Record number of car buyers underwater on their trades; loan lengths increasing
 

http://ecomodder.com/forum/attachmen...1&d=1490368135
Flickr img: by State Farm

Things in the new-car purchasing world are getting scary:

Jalopnik: A Record 32 Percent Of Car Buyers Are Underwater On Their Trades: Report

This situation coincides with (1) increasing new vehicle prices, (2) increasing loan lengths, and arguably (3) decreasing financial literacy.

A recent spate of articles on this side of the border point out that the problem is hardly restricted to the U.S.

In Canada, loan lengths have also been going off the deep end too...

Globe and Mail: The rise of longer car loans, a major risk to household finances

Automakers have been pushing longer term loans hard as a way to keep increasing record year-over-year sales. That keeps the buyers' monthly payments down, but the downside is obvious to anyone who thinks about it for more than 2 seconds (before the next shiny new thing distracts their attention).

The result is more and more people being deeper in debt when they can't resist the siren call of their next new car:

The solution? The Globe's writer suggests people try living within their means, and not taking out massive loans on depreciating baubles. Pay cash for used cars. Or if you must borrow, buy a significantly less expensive vehicle and sock away the difference between what you're paying and what you would otherwise be spending each month into your "next vehicle fund".

What a quaint idea. Likely to be heeded? Not if you look at where the stats are going.

And a diamond engagement ring should only cost 3x your monthly haul!

Now THERE is money down the drain.

This is wonderful! It is precisely this stupid "oooooo shiny!!!" instant gratification consumer over reliance on credit BS that creates all sorts of havoc including bubbles and increased prices for those few of us that don't abuse credit.

Is this also why the media is perpetually whining about "how bad the economy is" all when people actually have it good- they're simply spending beyond their means as Standard Operating Procedure?

Go down in flames, idiots. I'll be laughing all the way.

I wonder how many people view "car payment" as a normal part of their monthly expenses and don't think about it beyond that, not realizing it doesn't need to be a life-long hamster wheel.

As long as the number fits the budget, good enough!

I grew up where my parents never had a car payment. Always bought used and in cash. I definitely view a car payment as an extra/unneeded expense. Could it be this sprouted from "keeping up with the joneses"?

I remember my dad once telling me: debt is good because it lets you lead the life you want, as long as you can make the payments. :)

I'm happy to say that was several decades ago, and he fortunately no longer follows his old advice.

Glad I don't live by that old adage. Car should cost no more than I have handy, in cash. Going on 14 years for the current car. Only about 8 for the truck, but it was well-used when I bought it. And just last weekend, I had a guy stop and ask if I wanted to sell it :-)

Ah, but you do -- OTM said "no more than" and you (and I) are just coming in well under that. ;)

That's the thought that came to my mind when reading the article. The "I'll always have a car payment" mentality that shields people from the reality of how much money they're forking out over a lifetime.

I have never had a car payment.
House is paid off too.
People like me are very dangerous to banks, not spending most of my life paying 1/2 to 3/4 of my take home to the banks.