Average new car payment $554

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Originally Posted by AuthorEditor
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As a result, the average monthly payment for a new vehicle continued to climb to a new high of $554 and to a record $391 for used vehicles, according to Experian.

https://www.cnbc.com/2019/06/06/auto-loans-hit-record-high-sending-borrowers-to-the-used-market.html


What I find interesting in these numbers is that used cars are as costly as these figures make them appear to be.
If the spread between buying new and buying used is only around $5.50 day, where are the vast savings to be had in buying used, particularly since you get back at least some of that marginal cost in fuel economy, which improves a bit every year as well as in maintenance and repair expenses that are always closer on any used car than they are on a new one?
Another factor is that the supply of new cars is limited only by demand. Given the glut of worldwide auto manufacturing capacity, supply could be increased considerably.
OTOH, the supply of used cars for sale is finite and those that can reasonably be considered as new car alternatives is but a subset of that total.
If more buyers turn to this limited supply, one need not have been an economics major to grasp that there is but one possible outcome for used car pricing.
Availability of good used cars is inevitably tied to new car sales volumes. We last saw this demonstrated about ten years ago, when new car sales collapsed and the supply of good used cars at reasonable prices dried up.
 
Originally Posted by Mad_Hatter
Originally Posted by madRiver
Vicious cycle for sure. The $400 not in hand is crazy. I think that is part of issue with people taking payments to hope for a no issues/maintenance or warranty. However most vehicles warranty except maybe VW cover the vehicle 7 years fully.


I bought my Kia for the 10yr/100k warranty. I paid it off long ago and when I did pay it off I still had several years left on the warranty. Still driving it today, been a great car.

Fwiw, there's a Chrysler/Dodge/Jeep dealership here that offers a lifetime limited powertrain warranty on every CPO. If they're still doing that the next time I'm in the market for a car, I'm gonna check them out.

They offered that for quite a while. I had it on my Magnum, I know someone who has it on a 2006 Charger.

At over 300,000 miles, it's still covered. (Covered doing the rear main seal at 302K.)
 
Originally Posted by Ws6
Originally Posted by clinebarger
Originally Posted by tony1679
Originally Posted by clinebarger
At 29 years old....NO WAY, NO HOW!!

I don't have a Mortgage or a Car Payment. And even if I was single, I couldn't see 200K getting me very far!
Owning a home & land is expensive!


I have two ways to easily do this.
1. I can buy an acre of family land with an existing well and septic for $5k. I can then build a small, simple, extremely energy efficient house for well under $75k, as I've already had multiple estimates based on what I want. Then pay off both cars (rounding way up) for $20k. That's only $100k. I have no debt other than that, so that's $100k I can put in savings, invest, etc. With no real bills, $100k will last a very long time with my lifestyle.

2. I can buy my current house I'm renting for $125k. I'd instantly have $25-50k equity in it (again, family deal). Paying off the two cars would leave me $55-60k, plus $25-50k in equity. My lifestyle consists of surfing BITOG and the everlasting hunt for the motherload of clearance oil. Not to mention the things I could do for income in all that free time that I couldn't do now.

Of course, as ad244 said, assuming I don't rack up millions in medical bills.


You'll find out when you own a home......
Existing Well & Septic?.....Sounds like a expensive disaster waiting to happen. My first home had Well & Septic, I don't wish that on anyone!
75K to build a new home.....I'm building a 30x40 shop right now & have @$26,000 in it. No Windows, HVAC, Insulation, Sheetrock, Plumbing, Interior walls, Carpet/Flooring, or Paint.
I haven't added in the Electrical stuff I've bought....Probably $3,000 so far.
Besides the Concrete.....I've done everything myself.

Equity doesn't mean mean jack unless you sell or borrow against it......Not something I'm interested in.
I've paid over $100,000 in property taxes alone in my lifetime thus far......Of coarse Rural Oklahoma is surely much cheaper.

If you have such accominating arrangements with family members.....Good for you! Most of us are not that fortunate!


Whats wrong with well and septic? Mine are fine. The ones I grew up with are still fine. No water or sewer bill is nice.


That. My house has been fed by the same well for 100+ years. Pump was replaced in about 1991. And unlike municipal water, it's actually palatable!
 
Originally Posted by Ws6

Whats wrong with well and septic? Mine are fine. The ones I grew up with are still fine. No water or sewer bill is nice.


Same here- I did replace the pressure tank after 25 years and I had to replace the line from the septic tank to the lateral field about 20 years ago, but that's it. Other utilities? Just electricity- averaging $150/month for a 3,500 square foot house.
 
Originally Posted by rooflessVW
Originally Posted by demarpaint
Originally Posted by Eddie
I don't believe in car payments. Save money till you can afford to pay cash. The only other way is getting a car payment for 1% and your $40K CD is paying 2+%. Ed

That's how I do it. I had two car loans in the past 11 or so years. One was zero %, the other just under 1%, my money stayed put. My motto is if I can't afford to pay cash for something I don't buy it. No if and's or buts.

Good for you guys, but I'm not dropping cash on a depreciating asset. I'd rather have my money just sitting losing value to inflation than tied up in something that could be a total loss tomorrow.


How does this make sense? You'd rather pay thousands in interest? A loan you're dropping cash and interest and if it's totaled the bank is going to get its money from insurance or you or both. Show me the math where this makes sense.
 
Originally Posted by fdcg27
Originally Posted by AuthorEditor
Quote
As a result, the average monthly payment for a new vehicle continued to climb to a new high of $554 and to a record $391 for used vehicles, according to Experian.

https://www.cnbc.com/2019/06/06/auto-loans-hit-record-high-sending-borrowers-to-the-used-market.html


What I find interesting in these numbers is that used cars are as costly as these figures make them appear to be.
If the spread between buying new and buying used is only around $5.50 day, where are the vast savings to be had in buying used, particularly since you get back at least some of that marginal cost in fuel economy, which improves a bit every year as well as in maintenance and repair expenses that are always closer on any used car than they are on a new one?
Another factor is that the supply of new cars is limited only by demand. Given the glut of worldwide auto manufacturing capacity, supply could be increased considerably.
OTOH, the supply of used cars for sale is finite and those that can reasonably be considered as new car alternatives is but a subset of that total.
If more buyers turn to this limited supply, one need not have been an economics major to grasp that there is but one possible outcome for used car pricing.
Availability of good used cars is inevitably tied to new car sales volumes. We last saw this demonstrated about ten years ago, when new car sales collapsed and the supply of good used cars at reasonable prices dried up.


In 2017 this is why I bought new. With 30k-50k miles was only $800 less.
 
Originally Posted by rooflessVW

Good for you guys, but I'm not dropping cash on a depreciating asset. I'd rather have my money just sitting losing value to inflation than tied up in something that could be a total loss tomorrow.



crackmeup2.gif


My car payment equates to @7% of my take-home pay. I'm on the road to ruin!
 
Originally Posted by Jarlaxle

They offered that for quite a while. I had it on my Magnum, I know someone who has it on a 2006 Charger.

At over 300,000 miles, it's still covered. (Covered doing the rear main seal at 302K.)


Nice, replacing those main seals ain't cheap.... did they require you to have all your maintenance done by them??
 
Originally Posted by HowAboutThis
Originally Posted by rooflessVW
Originally Posted by demarpaint
Originally Posted by Eddie
I don't believe in car payments. Save money till you can afford to pay cash. The only other way is getting a car payment for 1% and your $40K CD is paying 2+%. Ed

That's how I do it. I had two car loans in the past 11 or so years. One was zero %, the other just under 1%, my money stayed put. My motto is if I can't afford to pay cash for something I don't buy it. No if and's or buts.

Good for you guys, but I'm not dropping cash on a depreciating asset. I'd rather have my money just sitting losing value to inflation than tied up in something that could be a total loss tomorrow.

How does this make sense? You'd rather pay thousands in interest? A loan you're dropping cash and interest and if it's totaled the bank is going to get its money from insurance or you or both. Show me the math where this makes sense.

$240/yr in interest. Big whoop.

Meanwhile, my rainy day fund stays nice and fat, and GAP covers me nicely in the event that my massively depreciating SUV is rear-ended by a texting teen. So call the minimal interest I pay insurance.
 
Meanwhile, my rainy day fund stays nice and fat, and GAP covers me nicely in the event that my massively depreciating SUV is rear-ended by a texting teen. So call the minimal interest I pay insurance. [/quote]

Remember-there are those on here who buy a $200.00 ( that's been in a flood) beater-and the goal is to drive it to a half a million miles and reach (in their opinion) the pinnacle of automotive excellence.
 
Unless your can convince me numerically, if you're against losing money on a depreciating asset you're still doing it wrong, or you've hit a lucky spot of interest rates and savings rates with your current vehicle.

I was just messing with online calculators. Paying cash and investing what would be the monthly payment on a $15k loan in safe investments (CDs, money market accounts) will put you about $2k ahead at the end of 5 years. Really depends on the interest rates you assume you'll pay/receive, but that would probably be your "Gap insurance" on a car with a $15k loan. Also, twice I've had people total my cars. Both times I received the high end of Blue Book from their insurance. Maybe I'm just lucky. But I doubt it. You'll always lose money, on average, with insurance. That's how actuaries keep income above expenses.
 
Originally Posted by HowAboutThis
Unless your can convince me numerically, if you're against losing money on a depreciating asset you're still doing it wrong, or you've hit a lucky spot of interest rates and savings rates with your current vehicle.

I was just messing with online calculators. Paying cash and investing what would be the monthly payment on a $15k loan in safe investments (CDs, money market accounts) will put you about $2k ahead at the end of 5 years. Really depends on the interest rates you assume you'll pay/receive, but that would probably be your "Gap insurance" on a car with a $15k loan. Also, twice I've had people total my cars. Both times I received the high end of Blue Book from their insurance. Maybe I'm just lucky. But I doubt it. You'll always lose money, on average, with insurance. That's how actuaries keep income above expenses.



I guess so. I bought my son a compact car-it was one of those "one only" loss leader vehicles the dealer actually had. Due to no fault of his own-it was totaled with 12,000 miles on it. The first offer from the insurance company was for more than I paid for it. Actually made money. It was just a normal insurance policy-no GAP insurance or anything.
 
Prices go up, that's a given.

Today I saw corn in the store. I used to be able to buy 10 or 12 ears for a dollar. Today it was 79¢ an ear.
 
Originally Posted by HowAboutThis
Originally Posted by rooflessVW
Originally Posted by demarpaint
Originally Posted by Eddie
I don't believe in car payments. Save money till you can afford to pay cash. The only other way is getting a car payment for 1% and your $40K CD is paying 2+%. Ed

That's how I do it. I had two car loans in the past 11 or so years. One was zero %, the other just under 1%, my money stayed put. My motto is if I can't afford to pay cash for something I don't buy it. No if and's or buts.

Good for you guys, but I'm not dropping cash on a depreciating asset. I'd rather have my money just sitting losing value to inflation than tied up in something that could be a total loss tomorrow.


How does this make sense? You'd rather pay thousands in interest? A loan you're dropping cash and interest and if it's totaled the bank is going to get its money from insurance or you or both. Show me the math where this makes sense.


If you have a decent credit score, you'll pay little or nothing in interest.
We've bought three new cars over the past seven years and we financed two of them, since the loan rates on offer were 0.9% and 0% respectively.
We wrote a check for our most recent purchase since there were no great deals on financing on offer.
Only those without good credit pay thousands or even hundreds in interest.
 
Yes, true. However, monthly payments to some credit place for the car. Or, instead of 0% interest, my offer was an extra $1000 off the sticker price from corporate plus then I put the payments in savings, paid myself. So saved an extra $1000 plus paying for my next car right out of the gate AND making interest on it.

Many offers are 0% interest OR more cash off up front. I'm still ahead if you calculate cold hard cash.
 
Toyota right now: pay someone the low low 1.9% interest rate OR get an extra $1500 off and pay cash. One you're losing interest. The other you're paying yourself in interest AND getting $1500 off up front. If you have cash sitting around prove to me the second option is worse in cold, hard, sociopathic numbers I'll take a look. Otherwise, just admit you're OK losing a few hundred dollars for feeling more secure. It's ok to admit. LOL
 
Last edited:
Originally Posted by HowAboutThis
Toyota right now: pay someone the low low 1.9% interest rate OR get an extra $1500 off and pay cash. One you're losing interest. The other you're paying yourself in interest AND getting $1500 off up front. If you have cash sitting around prove to me the second option is worse in cold, hard, sociopathic numbers LOL


When I bought my Corvette in 2017, the deal with GM was the opposite. You got an additional $1,000 off if you financed with GM a minimum of $7,500. So I financed $7,500, got the first monthly statement and paid the loan off. The $1000 cost me a few bucks in interest for the 30 days I had the loan but was well worth the hassle. I hate debt.
 
Let's say you borrow $30k at 1.9% and instead keep $30k in a pretty conservative mutual fund earning 5% compounded annually. You're ahead 3.1% the first year, and every year for the life of the loan. It's how banks make money. They essentially borrow from you at a low interest rate and invest the money where it earns a lot more.
 
Originally Posted by RhondaHonda
Originally Posted by HowAboutThis
Toyota right now: pay someone the low low 1.9% interest rate OR get an extra $1500 off and pay cash. One you're losing interest. The other you're paying yourself in interest AND getting $1500 off up front. If you have cash sitting around prove to me the second option is worse in cold, hard, sociopathic numbers LOL


When I bought my Corvette in 2017, the deal with GM was the opposite. You got an additional $1,000 off if you financed with GM a minimum of $7,500. So I financed $7,500, got the first monthly statement and paid the loan off. The $1000 cost me a few bucks in interest for the 30 days I had the loan but was well worth the hassle. I hate debt.


See, this I'd say has a chance of working out in your favor, if I actually crunched the numbers. As long as that first month of interest was less than the extra cash they gave you.
 
When I paid off my new Civic in under two years I paid 900.00 a month on a 135.00 month payment. 450.00 e every two weeks kept rates low. 554.00 for a car payment imo is too much. I follow Dave Ramseys advice even though I'm not in financial trouble to this day.
 
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