Paying for Cars, and Paying, and Paying
For the first time, the majority of new car loans now stretch at least 5 years. As reported in the Washington Post on 5/4, 55% of todayís new car loans are for 60 months or more ñ up from just 22% in 2000. The trend toward longer financing periods has also increased the number of "upside-down" car owners ñ those who owe more on their vehicles than the vehicles are worth. In 2005, 33.5% of people buying cars with a trade-in owed more on their trade-ins than they were worth ñ up from 25% in 2001.
Mattís View
According to industry figures, the average new car "reliability" is 13 years and 145,000 miles. However, the average trade-in is less than 4 years old and has less than 55,000 miles. Transportation is one of the biggest expenses for most of us. The best way to get the most out of our transportation spending is to keep our cars for a long time. If youíre currently making payments on a car, once itís paid off the best advice is to keep making the payments ñ sending the money to a savings account so you can buy your next car with cash.
This article filed in: Spending
Managing Money by The Book
- "I delight in your decrees; I will not neglect your word." - Psalm 119:16
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