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Why Americans are suddenly paying $550 per month for new cars

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Why Americans are suddenly paying $550 per month for new cars

Message 1 of 32
31 REPLIES 31
Moderator Emeritus

Re: Why Americans are suddenly paying $550 per month for new cars

I guess I am not surprised; all prices seem to expand to fill every available dollar of the “average consumer’s” paycheck.

Though payment size has been a selling tactic of dealerships for as long as I can remember, certainly even a decade ago we had people on this forum suggesting don’t buy based on payment: always negotiate on the price instead.

Interestingly we are seeing average payment go up but aggregate sales data is slightly down year over year: not by much but by a little bit.



        
Message 2 of 32
Established Member

Re: Why Americans are suddenly paying $550 per month for new cars

More than 7 million Americans are now at least three months delinquent on their auto loan payments, the benchmark for many lenders to trigger a repossession.

Thats a scary figure.  I cant believe how many people justify taking a loan on a new car that will depreciate at least 50% over the life of the loan.   Ill stick with my $3000 truck Ive had for 4 years lol.


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Message 3 of 32
Valued Contributor

Re: Why Americans are suddenly paying $550 per month for new cars

I pay $982 per month, business SUV, 0% for 60 months, everything is relative to personal/business income.  I put 30k miles or more on my vechiles a year, leasing isn’t an option.  I’m looking at a new SUV next year and for what I want it will be over $1k per month. 

 

I’ll finance veichles if they are 0% for 36, 48, or 60 month offers, I don’t care what the monthly payments are.

 

 

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Message 4 of 32
Super Contributor

Re: Why Americans are suddenly paying $550 per month for new cars


@Soelden wrote:
More than 7 million Americans are now at least three months delinquent on their auto loan payments, the benchmark for many lenders to trigger a repossession.

Thats a scary figure.  I cant believe how many people justify taking a loan on a new car that will depreciate at least 50% over the life of the loan.   Ill stick with my $3000 truck Ive had for 4 years lol.


I won’t get any vehicle that isn’t new. I want a 5 year warranty and 5 year service contract to go with it. 



01/2019:
10/2019:

Hover over my cards to see my limits!
Goal cards: Cash+, Freedom.
Message 5 of 32
Senior Contributor

Re: Why Americans are suddenly paying $550 per month for new cars


@Soelden wrote:
More than 7 million Americans are now at least three months delinquent on their auto loan payments, the benchmark for many lenders to trigger a repossession.

Thats a scary figure.  I cant believe how many people justify taking a loan on a new car that will depreciate at least 50% over the life of the loan.   Ill stick with my $3000 truck Ive had for 4 years lol.


I still drive my 2003 Kia that I bought new, but it's my "backup" car that I pretty much just drive to work to keep it running. I live in the boonies and while I love the peace & quiet of rural living you need reliable transportation as there's no busses, no Uber. My primary car is a 2016 Mazda CX-3 that I bought in the fall 2017. That's my way of avoiding high prices & payments, buy late model cars 1 or two years old and let folks richer than me take that big first year depreciation; I paid $17.5k for it with 18k miles, it was $25k new. And the timing was just right, I got 2.99% for 65 months from DCU, my savings accounts are now paying me almost that much in interest.  I note the article says a major reason for higher payments is that folks are buying larger, more expensive cars. I'm in my 60s and have seen that cycle several times now: cheap oil/gas prices and folks buy bigger cars, high oil/gas prices and folks suddenly want smaller, cheaper cars. I've always liked smaller cars, whatever the price of gas, they're more fun to drive. My first car in 1968 was a Triumph Spitfire, a 2 seater convertible sports car that was so much fun to drive. I called the big American cars of that era American land yachts because in my parents' enormous Chrysler it felt like you just floated down the road, in my little Triumph you could feel the road.

 

 


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Message 6 of 32
Valued Contributor

Re: Why Americans are suddenly paying $550 per month for new cars


@Soelden wrote:
More than 7 million Americans are now at least three months delinquent on their auto loan payments, the benchmark for many lenders to trigger a repossession.

Thats a scary figure.  I cant believe how many people justify taking a loan on a new car that will depreciate at least 50% over the life of the loan.   Ill stick with my $3000 truck Ive had for 4 years lol.


I'm 40something years old.  I've driven/had/owned 2 cars in my entire life.  I buy them new and drive them into the ground.   Because I do this, I buy new and plan to purchase my next one new as well (I want to know everything that's ever happened to that car).

What drives me nuts is family who buy new cars every couple of years and just roll their loans over.  They're so upside down it's insane.
And they've been doing this for longer than I can remember.   In the early aughts, they were paying 600-700-800/month for car payments on $20k cars.

Oct 2019


Garden goal: keep on keepin' on
Usually a faithful practitioner of AZE5or6or7; working on AZE1or2 and grumbling about it.
Message 7 of 32
Senior Contributor

Re: Why Americans are suddenly paying $550 per month for new cars


@Saeren wrote:

@Soelden wrote:
More than 7 million Americans are now at least three months delinquent on their auto loan payments, the benchmark for many lenders to trigger a repossession.

Thats a scary figure.  I cant believe how many people justify taking a loan on a new car that will depreciate at least 50% over the life of the loan.   Ill stick with my $3000 truck Ive had for 4 years lol.


I won’t get any vehicle that isn’t new. I want a 5 year warranty and 5 year service contract to go with it. 


You are going to have a hard time finding a 5 yr warranty.  Most US Automakers are all offering 3 yr / 36000 miles bumper to bumper and 5 yrs / 60000 powertrain.   Hyundia and Kia offer 6 yr / 60000 bumper to bumper and 10 yr / 100000 mile power train.  


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Message 8 of 32
Super Contributor

Re: Why Americans are suddenly paying $550 per month for new cars


@MakingProgress wrote:

@Saeren wrote:

@Soelden wrote:
More than 7 million Americans are now at least three months delinquent on their auto loan payments, the benchmark for many lenders to trigger a repossession.

Thats a scary figure.  I cant believe how many people justify taking a loan on a new car that will depreciate at least 50% over the life of the loan.   Ill stick with my $3000 truck Ive had for 4 years lol.


I won’t get any vehicle that isn’t new. I want a 5 year warranty and 5 year service contract to go with it. 


You are going to have a hard time finding a 5 yr warranty.  Most US Automakers are all offering 3 yr / 36000 miles bumper to bumper and 5 yrs / 60000 powertrain.   Hyundia and Kia offer 6 yr / 60000 bumper to bumper and 10 yr / 100000 mile power train.  


I paid extra for it. I got premiumcare and the top tier maintenance plan (the one that included recommended and optional maintenance) on my 2004 Focus and 2009 Fusion. Never paid a dime for anything except tires. Even windshield wipers were covered. 



01/2019:
10/2019:

Hover over my cards to see my limits!
Goal cards: Cash+, Freedom.
Message 9 of 32
Established Contributor

Re: Why Americans are suddenly paying $550 per month for new cars


@DaveInAZ wrote:


My first car in 1968 was a Triumph Spitfire, a 2 seater convertible sports car that was so much fun to drive. I called the big American cars of that era American land yachts because in my parents' enormous Chrysler it felt like you just floated down the road, in my little Triumph you could feel the road.


There's a little place in New Hampshire near the seacoast that specializes in old British cars: http://www.britbits.com/

 

They have a few Spitfires for sale right now (click the sales link).

 

I love those little cars! When I drive by there I can feel the pull on my checkbook, which is why I have never stopped to look around. lol

 

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Message 10 of 32
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