Car Payments Now Average More Than $750 a Month. Enter the 100-Month Car Loan

[Patient957]

https://archive.is/jhWwb

Car Payments Now Average More Than $750 a Month. Enter the 100-Month Car Loan.

The price of new cars and trucks in the U.S. has increased 33% since 2020, and consumers are piling on interest as they stretch out loan terms to eight, nine and nearly 10 years.

David Kelleher, who runs a Dodge and Jeep dealership in Glen Mills, Pa., 27 miles west of Philadelphia, said many American families can’t comfortably take on a new-car payment these days.

“We don’t have $300 monthly payments any longer in new vehicles,” he said. “It’s a thing of the past.”

The average price of a new car broke the $50,000 barrier this fall, according to Kelley Blue Book. That is up from less than $38,000 in early 2020 before the pandemic hit. As sticker prices marched higher, so did monthly payments. For a few years, car shoppers were undeterred. Many needed new vehicles after putting off buying during Covid when supply chains were upended and dealer lots were empty. Others, feeling flush, opted for luxury vehicles at much higher price points.

Fast forward to November of this year and the average monthly payment for a new car was estimated to be $760, according to J.D. Power, an industry-research firm. The hefty cumulative inflation is starting to weigh on consumers, and now some Americans are falling behind on their car payments.

The struggle to keep monthly payments in check is so tough that the typical 48- to 60-month car-loan term has given way to 72-month terms, and longer, industry officials say.

In the third quarter, a third of all buyers took out loans that stretched at least six years, or 72 months, according to Experian data. A year ago, 29% of buyers did so. The volume of loans with 85 to 96 months to repay, or up to eight years, rose as well to 1.61% of car buyers through October.

Some loans now reach 100 months, or more than eight years, especially for the purchase of larger pickups, Experian data show.

[pizzadude]

This makes sense given that the 50 year mortgage may soon be a thing too

[Patient957]

[Varsity_Lu]

Buying a new car is one of the worst financial decisions a person can make.  Find a low mileage used Toyota or Honda, change the oil every 5k miles, and drive it 200k miles.  You'll pay almost half what a new car costs and get way more out of it.

[Patient957]

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@Varsity_Lu wrote:

Buying a new car is one of the worst financial decisions a person can make.  Find a low mileage used Toyota or Honda, change the oil every 5k miles, and drive it 200k miles.  You'll pay almost half what a new car costs and get way more out of it.

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I just broke 200K on my ES300.  It's just getting broken in.  The engine still runs like a top.  Try that with your modern 4-cylinder turbo.

[Varsity_Lu]

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@Patient957 wrote:

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@Varsity_Lu wrote:

Buying a new car is one of the worst financial decisions a person can make.  Find a low mileage used Toyota or Honda, change the oil every 5k miles, and drive it 200k miles.  You'll pay almost half what a new car costs and get way more out of it.

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I just broke 200K on my ES300.  It's just getting broken in.  The engine still runs like a top.  Try that with your modern 4-cylinder turbo.

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I have an Avelon with 170k and a Sienna with 134k.  Both run like a top.  I paid $4000 for one and $2000 for the other one.  The people selling them just didn't want an older car anymore.  No rust, everything  works...crazy value.  I'm hoping to drive them both past 200k.  My son just bought a Corolla with 65k for $10,000.  No one wanted it because it was an "old" 2016 model.  No joke.  He's off to college next year and it should last him through graduation at least.  Used Toyota are definitely the way to go.

[FicoMike0]

I'm so old, my first house payment was under $200 , first new car under $100. 

[crystal626]

100 month loans are insane. Modern cars have so many issues that most won't make it past 5 years without substantial monetary investment, you'll just be paying a lot more for the car in the end. What's next, the return of debtors' prison?

[TrapLine]

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@Patient957 wrote:

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Good thing "debtors' prison" is not in our mirrors now.

[Patient957]

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@crystal626 wrote:

100 month loans are insane. Modern cars have so many issues that most won't make it past 5 years without substantial monetary investment, you'll just be paying a lot more for the car in the end. What's next, the return of debtors' prison?

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Yeah, that's the irony of it.  Modern cars are built to break in 5 yrs but priced to be paid over 10.  It's a losing game, but there's apparently many people still willing to play.