Car Payments

[LoboGunLeather]

For the past 10 or 15 years lots of people have been refinancing their homes to pay off credit cards, then running up the credit cards again so they can continue to live with the new house payments. As long as real estate values have been escalating 6%, 8%, 10% per year the cycle has been pretty easy to continue.

Now mortgage interest has climbed back up again, home sales are slowing down, property values aren't riding the rocket up into the stratosphere, some folks are approaching one of life's tough lessons. The days of negative net worth living may be coming to an end.

I have noticed in recent months that automobile advertisements are pushing consumer leases again. Monthly lease payments far lower than any car loan payment for the same vehicle. Some folks will probably be choosing that route for a few years. Of course, at the end of the lease period they own nothing and have no equity for potential trade, probably very few options to keep playing the game.

Life has never been easy, but I think a bunch of people are going to find out just how tough it can get.

 

[URIT]

My concern over the huge debt the average American is carrying is the bubble being created by the bankers eager to provide these loans and the Fed generating the cash flow so bankers need to make questionable loans.

Bubbles are bad for everyone. As Yogi Berra once said, "It's like deja vu, all over again."

 

[Skeet 028]

First mortgage was 88.88 amonth...It was for fixing up the fixer upper I bought. I've never had a mortgage that was more than our car loan. Till we bought the 2nd farm...but we paid it off in 4 years with timber cutting etc. We always had one new vehicle It was imperative I get to work...so we had a bunch of junkers with the new. 90 miles to work one way... Most of the new cars were not the most expensive one on the lot though. Times have changed I think...

 

[Ivan the Butcher]

I have noticed in recent months that automobile advertisements are pushing consumer leases again. Monthly lease payments far lower than any car loan payment for the same vehicle. Some folks will probably be choosing that route for a few years. Of course, at the end of the lease period they own nothing and have no equity for potential trade, probably very few options to keep playing the game.

My niece leased a car about 30 years ago. They required an entry value of a few thousand dollars, which her nice little car easily covered. After two different leases, she had squat. Her over income lifestyle cost her her marriage and many of the things she wouldn't control herself on. Her Dad bails her out far too often, and one of these days, kaboom! I guess living in her barn beats being homeless! Many of our children's problems come from the parents spoiling the kids! Her brother is spoiled also but married a smart girl that keeps wraps on discretionary spending. (He buys a gun or two a year, instead of the trinket of the week!)

Ivan

 

[charlie sherrill]

Nothing beats paying interest on a rapidly depreciating asset. That’s why I drive a 21-YO pickup.

My F150 is only 18 years old. It has 104,000 miles and it's been paid for a long time. It had 81,000 on it when I paid cash ($7,000) for it ten years ago. I was recently offered $10,000 for it. No deal. I mostly hunt,fish, and farm with it. My 2017 Toyota "road van" has 150,000 on the clock and I've never had to do anything but normal maintenance. I'd like to have a new road ride but they're too damn high. I'm going to try and get at least 300,000 out of this one. It feels good not having a car note. I did Tulsa three weeks ago and hope to do Louisville in a couple months. See ya then.

 

[charlie sherrill]

Yeah it’s funny. When I bought my new F250 16 months ago I wondered how people pay for these $80k trucks I see on the lot. In 1991 my first house was $78k. I’d be willing to bet many people have auto payments higher than their mortgage……… or like some dim witted co-workers I used to have they don’t own a house because of their truck payment.

Not long ago I was looking at a truck. I told the salesman it cost more than my house. He said "you need to get a bigger house."

 

[JRB416]

My wife and I have not had vehicle payments for a very long time.

Many years ago when we were first married and had car payments, a decision was made to keep our vehicles long enough to pay them off then keep making the same payment into a savings account. We never felt a budget strain saving like this.

This has worked out very well for us. It took a few car buying cycles, but after a while we always had the money to pay cash when it was time to get something new.

 

[Ματθιας]

Are there any barebones stripper cars or trucks anymore? I'm talking basic rubber mat vinyl no power anything other than brakes and steering? Basic transportation.

Everything is loaded with all kinds of dealer added nonsense like "paint sealant", and all the other "protection packages".

A buddy of mine recently bought a $70K+ Audi. It had dealer applied or contracted window tint. It was one of the worst tint jobs I'd ever seen, and the addendum of the tint had a $750 price on it, plus a bunch of other add ons that added nearly $6K to the MSRP! I know this guy, he won't haggle - he paid full price!

 

[Denverd0n]

I agree the current generation seems to be much more comfortable with a huge debt load than we ever were.

They're more comfortable now. When they get ready to retire, and realize that they own NOTHING, and that their net worth is NEGATIVE, I don't think they're going to be feeling so comfortable.

Back in 1984 I did a factory special-order on a Ford F150. It cost me $13,100. I got a two year loan on it. That's the last vehicle I ever got a loan on. Nowadays I see advertisements for trucks where they're offering $15k off MSRP. The price has got to be crazy-high for them to be able to offer that much off!

We own two vehicles now. One is a 2001 Jeep Cherokee XJ that we bought new. The other is a 2021 Toyota Camry, also bought new. Got that shortly after I retired. We traded in a 2007 Toyota Corolla for it that, yes, we had bought new. As you can tell, we find good cars and then drive them for a LOT of years!

 

[HOUSTON RICK]

Best new car for the money for a full sized person including upkeep is a Toyota Camry.

 

[Ματθιας]

They're more comfortable now. When they get ready to retire, and realize that they own NOTHING, and that their net worth is NEGATIVE, I don't think they're going to be feeling so comfortable.

Back in 1984 I did a factory special-order on a Ford F150. It cost me $13,100. I got a two year loan on it. That's the last vehicle I ever got a loan on. Nowadays I see advertisements for trucks where they're offering $15k off MSRP. The price has got to be crazy-high for them to be able to offer that much off!

That gives an idea of what the markup is. They're still making money.

 

[DWalt]

No one has mentioned the increased cost of insurance on a new car. Right now, the cost of my car and home insurance is our greatest household expense. More than food, more than utilities, and more than property taxes. And I have two old vehicles with liability coverage only. I hate to think what my car insurance bill would be if I had two new cars and had to cover both with full insurance. It would at least double.

 

[Sistema1927]

A little over two years ago I wanted a truck with a little more oomph to pull our small travel trailer than my Tacoma. I also, if possible, wanted to pick up some more seating. So, I went on a quest to find Suburban, Yukon, or Expedition.

I spent six months looking, and saw a lot of worn out dogs. Some were priced as high as $20k. I finally found a private seller who wanted $5k for a 2001 Yukon XL with 150k on the clock. My mechanic said that it looked good to him, and it easily passed our emissions inspection. $5k cash went from me to the seller, and I put a new set of tires on it.

in January I will renew the registration on it after two years, and I have had zero problems. To me, it is as good as any new truck on the dealer lot, and a whole lot cheaper. It might not be as pretty as one that someone is paying $900 a month for, but the real beauty is that it isn't enslaving me to a lender. That, and only carrying liability insurance on it.

 

[ladder13]

I haven’t bought a used vehicle in about 40 years, since my financially struggling days. I love the smell of new cars and don’t care about depreciation.
We used to go about 5-6 years on a car. We now replace our DD’s about every 4 years even though we put less miles on them than before, now living closer to life’s amenities . Trade plus cash. That timeline will get shorter as we age.
As I have said many times, I am not interested in being the richest man in the cemetery.

 

[TIMETRIPPER]

I think a lot of people lease vehicles. Again and again. Don't know what else would explain the tons of fairly new used cars and trucks sitting on the independent car lots in my area.

John

 

[NYlakesider]

Are there any barebones stripper cars or trucks anymore? I'm talking basic rubber mat vinyl no power anything other than brakes and steering? Basic transportation.

Everything is loaded with all kinds of dealer added nonsense like "paint sealant", and all the other "protection packages".

A buddy of mine recently bought a $70K+ Audi. It had dealer applied or contracted window tint. It was one of the worst tint jobs I'd ever seen, and the addendum of the tint had a $750 price on it, plus a bunch of other add ons that added nearly $6K to the MSRP! I know this guy, he won't haggle - he paid full price!

Sounds like truck wise check the dealers for "Work Vechicle/Contractor vechicle.". Many times hidden at the back of the lot they might have a plain jane or 2 there.

As far as cars trying to find a Salesman's car probably will be much harder.

 

[glowe]

I think a lot of people lease vehicles. Again again. Don't know what else would explain the tons of fairly new used cars and trucks sitting on the independent car lots in my area.

John

Repossession!! Banks get lots of cars back and sell them through regional auction houses. Many end up being sold to used car dealers or their agents.

 

[madmikeb]

My first decent car, not a $100 junker was a 1979 Celica. Drove it until 2020 when I splurged on a mustang convertible and paid cash. Truck is a 2003 Tacoma, Toyota replaced the frame 4 years ago. Just picked up another Mustang convertible, a 2008 for my wife with 200k on the clock. Paid cash for all, I hate car payments!
Now that I'm living in AZ they won't rust out and I do all my own work so I'm not planning to ever have to buy another vehicle.

 

[tops]

In the second quarter of 2024, the average new car loan was 734/month and the average used car was 525. Duration was 68 months. That is the average, I bet the average truck or big SUV loan is over a thousand.

Where does the money come from? Jeepers

Edit: The average truck payment is 913. Loans as long as 96 months.

When I was starting out I thought a 36 mo. car payment was too long. Now loans are for 68-96 months. GOOD GRIEF!!!! What is the matter with people?
I can remember when cash would get a cheaper price but now it seems the majority don't care about how much or how long the payments so now I understand why cash is not king anymore.
About a year ago I decided I wanted a new and bigger tractor. The new tractor was 60 HP at about 60 thousand with a 60 mo. payment plan and no interest. They would knock of $1600 for cash.
I left my money in the bank drawing interest and my 45 HP tractor with 1800 hrs. is doing a super good job. Larry

 

[dockmurgw]

And then there's the...Drum Roll...50-year mortgage.