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Old 12-17-2019, 02:19 PM
  #1

One of the ladies DW works with bought a new car. Her loan is an 8-year term... yes 8 years.

I didn't even know they did car loans that long. Then DW and I looked up the cost of the car she bought ($45,000) and we realized there is NO way she could afford the payments unless she stretched it out like that. I can't even begin to imagine what her interest would be if she stretched it out the whole 8 years.


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Old 12-17-2019, 02:21 PM
  #2

That seems insane to me. Many years ago we bought new cars and since then we've bought new to us cars that are 2 to 3 years old. We have never spent more than about $22,000 on a vehicle, and we keep them forever. In 1999 I bought a new Corolla and had it for 18 years!
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Old 12-17-2019, 02:31 PM
  #3

Mine is five years but is over halfway paid off at the two year mark. I would have never have gone longer than a five year loan on it. I canít imagine an 8 year loan on a vehicle.
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Old 12-17-2019, 02:33 PM
  #4

Iíve never gone more than 5 years. My last car had 0% interest which was amazing.

I didnít think they did 8 years, but I guess theyíll do anything to get the sale. Plus, the money theyíll make on the interest makes it worth it.
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Old 12-17-2019, 02:46 PM
  #5

Four years max for me!


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Old 12-17-2019, 02:47 PM
  #6

That's crazy. I had the unfortunate experience of needing to get a new-to-me car at the end of the summer. It was unpleasant (especially since I wasn't prepared for it so hadn't done any looking around). I did finally buy a used car that I really like. But...it was expensive to me, even though it was a used car and a sedan and a Hyundai (which I don't think are terribly expensive).
When I went to work out the finances, they gave me several options and I was surprised to have the option to go out over five years.
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8 years is too long, but...
Old 12-17-2019, 03:12 PM
  #7

I wonder about those who buy their lease. If you factor in the length of the lease and then the time on payments to buy it out that probably is around the same timeframe.

I'm looking at replacing my car in the next year. I really don't want to go longer than 60 months.
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Old 12-17-2019, 03:54 PM
  #8

Itís actually more common than you think.
Last time we went vehicle shopping, we got a 6 year note. Most places have a hard time doing a 5 year note and have reasonable payments.

It was a 2 year old truck for $38000 and payments were still $575 a month.

Also, we keep cars for about 10 years before trading in.
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Old 12-17-2019, 04:10 PM
  #9

I have never heard of an 8 year car loan, but I did hear of a 7 year loan. The last new car we bought was in 2017 and we financed it. The loan officer of the dealership was surprised because we qualified for a 4 year loan due to our good credit. She said no one qualifies for that and the usual loan is now 6 or 7 years. I was shocked at that.
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Old 12-17-2019, 04:25 PM
  #10

We did five years, and I thought that was a long time. My last one was three.


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Old 12-17-2019, 05:01 PM
  #11

I usually do a five year loan, but work hard to pay it off early by making extra payments.
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Old 12-17-2019, 05:36 PM
  #12

There was a really good segment on NPR about this - here's a link. A third of all new car loans have terms longer than six years!
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Mine is a 5 year but
Old 12-17-2019, 06:22 PM
  #13

I make extra payments and put $15,000 down. I actually donít owe that much more on my 1.5 year old vehicle.
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Old 12-17-2019, 06:25 PM
  #14

I would say that if you need an 8 year loan you canít afford to buy that car.

We always set up a special savings account each time we paid off a car loan and deposited the payment amount each month. Since youíre used to making a car payment you donít really miss the money and when it is time for a new car you have a large down payment saved up.
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Old 12-17-2019, 07:17 PM
  #15

I am thinking she is paying twice as much for the car Not a good plan but understandable considering the backwards slide of salaries vs. cost of living. At least she will have some happiness in the new purchase and hopefully the car will run well the entire 8 years .
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Old 12-17-2019, 10:03 PM
  #16

I hate car loans. My current car has a 5 year loan, but I am doubling the payments. For some reason I got a better interest rate for a 5 year loan plus I like thinking, ďI only have to pay x amountĒ and ignore the fact that Iím paying x amount twice a month. I canít imagine having 8 years of loans looming over my head.

I keep my cars forever as well. My old car was a 2010 bought new to me with only 6000 miles in 2011 and it still feels like my ďnew carĒ with 100,000 miles . I only bought a new car because my son started driving and needed a car and I didnít want to buy him a new used car so I bought myself one and he is now driving my old new car.
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Old 12-18-2019, 05:42 AM
  #17

Very interesting topic. My wife and I have used loans to purchase several cars over the years, and we've kept every car for at least ten years. If I remember correctly, the loans in the 1980s were for three years. A car purchased in the late 90s was four years. A recent loan was for six years.

Anna mentioned the backward slide of salaries vs. cost of living, and that's definitely a factor to consider. With auto loans increasing in length, something is going to have to give.

DW and I needed to replace an aging vehicle (over 15 years-old) recently, and decided to do something we've never done before, lease. Many economists say it's a terrible idea, but after crunching numbers, we decided it made sense. Unlike a house, cars usually don't appreciate in value. By the time one is done paying off a five or six-year loan, the vehicle is worth a great deal less than what it was in the beginning. When a car reaches that age, the repair bills can start to increase. Thinking back, I have images of worn struts and shocks, leaky gaskets, bad starters, worn brake pads, and $$$$ on my brain. At some point, one has to ask if it's really worth it to pour all that money into a vehicle that is losing value every day.

Perhaps it costs slightly more to lease, but as far as we're concerned, it's worth it. No enormous down payment is needed. When the car is a few years old and the lease is up,
it can go back to the company and become someone else's problem. There are some maintenance expenses, but in the first few years, they're usually minimal. Besides, the vehicle is still under warranty.
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Old 12-18-2019, 01:45 PM
  #18

I had my last car for 11 years and got a brand new car a year ago.

My loan is 7 years. I wanted a shorter term but the interest rate would have been insane. I am already a year ahead on payments so it will be paid off well before the 7 years is up.
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Old 12-19-2019, 04:58 AM
  #19

This is what happens when people think they "need" a 45K car. Bad move. I'm sorry if I sound mean, but people need to be financially responsible.
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