84 month USED car loan!

[disneysteve]

I heard a radio ad yesterday saying you can get a 2006 certified pre-owned BMW for just $299/month, which I actually thought sounded pretty reasonable for a 2-year-old luxury car. Then the "fine print" conditions got listed. You need to put down $3,500 at signing and pay $299/month for 84 months. That's a 7-year-loan on a used car. That's insane! If you need a 7-year-loan on any car, new or used, you simply can't afford it.

[bjl584]

I can relate. I was recently at the car dealership with my dad. He was getting some warranty work done, so we had some time to kill. As I was wandering around the car lot I noticed a really nice car that was only a few years old. On the window the payment was listed as only being around $200 a month. My first reaction was that there must be something wrong with the car, so I asked a salesman why the payment was so low on such a new car. He told me that the financing term on the car was 84 months. I just looked at him and said that the mortgage on my house is only about twice as long as that. Who would finance a car for 7 years? He said, "People that can't afford to buy a car." Wow.

[InDebtInDC]

What about the argument that you never want to own equity in depreciating assets, or assets that are otherwise subject to total loss?

[disneysteve]

Who would finance a car for 7 years? He said, "People that can't afford to buy a car." Wow.

His answer wasn't quite right. It isn't people who can't afford A car. It is people who can't afford THAT car. There is a big difference between the two.

[disneysteve]

What about the argument that you never want to own equity in depreciating assets, or assets that are otherwise subject to total loss?

I've never heard that. I've always heard that you shouldn't finance a depreciating asset. Why pay interest on something that is steadily losing value? As for being subject to loss, it is insured, so you are protected in that case.

[bjl584]

His answer wasn't quite right. It isn't people who can't afford A car. It is people who can't afford THAT car. There is a big difference between the two.

I think that was what he was driving at, but it was alarming either way.

[simpleyme]

well how about a new car then guys;-)

I heard an ad for a sweet brand new kia rio for 126 bucks a month ! they wanted a couple K down ,licence and fees but you have it paid off in a mere 96 months;-0

do kias have a track record are we sure it will still be on the road in 96 months?


on the other note I do not finance depreciating assets, as I do not finance anything at all except my house ,but everything I own is depreciating, from my computer to my shoes, It would be a spartan existence without depreciating assets

[bjl584]

Kia's come with a 100,000 mile 10 year warranty, so I guess they are pretty confident that their cars will still be on the road after 96 months. The way that I drive, if I financed a car for that long it would have around 240,000 miles on it before I had the title in my hand.

[Snowgirl]

Know someone who took out a 7 year loan on a 1-year used minivan. You know, with the one child, they had to get rid of the lease on the compact car, and buy a large minivan, kids take some much room... And with the buy out on the lease, it was the only way they could afford a minivan. Since it's not a new car, no promotional interest rate either, just a small 8-9%!!

Now, I'm not against car loans, since most people do need a car, and not everyone has cash to pay for it or wants to deal with the uncertainty of a 2000$ old model, but how can they not see that they can't afford this car? It reminds me of the salesman when with bought our last car: there was a 0% promo on 4 years financing, and with a good price on the new car and our trade-in value, we were aiming at a 600$ payment. He wasn't offering enough for the trade-in, so the payment was higher (which we could afford, not the question), but he showed us the payment on 5 year, see, it's way less! Yeah, we're not negotiating a payment, we want a fair price!

[simpleyme]

well that good news about the warranty on the KIA as my SIL bought one and I did not ask her how she "bought" it but I am sure it came with a fat payment book

[simple987]

An 84 month loan doesn't suprise me at all. There will always be people that are only concerned with getting a luxury car for the lowest possible price. It could be a 50 yr loan and they wouldn't care!!

[bjl584]

A 10 year car loan is not out of the question. You will start to see loans of this nature becoming more and more common as quality of cars continues to improve, as warranties in the industry run for 100,000 miles or more, and as public perception of cars lasting for years and years without major problems continues to evolve. Gone are the days of a car being "worn out" after 100,000 miles. Still, I would never advise to finance a car for an extended period of time.

[disneysteve]

A 10 year car loan is not out of the question.

That is just complete and utter insanity. No matter how long you expect to keep your car, if you can't pay it off in 3-4 years tops, you are looking at the wrong car. There are still perfectly good new cars well under 20K and good quality dependable used cars easily in the 10K range, if not less. Nobody should ever have to finance a car over 7 or more years.

[bjl584]

That is just complete and utter insanity. No matter how long you expect to keep your car, if you can't pay it off in 3-4 years tops, you are looking at the wrong car. There are still perfectly good new cars well under 20K and good quality dependable used cars easily in the 10K range, if not less. Nobody should ever have to finance a car over 7 or more years.

I agree, but it won't be long before these types of loans start to appear. I would never do it, but I guarantee that many people will, and they probably won't think twice about it either.

[disneysteve]

I agree, but it won't be long before these types of loans start to appear. I would never do it, but I guarantee that many people will, and they probably won't think twice about it either.

Sad but true. Just as there are now 40 and 50 year mortgages and 6 and 7 year car loans.