>Average Price of a New Car is $31K - New loans 97 months <
#1
04-11-2013, 04:32 AM
>Average Price of a New Car is $31K - New loans 97 months <
Introducing the 97-month car loan
<cite class="byline vcard">By Mike Ramsey | The Wall Street Journal – <abbr title="2013-04-09T20:22:03Z">Tue, Apr 9, 2013 4:22 PM EDT & MCF `Space - April 11, 2013 4:20 AM EDT 
</abbr></cite>
Hi `Member's,
I don't know why I was surprised to see that the average price of a New Car is over $31K
...I know that everything I purchase & every supply I ship has been climbing every month...Everything is increasing in price except my paycheck 
When do you think you will be buying a new car/vehicle ?
Last month Nakisha Bishop took out a loan to buy a $23,000 Toyota Camry and pay off several thousand dollars still owed on her old car. The key to making it work: she got more than six years—75 months in all—to pay it off.
"I had a new baby on the way, and I was trying to keep my monthly payment a little bit lower to help afford child care," Ms. Bishop, a 34-year-old sheriff's deputy in Palm Beach County, Fla., said recently. She pays $480 a month for the 2013 Camry, just $5 a month more than the note on her old car. The car won't be paid off until her 1-month-old daughter is heading to first grade.
Ms. Bishop's 75-month loan illustrates two important trends rippling through the U.S. auto industry. Rising new-car prices and competition among lenders to attract borrowers is pushing loans to lengthier terms. In part, banks see the longer terms as a way to attract buyers, by keeping monthly payments under $500 a month.
The average price of a new car is now $31,000, up $3,000 in the past four years.
But at the same time, the average monthly car payment edged down, to $460 from $465—the result of longer loan terms and lower interest rates.
In the final quarter of 2012, the average term of a new car note stretched out to 65 months, the longest ever, according to Experian Information Solutions Inc. Experian said that 17% of all new car loans in the past quarter were between 73 and 84 months and there were even a few as long as 97 months. Four years ago, only 11% of loans fell into this category.
Such long term loans can present consumers and lenders with heightened risk. With a six- or seven-year loan, it takes car-buyers longer to reach the point where they owe less on the car than it is worth. Having "negative equity" or being "upside down" in a car makes it harder to trade or sell the vehicle if the owner can't make payments.
Car makers have mixed feelings about long-term loans. They allow consumers to buy more expensive—and profitable—cars. But long loans may keep some people from replacing their cars, cutting into future sales.
Few lenders were willing to discuss the move to longer loans. Ally Bank, the largest car financier, declined an interview request but said in a written statement: "Generally, the current economic and consumer environment is more favorable for longer terms as compared with prior periods... The used vehicle market remains strong, current vehicle quality also helps to maintain appropriate values, and consumer credit profiles are improving."
JP Morgan Chase and other auto lenders declined to comment.
Credit availability has played a key role in the auto industry's ups and downs. During the financial crisis in 2008 and 2009, banks reined in lending dramatically, which made it hard even for consumers with good credit histories to buy cars. For the last three years, auto sales have been rising, helped as banks have eased credit standards and became more willing to offer longer term loans.
Experts say there is an appetite for more risk because banks see limited downside in auto lending. The delinquency rates on car loans are near record lows, and used car values are at record highs. And if a buyer defaults, the bank can repossess and sell cars with limited losses.
Melinda Zabritski, director of automotive credit for Experian, said the greater availability of credit is helping the surge in new car sales. The percentage of subprime loans isn't far below the record level of 2007, and the length of loans is growing, she said.
And while the length of the loan may seem long, the average age of a vehicle on the road today is 11 years. Vehicle durability continues to improve and used vehicles don't depreciate in value as fast as they used to.
With increased competition between the banks for business, offering loans longer than 72 months, or subprime loans is one way to compete for new borrowers. "Consumers tend to be monthly payment buyers. One way that lenders compete is to offer longer term loans," Ms. Zabritski said.
She said that people who get the longer loans tend to have good credit scores, and are buying relatively expensive vehicles.
Credit unions and independent banks have been more likely to use the long-term loans than finance companies operated by auto companies, Ms. Zabritski said.
Ford Motor Credit, the in-house lending arm for Ford Motor Co, has averaged between 59 and 60 months on new car loans for the past five years. Beyond the added risk, longer loans keep buyers from coming back as often, said Margaret Mellott, a spokeswoman for Ford.
"We don't want to keep buyers out of the showroom longer than that," she said.
The length of loans has come a long way since Lee Iacocca, then a Ford regional manager, helped pioneer auto loans in the 1950s. He became a management star by developing a '56 for $56 sales pitch. The idea: consumers could buy a 1956 Ford for 20% down and $56 a month. The loans were paid off in just 36 months.
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<cite class="byline vcard">By Mike Ramsey | The Wall Street Journal – <abbr title="2013-04-09T20:22:03Z">Tue, Apr 9, 2013 4:22 PM EDT & MCF `Space - April 11, 2013 4:20 AM EDT </abbr></cite>Hi `Member's,
I don't know why I was surprised to see that the average price of a New Car is over $31K
...I know that everything I purchase & every supply I ship has been climbing every month...Everything is increasing in price except my paycheck When do you think you will be buying a new car/vehicle ?
Toyota Camry sits on a dealer lot on October 2, 2012 in Northbrook, Illinois. (Photo by Scott Olson/Getty Imag …
Last month Nakisha Bishop took out a loan to buy a $23,000 Toyota Camry and pay off several thousand dollars still owed on her old car. The key to making it work: she got more than six years—75 months in all—to pay it off.
"I had a new baby on the way, and I was trying to keep my monthly payment a little bit lower to help afford child care," Ms. Bishop, a 34-year-old sheriff's deputy in Palm Beach County, Fla., said recently. She pays $480 a month for the 2013 Camry, just $5 a month more than the note on her old car. The car won't be paid off until her 1-month-old daughter is heading to first grade.
Ms. Bishop's 75-month loan illustrates two important trends rippling through the U.S. auto industry. Rising new-car prices and competition among lenders to attract borrowers is pushing loans to lengthier terms. In part, banks see the longer terms as a way to attract buyers, by keeping monthly payments under $500 a month.
The average price of a new car is now $31,000, up $3,000 in the past four years.
But at the same time, the average monthly car payment edged down, to $460 from $465—the result of longer loan terms and lower interest rates.In the final quarter of 2012, the average term of a new car note stretched out to 65 months, the longest ever, according to Experian Information Solutions Inc. Experian said that 17% of all new car loans in the past quarter were between 73 and 84 months and there were even a few as long as 97 months. Four years ago, only 11% of loans fell into this category.
Such long term loans can present consumers and lenders with heightened risk. With a six- or seven-year loan, it takes car-buyers longer to reach the point where they owe less on the car than it is worth. Having "negative equity" or being "upside down" in a car makes it harder to trade or sell the vehicle if the owner can't make payments.
Car makers have mixed feelings about long-term loans. They allow consumers to buy more expensive—and profitable—cars. But long loans may keep some people from replacing their cars, cutting into future sales.
Few lenders were willing to discuss the move to longer loans. Ally Bank, the largest car financier, declined an interview request but said in a written statement: "Generally, the current economic and consumer environment is more favorable for longer terms as compared with prior periods... The used vehicle market remains strong, current vehicle quality also helps to maintain appropriate values, and consumer credit profiles are improving."
JP Morgan Chase and other auto lenders declined to comment.
Credit availability has played a key role in the auto industry's ups and downs. During the financial crisis in 2008 and 2009, banks reined in lending dramatically, which made it hard even for consumers with good credit histories to buy cars. For the last three years, auto sales have been rising, helped as banks have eased credit standards and became more willing to offer longer term loans.
Experts say there is an appetite for more risk because banks see limited downside in auto lending. The delinquency rates on car loans are near record lows, and used car values are at record highs. And if a buyer defaults, the bank can repossess and sell cars with limited losses.
Melinda Zabritski, director of automotive credit for Experian, said the greater availability of credit is helping the surge in new car sales. The percentage of subprime loans isn't far below the record level of 2007, and the length of loans is growing, she said.
And while the length of the loan may seem long, the average age of a vehicle on the road today is 11 years. Vehicle durability continues to improve and used vehicles don't depreciate in value as fast as they used to.
With increased competition between the banks for business, offering loans longer than 72 months, or subprime loans is one way to compete for new borrowers. "Consumers tend to be monthly payment buyers. One way that lenders compete is to offer longer term loans," Ms. Zabritski said.
She said that people who get the longer loans tend to have good credit scores, and are buying relatively expensive vehicles.
Credit unions and independent banks have been more likely to use the long-term loans than finance companies operated by auto companies, Ms. Zabritski said.
Ford Motor Credit, the in-house lending arm for Ford Motor Co, has averaged between 59 and 60 months on new car loans for the past five years. Beyond the added risk, longer loans keep buyers from coming back as often, said Margaret Mellott, a spokeswoman for Ford.
"We don't want to keep buyers out of the showroom longer than that," she said.
The length of loans has come a long way since Lee Iacocca, then a Ford regional manager, helped pioneer auto loans in the 1950s. He became a management star by developing a '56 for $56 sales pitch. The idea: consumers could buy a 1956 Ford for 20% down and $56 a month. The loans were paid off in just 36 months.
More on Yahoo! Autos
1 - 6 of 30
prevnext
Last edited by Space; 04-11-2013 at 04:53 AM.
#3
04-11-2013, 05:06 AM
Join Date: Jan 2008
Location: Mountains of Utah
Posts: 4,903
Your funny Space, I too heard about this new long term loan trend the other day and shook my head "Hell no" there's no way I want to be obligated to pay $500 per month for the next 8 years for a vehicle. Give me the $5,000 car and I will get many years out of it. I have had my Monte since 02 and the same 96 GMC 1500 work truck since 2001. So NO I don't want a new vehicle at those rates, my next new vehicle will have to be the Hover round.....
Heh it has a cushioned seat and a beer cooler so I'm set... But where do I keep my National Enquirer without it being blown away at 10 mph?
Heh it has a cushioned seat and a beer cooler so I'm set... But where do I keep my National Enquirer without it being blown away at 10 mph?
Last edited by ZIPPY02; 04-11-2013 at 05:09 AM.
#4
04-11-2013, 05:14 AM
But where do I hang the T.P. at ?
LoL `Greg, ^ You don't need any T.P. , just `go fast & blow dry Thanks `Greg for your post (funny) + pic
It does seem that every new car I really like is close to or over $50K
In certain area's of Florida you can buy a House with a pool 4 that price
I don't know how many family are making it with the cost of everything going `up...WoW....."Live your `Now (Present) >EnJoy"Space/Out
#5
04-11-2013, 05:35 AM
Join Date: Sep 2008
Location: Southeast PA
Posts: 25,136
Don't people know how to take at LEAST 25% and make a down payment anymore...
My car is going to cost me $289 a month over 5 years. And I even plan to pay that off in 4.
Everyone seems to just want something right away, not take the time to save for it haha
My car is going to cost me $289 a month over 5 years. And I even plan to pay that off in 4.
Everyone seems to just want something right away, not take the time to save for it haha
#6
04-11-2013, 06:04 AM
Thanks Mod `Mike, for your words/post...
Don't you know it's the "I want it now generation, no matter what it cost" Parents/teacher's/mentor's don't seem 2 be teaching there students in life that it pays to do your homework & save for the things that you want in life...
I am surprised to read how many people are upside down in their vehicles (owe much more then the vehicle is worth)...
You must thank your teachers/parents that taught you well & how to save before you owe more then you can afford...But many spend everything they have & more & then file bankruptcy
& let the system absorb a persons mis-management of their funds, or lack of funds $'s What's wrong with our country ? Add 2 the list
Don't you know it's the "I want it now generation, no matter what it cost"
Parents/teacher's/mentor's don't seem 2 be teaching there students in life that it pays to do your homework & save for the things that you want in life...I am surprised to read how many people are upside down in their vehicles (owe much more then the vehicle is worth)...
You must thank your teachers/parents that taught you well & how to save before you owe more then you can afford...But many spend everything they have & more & then file bankruptcy
& let the system absorb a persons mis-management of their funds, or lack of funds $'s What's wrong with our country ? Add 2 the list
Last edited by Space; 04-11-2013 at 06:44 AM.
#7
04-11-2013, 08:16 AM
Join Date: Sep 2008
Location: Southeast PA
Posts: 25,136
I am very grateful to have been taught the value of a dollar, and working hard and saving up. I don't make a large amount of money, but I'm very budget conscious for what I want.
The dealership tried to sell me gap insurance when I bought my 2013. I just looked at the guy and said, did you really ask that with my down payment? And he chuckled and said, I guess I can't slip that one by you.
The dealership tried to sell me gap insurance when I bought my 2013. I just looked at the guy and said, did you really ask that with my down payment? And he chuckled and said, I guess I can't slip that one by you.
#8
04-11-2013, 08:19 AM
I would never go past 5 years on a car loan. When I bought my Monte, I put 33% down and my payment was only $233 a month. I would have paid it off earlier that 5 years, but on a zero percent loan, I wasn't paying any extra. (actually, I did round my payment to an even 240 every month. LOL So my last payment was like $130 or something like that).
In my opinion, if you can't afford to buy the car and afford the payment over 5 years, then A) you arent putting enough down, or B) you shouldnt be buying the car, because you can't really afford it. Or C) BOTH! Lol
In my opinion, if you can't afford to buy the car and afford the payment over 5 years, then A) you arent putting enough down, or B) you shouldnt be buying the car, because you can't really afford it. Or C) BOTH! Lol
#9
04-11-2013, 08:23 AM
Join Date: Sep 2008
Location: Southeast PA
Posts: 25,136
I didn't want to go past 4 years, but it's a low enough APR and I can take it easy for the first couple of months while the wedding and everything is happening. Then I can pay more on each month and drop the overall payments down from 5 years.
#10
04-11-2013, 09:36 AM
Join Date: Jan 2008
Location: Mountains of Utah
Posts: 4,903
That is the key, the down payment amount. Your right Space the want it all and want it now frame of mind is pushed on us all by the advertising campaigns and the ease of financing made available to buyers. You guys who make a healthy deposit have learned how to play the game on your terms and not the lenders and their buddies the Repo man...When I signed on the dotted line for my Monte I layed down $7 G's and had a cheesy payment of $189 per month. And did pay it off about 6 months early.