The LA Times exposes some of the craziness that is going on with auto financing these days in New cars that are fully loaded — with debt
When Jennifer and Bobby Post traded in their 2001 Chevy Suburban last year for a shiny new Ford F-350 turbo diesel with an extended cab, it seemed like a great deal. Even though they still owed $9,500 on their SUV after the trade-in value, they didn’t have to put a penny down.
The dealership, near the Posts’ home in Victorville, made it easy; it just added the old debt to the price of the new truck and gave the couple a seven-year, $44,276 loan.
First of all, why the hell do they still owe 10k on a 7 year old vehicle? Then there is the rolling of the loan into a new, longer one so they can get a lower monthly. Uhg. Compound interest people, do some googling.
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.
My mind = blown. If you can’t afford to pay your car off in 3 or 4 years, you should be looking at a different car, or pricing out a bus pass.
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. …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.”
I am shocked, SHOCKED to hear a business trying to make money off you did not have your best interests at heart. Is personal responsibility dead?