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volvoclearinghouse
volvoclearinghouse SuperDork
3/4/16 9:17 a.m.

I heard on the radio (NPR) yesterday that the average new car payment in this country is now $500 per month.

Am I the only one who sees this as a potentially unsustainable situation?

Automotive bubble, anyone?

eastsidemav
eastsidemav Dork
3/4/16 9:20 a.m.

Much like average new car price (over $30K), this is incomplete information. I'd really like to see media payment and median sales price, but have not been able to find either when digging around during the past.

dj06482
dj06482 SuperDork
3/4/16 9:26 a.m.

With the rise in the average cost, more people are turning to leasing as opposed to owning outright.

pres589
pres589 UberDork
3/4/16 9:41 a.m.

In reply to eastsidemav:

http://www.usatoday.com/story/money/cars/2015/05/04/new-car-transaction-price-3-kbb-kelley-blue-book/26690191/

2015 US median new car price was $33,560.

For giggles; http://money.cnn.com/2015/09/16/news/economy/census-poverty-income/

2015 US median family income was $53,657, which is down from the year before.

Personally I cannot imagine buying a car / making payments on a car anywhere near $33k. I do have a car payment right now and it's about $225 a month. I sort of regret getting the car I got but it's not been bad really and I don't know that I could be paying much less per month without also turning wrenches now and then.

RossD
RossD UltimaDork
3/4/16 9:43 a.m.

A Median income family is not the group of people buying new cars.

Javelin
Javelin MegaDork
3/4/16 9:43 a.m.

Car payments are for dolts! (Present company excluded )

bmw88rider
bmw88rider Dork
3/4/16 9:44 a.m.

Not really a surprise. That is a 28K car on a 5 year note with 3% interest. All of those are very average numbers especially since there are a lot of got to have the nice shiny thing people out there that barely get even on the car note and then trade it off.

92dxman
92dxman SuperDork
3/4/16 9:48 a.m.

I work for a group of dealers and it's not uncommon to see payments minimum $400/a month. I think the highest I've seen is maybe $550-$600 a month and it wasn't even for a luxury car.

BoxheadTim
BoxheadTim UltimaDork
3/4/16 9:49 a.m.

My concern would be more about the length of the car payment rather than the payment itself. Yes, $500 is a lot, but the bigger issue IMHO is that 60-72 month car loans are more and more popular.

On a 3 year note you're usually not upside down for that long so if it turns out that you can't afford the payment for one reason or the other, you should be able to get out of the loan without ending up even deeper in the hole. Try that with a 72 month car loan halfway through...

Tom_Spangler
Tom_Spangler UltraDork
3/4/16 9:53 a.m.

Ah, cool. Another "debt is for idiots" thread. Haven't had one of those in a while.

slowride
slowride HalfDork
3/4/16 9:57 a.m.

Mine is ~$400/month. I've got 3 left! And then the car will commence falling apart I'm sure.

My loan was 48 months. I would be unhappy if I was paying that much for 72.

I actually would've expected the average to be higher.

logdog
logdog SuperDork
3/4/16 10:00 a.m.

Every day, even on this board, I see people spend money in ways that I do not.

There are only 2 things worth spending money on.

SyntheticBlinkerFluid
SyntheticBlinkerFluid UltimaDork
3/4/16 10:02 a.m.

Unfortunately some of us are stuck making payments, because we don't have $35k cash to drop on a vehicle.

mtn
mtn MegaDork
3/4/16 10:03 a.m.
volvoclearinghouse wrote: I heard on the radio (NPR) yesterday that the average new car payment in this country is now $500 per month. Am I the only one who sees this as a potentially unsustainable situation? Automotive bubble, anyone?

How many car loans are there? What are the loans that are written? What if it was a 1 year loan? What if it is at 0.59%? Are they for the full value of the purchase price or with a downpayment?

I have no clue if there is a problem with the fact that the average car loan is $500 a month. Just like I have no clue if $200,000 in student loans is a bad thing--is it for an art degree, or is it for Medical School?

How about this statement: My wife and I are living paycheck to paycheck and have $25,000 in debt. That sounds bad, right? Well, we're living paycheck to paycheck because we put "too much" in our 401k's. Our debt is her student loan debt. And our emergency fund is "locked away" which forces us to live paycheck to paycheck.

I'm not saying it isn't something to worry about, the average car loan. I'm just saying it is one piece of a larger puzzle, and I have no idea if that little red jig-saw piece is part of a fire in a fire place, or if the whole house is burning down.

pres589
pres589 UberDork
3/4/16 10:05 a.m.

In reply to Javelin:

My taking on a car payment was a calculated move on my part to get my credit rating in order. At the time I had no rating at all per multiple banks. That car payment plus two credit cards took me from no rating to something around a 635 FICO score to my current ~780 FICO score in right around two years time. I may be in a small minority on the reasons for having a car payment but I feel like it was a pretty good move on my part. I also like having that nest egg in my savings in case I need it unexpectedly.

Woody
Woody MegaDork
3/4/16 10:05 a.m.

The emergence of leasing in the late 80s shifted the consumer's focus from selling price to monthly payment amount, driving MSRP upward.

The_Jed
The_Jed PowerDork
3/4/16 10:15 a.m.

As much as I want a new or at least newer car, my AADD won't let me pull the trigger on a 5 or 6 year car note.

Dr. Hess
Dr. Hess MegaDork
3/4/16 10:16 a.m.
SyntheticBlinkerFluid wrote: Unfortunately some of us are stuck making payments, because we don't have $35k cash to drop on a vehicle.

The reason you don't have $35K cash to drop on a vehicle is because you are stuck making payments.

Sub Prime Auto Consolidated Debt Obligations are the next big bubble to pop.

sachilles
sachilles UltraDork
3/4/16 10:20 a.m.

Bought my first ever new car this year. $390/month.

I figure I spend X amount a month on a car anyway. Either fixing old crud, or paying for new crud. It's a gamble either way you look at it.

However, my wife and I are finally financially stable enough, that the risk is fairly low. Could have financed less of it, but decided the money was working better where stashed. It's a very weird feeling being a responsible adult. Took me 42 years to get here.

Appleseed
Appleseed MegaDork
3/4/16 10:29 a.m.

The reason I spent big money on the FR-S is because they will never be affordable/cheap. The cheap ones will be beat to E36 M3, and the good ones will be priced accordingly. I wasn't about to buy a bunch of problems a few years later.

Don't tell me otherwise.

WOW Really Paul?
WOW Really Paul? MegaDork
3/4/16 10:29 a.m.
SyntheticBlinkerFluid wrote: Unfortunately some of us are stuck making payments, because we don't have $35k cash to drop on a vehicle.

I did a 5yr loan at $60/wk since I get paid weekly(I love that).....that was done as I still had an outstanding personal loan that also pulled $60/wk. I just paid off the balance of said personal loan yesterday, and turned my 5yr auto loan into a 3yr by just adding $40/wk to the payment schedule. The longer term loans are beneficial IF you have good enough credit to get them locked into lower interest rates and then pay more on them when you can budget it.

I see the average cost increase as mainly driven by the astronomical price of pickup trucks, which obviously sell really well.

The_Jed
The_Jed PowerDork
3/4/16 10:29 a.m.
Dr. Hess wrote:
SyntheticBlinkerFluid wrote: Unfortunately some of us are stuck making payments, because we don't have $35k cash to drop on a vehicle.

The reason you don't have $35K cash to drop on a vehicle is because you are stuck making payments.

Sub Prime Auto Consolidated Debt Obligations are the next big bubble to pop.

That can't be a serious post.

Dr. Hess
Dr. Hess MegaDork
3/4/16 10:39 a.m.
The_Jed wrote:
Dr. Hess wrote:
SyntheticBlinkerFluid wrote: Unfortunately some of us are stuck making payments, because we don't have $35k cash to drop on a vehicle.

The reason you don't have $35K cash to drop on a vehicle is because you are stuck making payments.

Sub Prime Auto Consolidated Debt Obligations are the next big bubble to pop.

That can't be a serious post.

Shirley you can't be serious, The_Jed.

bastomatic
bastomatic UltraDork
3/4/16 10:39 a.m.

PLEASE tell me there's no such thing as an auto loan CDO.

mad_machine
mad_machine MegaDork
3/4/16 10:44 a.m.

just like college being too expensive.. cars are expensive because anybody can get a loan.

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