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Valued Member
Posts: 37
Registered: ‎07-05-2012
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Introducing the 97-month car loan

From the article-

Last month Nakisha Bishop took out a loan to buy a $23,000 Toyota Camry and pay off several thousand dollars still owed on her old car. The key to making it work: she got more than six years—75 months in all—to pay it off....

 

Ms. Bishop's 75-month loan illustrates two important trends rippling through the U.S. auto industry. Rising new-car prices and competition among lenders to attract borrowers is pushing loans to lengthier terms. In part, banks see the longer terms as a way to attract buyers, by keeping monthly payments under $500 a month.

 

http://autos.yahoo.com/news/introducing-the-97-month-car-loan-202203365.html


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My first thought- 97 months!?

My second- Suze would NOT approve.

 

I can't even imagine the interest one would pay on a loan that long. Although I did find it a little confusing where it seems to refer to longer loans as  either a way to compete for customers or as a subprime loan. But the article seems to be saying that these consumers tended to have better credit scores.  I feel like if you need 97 months to pay off a car, its out of your price range.

 

This is my first time starting a thread so I hope I did it right!



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Senior Contributor
Posts: 4,336
Registered: ‎09-06-2008
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Re: Introducing the 97-month car loan

I literally just heard about this on tonight's news!  Nuts!

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Established Contributor
Posts: 650
Registered: ‎03-01-2012
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Re: Introducing the 97-month car loan

Potential problem with such long term loans (particularly if you are making a small or no downpayment) is that you will be upside down on your card for a longer time.  Consequence of that are:

 

- you total your car, get insurance payment for the value of the car that will not be able to cover the remaining balance on the loan.

- you sell you car, and the payment you got is not enough to cover the remaining balance on the loan.


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Frequent Contributor
Posts: 320
Registered: ‎07-08-2012
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Re: Introducing the 97-month car loan

This is the unexpected consequence of the auto bubble.

Cars today are way beyond expensive. Some of it has to do with easy money (explosion of sub prime auto loans) combined with government over regulation.

A brand new Ford Focus shouldn't cost $23,000. That car used to cost about $14k when my mom bought one back in 2004-ish.


A "decent" car will set you back $30,000. I would love to one day say I bought a brand new car, but I don't expect that to happen anytime soon. Even used car prices are outrageous. But still a smarter buy.
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