New Stats: Avg Auto Loan: $30,032 / Payment: $503 / Duration: 68 mos

[akirby]

I had heard Ford dealers were prohibited from buying lease returns but maybe it's not true.

[blazerdude20]

I had heard Ford dealers were prohibited from buying lease returns but maybe it's not true.

Dealer I used to work for did it on the regular. It isn't a steal of a deal by any means but the dealer already knows the condition so it's typically worth it to avoid send backs. Rules could be different now though.

[Tico]

Too many focus on monthly payment and not total cost of the time you have the car. It really depends how long you plan to keep the car. I tend to keep mine 7 to 10 years. Kept my mustang for 12. So in that case was cheaper to buy even with five year loan rather than the four leases I would have went through. It would have been tens of thousands more over 12 years. Even with repairs it was a better. But if you want a new car every 4 or 5 years yes then maybe lease. Point is lower monthly payment is not always lowest total cost when measuring over 5 or ten years of driving. Don't think short term.

Edited June 6, 2016 by Tico

[blazerdude20]

Too many focus on monthly payment and not total cost of the time you have the car. It really depends how long you plan to keep the car. I tend to keep mine 7 to 10 years. Kept my mustang for 12. So in that case was cheaper to buy even with five year loan rather than the four leases I would have went through. It would have been tens of thousands more over 12 years. Even with repairs it was a better. But if you want a new car every 4 or 5 years yes then maybe lease. Point is lower monthly payment is not always lowest total cost when measuring over 5 or ten years of driving. Don't think short term.

Very true. However for the people that buy every 2-3 years (that's a lot of people) it makes no sense to buy a vehicle. Might as well lease it.

[akirby]

The first decision is how long you want to keep the vehicle - how you finance it is really a separate decision. You can lease and then buy it out to keep it or you can buy it and trade it/sell it after 3 years. Outside of special mfr lease incentives and differences in interest rates - it's basically a wash either way. You're still paying the depreciation over the first 3 years.

[Biker16]

I have an feeling that SUVs sales have been driven, not simply by native demand, but primarily by Financing. this is only Way to explain how Prices have risen so fast, yet incomes have been so stagnant.

 

It is possible that the sales of Vehicles like the F150, which now are topping out over $60,000, will be out of Reach of many buyers if the financing model changes.

 

Who wins in this scenario?

 

 

http://www.stltoday.com/business/local/as-subprime-auto-borrowers-default-collection-suits-pile-up-in/article_241c726e-3532-537c-b1d2-b17e166cf92d.html

 

 

As subprime auto borrowers default, collection suits pile up in local courts

By Walker Moskop St. Louis Post-Dispatch 13 hrs ago (232)

 

 

http://www.bidnessetc.com/69938-jpmorgan-chase-sees-risks-rising-auto-loans/

JPMorgan Chase & Co Sees Risks Rising in Auto Loans

Big Banks By Abdul Wasay

Jun 3, 2016 at 2:37 pm EST

JPMorgan Sees Risks Rising in Auto Loans

JPMorgan shows concern over growing number of sub prime auto loans

The chief executive of JP Morgan Chase & Co. (NYSE:JPM), Jamie Dimon warns that banks may face the emergence of sub-prime auto loans. At a conference on Thursday, he pointed out that auto loans have increased exponentially in recent years, as competition has increased and banks have become more willing to sell loans, often with fewer requirements.

[630land]

60% of these "new cars" are actually trucks/SUV's, so that is main reason for the higher prices.

 

Americans will empty their wallets and sign life away to have a 'big ute' parked in driveway. And to be at same level as a Drive-Thru window to get fast food.

 

A new car? Buyers who want them demand huge rebates and grind down to the penny, so makers are pushing Utes as 'fashionable', saying "anyone who's anyone drives one and cars are cheap and small." :P

[akirby]

Oh please - there's no "prestige" in owning a crossover. They're just popular - people like the higher seating position and cargo area and they look a lot better than most minivans and station wagons.

 

As for that article - that problem is caused by people with bad credit buying cars they can't afford in the first place and then not making payments and letting their insurance lapse. Blame the banks for financing them at all.

 

Even with 29% interest you're fine as long as you don't overextend yourself on the payments and you make the payments on time.

[silvrsvt]

I have an feeling that SUVs sales have been driven, not simply by native demand, but primarily by Financing. this is only Way to explain how Prices have risen so fast, yet incomes have been so stagnant.

People are also keeping their cars much longer and used cars (trade in/financing for a new car) are also more expensive because supply being killed off from Cash For Clunkers and other things.

 

Average age for a car in the US is 11.5 years...which helps explain the demand for new cars now. If you where going to keep a car for 10+ years, wouldn't you buy something that meets a multitude of different roles (like a SUV/Truck) vs a Sedan.

[BORG]

People are also keeping their cars much longer and used cars (trade in/financing for a new car) are also more expensive because supply being killed off from Cash For Clunkers and other things.

 

Average age for a car in the US is 11.5 years...which helps explain the demand for new cars now. If you where going to keep a car for 10+ years, wouldn't you buy something that meets a multitude of different roles (like a SUV/Truck) vs a Sedan.

 

 

Sorry, this isn't 2010 anymore. CFC took the $100 used car junkers off the road 8 years ago, that has nothing to do with the market today. Actually, since those people had to buy new cars, those cars are filling the used car markets now which are pretty old now as well. And we're literally only talking thousands of vehicles, not 10s of millions of used cars sold annually. People stopped buying new cars 8+ years ago during the great recession but started buying them again 6 years ago so the used car prices are dropping about 5-15%, more so for the non-SUV small cars which are flooding the market with no buyers.

[jasonj80]

CFC never had the impact on the market the way analyst's think it did, only about 700K units were sold in the program, of those sales only 125,000 were sales that would not have happened. The impact of the market was a few years of SSR around 10million units vs the 15+ million you've had for the past 2 years and the mid 2000's. Even if the bad times there were ~37million used vehicle sales in a year, which is down from the normal 42-47 million sales.

[630land]

CFC was 7 long years ago, 2009, get over it. Just because some Caprices/Panthers and Jeep Grand Wagoneers were scrapped, it was "the end of the car world".

 

There is getting to be a glut of used off lease 2010-14 cars now, the "shortage" is in the beater/BHPH class now.

 

Anyway, per The Truth About Cars, they say that SUV's mean "you made it", while a compact car is "poverty spec". Their words not mine.

I think they were joking, but ask any new SUV buyer and brag about the size and stature to show they "own more car per pound".

Seating position is a status symbol too.

 

That's just how it is. Can't "mandate" manual transmission "sporty cars" to average buyers as car guys expect.

Edited June 6, 2016 by 630land

[Anthony]

When I bought my Focus, my neighbor who has a 5-series and an X5 asked me what kind of car it was. He said it was "so sporty looking". (Granted we don't get many Foci around here, which is another reason I like having it)

[aneekr]

they look a lot better than most minivans and station wagons.

 

I know that looks are subjective, but for me, styling for the current crop of crossovers ultimately boil down to degrees of ugliness. Hideous on one end of the spectrum, tolerable on the other.

 

Station wagons, on the other hand, can actually be aesthetically pleasing! A good example is Ford's current generation Mondeo wagon. While I'll acknowledge that not all styling elements of this wagon will be to everyone's liking, to me it looks much better than any crossover vehicle in Ford's global product portfolio:

 

[sullynd]

I generally like wagons but think the rear of the Modeo poorly proportioned.

[akirby]

It is completely subjective. Edge, Escape andd Explorer look far better to me.

[silvrsvt]

Station Wagons haven't been popular since the late 1980s...the last "successful" pure wagon was the Taurus Wagon.

 

They more or less suffered the same fate as Minivans have, which started to replace wagons in the late 1980 and in-turn where replaced by SUV and CUVs in the late 1990s.

[Kev-Mo]

I had heard Ford dealers were prohibited from buying lease returns but maybe it's not true.

My neighbor is an independent dealer. I have gone with him to the auction lot (pre-auction) when I was in the market. There are certain Fords (usually the nicest of the bunch) that he says are only open for bid by select Ford dealers - independents are not allowed to bid on these vehicles. I presume these are the cream of the crop lease returns.

Edited June 7, 2016 by Kev-Mo

[630land]

Toyota, Honda and Chrysler have no problem selling minivans.

 

Also, 2WD SUV's are the station wagons of today. i.e. a base Escape S, which can't get AWD, is essentially a Focus wagon.

Edited June 7, 2016 by 630land

[aneekr]

a base Escape S, which can't get AWD, is essentially a Focus wagon.

 

A slower, less agile, uglier, and inefficient Focus wagon.

 

Speaking of Focus wagons, I agree with Car and Driver that Focus ST Diesel Wagon is the most sensible performance car in the world.

 

[silvrsvt]

Toyota, Honda and Chrysler have no problem selling minivans.

 

http://www.autonews.com/article/20140602/RETAIL01/306029976/minivan-meltdown-maximum-margins

 

Minivan market:

 

[Anthony]

 

http://www.autonews.com/article/20140602/RETAIL01/306029976/minivan-meltdown-maximum-margins

 

Minivan market:

 

 

 

I hate media outlets that post graphs that scale to the first data point. It usually is done to strengthen a negative point.

 

Fixed:

 

(Note: yup, it is still a huge drop, but now notice it doesn't look like there's only a trickle of sales)

 

[theoldwizard]

My son bought a new Explorer about 3 years ago. Shopping around, he got a 1% loan for 72 months.

 

With a 1% cash loan, you could just put the money in AT&T stock (or MO) and be 2-3% ahead !!

[fnews]

The cost of new cars is growing. But now there is absolutely no problem to take a loan to buy a car. I think that it is not necessary to pay 68 months. You can pay the loan much earlier or choose a loan which will be suitable for you. Now, many banks provide various options for loans, the main thing is a good credit rating.  But I do not see any sense of renting a car to buy it later. Savings from this solution will be minimal.

Edited May 22, 2019 by akirby
Suspicious link removed

[jcartwright99]

I am actually surprised it's that low for the loan amount.  I would have thought trucks and suv's around the 50k mark or higher would have pushed that number up.

I have a 0% 72 month loan. 2 years in and still love my car. We'll see what happens but I am pretty sure I am going to keep my Fusion for the long haul.