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Would you take out an 8 year car loan for a car you cannot afford?

Would you do an 8 year auto loan to get a car you really couldn't afford?


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WD Pro

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Damn, I thought I had signed up to a mustang forum ... :shock:

Finances should defo be a taboo subject ... :lipssealed::cwl:

WD :like:
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bnightstar

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Damn, I thought I had signed up to a mustang forum ... :shock:

Finances should defo be a taboo subject ... :lipssealed::cwl:

WD :like:
Why I still wonder how people afford to whipple the world for example :D or all this fancy suspensions and tires that I only dream about :( heck even students here afford car mods that I can't :(
 

tokuzumi

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I voted no, mostly because I don't want a car payment for that duration. But it would also depend on interest rate. If rates are low, finance "penalty" is negligible. In the early 80s when rates were 13%+, you definitely wanted your loan duration to be short. But I could see myself extending the loan duration, and paying extra when finances are flush, and the minimum required payment when I need to put money elsewhere.
 

FirstGT

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I see these same things posted on boat forums and Harley forums and it's same discussion. Rather boring imo but then again it's generating lots of discussion so what do I know.
 

Strokerswild

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I put 10 grand down on a loaded 15 prem. GT. And took out a 5 year loan for the rest. I paid it off in a little over 3 years. I really wanted a GT500 this year. But after I did the math. Even with me putting 30 grand down that I had. From selling my race car. I was still looking at a $650 a month car payment for 6 years. As much as I love cars. I have a hard time putting down that kind of money on an object. That will be worth 60% less than what you bought it for in five years. My income is in the 150-200k a year range. So I could have afforded the GT500. But there is some much more to life than homes and cars. Im honestly glad I didn’t buy the look at me house and car. Like so many of my coworkers. I’m in my early 50s. And completely debt free. With my kids grown & on their own. And all my possessions paid for. It grants me and my wife a lot of freedom. Without stressing about money. Plus you become accustomed to a certain life style. And you have to plan for the future. So right now I’m maxing out the 401k. In the off chance I live to be 90. I like to travel. And would hate to give up the trips to tropical islands. Just because I got old. Life is about balance. In my mind. Balance is out the window with 8 year car loans. And houses that cost three quarters of a million dollars. Strictly my opinion. Not judging anyone with that type of loans. Or homes. Its just not for me.
We might be related, lots of common points.

I did basically the same with my '15, I typically shoot for a 5-year term with enough down to keep a payment well under $500 and then pay ahead to knock it out by the time the bumper to bumper warranty is up. I also lust after a new GT500, but 'been there done that' with the last-gen GT500 and not being able to really use that kind of power in a road car not to mention not wanting to have that much stuck in a car that sits in a garage 95% of the time like my '15 already does along with others (and a fleet of motorcycles). Too many other interests and priorities. I'm 50 at the moment and intend to have my properties paid off well before I hit 55, and at that point I'll be totally debt free as well.

Personally, I can't see going with a car loan term beyond 5 years unless zero percent. It's a big neon sign that new vehicle prices have gone beyond the means of most.
 

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Bear_Stang

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I worked my ass off through college so I would not be in a horrible position financially. Directly out of college, I replaced my old beater with an st focus for 15k (actually paid ~18k over the life of the loan). Even after the dealer pointed out that I could grab a mustang for about 40bucks more per month, I stuck with the focus. That 40 bucks was crucial several months during my first 4 years. Could I have afforded to buy a mustang at that point... yes, but I would have had to give up internet or eat ramen a bit more each week.

After multiple years of driving the focus and moving up the chain, I was finally in a position to purchase the mustang I wanted. It would require some minor lifestyle changes like not going out to eat 20+ times a week and cutting superfluous items from my monthly expenditure (patreons & other subscriptions), but the money was there so I could finally grab a pony... Months later ford announces that there is an electric pony in the pipeline <slap>, and Tesla debuts a truck that can outperform that electric pony <double slap>. Back on topic, afford is subjective to a point; I can afford my mustang as long as I am smart with my money. Some would say that you should not have to change your lifestyle to see if you can "afford" something. I say those people are in a different tax bracket and I can't live their life.

Now the real question that most people miss is should you take our a 30 year mortgage on a house you can't afford? This is what catches more young professionals versus anything else. Part of this is cause by the market & zoning practices that make it hard to grab affordable housing in most city limits. Another part is a drastic misunderstanding that cheap housing does not automatically mean mobile home (some of these break the 100k mark nowadays). Beyond that, the ideal of a starter house is hard to swallow when your significant other constantly watches HGTV.
 

3star2nr

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Bro let me hit you with something else.
I bought my car new in 2016.

In less than 6 months my performance pack tires were done. Tires for these cars is around 1500.00 for a set installed.

I stupidly put back on summer tires so i needed another set within a year.

Then I hit a curb one night, needed a rim and a tire. Thankfully ford covered me on that. But the wreck bent my control arms so 6 months later i was back buying another pair of fronts and getting control arms, Bill came to around 1600.

So in 3 years.
3000.00 in Tires, 1600 in repairs.

And now at 60k miles
new clutch =1000.00 in parts
New plugs =80.00
Transmission flush= 40.00
Shifter=475
Rear diff flush= 40.00
Royal purple oil change= 40.00
Serpentine belt = 100
Coolant flush =150
Pads = 255
Rotors =224.

So the real world cost of ownership, was my monthly car payments plus 7000.00...

You can go cheaper switching to all seasons immediately and installing curb sensors. But humans make mistakes... And even if you are perfect you still need to be able to drop at least 1000.00 at any time to cover something... Even if its a speeding ticket which is gonna run you around 400.00 on average
 

Rock&Roll

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8 year car loan is crazy.

Reminds me of when everyone ( but me ) was buying overpriced big McMansions and the banks where making a ton of money giving out the loans and then it backfired and govt had to save all the banks.

The moral of the story ... the banks when every time.
 

tokuzumi

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60k on a clutch? Was the old one slipping, or did you just replace to a performance clutch? Sounds like the same thing with the shifter. A mod, and not a broken part.
 

w3rkn

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leasing or buying, wouldn't change my question. a car loan past 10% of gross income is no longer considered affordable whether its a lease or not. Lease would probably be even worse actually, if you think of it...a lease you almost always end up writing a check up front for thousands of dollars to cover the instant depreciation of the vehicle you leased...and common sense would say anyone seeking an 8 year loan on a car they really cannot otherwise afford probably doesn't have the several grand out of pocket to even initiate the leasing terms.
What..? I still do not get your line of questioning. Most people today driving can NOT afford the cars they drive, so instead of buying it, they lease it (for a time period).
  • -Most people who can NOT afford cars... lease!
  • -Most people who can not afford to finance a car loan for under 6 years.... lease.
  • -Those who really want a car they can't afford to buy.... lease.
  • -Those who can not afford a car that want to keep, lease it for 4-6 years. Then buy it (after their lease is up) and finance the remainder...


You questions are not about buying anything, it is about leasing. And yes, many People lease to own.... or try before you buy. There is a difference in owning a car & leasing one.
 
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Ebm

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This thread is pointless. No one in their right mind would say yes because you already told them off in your initial post. I bet every one of us has made a poor financial decision in their life in one way or another. Going out to eat could be looked at as a poor financial decision because you can eat at home for a lot less. Drinking alcohol could be looked at as a poor financial decision. You just have to take your chances carefully. By the way, I would not finance a car for 8 years.

Facts:
In May of this year(2019), the average new car price was $36,718 with an interest rate around 6%. This has probably gone up a little by now.
The average monthly new car payment in the US is $554 and average monthly used car payment is $391 in the first quarter of 2019. These numbers have likely gone up a little by now.
The average lease payment is $457 in the first quarter in 2019. This figure has likely gone up as well.
 
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vernonator

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Some folks are strictly "Payment" buyers, as in - I can afford $x @ month. If they need to stretch that out to 8yrs to get the car they like, that is their decision. Now would I do it? That depends...what is the rate? Is it a car I am going to keep for 8+yrs, does that include an extended warranty. Hard to answer without knowing the details. But in general no...longest I ever did was a 66mos for an F-150 but that was at 0% and I drove it for 8yrs or so.
 

cib24

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The next question that should really be asked is how many people bought their car on finance (whether a lease or term loan), and have modifications on the car? Logic says that the money spent on those modifications should be spent on reducing your balance owed on the car that is still technically the "bank's" car .

Yet, I'm sure there are quite a few people on here that have $5,000, $10,000, $20,000, $30,000 invested in their Mustang's yet are still paying off the car loan. I am sure this scenario also applies to any other car out there that you can modify as well.
 
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Norm Peterson

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Haven't bought a car I couldn't comfortably afford yet, hope I'm never put in the situation of having to choose between something I'll at least enjoy driving and whatever that comfortable affordability might end up being.

My situation might be a bit different. I'm 72, the house is paid for and car expenses are essentially down to insurance, maintenance, repairs, modifications, and replacement of consumables on the car that sees some track time. The fact that I'm on the leading edge of 'boomers' and only one generation removed from the Great Depression of the 1930's probably had a lot to do with acquiring a very conservative attitude toward what was meant by "affordability". I suspect once you younger guys have been living on Social Security and Required Minimum Distributions for a while that "affordability" will mean something a bit different from what it does today.

I think technically we stretched a bit further than was considered acceptable at the time when we got into our first house, but times were relatively good, employment reasonably stable, and there were no car payments or student loan payments competing for my paycheck. That was the only time.


Norm
 

Ebm

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Haven't bought a car I couldn't comfortably afford yet, hope I'm never put in the situation of having to choose between something I'll at least enjoy driving and whatever that comfortable affordability might end up being.

My situation might be a bit different. I'm 72, the house is paid for and car expenses are essentially down to insurance, maintenance, repairs, modifications, and replacement of consumables on the car that sees some track time. The fact that I'm on the leading edge of 'boomers' and only one generation removed from the Great Depression of the 1930's probably had a lot to do with acquiring a very conservative attitude toward what was meant by "affordability". I suspect once you younger guys have been living on Social Security and Required Minimum Distributions for a while that "affordability" will mean something a bit different from what it does today.

I think technically we stretched a bit further than was considered acceptable at the time when we got into our first house, but times were relatively good, employment reasonably stable, and there were no car payments or student loan payments competing for my paycheck. That was the only time.


Norm
Ha, you are funny Norm. There won't be any social security left when us younger guys get to your age(if we are lucky enough to see your age).

Norm, there are a lot of differences between when you were in your 20s and 30s and now. The average person back then could afford to have a house and a car or two. These days, prices for EVERYTHING are much higher than they used to be. Darn inflation. Back then, houses were handed down from generation to generation. This isn't as common as a practice anymore either. Back then were simpler times, the world kind of just sucks today lol. I say back then, but I'm in my late 20s, so I wasn't even born.
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