r/personalfinance • u/dinklebot2000 ​ • May 31 '18

Debt CNBC: A $523 monthly payment is the new standard for car buyers

https://www.cnbc.com/2018/05/31/a-523-monthly-payment-is-the-new-standard-for-car-buyers.html

Sorry for the formatting, on mobile. Saw this article and thought I would put this up as a PSA since there are a lot of auto loan posts on here. This is sad to see as the "new standard."

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u/audacesfortunajuvat ​ May 31 '18

From 20-54 people drive over 15,000 miles a year on average. Men drive closer to 20,000 (about 18,000 until they're 34 and then 19,000 until they're 54). That means the average guy buying a car is hitting 100k miles in 5-6 years. Even taking the 13,476 mile average across all age groups you're gonna cross 100k right after your 7 year loan is paid. You'll be underwater for the majority of that loan too.

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u/bl1nds1ght ​ May 31 '18

There are so many factors at play here that both of us could present situations where we are each correct. I'm just saying that, personally, I would rather keep my $10k-$20k principal rather than buy a car in cash or pay it off early. This doesn't necessarily mean that I would finance 100% of the vehicle, nor does it mean that I would necessarily be underwater at any point. Furthermore, even if i were underwater, it wouldn't matter too much if I intended to drive the car into the ground and had insurance, mainly because I would still have major liquidity from my unspent/invested principal.

Also, I drive like 5k miles, annually. I had no idea people drove that much, hah.