The 7-Year Car Loan: Watch Your Wallet

[Anonymous]

Anonymous wrote:4 years used to be the norm, then it stretched to 5. We pay cash and keep our cars for 8-9 years (our newest car is 6 years old and the oldest is 13 years old) but it seems like most people get new cars much more often.

We could pay cash but prefer a 0 or 2% loan and invest the cash.

But we also keep the cars 10 years or longer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:4 years used to be the norm, then it stretched to 5. We pay cash and keep our cars for 8-9 years (our newest car is 6 years old and the oldest is 13 years old) but it seems like most people get new cars much more often.

We could pay cash but prefer a 0 or 2% loan and invest the cash.

But we also keep the cars 10 years or longer.

Agreed. This is the best way to go. Provided you pick a vehicle that can last 10 years without serious repairs. The 10 year rule is also good because you don't have to worry about driving a hoopty!

[Anonymous]

I don’t think new cars will reliably go 10 years anymore. Too many electronics to break.

[Anonymous]

This article makes sense. We hadn’t purchased a car in a long time and went car shopping. We earn $500k HHI and were shocked how expensive cars are now. Clearly it’s because Of the financing. Similar to college tuition. Drove home from car shopping and noticed all of the expensive cars on the road. This is everywhere. The average American should be driving a $15k car. But they aren’t.

[Anonymous]

Biggest money suck. Buy used and pay cash. If you can only afford a junker so be it.

[Anonymous]

My wife took a 7 year loan on her GMC Denali. It was zero percent interest and zero percent down. She also took out an extended warranty for an extra four years to make it 7 years bumper to bumper.

From her point of view I own the car at end of seven years, I have no repairs in the seven years, I pay no interest. Her monthly payment was the same almost as if she leased it for three years. Why cause lease payment has costs rolled in and some interest. Yes she was stuck with same car seven years.

This month is 7 years. Loan is done, truck still runs fine. Took it in last week for a free bumper to bumper check to make sure all good, and if not still under warranty.

[Anonymous]

If it’s 7 years and a better rate at low or no interest, wouldn’t it make sense to do the 7 years and pay it off in 4 or 5?

[Anonymous]

Anonymous wrote:If it’s 7 years and a better rate at low or no interest, wouldn’t it make sense to do the 7 years and pay it off in 4 or 5?

If you can get a no interest 7 year loan take it. Other than that, don’t do more than 5 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:These should be outlawed. Especially since it states how common it is to roll your previous car loan into your new one! 7 years is too long for a car loan since many cars don't make it that long or are totaled before.

If the car is totaled, the insurance pays out. Every car should last 7 years if maintenance is done regularly.

Yeah every car should last 7 years. Btw, why is a 7 year car loan appealing? If that’s your option, just lease!

You need good credit to lease a car. People with bad credit would much rather buy a used SUV with 50,000 miles on it for $40,000 over 8 years at 8.99% interest! Seriously, people do this.

Sometimes the comments on this site are beyond idiotic. People with bad credit would actually much rather get a loan for a reasonable rate. They cannot. This is what is known in the real world as "predatory lending," not a personal preference.

People with bad credit pay higher rates because they have to compensate the lender for additional non-payment risk. Payday loans are predatory lending. Paying 9% instead of 3%isnt.

[Anonymous]

People with lesser credit should be buying used for cash. I have excellent credit and buy used for cash.

I literally this week, just scrapped a 1997 Chevy Cavalier that I bought for 3k in 2007. It actually ran well but the frame had rusted out (from being up north in salt).

I now drive a 5k car-I am in fact saving to buy a new car, for cash, for my 50th birthday. But I don't mind waiting till 51 if I don't have it saved!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:These should be outlawed. Especially since it states how common it is to roll your previous car loan into your new one! 7 years is too long for a car loan since many cars don't make it that long or are totaled before.

If the car is totaled, the insurance pays out. Every car should last 7 years if maintenance is done regularly.

Yeah every car should last 7 years. Btw, why is a 7 year car loan appealing? If that’s your option, just lease!

You need good credit to lease a car. People with bad credit would much rather buy a used SUV with 50,000 miles on it for $40,000 over 8 years at 8.99% interest! Seriously, people do this.

Sometimes the comments on this site are beyond idiotic. People with bad credit would actually much rather get a loan for a reasonable rate. They cannot. This is what is known in the real world as "predatory lending," not a personal preference.

People with bad credit pay higher rates because they have to compensate the lender for additional non-payment risk. Payday loans are predatory lending. Paying 9% instead of 3%isnt.

Yeah, this. The notion that someone who is a bad credit risk should get the same rate as someone who is a good credit risk is really misplaced. There may be an unavoidable, tragic reason someone has bad credit, or they may just be irresponsible - but the credit score doesn't make that kind of distinction. And interest rates reflect credit ratings.

Also, while there is an element of systemic unfairness in this (and yes, sometimes predatory lending or other unscrupulous behavior), people are, in many cases, financial idiots. If you have terrible credit, and are paying $40,000 for a car, you're an idiot, regardless of others behavior. If you're paying $40,000 for a used care with 50,000 miles on it, and have bad credit, you should let someone else take over your finances.