The 7-Year Car Loan: Watch Your Wallet

[Anonymous]

1/3 of all loans are longer than 6 years. Wow!

https://www.npr.org/2019/10/31/773409100/the-7-year-car-loan-watch-your-wallet

[Anonymous]

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.

[Anonymous]

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.

I can't even imagine what is going through someone's mind when they decide to trade in a car they're $5,000 underwater on. It sounds completely insane to me and I would assume most people here. If you're underwater on your car, please keep making the payments, don't trade it in!

[Anonymous]

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.

[Anonymous]

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.

I agree, plus get gap insurance people.

[Anonymous]

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.

I agree, plus get gap insurance people.

Even gap insurance won't cover the whole loan if you're rolling debt from your underwater loan into a new car purchase. Gap insurance has limitations.

https://www.thebalance.com/gap-insurance-vs-loan-lease-payoff-527213

Loan/lease payoff generally only covers 25 percent of the ACV of your vehicle. For instance, if your vehicle has an ACV of $20,000, the maximum the loan/lease payoff coverage will pay is $5,000. Also, with loan/lease coverage your deductible usually applies. Both of these stipulations could leave you with an out of pocket expense in case of a total loss.

[Anonymous]

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!

[Anonymous]

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.

[Anonymous]

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.

This is what people don't understand about poverty. A couple of bills you can't pay and your credit rating goes down. Because of that, loans like you mentioned are your only option. Granted, you can get a used Honda for $8000 rather than $40,000 SUV but still. The less money you have, the more it costs to live.

[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.

This is what people don't understand about poverty. A couple of bills you can't pay and your credit rating goes down. Because of that, loans like you mentioned are your only option. Granted, you can get a used Honda for $8000 rather than $40,000 SUV but still. The less money you have, the more it costs to live.

Yep. When I was younger and making just $15,000/year, I racked up credit card debt because it was the only way to cover my expenses. I was 30 days late on 2 payments and it tanked my credit. When I tried to buy my first car, only one bank would approve me for a loan for a Ford Focus and it was with a sky-high interest rate. I had to get a car to get to work, so I didn't have a choice. Also, the only way to improve my credit was to take on that loan and make all the payments (which I did).

People don't understand how easily you can get effectively shut out of the credit market and how you're in a catch 22: you can't access credit, but maintaining good records on an installment loan is one of the best ways to build good credit and gain access to additional credit.

[Anonymous]

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.

[Anonymous]

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.

[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.

Well, actually 3 years used to be the norm. Beyond five doesn't make a lot of sense because you're making payments on a car out of warranty. Having your car paid off out of warranty is ideal since you can cover repairs easily with your former car payment.

[Anonymous]

3-5 years was the norm and its because people are buying what they cannot afford. People are dumb and say I want a $400 car note monthly rather than pick a price based off the payment they want and length of the note.

[Anonymous]

Anonymous wrote:3-5 years was the norm and its because people are buying what they cannot afford. People are dumb and say I want a $400 car note monthly rather than pick a price based off the payment they want and length of the note.

This is why the sales person at the dealerships always ask you "How much do you want to pay per month?" They know you'll say as little as possible thinking that means you're getting a good deal. Meanwhile they figure out how much you really CAN afford then stick you in the most expensive car you can finance over the longest term possible.