Buy a used car. Not everybody can afford a new car. A 9 year loan is always an irresponsible decision. It doesn't matter whether the car is $15,000 or $150,000.

 

Yeah exactly. Some wear & tear items are too right? wipers and that sort? Ahh well.

 

I see alot of places offering the 108 month loans on Bentleys, Lambos, etc. I can see maybe doing it on a car like that if you plan to keep it as a collectible......however anyone into collecting those types of cars should be making a couple million and not need to do that.

As for leasing in general, I don't know why most people say leasing is for people who cannot afford the car. I don't think people who are able to pay $1500-2000 per month for a lease are doing it because they cannot afford it otherwise. Personally, I am tired of putting $15-20k down for a car.....paying $1000-1500 per month then for 2-3 years while I drive it and then have to pay another $5k when I sell it because the loan is upside down because the darn cars values fall faster than the economy. I would rather pay $1500-2000 per month with nothing down for 3 years and then be done with it.

 

I see alot of places offering the 108 month loans on Bentleys, Lambos, etc.[/B] I can see maybe doing it on a car like that if you plan to keep it as a collectible......however anyone into collecting those types of cars should be making a couple million and not need to do that.


Not for nothing but i would think if someone is personally in the market for a Bentley and/or Lambo i would think they can simply afford to pay it off in cash ?? Why waste the money paying interest on a 9 year loan when they can drop off a check and be gone whoohoooo

 

I guess for them it depends on what the interest rate is on that 9 year loan. If it is lower than the rate of return on their investments, a lot of people seem to like to use that cash elsewhere instead of dropping it all on a $200K car. I wish I had to make that kind of decision

 

You think that is bad. Here in Canada some places you can get 40 year mortgages, now that is ****ed.

 

How about an Interest-only auto loan? Or, do you think that would be a bad idea?

 

A car is a depreciating asset. So, lets say a $20K car is worth $10K in 3 years. You put no money down and have an interest only loan. So, when you go to sell it or trade it 3 years after purchase, where is the other $10K coming from to pay the loan off? Remember, the lender will not release the title until the loan is paid off in full.

 

Make double payments, and then if you have a troubling time because of job loss, its only just that much easier to pay the monthly payment without hitting your credit score.

 

9-year loans probably came about because of the home mortgage situation. The reasoning seems to be that if you can't afford a big mortgage, you can't afford a big car payment either.

 

Well, then there is part B. The banks would never offer this due to risk. Rule of thumb is that the general public will tend not to pay more than what is due. So double payments would be few and far between from the general public. Then, customers are burried and we now have the same issues in the auto industry as the mortgage industry.

 

I wonder if these loans require PMI?

 

Banks know that cars are lasting longer, even Mexican and Canadian cars. I was offered a 7 year loan a couple of years back however I didn't need a car at the time, and I wouldn't take more then a 60 month term.

Even with the risk involved, by the time the car becomes junk, the bank would've made up the principle, a lot of interest and they get to repo your car and auction it to a junkyard if the loan defaults.

 

OK...folks...did no one see the smiley face after my suggestion of an interest-only car loan? T'was a joke!

Interest-only loans, even on a home that appreciates, is a STUPID idea! It is (was) a vehicle for people to buy more house than they could afford. People were betting on the fact that the houses in their area were going to continue to appreciate at 20% a year, even though people's salaries were not going up 20% a year. But, that's a different conversation.

 

This is different than the housing industry. The housing industry bust happened because of all the 3 year ARMS that expired after those 3 years and people's rates/payments skyrocketed beyond what they could afford.


I dont see much difference between one of these long term loans vs a lease. There are pros & cons to both, but they are essentially the same - affordable payments for a car.


I have a 7 year loan. Not quite 9 year, but I got it because i wanted a low payment. No prepayment penalties and I pay off a higher amount with each payment, but if I ever needed to (lost job, tight on finances, etc) I can drop to a lower payment if needed.

You're basically paying a set amount for the use of a car regardless of what financing option you use. Whatever choice you pick only determines how much you save in the long run.