I own 2 six year old Honda Civics and one eight year old Honda Insight for the four drivers in my household. My monthly payments are ZERO. They have been ZERO for the last four years. I expect them to be ZERO for at least 4 more years. I’d rather generate wealth than appear to be wealthy by driving a leased or financed BMW or Mercedes. But that’s just me.
Authored by Mick Shedlock via MishTalk,
The average size of a loan for a new car in the U.S. set a record in the first quarter as did the average payment.
Database firm Experian notes U.S. Monthly Auto Payments Reach Record High in First Quarter.
- New vehicle loans averaged $31,455
- The average monthly payment for a new vehicle hit at record $523/month
- Consumers are lengthening loan terms, with six years being the most common, to adjust to the higher costs and rising interest rates.
- Outstanding loan balances reached a record high of $1.108 trillion
- Loans for used vehicles reached $19,536, also a record
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Auto Math
$523 * 12 * 6 = $37,656
That total does not factor in the down payment.
Interest = $37,656 – $31,455 = $6,201.
That’s $1033.50 in interest annually.
Lovely.
At the end of six years, perhaps the car will fetch $5,000 in a trade-in, but everything depends on miles, damage, and of course advancements in self-driving.
Anyone trading the car in after three or four years will be hugely underwater.
“The dream of owning a new vehicle is becoming more elusive,” said Melinda Zabritski, senior director of automotive financial solutions at Experian.
Elusive Dream?
Ah, the dream of spending $30,000 to $50,000 on a depreciating asset.
Elusive has not yet arrived, but it will.
Admin is SMART. Really. Truly.
I also have a 23 year old car (67k miles) and a 13 year old car (34k miles) — paid for — and with as little as we drive I seriously think we’ll never need another car for the next 20 years.
New car buyers are idiots. (Except for Dutchman … who makes a lot of money and can afford it.)
I like new cars! I always buy one that’s ‘loaded’. I guess you could say cars are my vice.
I rationalize it: I don’t have boats / snow mobiles / ATV’s / fishing gear / hunting rifles.
I had to finally by a new Tacoma. My 76 Trailduster and 71 Fury required a certain amount of maintenance which my declining body was no longer able to do. Good news is I will go out with the Tacoma, so don’t have to worry about depreciation. And the money I saved over 30 years by myself keeping the rigs going meant the $30K for the Tacoma was just a part of what I saved. Different angle on the view, eh wot?
I buy cars that are 2-3 years old. I have never bought a new car in my life. My current one is a 2012 with 70,000 miles on it. I expect to own it for another 5-6 years. I am like Admin. When they’re paid for, they’re family. Get regular oil changes and otherwise do routine maintenance and a vehicle will go 250k miles without any major repairs, even an American one.
“When they’re paid for, they’re family.”
I’m with you there. I drive a 15 year old Z71 Tahoe that I bought used almost 10 years ago. ITs got 204k on it now. Put a lot down, paid off the rest in 2 years. I absolutely love that thing. Still looks and drives great, have no intention whatsoever of getting rid of it, its a member of the family. Had to get the wife something bigger to fit the kids car seats in, though. Almost 8 years without a car payment, now I have one again. Put a good bit down on a nice used SUV with about 80K on it, will have it paid off in 3 years (less hopefully). After the “new” car is paid off, Im going to keep putting that payment amount away each month so that when the Tahoe finally falls apart, I can just buy a replacement with cash and not have to finance one again.
I, too, try not to bash new car buyers. If not for them, I wouldn’t be able to get a loaded, gently used vehicle thats exactly what I wanted for a third of what a new one costs. Lease turn ins as well. Even though it would be completely retarded to buy one, I REALLY want an Infiniti QX80, but Im not paying anywhere close to what they cost, even used, right now. But, the way things are going with sub-prime borrowers increasingly not being able to borrow money, I think Ill be able to pick one up surprisingly cheap in another couple years.
98′ Ford truck (155k, purchased new), 01′ Ford SUV (140k, purchased used), 04′ VW (240K, purchased new). All paid for. Truck is currently OOS, squirrel damage, backburner priority, VW in the shop for medium repairs and maint, SUV: Up for use.
Until the repair/maint. costs become more than a monthly payment for something newer…I’ll keep fixing them.
I drive a 5 year old paid for whip. Bought it “new” as it was a leftover 2013 model that the dealer was trying to unload. So I got a bunch of $$$ off because of that and the premium I paid over a used vehicle from that same year was marginal – couple hundred. Also paid cash so there’s that too.
Used vehicles are a deal if you are ok driving the unloved, which is basically 4 door sedans. SUV’s, pickups or anything with large wheels on the other hand are grossly inflated even in the used market unless you go for a true beater on it’s last legs. You’d have to do some research to find the better deal of a 1-2 year old SUV vs. its showroom new counterpart, but that’s just a mild recession away from correction.
I don’t frown on new car buyers as they’re needed to keep a healthy used market. In reality the best thing economically is to drive your vehicles until they fall apart. It’s the never ending payments of turning over the debt every 3-5 years that kills people – but hey, you look good in that new ride.
I love new cars. I haven’t bought a used one since the 80s. That said, I I’ve been looking at used cars heavily for the past couple years. The deals are just incredible. The depreciation on used stuff has never been greater. And the selection is almost unlimited
True story: My daughter graduates from college 2 weeks ago. She had gotten a real job with a real company. So far so good. 5 days after coming home she goes off and leases a brand new Jetta. This is a kid with maybe $1,000 in the bank. I could not believe it as she said they waived the down payment for new graduates and the sales man told her it was a great deal. It got me to thinking, how this country is so screwed if a kid with no assets can drive off the lot 5 days after graduation with a brand new car and no cosignors. Apparently you can multiply this scenario by the thousands or millions. Out.
What?
No daily dose of ERIC PETERS?
Blow me asshole. You haven’t left yet?
One Peters guest post per month max. This man crush of Peters’ peter is starting to get scary.
See ya later ahole.
I will continue to use the strategy of buying used cars that are just returned off a lease. These cars are babied and have lower mileage due to the penalties under the lease.
Still driving a ’06 Camry (178k miles) and my last payment on a ’10 Corrolla (85k miles) is next month.
Need to replace the Camry in the fall with a Forrester for the wife b/c the family is moving into the Upstate NY snow belt this Summer. I will start perusing the returned leased ones in a couple of months.
New cars are for suckers.
my daily commute is in a 62 year-old vehicle. I’d guess 90% of the commuters around me, don’t own their cars, the banks do
Wife’s truck: 2011 6.2L Ford F150 Lariat with 103k miles Bought used with cash in 2013 with 15k miles for $26k, almost half off sticker of $48k.
My car: 2013 Mini Cooper Coupe S with 35k miles. Bought used with cash with 13k miles in 2016 for $16k, more than half off sticker of $35k.
Both sons drive paid for like new used cars as well.
Will be upgrading the truck next year and the Mini will go in another 2 for my retirement Porsche. Used and cash, it’s how you afford nice things.
In some states, you can purchase a good used car about 2 to 3 years old from a private party without any sales tax, and remaining factory warranty. Talk about the best of both worlds. You can avoid paying for the gold plated pensioner parasites, AND get a relatively new vehicle without a bunch of depreciation loss. Sold. Suckers by new.