Posted on 12/31/2007 11:35:21 AM PST by Freedom_Is_Not_Free
When Jennifer and Bobby Post traded in their 2001 Chevy Suburban last year for a shiny new Ford F-350 turbo diesel with an extended cab, it seemed like a great deal. Even though they still owed $9,500 on their SUV after the trade-in value, they didn't have to put a penny down.
The dealership, near the Posts' home in Victorville, made it easy; it just added the old debt to the price of the new truck and gave the couple a seven-year, $44,276 loan.
The Posts were a little worried about taking on such a long obligation, but they couldn't pass up a monthly payment under $700. Now they're having regrets.
"I didn't realize how much debt was in it," said Jennifer Post, who has since moved with her family to Iowa. Now, she'd like to get rid of the truck but can't, because there's so much debt that she'd literally have to pay someone to take it off her hands.
"We have no options," she said.
[snip]
Gone are the days of the three-year car loan. The length of the average automobile loan hit five years, four months in October, up more than six months from 2002, according to the Federal Reserve. And nearly 45% of loans written today are for longer than six years...
At the same time, the amount of money drivers owe on their cars is soaring. In October, the average amount financed hit $30,738, up $3,500 in just a year and nearly 40% in the last decade, according to the Fed. More troubling, today's average car owner owes $4,221 more than the vehicle is worth at the time it's sold -- up from $3,529 in 2002, according to industry analyst Edmunds.
(Excerpt) Read more at latimes.com ...
Seven year car loans. Routinely selling cars upside-down on loans. Maxed out multiple credit cards. Routinely refinancing homes to consume disposable goods. These are not a prescription for long-term economic health. They spell out a short term boom. When the US consumer hits the wall of maxed out debt, the party will end and the economy is going to sputter.
I've more or less quit posting on the housing threads because I'm sick of the idiotic responses saying I'm just trying to talk down the economy. But I grieve thinking about the end-game when the consumer debt ponzi scheme comes to a halt. It won't be TEOTWAWKI, but it is certainly going to be difficult to continually grow the economy year after year when businesses can only sell goods in an amount proportional to incomes and not to a continually growing debt load as well.
I see some bad times ahead. Sorry for the doom and gloom, but I can't figure out how to reconcile this massive increase in consumer debt that is rapidly approaching critical mass, with a healthy long-term economy. I just can't.
Maybe someone can explain it to me.
Not to worry Jenny & Bob...the gov't will bail you out like they did for your home.
Well, you can't fix stupid people who spend & spend money they DON'T HAVE.
If government was really “about the people”, there is a way out of our spendy lifestyles. If savings was tax free there would be more incentive to save than to spend - for most.
Yes you do. Stop paying on the vehicle. It'll eventually get repossessed and then you can start over. My recommendation would be you buy a piece of crap and use the savings to finance a brain transplant.
I want a car to come fully loaded with a very strong chassis, big block V8, bullet proof windows, and a good mount for an M249 SAW.
They couldn't?????
Um... this is a repost of the same article with the same title.
http://www.freerepublic.com/focus/f-news/1945963/posts
Can we get a lock please?
Debt is about bad habits and a microwave attitude.
Anyone that says debt is a good because I need it for credit doesn’t understand the basics of money.
And until businesses quit loaning to those that will never repay this will not end.
Thread cop
If you can’t pay off a car in 3 years, you either need to look for a cheaper model or get a used car.
Sell the SUV yourselves. Doesn't everyone know by now that car dealerships don't give you squat on trade-ins?
They're in business to make money for crying out loud.
Thanks for posting the article. We haven’t financed a car since 1990 and I had no idea financing was so reckless now. My kids are reaching the car-buying age and I really hope they consider the debt they might assume. As for hubby and me, we drive a 1984 Mercedes 300TD and a 2001 BMW 535i, both bought used, with cash. It’s the only way to go. We still have our 1990 VW Vanagon Multivan. Anyone want to buy it? ;o)
The other thread has 266+ replies already. Why do we need another, wherein we’ll get the exact same replies? :P
Normally I don’t care (because the search engine is so wretched) but this is ridiculous.
Nothing has changed for over 100 years. As Scrooge says:
"Fools who have no money spend it, get in debt, then try to end it. Seek me out to befriend 'em, knowing I have cash to lend them."
LOL !
Insane isn’t it? $700 is the rent I pay on my apartment....unbelievable.....I’m shoveling away money with an expense that low, and these idiots couldn’t pass up that all for a stupid truck? Dumb dumb dumb.....
“Sell the SUV yourselves. Doesn’t everyone know by now that car dealerships don’t give you squat on trade-ins?”
Yep, that one always blows my mind.
Yeah selling a car can be annoying, but it is more then worth the time and effort.
That and people buying brand new that have no business doing so, mostly young people. They should be buying used. These days cars are far more reliable, it not an issue.
I didn’t buy new until I was 39 and could afford to pay for the whole thing, no financing.
Not to mention people never learn to do even the basic maintainance themselves.
Money has been to easy for to long.
Now the value of that money is declining.
Interestingly, there is something to be said about being heavily in debt while the currency is declining. It is really the lenders that are going to eat it under these conditions. The dollars used to pay back the debt are worth significantly less than what they were worth when they were borrowed.
The opposite is true for those who have large cash holdings. If the value of the dollar declines 15%, they’ve lost 15% of the value of their holdings.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.