

    @Schwartz: What about an A3 quattro? Also on the A5 (5th gen A platform) chassis, also great. I considered the A3 before getting the GTI but by the time I optioned on the HIDs and bluetooth (which I can retrofit to the GTI on my own) and a few other things the price had gone to like 35K and higher.

    The GTI lost the soft-touch stuff that scratched like crazy in 07. It was more trouble than it was worth, as you found out. I don’t have it but I like the interior just fine anyway. yg17 has an 08 that also doesn’t have it. I don’t have any rattles yet but some people say they have some. Anything you can track down and tighten on your own?

  70. traezer says:

    @Manok:

    Huh?

  71. yg17 says:

    @Buran: Crap, I’m busy Saturday night and head back to school on Sunday. Perhaps sometime over spring or summer break

  72. LatherRinseRepeat says:

    I don’t get why people buy new cars every other year, and roll their previous loan into a new loan. It’s crazy. I know a guy that did that 3 times in 2 years. His monthly car payments are over $500 a month.

    @SCHWARTZ:

    Get the Cayman. A co-worker has one and it’s really nice. Plus the resale value will be better than the other cars you listed. I’ve got an Evo IX at the moment. I’d like to the new STi because of the hatchback, but I don’t like car payments. So I think I’ll keep my Evo for a while. :-)

  73. humphrmi says:

    @quail: There isn’t much real difference between leasing and financing today. You can still end up upside down, there’s still a “rate” you’re paying for borrowing (their car, instead of their money), and since lease payments are generally lower than financing rates they rape you on the rate.

    Back in the days when there was a tax benefit for leasing, it was stupid not to. Today, eh, no diff.

  74. Schwartz says:

    @Buran:
    It’s all in the headliner/pillars from what I can tell.

    I’d go for the A3 Quattro, but honestly, why not just get an R32 instead and not pay the premium for the Audi name? Yeah, the interior’s nicer, but not sure if it’s worth all the extra cash.

  75. okvol says:

    At the Caddy dealership in Oxnard, I bought at 02 Neon, 5 speed manual, $6000 based on their web site, and the Caddy dealership handles the web deals. Had the cash in bank, bounced half through credit card for points. Gets 37MPG on highway, and is still shiny.

    If you want an investment, buy a Harley motorcycle and put it in storage. That’s about the only vehicle that will increase in value.

  76. B says:

    @Schwartz: Have you looked at the BMW 128? It starts about 3 grand less than the R32, and has similar hp/weight. The only difference is it’s RWD, not AWD.

  77. yg17 says:

    @Schwartz: You also get 2 more doors on the A3 which may or may not matter to you.

    Or, for that money, you can get a BMW 3 series, which although it’s about 20 less horsepower, it’s RWD and availabe with a 6 speed manual. And it probably has the nicest interior of all of them.

  78. yg17 says:

    @Buran: Yep, no rattles here from my GTI interior (which is what I’d expect on a 2 week old car). My radar detector mount can make quite a racket though and I need to find some way to dampen that.

  79. Trae says:

    Just for the record: I drive a 1998 Chevy Venture with over 218,000 miles on it.

    I’ll replace it when it dies.

    Probably with something used.

  80. tinmanx says:

    Nothing wrong with getting a new car, it’s a feel good thing. I just got a new Honda Fit this weekend. It doesn’t offer anything more than my old ’95 Nissan Altima (except better safety features), but I got it anyway because it was relatively inexpensive and after working and saving for a few years I felt it was time to treat myself to a new car. And I don’t regret it one bit, but then it’s only been 2 days.

    People just get in over their heads when they buy things they can’t afford. That can happen with anything.

  81. Buran says:

    @Schwartz: I don’t like two-door cars. It’s gotta be five-door hatch or wagon for me.

  82. gingerCE says:

    Okay, I bought my car new from the dealership with financing. I got a great deal (I think) for my Civic but 5 years of payments did drag on. However, my car is now paid off and I plan to drive if for another 5+ years.

    I think the problem is people think every few years they’ll turn my car in, finance another or car, or take out a lease and continue the debt cycle. I got into debt, but was focused on the light at the end of the tunnel. I knew when I was getting my car that it was gonna be my car for as long as it keeps running and I have no plans on getting a new car for a long time.

  83. forgottenpassword says:

    as soon as my 1999 jeep dies (in probably 3-5 years) it will be the first time I buy a newish/used vehicle with cash. I plan on doing this for every vehicle I need. I HATE debt…. especially car loans.

  84. King of the Wild Frontier says:

    Sadly, I can believe this totally. I have an older brother who had a new truck habit for years; we used to joke about how he was addicted to new car smell, but the joke wasn’t so funny when he started begging the rest of us to cosign loans, then to help him cover the monthly payments. Now we have a nation full of people like him. Great.

    Me, I’m driving a 10-year-old car that I paid US$2500 for last summer, cash; it replaced my 12-year-old car. No monthly payments. I’ll buy brand new once I win the lottery.

  85. sven.kirk says:

    @quail: Look at the penalties for leasing. They are outrageous. one example is mileage overage. It is anywhere from 15 cents (and higher) per mile. Not to mention damage to vehicle.

  86. remusrm says:

    Well I agree with some of you but get a new car that is reliable and will last. Most people buy new cars since the older ones are more to fix and not worth it. I see in Europe the same trend. I also agree is not good to roll negativity on a new car. But most of you seem like kids on your finances and seem to “brag” on your money and all that I think the other. Most people will not pay 6k for a used car like for a NEON with horrible reliability. I think you should make payments for a car and keep it around 8 yrs max, and not get a damn expensive one, 350 for 48 months or 60 is a good deal.

  87. Keter says:

    I remember years ago when the “rollover” financing started, it was pretty typical for people to buy a cheap car (not much resale value) and a couple of years later, after some lifestyle change, they would roll the difference into a loan for a minivan or luxury sedan. Many of these same people played the real estate game, selling or refinancing to get cash out, which enabled them to keep playing the credit game. Now that the real estate game has played out, it only makes sense that the piper is beginning to play for the car-refinance addicts.

    I have bloody little sympathy for these people; the only sensible way to live is to buy only what you need and can afford…and be realistic about what you can afford. Never let “them” tell you how much you can afford to pay. You know your history, and have a good idea how much you can make (almost worst-case scenario) if times get bad. Finance only what you can afford to pay under bad circumstances, and when times are good, use the extra money to pay off debt.

  88. yg17 says:

    The people who like changing cars every couple years need to consider leasing. It’s just dumb to keep trading in cars without paying off the old one first (granted, I just did this 2 weeks ago, but my trade in was more than the loan payoff. Depreciation isn’t predictable, so others may not be as lucky).

    I think leasing is a pretty bad idea though IMO. You make payments on something that you’ll never really own. People who always lease will have a car payment for the rest of their life. With my car, I’ll make payments for a few years, pay it off, and it will be mine, and I’ll keep it for another few years and not have a monthly car payment. And, for those few years between paying off your current car and buying a new car, you can put the amount of your monthly payment into a savings account and have a pretty good downpayment for your new car.

    I’m on a 6 year loan at 5.9%. But once I graduate in college in May and get a real job, I’ll pay more than the monthly payment and get it paid off sooner. Since I should be staying in St. Louis, I’ll live at my parents house for a few years and have hardly any expenses, and put a good chunk of my salary towards student loans and my car loan. And I was smart and didn’t rack up any credit card debt in college either, so I don’t have to worry about that. Yeah, maybe I’ll be the loser living at his parents house until he’s 25, but I won’t have nearly as much debt as those who ran the hell away from their parents after graduating. I win :D

  89. forgottenpassword says:

    man, some of you guys are insane! In my mind a car is an item used to get one from point A to point B. NOT a status symbol, NOT who you are, you own your car…. your car should never own you.

    Now unless your hobby or total lifestyle revolves around your car AND you comphensate for it by being fiscally reasonable in every other aspect of your life (that means not buying/owning a house you can barely afford etc. etc..)…. then you are a moron . Paying for something that decreases in value rapidly… just for the heck of it.

    Maybe Its because i grew up in a modest home, where my parents were very responsible & conservative when it came to money … where a car was a tool used to survive…. not a status symbol.

    I drive a payed off 8 year-old jeep because it has 4 wheel drive & I NEED it to get me thru the winters here (snow & ice storms). I didnt buy it to look cool.

  90. goodkitty says:

    @Starkicker: Basic money management isn’t taught, no. When I got a jerb and finally had some money and checks, I had never written one before nor did I know how. For the most part, kids are just provided with things, with no real recognition of what it took to get it or what was involved in terms of a financial transaction. Then again, most parents seem to think the state will magically raise their young, when in reality the state just wants you out of their liability ASAP for the lowest cost possible. Increasingly though, we’re seeing a serious and hostile organized financial machine being set up to systematically fleece everyone, which is scary. Even people who were taught good financial systems I see sometimes get caught up in things that seemed like a good idea (like the NY energy company thing), but were just well-dressed scams. You have to not only be taught good skills, but be completely skeptical of everyone and everything, which is not the way I think most people want to live.

  91. hn333 says:

    @forgottenpassword: FORGOTTENPASSWORD for President !

  92. @Buran: He’s getting better. He has a childlike adoration for snow clothing, so every Christmas I look for an EVEN MORE RIDICULOUS piece of winterwear. He loves to act like he’s arctic Rambo, suiting up to go conquer the weather. (When it’s only 21*F out and I’m still dashing out in short sleeves to pick up the paper.)

    But cherry pit footwarmers (such as: [www.cherrypitpac.com] but I made ours) saved his life, because he HATES going to bed cold, and those warm up the bed and our feet nicely.

  93. Parting says:

    Bah! Personal responsibility ??? What’s that???

    I have no pity for idiots.

    You pay/loan/rent what you can afford. And what you can pay back. A car could get in a accident/stolen/vandalized. It’s does not appreciate in value. And if you cannot afford new car, you don’t need it.
    @forgottenpassword: Truth and nothing but the truth.

  94. inspiron says:

    @Starkicker:

    Financial literacy does not need to be thought it just needs to be followed!

    Spend less than you make, its simpler than starting a fire.

    Stories like this make me glad to have bought a $1000 car in full with cash….mmmmm….so good…..complacency is the way to go!

  95. scampy says:

    @howie_in_az:
    I do it because I dont care about depreciation. I dont buy a car for an investment and I doubt anyone else does either since they always lose value. I do however keep my car till it doesnt run anymore and is uneconomical to repair. I bought my truck new in 2000 and will probably have it until 2030 or so since I only drive about 5000 miles a year. I have much more piece of mind knowing Im the only owner and I KNOW the oil was changed when it is supposed to. I know it wasnt in a flood and cleaned up. I know it wasnt in an accident and repaired etc… If more people would buy a vehicle and never get rid of it till it dies there wouldnt be so much auto debt out there, but instead people have to have a new car every 2 or 3 years.

  96. youbastid says:

    @humphrmi: How do you end up upside down on a lease???

  97. Kaix says:

    Next (or near future) credit meltdown: student loans.

  98. Buran says:

    @Eyebrows McGee: I say we throw them headfirst into a snowdrift.

  99. JollyJumjuck says:

    I leased a new car (first time ever) nearly 3 years ago mainly because (a) I couldn’t afford to buy a new car, (b) the lease payments were a partial tax write-off because of my business, and (c) my previous car, although only 7 years old at the time, ended up becoming a money pit because it would break down every couple of months (yes I did regular maintenance, but somehow the water pump, then the transmission, then the gasket seal all went, within the span of 6 months). I ended up with a used car from an inheritance so I got someone else to take over the lease (after forking out nearly $1k for the transfer fees). The car I have now is 3 years old, and one of the internal computers broke down (luckily it had an extended warranty or that would have been over $1k in repairs as well). Oh ya, I had the leased car for 1.5 years and the windshield wipers quit right in the middle of the worst snowstorm in years in the area; got that fixed under warranty but somehow a hole got punched in my gas can during or after the tow and I had to pay for that too.

    If this sort of thing is typical for others and I don’t just have really bad luck when it comes to car repairs, then I can see why people buy new: avoid the hassle of repairs and breakdowns. Aside from the cost, there is the inconvenience and aggravation because it invariably happens going to or from work.

  100. youbastid says:

    @Kaix: Meltdown after that: predatory lunch money lending.

  101. iamme99 says:

    Leasing only makes sense if you have a business and can write off at least 50% of those payments as business expenses.

    Otherwise, you get stuck in one lease after another, as I did for years and years. Many people don’t save much money, so they don’t have a decent down payment to buy a car when the lease expires. You either jump into another lease with similar monthly payments or take on a massive monthly car payment with little to nothing down (talking about new cars here).

    And many of the ads I see these days require a hefty down payment to get the $$ figure that is being advertised. They call it a “capital cost reduction” payment :)

    Why in the world anyone make a down payment on a rental (which is what a lease is) is beyond my understanding.

    I finally escaped out from under the lease trap in 2002 when I brought a new car. I paid about 25k, 5k under sticker and less than supposed dealer cost. If I remember correctly, I put down 10k and financed 15k at 4.75% for 4 years. I paid it off a little early and it was amazing how good it felt for the first time in my adult life to not have an approximately $400/month car payment hanging over my head, each and every month!

    I’ll tell this to all the young people here: When you get into your 40’s and older, many of you may well look back and say damm, I REALLY wish I had not been so concerned with “status” and instead had saved some of that money I threw away on car payments. I live in an area where high end Mercedes/Lexus/BMW’s are a dime-a-dozen. Some families have 2, 3 or 4 of these. I see 18-20 year kids driving BMW 330’s and M3’s that their parents gave them or pay for. It’s not uncommon to see Ferrari’s, Lamborgini’s, Bently, etc. around here. The town I live in even has a Lamborgini dealership :)

    Living in this area gives you a dose of reality when you realize that it is nearly impossible to “out-status” people like this with any car that a normal person could buy. Better to save and invest your money when you are young so you have a chance of owning more than just a flashy car. If I had only learned that lesson younger – sigh.

  102. Parting says:

    @Kaix: Student loan programs are extremely predatory in US.
    However, probably next meltdown would be linked to credit cards. People that buy expensive cars they cannot afford are same people that rack up credit card debt.

  103. TechnoDestructo says:

    @HRHKingFriday:

    Don’t let a Dodge Intrepid of all things dictate your opinion of used cars.

  104. missdona says:

    Cindy is a moron.

    I financed my car in 2001, 5 year note at 0%. My dad told me the only people who give you money for free are “your parents and Ford”.

    I’m still driving my Focus, and will continue to until it dies.

  105. humphrmi says:

    @youbastid: I have. It’s not impossible. One might think the obvious: you overdrive your mileage. That’s an easy way to end up owing more than you own. But also if you don’t keep up the payments (like you might end up doing in a conventional loan) and the leasing company takes back the vehicle before its due date, they calculate what you owe just like any other loan – what the car is worth less what you’ve paid. And you’re on the hook for the difference.

  106. humphrmi says:

    @missdona: Then why did Chrysler give me 7-years, same as cash? Oh yeah, because Ford fans don’t go to Chrysler dealers.

    I’ll drive my Dodge until it dies too. Your Ford dealer doesn’t have a lock on cheap financing.

  107. synergy says:

    Holy crap! I’m poor so I had to take out a loan, but I paid off that sucker in 20 months!

  108. missdona says:

    @humphrmi: That was 2001, when 0.0 financing was invented. And my dad works for Ford. I got my car for cheap.

    Enjoy your Chrysler. I’m glad you’re happy with it.

  109. ginnylavender says:

    I am amazed at the number of people who have notes on two cars, totaling more than their mortgage payments. And they’re usually still upside down on them. Part of the problem is that I live in a metropolitan area with long commutes and a miniscule amount of public transport, but from what I see, an awful lot of people are making extremely bad decisions about car buying.

  110. skeleem_skalarm says:

    Oh my gosh. I’m just stunned. Who in their right mind would take a car loan out for any longer than 3 years (4 max)? I know the things are expensive, and we want our toys and we want them NOW, but five-year car loans (and up) make me want to scream. What is wrong with us?

  111. KJones says:

    From the item:
    > “It’s our own fault that we traded in vehicles so
    > many times, but we never thought it would get to
    > this,” said Gerhardt.

    That’s too many words. They never thought, period.

    The US has little or no public transportation infrastructure, and then people wonder how this mess happened. 9_9

    For those who feel the “need” to have two cars at once, if you live in the right climate, try a scooter instead of a second car. Or instead of a car, period; people own too much “stuff” as it is.

    Scooters are cheap enough to buy out in a year, gets far better gas mileage (most over 100 MPG), and are good enough for short jaunts where carrying large amounts of stuff isn’t necessary (e.g. going to work). If your co-workers laugh, remember to point out the fuel economy.

    The Honda Cub C90 is not sold in the US, but is sold in Mexico (importing, anyone?) and gets 200 MPG. That’s not a typo.

  112. humphrmi says:

    @missdona: Uh, yeah. Nobody thought of zero percent financing before you bought your car. You stick with that belief. I guess I got you to thank for it.

  113. Buran says:

    @KJones: you can’t import anything less than 25 years old.

  114. arirang says:

    I don’t feel sorry for any of these people. Hell these people live in my town, most likely, ARMs a-poppin’, credit cards a-maxin’… As I drive around in a fully paid handmedown 11 year old car smiling all the way to the bank.

  115. kabuk1 says:

    I disagree that GAP is a ripoff.

    Here’s my automotive tale of woe;

    I owed about $19,000 on my car as of December ’07. It was an ’05 Dodge Neon SRT-4 that I got completely RIPPED on. Classic case of the sleazy car dealer. They saw me come in, a young-looking female(I’m 27 but I look at least 10 years younger), and they decide to take me for all I’ve got. The car had only been at the dealership for a day or two, so it’s not even tagged yet & they charge me nearly full price on it, plus tacked on all sorts of warranties that I later came to find out were null & void to begin with b/c of what the previous owner did to the car. They withheld all sorts of critical info- like the warranty thing, the fact that it had NOT received a 5-point inspection(I pulled off more crap from that car, including a home-made oil catch can & enough blinky lights to embarrass a teenage ricer kid), the stabilizer chains had been removed, stuff was hooked up wrong in the engine, and the ENTIRE ENGINE had been completely replaced by the past owner. So I find out all this crap about a year later when I take it in for warranty repair work & find out my warranty is worthless. And now there’s nothing I can do about it, short of suing them, which I can’t afford to do. So now I’m stuck with a dying car that I still owe about $5000 more on than it’s actually worth. But on Dec. 13th, I got in a wreck, totaling it. My insurance is only giving me about 14 grand, and if I didn’t have GAP I’d have to pay the rest. That’s why I will always purchase GAP protection no matter what car I buy.

    That said- buying cars SUCKS. I’m in the process right now & it’s excruciating. My credit is terrible thanks to a long string of exes ruining it for me, and my only saving grace is 2.5 years of on-time car payments in my name. STILL, nobody will finance me! I think though, after reading this article, that that may be a blessing in disguise. Even if I do get financed somewhere, I may just go to one of those “buy here, pay here” lots instead. I’ll be paying every 2 weeks, but I’ll get it paid off in 4 years versus 7 & there won’t be thousands of dollars of interest tacked onto the price of the car.

    Buying cars should NOT be such a ripoff.

  116. missdona says:

    @humphrmi: You’re quite welcome.

  117. Me - now with more humidity says:

    B and Schwartz: Don’t overlook the Subaru performance cars. They’ll fly… and they’re AWD.

  118. Me - now with more humidity says:

    KSchwartz: written like a single city dweller with no children.

  119. ShadowArmor says:

    “I personally don;t see why people would roll over an auto loan.”

    Because it gets them the new car, gets rid of the old car, keeps the payment down, and they don’t see the bad side.

    “Leasing only makes sense if you have a business and can write off at least 50% of those payments as business expenses.”

    I agree, though I’d add that if you are absolutely positively 100% one of those people that no matter what is going to get a new car every 2 years, then you might as well lease.

    As far as new cars go — a new car isn’t financial suicide at all if and only if you KEEP IT. Buy a new car, drive it for at least 8 years, but preferably until its cost-prohibitive to maintain. I bought new during the 0% interest craze, financed the full ride, and paid it off last year (4 year loan paid early). I was never upside down on the car and take good care of it, so it takes care of me.

    Yes, I’d LOVE a new car. That G35x looks awesome with 300+ hp, or perhaps a 2 y/o A4, but i’ll have to wait.

  120. kwsdurango says:

    I’ve never purchased a new car and probably never will. If you’re willing to put in the time and effort there is a whole world of interesting used cars that hold up well from a design and mechanical standpoint and retain some value. I don’t understand people who need new cars every few years, don’t take care of their cars (after spending so much!), and use the word “investment” when talking about it. Crazy! We are a nation of big debt and monthly payments. I learned money management by working commission jobs – and paying cash for the things I want. No monthly payments here for anything – and no stress!

    My two cars:
    1998 Honda Civic, (daily driver, paid cash – used, 78k miles. It does the job and if it’s stolen or hit, I don’t care.

    1983 Porsche 911SC, paid cash for this 12 years ago and now it’s “vintage” status so the insurance is really cheap. The market value at around $18k is the same as I paid for it and I’ve kept it in perfect shape. Porsche design holds up extremely well. People always comment on it… Oh, and the best part, it’s still quick, definitely sporty and really fun to drive (especially since there’s no payments!).

  121. Rusted says:

    @mantari: I did that but paid it off in one year and four months. I hated that loan. Chase, never again.

    @MrEvil: I bought a Subaru, New in 2003. Think about it. New, not some problem that someone sold to get out from under, or worse a pre-abused car. 62,000 miles of very trouble-free driving. I’m keeping it another five years at least.

  122. missdona says:

    @kwsdurango: I agree, the “investment” concept is ridiculous. It’s a car, a mode of transportation; and unless if the car is rare, being wiped with a diaper, and not being driven, it’s not an investment.

  123. Parting says:

    @kwsdurango: Not everyone is car savvy, so a new car is ”assurance” that’s there is no major flaws.

  124. theblackdog says:

    @officeboy: I can tell you that the CPI is based on a survey conducted by the Bureau of Labor Statistics known as the Consumer Expenditures survey. [www.bls.gov]

    I would say that if people aren’t answering this survey honestly and lowballing the prices, they’re putting the screws to themselves and the rest of us.

  125. mizj says:

    One of my aunts rolls her loans over every three years. She also has about $20K in credit card debt. I have no idea how she sleeps at night.

    Also, I wish I’d read this thread earlier. I just bought a Tiburon (which I LOVE), but now I’m sure that even with my wheeling and dealing, I probably still got screwed.

  126. JoshKEF says:

    Here’s a quick story for you. In 2005, I purchased a brand new 2006 Vette (not the Z06 model) for $63,000 w/ 0 down, 100% financing @ 10.5%.

    Since I couldn’t afford it, I did the same thing this lady did, and like an idiot, I traded it in–upside down already–for a new (9k mi, used as demo model) Tahoe, fully loaded for the same terms @ $53,000.

    Prior to this, I also purchased a used 2002 Yukon (88k mi) for $20k @ 10% w/ 0 down/100% financing. I ended up not being able to keep any of them.

    Long story short, I did a volunteer repo on the $53k Tahoe and the $20k Yukon. They were auctioned by the bank.

    And, here is the interesting part: what they sold for at dealer auction. The $53k Tahoe sold for $13,500 (yes, that right), and the $20k Yukon fetched a whopping $7,500.

    I’m no longer in debt, and have found a couple guys that can get me into the big Mannheim dealer auction lot every week here in Atlanta. The savings are tremendous–at least 8k off sticker price on new models. Never again will I ever buy from a dealer.

    And, no, never again will I finance anything. I’ve learned a lot from sites like this, Dave Ramsey, and so forth. But, I must say–if one were on the other side of the coin and selling goods & services to people like her (or me, a couple years ago), imagine how much money can be made…

  127. bdgbill says:

    Just last night I saw a guy delivering pizza to our building in a late model Mercedes. I often see pizza guys driving cars nicer than mine. I have a crappy car but at least I’m not driving around delivering pizzas at 10:00 at night.

  128. barty says:

    These 6-7 year loans just enable payment buyers to get more car than they can reasonably afford (and far more than what they actually NEED) but put them in the position of being upside-down until maybe the last 12 months of the loan, if they get that far.

    My rule of thumb is, IF you must buy a new car or take out a loan on one, is to look at the payments on nothing more than a 48 month loan. If the payments are too high for you on that term loan, then you can’t afford the car. Period. However dealers are all too eager to do “whatever it takes” to get someone behind the wheel of a car, so loan terms have gotten progressively longer to get people into what amounts to a status symbol vehicle.

  129. Anitra says:

    I bought a two-year-old car with a four-year loan. Paid it off about a year and a half “early”. My husband and I have sworn off car loans now. Why not just save up the money and buy a used car for cash?

    “no one told me” cracks me up. How about her parents or grandparents? Is the concept of “buy what you can afford/pay for what you buy” really that unusual?

  130. Sucko-T says:

    @joshkef

    Once you see those auction prices you quickly realize how much of a KILLING the dealers are making off used cars. Buying less than wholesale bluebook and often asking more than retail (for negotiation padding)

    The advice of buying a slightly used car or a CPO from a dealer seems ludicrous to me. You can often buy a new car for what some dealers want for a used one. The best bet is private party or buy a car that’s older and has depreciated more.

  131. harryhoody says:

    I say if you can pay cash for it go for it…otherwise, buy the clunker. I am saying this as a plot to purchase an $83,000 car.

  132. psyop63b says:

    I bought my car (slightly) used. 13K on the odometer and lots of options, but still less than a brand-new one equipped with just the basics.

    I’ll have my note paid off this month (a full 3 YEARS ahead of schedule). By my calculations, the amortized interest savings to me will be about $1200.

  133. anatak says:

    And nearly 45% of loans written today are for longer than six years. Even some staid lenders owned by the carmakers, such as Toyota Financial Services and Ford Credit, are offering seven-year financing. And a few credit unions, particularly in the West, are tinkering with the eight-year note.

    Yeah, that gave me a queasy feeling. After paying ours off (WAY early), I can’t imagine staring down the barrel of 6, 7 or 8 year car loans and saying, “Yes”. Of course this industry is also heading for a meltdown. If you do stupid for long enough, eventually the cards will fall in on you. And the car loan industry has been doing stupid for a LONG time. Good riddance.

    “Not one dealer ever said this was a problem. Ever. I never had a dealership say no.”

    No, they won’t tell you “No”. The finance guy is a salesman, just like the salesman that talked you into another stupid new car that you can’t afford. Now the finance guy is talking you into finance terms that you can’t afford. “No” isn’t in their vocabulary. “Commission” is.

  134. anatak says:

    @traezer: gosh! I was waiting for the part about the salesman pressing the gun barrel into your temple while you signed the paperwork.

  135. missdona says:

    @anatak: Right, a Car Salesman’s job is to sell cars. If you come knocking on the door, wanting a car, it’s his job to get you what you want.

    He’s not the “Keep You out of Financial Trouble Man.”

  136. TechnoDestructo says:

    @kabuk1:

    Buying cars IS such a ripoff because of people like you.

    One idiot (and admit it, buying that car for that price at whatever shitty terms you got was idiotic) like you is worth probably 3 or 4 skeptical, heavily-armed-with-information shoppers like me.

    If you live in someplace that is chock full of people like you, all car dealers will handle everyone as though they were like you, and will be happy to get rid of people like me.

    Which is why I buy private-party. I’ve had 7 cars, and 6 have been purchased from individuals. (Granted, 5 of those cars were beaters.)

  137. hotcheapnsexy says:

    MREVIL sounds like my kind of man…..haha.
    I had a 3 year car loan. That was enough 4 me. I just got laid of from the mortgage industry.After being horrified by seeing people in serious car payment debt, I have reserves to live on being a single parent and paying a mortgage too.

  138. rgr1ce says:

    Yep…it is the next big fiasco. Much like mortgage lenders who took this country to its financial knees, car dealers who arrange loans routinely embrace and practice predatory lending behavior (loan arranging practices). In the credit approval process they overstate your income, and other data which banks,credit unions, and other lenders use to determine your ability to repay the loan as agreed. Further they overstate most preowned vehicle’s value to the same lenders by describing the vehicle in a “book-out” (format which states the value of the vehicle purchased, its mileage and the optional equipment)i.e., they may tell lenders the vehicle has a sunroof, or leather upholstry etc. to inflate the wholsale value to the banks. This value is a part of the equation to determine how much money a lender will approve on a retail installment contract. The effects of this “bank fraud” are obvious. If the vehicle is ever repossessed, the posibility of recovering the balance of the loan is impossible. And the taxpayer again will ultimately suffer. This arm of the auto industry needs swift federal intervention and investigation.