Seven year auto loans

[Gumby]

Quote:

Originally Posted by braumeister An even better solution is what my car has -- a complete searchable manual loaded to the car's infotainment system that I can access with two taps on the screen.

IMHO, the best solution is to sell cars, simple cars, that get me from point A to point B, not a rolling computer/entertainment system that requires navigating 15 computer screens, each with several drop down menus and sub-menus.

Interesting fact: In 2017, the USS John S. McCain (DDG-56) ran into a Liberian tanker in the Strait of Malacca, resulting in the deaths of 10 sailors. A principal contributing factor was that no one on the bridge could figure out the computer that controlled the separation of the steering function (rudder) from the throttle function (engines), and they accordingly screwed up the transfer of throttle control from the helm to the lee-helm station. So the ship was unable to maintain its heading and crossed into the path of the tanker. When I was in the Navy, that transfer would have been made via a simple, two-position, manually operated switch.

[Mr. Tightwad]

Quote:

Originally Posted by Music Lover I'm not as optimistic as you. Unless there is a breakthrough in technology increases will continue to be gradual. There is a lot more than tires and wipers to worry about on electric cars. And, no one will ever offer a 1 million mile warranty on a car.

The air cabin filter has to be changed every 2 years. So tires, wipers and air filters. It's really nice not to have to repair all those engine parts that break down with an ICE car.

Model 3 batteries are expected to last 300,000 to 500,000 miles. Replacements run around 5-7K. That's in todays prices. And car and driver wrote an article on Tesla developing a 1,000,000 mile battery. No discussion on the warranty.

Another poster mentioned the weight of his truck. My Model X weighs 5300lbs.

For those of you that like ICE cars or are unwilling to adapt, continue driving what you want to drive. California is up to 5.6% of new car purchases being EV. A state with 38 million people. I remember when online retail sales crossed the 1% threshold. Now years later the list of retail stores closing is long and mall traffic is nothing what it used to be.

[brewer12345]

Quote:

Originally Posted by Mr. Tightwad The air cabin filter has to be changed every 2 years. So tires, wipers and air filters. It's really nice not to have to repair all those engine parts that break down with an ICE car. Model 3 batteries are expected to last 300,000 to 500,000 miles. Replacements run around 5-7K. That's in todays prices. And car and driver wrote an article on Tesla developing a 1,000,000 mile battery. No discussion on the warranty. Another poster mentioned the weight of his truck. My Model X weighs 5300lbs. For those of you that like ICE cars or are unwilling to adapt, continue driving what you want to drive. California is up to 5.6% of new car purchases being EV. A state with 38 million people. I remember when online retail sales crossed the 1% threshold. Now years later the list of retail stores closing is long and mall traffic is nothing what it used to be.

Then you will just have to deal with the smug.

https://youtu.be/mxuwXczWQC0

[Mdlerth]

Quote:

Originally Posted by Mr. Tightwad ...car and driver wrote an article on Tesla developing a 1,000,000 mile battery. No discussion on the warranty.

For a typical car driven about 15,000 miles per year, the battery will last for 67 years. A seven year loan is only a blink by comparison!

[aja8888]

Quote:

Originally Posted by Elizrogers I like new technology as long as it is making something better, not just different. So, many of the new gadgets in cars are really entertainment, not making for easier or safer driving. I rented a car last year on vacation. I have always been considered an intelligent person and good the technology, since I worked in IT mist of my life. But I got in the car, put the key in and pushed every button, every way, trying to get it to start. I finally swallowed my pride and went back into ask how to start it. Apparently, there was a certain rhythm on key, button, brake, hold your mouth just right that had to be done in the right order. I hadn't seen one of these new cars since I drive 2002 Highlander and you can start it by simply insert and turn key. Not only that, that the TV screen that sits where the speedometer used to constantly distracted me with stupid messages. It would flash a sign when you were 100 ft from a signal, then at 50 ft. Like you can't see a bright red or green light right in front of you. Then it would tell you there was a pedestrian 50 ft ahead, but they were on the curb waiting for a bus, so I can see that. I have to wear reading glasses to read anything, but I cannot see with them if I'm driving, only for reading. So, I'd have take my eyes off the road, put on glasses, read the unnecessary message, take them off and look at the road again, if I was going to try to read them. There were a dozen other messages it popped up too, but I eventually learned to just ignore them. Who the heck thinks up these new distractions and why? What they need us something that tells you to "watch the road", not that distracts you from it.

A few weeks ago, I ended up with a really loaded 2019 Infiniti XG30 as a rental car for my annual trip from Texas to Connecticut (unanticipated rental upgrade). By the time I made it to I-44 in Missouri, about 500 miles, I had figured out how to disable all but one of the annoying screen messages from the convenience (aka, safety) features. We got that last one to quit flashing at us later in the week.

The balance of the use of the seemingly nice car for the trip was pleasurable.

[jazz4cash]

Interest rates are out of whack wrt risk. It doesn’t make sense that I can get a 7 yr loan for >100% of purchase price on a depreciating asset for nearly the same rate as a mortgage secured by real property. A six year car loan rate is LESS than the mortgage. That makes the 7yr loan a reasonable option. attractive. It’s more like a lease to me. The key is if it is used to buy more car than you can really afford or employment/income is not stable. E.G. it can be an enabler if you already have financial issues.

[bolt]

Quote:

Originally Posted by jazz4cash Interest rates are out of whack wrt risk. It doesn’t make sense that I can get a 7 yr loan for >100% of purchase price on a depreciating asset for nearly the same rate as a mortgage secured by real property. A six year car loan rate is LESS than the mortgage. That makes the 7yr loan a reasonable option. attractive. It’s more like a lease to me. The key is if it is used to buy more car than you can really afford or employment/income is not stable. E.G. it can be an enabler if you already have financial issues.

Todays economy is based on debt. Debt runs the current worlds economy based on the domestic and international USA dollar's current value.
Not being snarky but modern money mechanics is a good book.

Do you really believe 0% interest auto loans are no cost loans?
First, what else could those funds generate(opportunity cost)other than a depreciating asset requiring costly mainitence?

A bank will create money/value for itself anytime opportunity presents itself.
Many succumb to misleading marketing imho.
Best wishes.....

[bolt]

Quote:

Originally Posted by Gumby IMHO, the best solution is to sell cars, simple cars, that get me from point A to point B, not a rolling computer/entertainment system that requires navigating 15 computer screens, each with several drop down menus and sub-menus. Interesting fact: In 2017, the USS John S. McCain (DDG-56) ran into a Liberian tanker in the Strait of Malacca, resulting in the deaths of 10 sailors. A principal contributing factor was that no one on the bridge could figure out the computer that controlled the separation of the steering function (rudder) from the throttle function (engines), and they accordingly screwed up the transfer of throttle control from the helm to the lee-helm station. So the ship was unable to maintain its heading and crossed into the path of the tanker. When I was in the Navy, that transfer would have been made via a simple, two-position, manually operated switch.

Again, I'm in agreement.

But BestBigBusinesses(BBB) that be,.. now sell hand held computer devices called "phones"!

0r is that (BBB) BetterBusinessBeareau?

Best wishes...

[jazz4cash]

Quote:

Originally Posted by bolt Todays economy is based on debt. Debt runs the current worlds economy based on the domestic and international USA dollar's current value. Not being snarky but modern money mechanics is a good book. Do you really believe 0% interest auto loans are no cost loans? First, what else could those funds generate(opportunity cost)other than a depreciating asset requiring costly mainitence? A bank will create money/value for itself anytime opportunity presents itself. Many succumb to misleading marketing imho. Best wishes.....

I have no idea why you posted this in reply to my comment. It doesn’t rebut my contention that risk is mis-priced these days. I agree today’s economy is based on debt but I’ve never seen a bank offer a 0 % auto loan. That would be something !

[Gumby]

I have seen 0% auto loans from the captive finance subsidiaries of auto manufacturers, but that is a cross subsidy to spur sales. I don't think I've ever seen a normal bank offer a 0% auto loan either, but then I am not the most up to date on these things.

[athena53]

Quote:

Originally Posted by Gumby I have seen 0% auto loans from the captive finance subsidiaries of auto manufacturers, but that it a cross subsidy to spur sales. I don't think I've ever seen a normal bank offer a 0% auto loan either, but then I am not the most up to date on these things.

I agree. If you agree on a price and tell them you're getting your own financing, then tell them you want THAT price and zero-percent financing, you generally can't get it. They used to be a bit more honest: you could get either a rebate of $X or zero-percent financing but not both.

[Andre1969]

Quote:

Originally Posted by Mr. Tightwad It's really nice not to have to repair all those engine parts that break down with an ICE car.

In my experience, it's usually been everything BUT the engine that would break down, in an ICE car. Although there are maintenance issues, such as spark plugs, belts, hoses, coolant changes, oil changes. Eventually you'll need exhaust work done, although with improvements in the technology, it's been ages since I've had to visit a muffler shop. I think the last time I had to have exhaust work done was on a 1985 Silverado...BUT that was in 2009! I had to have everything aft of the catalytic converter replaced...the pipe to the muffler, the muffler itself, and the dual exhaust pipes that came off of the single muffler, although I had those replaced by an extra large single pipe. Total bill was under $300. That truck had been in the family since new, and I knew its history...that was its only exhaust repair.

But, on something like a Tesla, you'd still have brakes, suspension, I'm sure the thing has some sort of a transmission and differential. Electronics galore. Sensors and such. Power window motors. Power door locks. Windshield wiper motors. Dash displays. Sound systems. Air conditioning. Heat. Defrost. The HVAC control unit. So, I wouldn't expect a Tesla to be totally trouble free for hundreds of thousands of miles. But, getting rid of the ICE engine does take a few things out of the equation.

[ncbill]

Quote:

Originally Posted by Mr. Tightwad The air cabin filter has to be changed every 2 years. So tires, wipers and air filters. It's really nice not to have to repair all those engine parts that break down with an ICE car. Model 3 batteries are expected to last 300,000 to 500,000 miles. Replacements run around 5-7K. That's in todays prices. And car and driver wrote an article on Tesla developing a 1,000,000 mile battery. No discussion on the warranty. Another poster mentioned the weight of his truck. My Model X weighs 5300lbs. For those of you that like ICE cars or are unwilling to adapt, continue driving what you want to drive. California is up to 5.6% of new car purchases being EV. A state with 38 million people. I remember when online retail sales crossed the 1% threshold. Now years later the list of retail stores closing is long and mall traffic is nothing what it used to be.

That is Musk's claim...but that's assuming only a few modules go bad, not the entire battery pack.

A new pack is going to be 5 figures out of warranty...and don't forget the multiple drive unit replacements some Tesla owners have experienced, since those aren't cheap either.

I suspect most Teslas simply won't be worth fixing out of warranty, which is fine for those who don't mind just paying for a new one every decade or so.

[GravitySucks]

https://www.npr.org/2019/10/31/77340...ch-your-wallet

Reviving as a new related article came out.
Two take aways for me:
I must really be out of touch. I thought 5 loans were still the most common duration. Looks like it been the 6 year loan for over a decade.
While similar car prices have tracked close to inflation people are now spending more by buying bigger, more luxurious cars. So more of that incoming is going out on a depreciating asset every year. If average incomes are tracking inflation (or less if you read some press) were is that extra money coming from?

[Andre1969]

I didn't realize 7 year loans got that popular, either. That article states that the average transaction price for a new car is $37,782. Historically, when you adjust for inflation, that's really not *too* ridiculous. I bought a new 2000 Intrepid in late 1999. It was $22,389 out the door, with tax, tags, an extended warranty, etc. Adjusting backwards for inflation, today's average would have been roughly $24,515. Not a huge difference. That would have been like me buying the Intrepid ES instead of my base model. Or a base Chrysler Concorde.

I didn't have any problems making the payments on that thing 20 years ago, with a 5 year term. And I was only 29 when I bought the car. They were offering 0.9% financing at the time though, and my payment was only $347.66/mo.

I just ran $37,782 through the payment calculator in Excel. Assuming you finance the whole amount, and at 5.49%, an 84 month term would be $542.75. A 60-month at 3.29% would be $683.77. I'm getting these interest rates from the NASA FCU website.


My old payment, adjusted for inflation, would be $535.80, adjusting for inflation. I had put $2,000 down on that car, and financed $20,389.


Anyway, while $683/mo sounds a bit high, it should be doable if you're willing to sacrifice. IMO if you need to finance it over 7 years or more, then maybe you need to be looking at something a bit less than $38K. The problem is, too many people think they "deserve" it, "earned" it, etc. And, dealers sucker them in with that low monthly payment talk.

[Teacher Terry]

7 years is ridiculous for a car loan.

[ncbill]

Quote:

Originally Posted by Andre1969 I didn't realize 7 year loans got that popular, either. That article states that the average transaction price for a new car is $37,782. Historically, when you adjust for inflation, that's really not *too* ridiculous. I bought a new 2000 Intrepid in late 1999. It was $22,389 out the door, with tax, tags, an extended warranty, etc. Adjusting backwards for inflation, today's average would have been roughly $24,515. Not a huge difference. That would have been like me buying the Intrepid ES instead of my base model. Or a base Chrysler Concorde. I didn't have any problems making the payments on that thing 20 years ago, with a 5 year term. And I was only 29 when I bought the car. They were offering 0.9% financing at the time though, and my payment was only $347.66/mo. I just ran $37,782 through the payment calculator in Excel. Assuming you finance the whole amount, and at 5.49%, an 84 month term would be $542.75. A 60-month at 3.29% would be $683.77. I'm getting these interest rates from the NASA FCU website. My old payment, adjusted for inflation, would be $535.80, adjusting for inflation. I had put $2,000 down on that car, and financed $20,389. Anyway, while $683/mo sounds a bit high, it should be doable if you're willing to sacrifice. IMO if you need to finance it over 7 years or more, then maybe you need to be looking at something a bit less than $38K. The problem is, too many people think they "deserve" it, "earned" it, etc. And, dealers sucker them in with that low monthly payment talk.

Bought our fully-loaded minivan for $25k out the door over a decade ago...based on CPI calculator today should pay $35k, but actual out-the-door price for top trim is now around $42k.

[Rianne]

I was all over Carmax, Carfax, Carguru searching used cars...all in the last couple of months. Went from 2012, 2015, 2018 looking for that sweetheart deal. The under 50K mileage. They show you the interior, under the hood, the trunk space. Then, both DH/me realized a used 2017 was only a couple $K less than a new. I mean out the door price.

So we bought a new 2019, fully loaded, took the loan out for the full price b/c dealer took an extra $1K off the price, so total $4K rebate. Within 6 days of purchase, I paid $21K to the dealer finance co. I'll end up paying @ $50 for the financing b/c I'll pay it off in 3 months. Total for the car was $22, 444.

[jazz4cash]

From the NPR article, I find this more shocking than the 7 yr term:
“For new-car purchases with a trade-in, about a third of people are now rolling over an average of $5,000 of debt from their old car loan into their new car loan, “

A 7 yr loan is more like a lease.

[Music Lover]

Quote:

Originally Posted by Teacher Terry 7 years is ridiculous for a car loan.

It depends. My brother was buying a new but the previous year's model several years ago and was planning on paying for it outright. Then they offered him 6 years at 0%. So he put the minimum down and made interest free payments for 6 years.

But I'm sure that someone planning on buying it outright is in the minority.