Americans owe $1 Trillion on their cars

[Tactically Fat]

I had a conversation yesterday afternoon about the buddy's brother's new-to-them vehicle.

Something like this:

$35k 2-year old SUV

Traded a 3-year old hybrid sedan and were "given" $18k in trade allowance, but still owed $26k on that car.

Right off the bat they added $8k to the price of the used SUV in negative equity.

*sigh*

 

[HoughMade]

I had a conversation yesterday afternoon about the buddy's brother's new-to-them vehicle.

Something like this:

$35k 2-year old SUV

Traded a 3-year old hybrid sedan and were "given" $18k in trade allowance, but still owed $26k on that car.

Right off the bat they added $8k to the price of the used SUV in negative equity.

*sigh*

But he felt good about getting "$18k" for the sedan, right?

 

[jd4320t]

I had a conversation yesterday afternoon about the buddy's brother's new-to-them vehicle.

Something like this:

$35k 2-year old SUV

Traded a 3-year old hybrid sedan and were "given" $18k in trade allowance, but still owed $26k on that car.

Right off the bat they added $8k to the price of the used SUV in negative equity.

*sigh*

Yep. I've seen many co-workers do the same thing.

 

[BehindBlueI's]

Is leasing a legit viable option for some or is it a scam?
My wicked step mother has just signed her second lease, when the first expired.

.

It can be, but you have to run the numbers yourself. USUALLY it's a losing deal for an individual (as opposed to a business), but there are exceptions. I leased my wife's car then paid it off 14 months later. There were significant incentives to lease that resulted in that method being cheaper than paying cash up front. By leasing and getting the extra incentives, then paying it off early, I paid a substantial amount less than simply writing a check for it or financing it.

With the understanding that's a rarity and usually you will lose money to lease, you may lose less money in certain situations. If you insist on having a new car every 3 years or so AND are a low mileage driver AND take good car of your vehicle AND don't want to make any modifications AND have good credit history, you'll probably lose less to lease than buying repeatedly. A high residual vehicle (something like a Jeep Wrangler that retains a lot of resale value) may have pretty low payments on a lease compared to a purchase, and newly released vehicles (say after a major body change between model years) may have manufacturer incentives to get some out on the street for people to see rolling around. You'll also have gap insurance so if the car is totaled while new, you aren't on the hook for the difference in insurance payment vs actual value. The bank has that risk (or did with my lease) and you just walk away.

 

[lovemachine]

I had a conversation yesterday afternoon about the buddy's brother's new-to-them vehicle.

Something like this:

$35k 2-year old SUV

Traded a 3-year old hybrid sedan and were "given" $18k in trade allowance, but still owed $26k on that car.

Right off the bat they added $8k to the price of the used SUV in negative equity.

*sigh*

Oy.

 

[lovemachine]

But he felt good about getting "$18k" for the sedan, right?

Wish I could get $18k for my Wrangler!

 

[Leo]

Leasing works best for company cars where the expense comes off the top line from tax perspective. It avoids a lot of property tax issues and various levels of depreciation rates that never seem to meet the true costs. In most cases it does not seem to work from a practical point of view for individuals.

If you like the intangible advantage of having zero worry, no maintenance concerns, desire to drive a new car every year with nothing but a simple visit back to the leasing company, that is where the value comes in. You don't even have to sit and listen to the salesman lie to you. You just point your finger to the next one you want and the guy tells you what your lease payment is. Most of the time our leased trucks were done without leaving my desk. They had people drop them off, at the end of the week they picked up the old ones.

 

[HoughMade]

Leasing works best for company cars where the expense comes off the top line from tax perspective. It avoids a lot of property tax issues and various levels of depreciation rates that never seem to meet the true costs. In most cases it does not seem to work from a practical point of view for individuals.

If you like the intangible advantage of having zero worry, no maintenance concerns, desire to drive a new car every year with nothing but a simple visit back to the leasing company, that is where the value comes in. You don't even have to sit and listen to the salesman lie to you. You just point your finger to the next one you want and the guy tells you what your lease payment is. Most of the time our leased trucks were done without leaving my desk. They had people drop them off, at the end of the week they picked up the old ones.

I agree with all of that.

However, many leases have a 12,000 mile per year max with a penalty of $0.15 to $0.20 cents a mile over that. So, on a 3 year lease, if you drive 50,000 miles (not unrealistic), the penalty could be $2,100 to $2,800...and that's at under 17,000 mile a year.

Just something to factor in.

 

[lovemachine]

I'm hoping to have my wife's grand cherokee paid off within the next 1.5 years. Then I won't be one of the Trillion dollars!

Assuming I don't cave in and buy a F150 or Silverado!!

 

[seedubs1]

Stupid to have a loan on a car/truck. Absolutely stupid. You're just handing your money over to the bank.

Another thing that's starting to happen.....people don't give a **** what you drive. It's no longer a status symbol. People just look at your car/truck and see how much debt you probably have.

People just straight up don't do the math on loans. I did the math on one of my buddies houses. He about shat himself when he saw that he had already paid more than the purchase price on his house and he was only 1/3 of the way through his loan.

 

[jd4320t]

Stupid to have a loan on a car/truck. Absolutely stupid. You're just handing your money over to the bank.

Another thing that's starting to happen.....people don't give a **** what you drive. It's no longer a status symbol. People just look at your car/truck and see how much debt you probably have.

People just straight up don't do the math on loans. I did the math on one of my buddies houses. He about shat himself when he saw that he had already paid more than the purchase price on his house and he was only 1/3 of the way through his loan.

I agree that people don't really care what we drive anymore. The whole car thing has almost disappeared. Can anyone even say what's "in" right now when it comes to cars? I can only that it's trucks.

I bought a Honda Accord EX because I liked it. It has room and gets the gas mileage I was looking for. I didn't get the Sport model to look more cool and I didn't pay thousands more for the V6 touring.

 

[Magneto]

I read an article that in the last quarter of 2016 the average car payment was $508 and the average term was 68 months. That is staggering to me.

 

[gregr]

I agree that people don't really care what we drive anymore. The whole car thing has almost disappeared. Can anyone even say what's "in" right now when it comes to cars? I can only that it's trucks.

I bought a Honda Accord EX because I liked it. It has room and gets the gas mileage I was looking for. I didn't get the Sport model to look more cool and I didn't pay thousands more for the V6 touring.

No vehicle payments here. A 2009 Tacoma and a 2015 Civic, paid for. But...the only thing keeping me from getting a new Tacoma is I hope to be able to retire in a couple years, and that would keep me from being able to...but man, I`d love a new Tacoma TRD off road.

 

[lovemachine]

I read an article that in the last quarter of 2016 the average car payment was $508 and the average term was 68 months. That is staggering to me.

68 months? That's all? Are you sure it wasn't 72 or 84?

 

[JettaKnight]

68 months? That's all? Are you sure it wasn't 72 or 84?

I can see 68 being an average... mean or median?

Aren't most auto loans 5 years?

 

[CHCRandy]

You guys think cars are bad....you should look at the cost of boats, % and terms. Credit Union guy was telling me the other day they regularly make $100,000 loans on ski boats. I asked how long they finance them for and he said somewhere around 5-7% and 120-144 months! I can't even imagine a payment like that on a boat.

 

[Tanfodude]

A lot of strong opinions here about car loans, and to the point of saying it's so stupid. People have choices and if they can make the payment while enjoying the ride, why not? It's stupid where you indulge into such but unable to pay, living beyond one's means. Also, every person's reason in buying a car is different. Some for show, some for personal comfort, some for self reward or a goal achieved.

Also, I'm pretty sure there are tons of people out there who say the same thing about us owning multiple guns and loads of ammo as stupid. Throwing money on something you can't take to your grave. But hell, we still do it cause we enjoy it.

It's pretty immature to say such choices as stupid. We only live once in this world. Why not live the most of it but smart enough not to drown in debt.

 

[hoosierdoc]

Because I'm tired of everyone living in the moment their whole life and then hopping on Medicaid for hundreds of thousands of dollars of nursing home care.

that will bankrupt our country faster than anything

 

[Tanfodude]

Then that's a different point. If people learn to stay healthy, then that should also solve a part of that problem. How many patients have you encountered that pretty much, most of their lives, didn't take care of themselves or just plain non compliant. But like I said, that's a whole different issue. Healthcare is, and will always be a drain, coz we're all frail, biological parasites of this blue planet.

Heck, if we're talking about wasting on things, we're right up there in food waste.

And also these:

https://www.washingtonpost.com/inve...b0774c1eaa5_story.html?utm_term=.6c9ff7fb52ed

Golden Hammer: GAO reports federal government wasted $125 billion in 2014 alone - Washington Times

50 Examples of Government Waste | The Heritage Foundation

But then again, nothing we can do about it.

One can live at the moment but still plan for the future, that's a choice. But to call it stupid for living at the moment is short sighted IMO without knowing that person's way of life.

I agree though, there are people, and I mean tons of them, don't know what the hell they're doing and drown themselves in debt, car loans is just one of them. Like this: http://www.cnbc.com/2016/12/13/us-households-now-have-over-16k-in-credit-card-debt.html

 

[seedubs1]

Because roughly 2/3 of Americans according to most polls literally can't afford an unexpected $1000 emergency bill. Yet I see a whole lot of people driving around in brand new cars. Americans in general live paycheck to paycheck. But they feel entitled to a nice new car. And let's not even get started on people not saving for retirement and expecting the .gov to take care of them while living like they're made of money driving new cars and living in mcmansions. Most Americans do not have their priorities straight.

And that's the reason that cars are no longer a status symbol in America. The guy in a trailer park that makes less than the poverty line can get approved for a brand new Corvette.

Personally, I call that stupid.

Now, if you are actually financially stable and responsible.....More power to you. Go buy that fancy car. But that's not the VAST majority of Americans.

A lot of strong opinions here about car loans, and to the point of saying it's so stupid. People have choices and if they can make the payment while enjoying the ride, why not? It's stupid where you indulge into such but unable to pay, living beyond one's means. Also, every person's reason in buying a car is different. Some for show, some for personal comfort, some for self reward or a goal achieved.

Also, I'm pretty sure there are tons of people out there who say the same thing about us owning multiple guns and loads of ammo as stupid. Throwing money on something you can't take to your grave. But hell, we still do it cause we enjoy it.

It's pretty immature to say such choices as stupid. We only live once in this world. Why not live the most of it but smart enough not to drown in debt.