Will Your Car Loan Outlast Your Car?
Remember the quality reputation of theYugos and the Hyundais in the late eighties! Well, if not, there is a reason and it is because they are no longer in operation. The running joke at the time was that if you purchased one of these brands, your car loan might outlast your car. Well, we don’t have to worry about that these days. Based on a recent study conducted by J. D. Power, a consumer research company that measures the quality of vehicles, Hyundai is now one of the many brands leading the pack in providing above average quality.
Consequently, the Hyundais of today are not the Hyundais of the past. Nonetheless, we cannot say the same for the now defunct Yugo brand. And the prices of cars today are not the same as the prices of cars in the eighties. In 1987, a brand new Hyundai Accent listed for $4,995 and today this vehicle starts at $13,000.
According to the Power Information Network, a research firm that analyzes dealership retail car deals, the average transaction price of all new vehicles purchased by consumers in the first half of 2006 was $26,634. In order to keep up with the Jones (or with whomever you are competing), more consumers are opting for more expensive cars with all of the bells and whistles. Because of this trend, automakers and financial institutions keep coming up with every possible creative financing option to place consumers in the vehicle of their dreams.
As a result of consumers being strapped for cash, being upside-down in their trade-in (owing more on the loan than what the trade-in is actually worth), and bringing a smaller down-payment to the table, the most current data provided by the Consumer Bankers Association revealed that the average new vehicle loan in 2005 was $23,535. In addition to our kid’s piano lessons, college tuition, private school, braces, the mortgage payment and, oh yes, let us not forget child support payments, now how can many of us afford this?
In the eighties, consumers thought it was absurd to finance a vehicle for 3 years (36 months). In today’s time, if a consumer finances his/her vehicle for 3 years (36 months), auto analysts would most likely refer to it as a lease. more>
