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97 month car loans becoming the norm : Swingers Discussion 220211
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FORUMSGeneral DiscussionsOpen Forum97 month car loans becoming the norm
TOPIC: 97 month car loans becoming the norm
Created by: Nkenswing
Original Starting post for this thread:
With interest rates at relative lows and growing car sales encouraging creditors to take riskier bets, more car buyers are taking out longer loans than ever before.

According to a report from credit bureau Experian, the average new-car loan rose to 65 months during the last quarter of 2012, the highest on record.

The number of buyers taking out loans ranging from 73 to 84 months shot up by 19.4 percent, the highest increase of any loan category. Believe it or not, some buyers have even taken out 97-month term loans -- that's more than eight years under a lender's watchful eye.

Granted, only a very tiny proportion of all new-car loans in 2012 -- less than half a percent -- were longer than 85 months. Nearly 43 percent of new-car loans were between 61 and 72 months. An additional 30 percent were for between 49 and 60 months, Experian said. But a significant 17 percent of all new-car loans were for terms between 73 and 84 months, up from 11 percent a year earlier.

Average national interest rates are down from the last quarter of 2011 -- 4.36 percent for new cars and 8.48 percent for used cars -- and banks are approving more subprime buyers for loans. But the market is relatively stable, with delinquencies on loan payments remaining flat and historically low.

While factory-backed financing companies typically offer loans with up to 60-month terms, several automakers are hoping to lure more buyers with 72-month loans. Mitsubishi has a killer deal on remaining 2012 Outlander and Lancer models, with no interest for 72 months. Hyundai is even offering 72-month loans on its pricier models, such as the 2013 Genesis, that come with lower rates than those offered on cheaper models (2.9 percent versus 3.9 percent for a 2013 Accent).

Even the luxury market has its own ways of luring buyers with less cash on hand. Lexus and Mercedes-Benz offer loans with balloon payments, whereby buyers fork over a large sum of cash at the end of the loan in exchange for cheaper monthly payments early on, for up to 48 and 72 months, respectively.

Still, car buyers who choose to pay off their debts over a longer time period -- the average new-car loan was up $272 to $26,691 -- and who cannot put money down are getting hit hard. Subprime and deep subprime buyers, on average, paid far higher monthly payments and interest rates than more creditworthy buyers. Buyers with the worst credit scores -- those below 550 -- were paying 12.5 percent on new-car loans and a whopping 17.7 percent on used-car loans in the last quarter of 2012, according to Experian. That compares with 3 and 4 percent, respectively, for buyers with the best credit ratings.

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It's about getting the foot in the door and establishing the precedent that they can do this. Once people have come to accept it, all they need to do is fudge the parameters.

It will be met with broad public support, because people, for the most part, are stupid.

Chesapeake VA
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I just disagree with any idea to limit this kind of thing. There are plenty of excise taxes in place to keep contributions and distributions in place that there is no need to go after the cornerstone of asset accumulation in America. The 10 yr projection is minor, and folks will change their habits on this which will ultimately yield nill in additional tax revenue.

If this is a slap on wealth, as in Mitt and the big IRA......sorry, not enough of those big fish to be fooling with this shit. It certainly goes with social policy more so than responsible tax planning.

Philadelphia PA
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Define "ridiculous".

I will not keep my retirement in a 401k or IRA, because like I said, I do not believe I will reach "retirement age" before one or both of these things happen:

1. "Retirement age" become 70 or even 75... just keep bumping it forward and I can't ever touch it....

2. The government finds a way to go after it (such as the above mentioned proposal).

Call it paranoid all you like. Obama has made his position clear - privately held retirement plans are up for grabs. It won't pass this time, or maybe not even next time, but it will someday, and when it does, I won't be a part of it.

Chesapeake VA
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I read this.....has to be one of the most ridiculous ideas I have ever seen.

Philadelphia PA
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It'll be interesting to see what happens if the new 401k return limit is enacted, setting a $205,000 cap on an annual return. Right now with returns of around 6% this would only impact those over $3.3 million, but if we have a rockin' year (there are people who have had 30-50% years) it'll hit a shit ton of people.

Chesapeake VA
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I've done the same thing. It's not often the checks are No Transaction/No Interest at all, but when they are, damn straight.

Chesapeake VA
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nice!!

Philadelphia PA
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Oops, should have stated this time they had a 4% transaction fee. I've only seen one 0% transaction fee offer. I figured I'd be making money though.

Brooklyn Park MN
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Off the topic of a car loan, but just thought it might be interesting to post here...

I keep getting special offer checks included with my CC bills. Usually I throw them away because they charge a 4%-5% fee, and payments will be applied to the low or 0% rate on the checks before being applied to other charges. Which means, until the amount of the check is paid, you rack up interest on the other amounts.

So, I got an offer on checks with a 0% fee, and 0% interest for 14 months. Obviously the CC company hoped I'd keep using the card and ring up interest. I always pay the statement amount so I never ring up interest on CCs. I didn't use the card, until the next statement showed $0 balance, then I cashed a check for $10,000.

I put the money in a mutual fund, and earned 24% on that money over a year. In the mean time I put the card away and never used it. I paid the minimum amount on the CC so it wouldn't revert to the default "cash advance" interest. At the end of the period, I paid the balance off.

I figure I made $2,400 on their money- less the taxes of course.

I did it again, a few moths ago. I won't know how that turns out until next year though- whatever this mutual fund goes up, less the 4% and taxes.

It's like free money.

Brooklyn Park MN
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Yep, the boring way works.

Philadelphia PA
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TOPIC: 97 month car loans becoming the norm