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    Thread: In 2019, More than half of all auto loans in Canada are 84 month or longer terms

    1. Member MGQ's Avatar
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      07-21-2019 11:20 AM #1
      Bad news: 8 year loans on the rise
      Good news:
      Get a new Challenger Hellcat 6-speed for only $228 weekly @3.99% for 96 months!


      https://www.autonews.com/finance-ins...getting-longer

      TORONTO — Loans with terms of 84 months or longer made up more than 50 per cent of all automotive financing in Canada in the first half of 2019, according to J.D. Power. While this number is consistent with previous years, 96-month loans are on the rise.
      Mitigating that risk is prompting dealers to offer insurance products that allow consumers to literally walk away from car payments in the event they can no longer support them, said David Hertzog of BDO Canada, an accounting, tax and advisory firm for a variety of sectors.

      “Walkaway insurance would be the one that would cover off [buyers] if there’s negative equity on the vehicle. “If you’re upside-down on your loan — let’s say you’ve got to get out after four years, you lose your job or you’re sick and you can’t make the payments — walkaway insurance will cover you off, depending on what coverage you get,” said Hertzog, who works with dealers in the Greater Toronto Area.

      “F&I departments in dealerships are being urged to sell this policy because it protects the customer, but it’s obviously a revenue-generating product for the dealer.”
      "somebody's giving me a whole lotta money to do what I think I want to"

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    3. Senior Member VarianceVQ's Avatar
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      07-21-2019 11:36 AM #2
      I didn't know there was such a thing as a longer than 72-month car loan until recently, let alone longer than 84.

      Might not be awful if it's a very low APR and you plan on running the thing into the ground but outside of that...
      Next car desires subject to change... Perpetually.

    4. Member 2.0_Mazda's Avatar
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      07-21-2019 11:43 AM #3
      Oh my. And I felt bad with my 48 month loan.

      If you can't afford the car, don't buy it.

    5. Member Bibs's Avatar
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      07-21-2019 11:48 AM #4
      In the blue collar town I’m in, every entry level union guy has to get the biggest, baddest truck as soon as he lands his first gig.
      It’s a uniform for them. My brother in law runs a Chevy dealer, and tells me these stories all day long.
      It doesn’t help that a truly cheap truck is hard to find, but most people want flashy new trucks.


      Sent from my iPad using Tapatalk

    6. Member MGQ's Avatar
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      07-21-2019 11:57 AM #5
      Lots of vehicles in my area seem to be ridiculously high-end as well. I’d like to think it’s all wealthy people, but if half of new cars are 84mo. + terms, then apparently not the case for everyone.

      You can get a bare bones Nissan Micra for $81 bi-weekly though. (@5.39/84) Priced in usd, that’s a pretty cheap payment
      "somebody's giving me a whole lotta money to do what I think I want to"

    7. Geriatric Member BRealistic's Avatar
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      07-21-2019 12:00 PM #6
      Quote Originally Posted by Bibs View Post
      It doesn’t help that a truly cheap truck is hard to find,
      When ten year old 120k mile trucks are still 15-20k... it make you think new ain't so bad.

    8. Member dr_spock's Avatar
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      07-21-2019 12:00 PM #7
      If you have the self-discipline, you could save up and pay cash in 8 years time. Less risk should you lose your job or something and the repo-man comes calling.

    9. Senior Member LT1M21Stingray's Avatar
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      07-21-2019 12:09 PM #8
      I would take a 25 year mortgage for the new Corvette.
      Quote Originally Posted by Mk1Madness
      Back when making your car faster and better handling was the big thing.
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    10. Member worth_fixing's Avatar
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      07-21-2019 12:33 PM #9
      see my comments in the Ci Corvette thread.

      lol

      i think we're high on our maple syrup, eh?
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    11. 07-21-2019 12:44 PM #10
      People want what they want, I guess.

      Why think ahead when you can have item x now?
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    12. 07-21-2019 01:30 PM #11
      I just read a few articles about Canada's credit crisis, it's easy to see parallels to our own issues in the US.

      Crushing students loans, crazy housing markets and two generations trying to live the life their grandparents had, but on credit.

      It's fun in the beginning but in time it catches up with you. With low retirement savings added to the list and getting old is going to be a tough time for many.

      Upon reflection I've come up with a new saying, "only the debt free die young".

    13. Member someguy123's Avatar
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      Handed in my car enthusiast 'card'.
      07-21-2019 01:35 PM #12
      Well if it’s 0% finance....still, at over 48 months the car worth’s a lot less, but you’re still paying the same amount for an old, depreciating asset.

    14. Member Elite_Deforce's Avatar
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      07-21-2019 01:42 PM #13
      Can't fix stupid, amirite?
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      07-21-2019 01:50 PM #14
      Driving is fun. Debt for fun.

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      07-21-2019 03:13 PM #15
      I don't get the anti payments mentality, though I do get the anti high interest mentality.

      I'll admit it, I financed the whole lot of my Alltrack, for 84 months!!! However, it was at .95% interest, yes, less than 1 percent. I could have paid cash but that would have been dumb IMO. I'd rather have that money in my retirement account growing than sitting in car equity. According to what the dealer would offer me on trade today I'm about $1000 underwater on the car after 18 months, and should be in positive position soon so if I did have to dump it I could.

      Also before you say I would have been better taking the cash deal, there was no cash deal. I asked the finance lady at the dealer why VW didn't offer a cash deal that was at least 1/2 of what the multi thousand dollar interest rate subsidy was. Her answer was that auto makers like to have people making payments, then when they compute you have equity they start sending you those deals where you can move into a brand new car for the same monthly payment. I'd image lots of people take them up on that.

    17. Member MGQ's Avatar
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      07-21-2019 03:54 PM #16
      Quote Originally Posted by KrisA View Post
      I could have paid cash but that would have been dumb IMO. I'd rather have that money in my retirement account growing than sitting in car equity.
      The vast majority of people don’t do it that way, that’s the anti payment stance lots have. Also extra long amortization leads to people taking on more debt than is reasonable, on a car that will be long out of warranty and could still be upside down, 0% or not. In some parts of Canada your car could have rust perforation before the last check clears!
      "somebody's giving me a whole lotta money to do what I think I want to"

    18. 07-21-2019 03:54 PM #17
      Same here. I could have paid cash for my Fiat 500 three years ago but 0% financing was a free loan, and I can do something else with the cash. Could have done it for 84 months but I opted for 72. I'd rather have car left at the end of the loan as opposed to loan left at the end of the car. Halfway there ...

    19. Senior Member Lwize's Avatar
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      07-21-2019 04:05 PM #18
      I wouldn't mind 72 or 84 months at zero % financing, but paying interest on a new car purchase for that long is nuts.

      I'm paying 1.9% over 4 years on a CPO Toyota thru Toyota Financial, and 1.9% is at the outer edge of acceptable (to me).
      I reject geometry.

    20. Moderator Oliver@triplezoom's Avatar
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      07-21-2019 04:17 PM #19
      Quote Originally Posted by Lwize View Post
      I wouldn't mind 72 or 84 months at zero % financing, but paying interest on a new car purchase for that long is nuts.

      I'm paying 1.9% over 4 years on a CPO Toyota thru Toyota Financial, and 1.9% is at the outer edge of acceptable (to me).
      On a $30k loan paid over 84 months at 0.9% you're not even paying a grand in interest. Seems reasonable to me.

    21. Senior Member AZGolf's Avatar
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      07-21-2019 05:08 PM #20
      Quote Originally Posted by MGQ View Post
      The vast majority of people don’t do it that way, that’s the anti payment stance lots have. Also extra long amortization leads to people taking on more debt than is reasonable, on a car that will be long out of warranty and could still be upside down, 0% or not. In some parts of Canada your car could have rust perforation before the last check clears!
      Lots of cars have 4, 5, 6, even 10 year warranty periods and are more reliable today than ever before. With interest rates near or below the rate of inflation, there's truly a lot of worse things to spend money on than a new, reliable car.

      As for the mention above about a 0.9% interest rate, that is true but keep in mind any interest rate below about 2.3% means you're the one getting paid since the interest is less than the rate of inflation anyway. Even a 3.9% interest loan is effectively only 1.6% after inflation.

    22. Geriatric Member BRealistic's Avatar
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      07-21-2019 05:16 PM #21
      Quote Originally Posted by AZGolf View Post
      Lots of cars have 4, 5, 6, even 10 year warranty periods and are more reliable today than ever before. With interest rates near or below the rate of inflation, there's truly a lot of worse things to spend money on than a new, reliable car.
      Don't confuse a longer power-train warranty with a full warranty.

    23. Member MGQ's Avatar
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      07-21-2019 06:05 PM #22
      Cars are certainly lasting longer, but that advantage is erased when you extend your payments by an equal amount. Sure, get a car you can afford and stretch the payments at low interest, I have a hunch a lot of people are just paying the most they can afford for 84 months instead of 48.
      Last edited by MGQ; 07-21-2019 at 06:09 PM.
      "somebody's giving me a whole lotta money to do what I think I want to"

    24. Moderator Harv's Avatar
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      07-21-2019 06:18 PM #23
      Insane. I can't help but think that 99% of these loans are going to be upside down by year 3.

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      07-21-2019 07:21 PM #24
      Quote Originally Posted by MGQ View Post
      The vast majority of people don’t do it that way, that’s the anti payment stance lots have. Also extra long amortization leads to people taking on more debt than is reasonable, on a car that will be long out of warranty and could still be upside down, 0% or not. In some parts of Canada your car could have rust perforation before the last check clears!
      Thankfully that's not the care here in the prairies. I had my 2010 Golf Sportwagen TDI for almost 8 years when I took the dieselgate buyback, at that time there wasn't a SPECK of rust on it and other than a couple of dings and some scratches that only were visible because the car was black it looked amazing. Even the brakes looked good when I gave it back, I don't remember there being any rust on the original calipers at all. I should also mention that the TDI didn't need a single $ in repairs in the time I had it. Very cheap car for me, bought it for 33k cash, drove it for 8 years and got over 20k on the buyback.

      Unless I get sucked in on an R I expect to drive my Alltrack for at least 10 years.

    26. Senior Member Iroczgirl's Avatar
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      07-21-2019 08:23 PM #25
      Quote Originally Posted by LT1M21Stingray View Post
      I would take a 25 year mortgage for the new Corvette.
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      Quote Originally Posted by Crimping Is Easy View Post
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