It's none of my business, I get that part of it. The length of your car loan is a matter between you and maybe your spouse and certainly your bank and whoever you may confess to…
But I saw an item yesterday about folks signing for car loans that last as long as 8 years, zowie, that's a sockeroo of a loan.
The report said 8 years is the extreme, but still, about 1 out of 6 car loans these days is for at least 6 years.
Now, the average age of a car at trade-in is just over six years…unscientifically, that sounds to me like a lot of folks expect to be making a monthly car payment for as long as they live.
That's interesting. In fact, it's a lot of interest.
Here's an example: a nice lady in Palm Beach, FL, still owed several thousand dollars on her old car, but she decided last month to get a new car anyway. She bought a new Toyota Camry for $23,000. Well, to be more exact, she let her bank buy the car for $23,000 and also pay off the old loan, and she agreed to pay the bank a grand total of $36,000 over the next 75 months, at $480 a month.
That's more than six years. A sockeroo.
The nice lady had a baby girl shortly after driving her new Camry off the dealer's lot. Her daughter will be graduating from the first grade when the loan is paid off.
Again, I understand this is none of my business. But I think it's a bad business.
It was a somewhat simpler business in 1956, when Lee Iacocca helped to establish the great American tradition of auto loans. In that year Mr. Iacocca, then a Ford regional manager, made his mark with "a '56 for $56," selling a 1956 Ford car for 20% down and a 36-month car loan with a $56 monthly payment. Those were the days.