Car loan stats
Lexus Fanatic
Joined: May 2012
Posts: 68,096
Likes: 3,870
From: Maryland
Exactly why I have leased my previous 2 cars. It's actually cheaper for me to lease. We do own one car that is paid off but I'm leasing my current one. I found myself every 5-6 years in a new car anyways, why? Because the repair costs started to get ridiculous due to the high miles. I would always buy CPO cars with 20-30K on them and by the time it got to year 5 I'd be in the dealership.
Lexus Fanatic
Joined: Oct 2003
Posts: 94,226
Likes: 222
From: Virginia/D.C. suburbs
Lexus Fanatic
Joined: May 2012
Posts: 68,096
Likes: 3,870
From: Maryland
I've done the math on it, 5 years is a magic number. If you can keep a car for more than 5 years then you are saving money vs leasing. If its less than that though, you may as well lease every 3 years, worst case you're breaking even just with less downside risk of repairs, an accident destroying resale value, etc.
My numbers were always done with a 5 year loan though, as thats the longest *I* would ever finance a car for, if it were a 6 or 7 year loan that would make that magic break even number even bigger.
Advanced
Joined: Jun 2017
Posts: 517
Likes: 44
From: Earth
Lots of informative comments on this topic. 
But these longer loan terms don't really surprise me. What I'd like to know is what percentage of these longer termed loans are sub-prime? And what are the overall default rates on all loans beyond 60 months? Because of the frequency of these loans I assume the finance companies considers them a profitable risk.
But these longer loan terms don't really surprise me. What I'd like to know is what percentage of these longer termed loans are sub-prime? And what are the overall default rates on all loans beyond 60 months? Because of the frequency of these loans I assume the finance companies considers them a profitable risk.
Lead Lap
Joined: Feb 2017
Posts: 703
Likes: 97
From: California
69.3 months is average??? Damn I mean I understand interest rates are low, but almost a 6 year loan??
I have the same mentality as mjeds ^^^, if you cant pay it off in 3 years, you cant afford the car and you should look elsewhere.
Does 717 really get people a good rate? Idk, that still seems like a low score to me to be getting the best rates.
I have the same mentality as mjeds ^^^, if you cant pay it off in 3 years, you cant afford the car and you should look elsewhere.
Does 717 really get people a good rate? Idk, that still seems like a low score to me to be getting the best rates.
Lexus Fanatic
Joined: May 2012
Posts: 68,096
Likes: 3,870
From: Maryland
717 is definitely not a low score, it's just not an "elite" score. No score over 700 is a bad score.
I see people's credit scores every day, a score over 800 is very rare. Most I see are 700-740 so that makes sense 717 would be average.
I see people's credit scores every day, a score over 800 is very rare. Most I see are 700-740 so that makes sense 717 would be average.
Lead Lap
Joined: Feb 2017
Posts: 703
Likes: 97
From: California
Interesting. I'm over 800 and it drew me to look up the % of people who are 800+. It said 20.4% of Americans have a credit score of 800-850. Wonder how accurate that is because I was really surprised, thought it would be much much lower than that. You also mentioned you see them everyday and how rare it is to see people over 800.
Last edited by premier3IS; Jul 17, 2017 at 06:48 PM.
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Intermediate
Joined: Feb 2015
Posts: 327
Likes: 65
From: Ca
I completely disagree with this strategy as you still have housing expenses unless you live with parents. 15 years of housing expenses plus 15 years loss in RE appreciation I do not think there is much savings.
Lexus Test Driver
Joined: Sep 2016
Posts: 8,564
Likes: 389
From: PA
There's a whole reverse mortgage generation, and we're not talking about milennials, we're talking about people who are seniors today....not leaving anything to heirs probably is financial freedom...is it wrong, is it right, I suppose the way I was brought up, it's wrong, but I am only one person and my parents are two. I hope they live as long as humanly possible, we're 6.x yrs away from no house payment, I look forward to it. I mentioned the car payment thing today to a colleague and he said ye gads if we didn't have a car payment we'd be rich (he has a 5 and 3 series both leased)
Lexus Champion
Joined: Oct 2015
Posts: 2,424
Likes: 192
From: CA
my housing costs from 1997 - 2012 when I bought my house were roughly $110,000, but I saved over $300,000 in that time.. I lived in a 420 sq ft. studio apartment, wasn't married, no kids, and the apartment was for sleeping and showering basically. started at $440 a month in 1997 and ended at $890 a month in 2012.
The house I bought sold for $340K in 1999, $540K in 2005, $670K in 2007, and I bought it after the RE bubble in 2012 for $375K. my mortgage is only $900 a month, about the same I was paying for rent..
If I had bought in 1999 with 5% down I would have been paying $3000 a month. paid a much more in interest, and been living paycheck to paycheck.
from 1999 - 2012 I wasn't married, had no kids, didn't need a house, but I knew I would be remarried some day with a family and want a house.
Intermediate
Joined: Feb 2015
Posts: 327
Likes: 65
From: Ca
I'll have to disagree with you.
my housing costs from 1997 - 2012 when I bought my house were roughly $110,000, but I saved over $300,000 in that time.. I lived in a 420 sq ft. studio apartment, wasn't married, no kids, and the apartment was for sleeping and showering basically. started at $440 a month in 1997 and ended at $890 a month in 2012.
The house I bought sold for $340K in 1999, $540K in 2005, $670K in 2007, and I bought it after the RE bubble in 2012 for $375K. my mortgage is only $900 a month, about the same I was paying for rent..
If I had bought in 1999 with 5% down I would have been paying $3000 a month. paid a much more in interest, and been living paycheck to paycheck.
from 1999 - 2012 I wasn't married, had no kids, didn't need a house, but I knew I would be remarried some day with a family and want a house.
my housing costs from 1997 - 2012 when I bought my house were roughly $110,000, but I saved over $300,000 in that time.. I lived in a 420 sq ft. studio apartment, wasn't married, no kids, and the apartment was for sleeping and showering basically. started at $440 a month in 1997 and ended at $890 a month in 2012.
The house I bought sold for $340K in 1999, $540K in 2005, $670K in 2007, and I bought it after the RE bubble in 2012 for $375K. my mortgage is only $900 a month, about the same I was paying for rent..
If I had bought in 1999 with 5% down I would have been paying $3000 a month. paid a much more in interest, and been living paycheck to paycheck.
from 1999 - 2012 I wasn't married, had no kids, didn't need a house, but I knew I would be remarried some day with a family and want a house.
in 1997 median home value in LA was 170K
in 2012 it was 398K
Let's forget about kids, family and other choices that you've made. You lost an opportunity to make over 200K in housing appreciation (or you would have an opportunity to sell it for $580 in 2006). In addition you lost available tax deduction. So in reality it is a wash in your case.
Edit: For apples to apples comparison do not swing from 400sq.f. apartment to 2000sq. f. home otherwise your opportunity loss will be even larger. For example you would have bought house for 240K and in 2006 it would sell for 740K.
Last edited by Oldfart; Jul 18, 2017 at 08:23 PM.
real estate doesn't always go up, and yeah i know about "the long term" but sometimes timing sucks... many moved to san francisco in various peaks to take a nice high paying job only to get laid off in a dip and be upside down on a house to the tune of hundreds of thousands of dollars and they couldn't stay in the house with the huge mortgage and so go bankrupt.
in the end there's prudent timing but there's also luck. i've made money and lost money on real estate, mostly because of timing. i did save hard though and invest, and am very fortunate to own my home, so my overhead is lower than most with mortgages, although in recent years with interest rates so low it's been a real help to many. but i do worry for those on ARMs if rates begin to climb again...
save some for a rainy day folks, it will likely happen at some point no matter how good your strategy.
in the end there's prudent timing but there's also luck. i've made money and lost money on real estate, mostly because of timing. i did save hard though and invest, and am very fortunate to own my home, so my overhead is lower than most with mortgages, although in recent years with interest rates so low it's been a real help to many. but i do worry for those on ARMs if rates begin to climb again...
save some for a rainy day folks, it will likely happen at some point no matter how good your strategy.
Lexus Test Driver
Joined: Sep 2016
Posts: 8,564
Likes: 389
From: PA
real estate doesn't always go up, and yeah i know about "the long term" but sometimes timing sucks... many moved to san francisco in various peaks to take a nice high paying job only to get laid off in a dip and be upside down on a house to the tune of hundreds of thousands of dollars and they couldn't stay in the house with the huge mortgage and so go bankrupt.
in the end there's prudent timing but there's also luck. i've made money and lost money on real estate, mostly because of timing. i did save hard though and invest, and am very fortunate to own my home, so my overhead is lower than most with mortgages, although in recent years with interest rates so low it's been a real help to many. but i do worry for those on ARMs if rates begin to climb again...
save some for a rainy day folks, it will likely happen at some point no matter how good your strategy.
in the end there's prudent timing but there's also luck. i've made money and lost money on real estate, mostly because of timing. i did save hard though and invest, and am very fortunate to own my home, so my overhead is lower than most with mortgages, although in recent years with interest rates so low it's been a real help to many. but i do worry for those on ARMs if rates begin to climb again...
save some for a rainy day folks, it will likely happen at some point no matter how good your strategy.