Edmunds is a company that collects car-shopping and pricing information. Here, they’re being used as the source for the loan-term statistics.
Term
84 months or longer car loans
“84 months or longer” means the car loan is for 7 years or more. That can lower the payment, but it often costs more in interest and keeps you paying longer.
This is another way of saying the loan is very long—over about 6 years. If lots of people are doing it, it usually means car prices and payments are harder to manage.
A “loan term” is how long you have to pay back your car loan. Longer terms mean smaller monthly payments, but you’re paying for the car for more years.
The host means that if people take longer to pay off their cars, they don’t switch as often. Less switching can slow down the car market for dealers and everyone else involved in selling cars.
An 84-month car loan is a car loan you pay off over about seven years. The longer the loan, the harder it can be to switch cars if the car’s value drops.
Negative equity means your car is worth less than what you still owe on it. If you try to trade it in, you may have to pay extra—or add that shortfall to your next loan.
Monthly payments are what you pay each month to pay off the car loan. They depend on your interest rate, how much you borrow, and how long you take to repay it.
Cash down is the upfront money paid toward the vehicle purchase. It reduces the amount financed, which can lower monthly payments and total interest compared with financing the full purchase price.
Loan term length is how many months you have to pay off the car loan. Longer terms can change your monthly payment and usually affect how much interest you pay over time.
Concept
rolling a tremendous
“Rolling” usually means adding extra costs into your new car loan. That can make you borrow more money than the car is worth, which can be risky if the car’s value drops.
Trade equity is how much money you actually gain (or have left over) when you trade in your old car. If it’s zero, the trade-in doesn’t help lower the new loan.
They’re using “financial suicide” to mean taking on a loan that’s too expensive for your budget. The monthly payments can become unmanageable and trap you in debt.
It’s the idea that prices are affected by how many cars are available (supply) and how badly people want to buy them (demand). If fewer people can buy, demand drops and the market shifts.
Concept
high profit margin, high priced vehicles
They’re saying car companies may sell fewer cars, but make more money on each one. Instead of selling lots of cheaper cars, they focus on pricier models that cost more to buy.
Concept
high water mark for new car sales
They’re talking about the highest point the market has ever hit for selling new cars. After that peak, sales have been slipping instead of growing.
Concept
84 months and 96 month loans
They’re referring to car loans that last a long time—about 7 to 8 years. If you have a loan that long, it can be harder to switch cars sooner because you’re still paying off the old one.
Concept
inventory is just sitting
It means dealers have cars that aren’t selling and are staying on the lot. When that happens, sellers often have to lower prices or offer deals to move the cars.
Stellantis is a big car company that makes many brands. The hosts are using it as an example of what can happen when cars sit unsold because prices are too high.
A buyer’s market means there are more cars available than people want to buy right now. That usually gives shoppers more negotiating power and better chances to find discounts.
Loan-to-value ratio is a way lenders measure how big your loan is compared to the car’s value. If it’s over 100%, you’re borrowing more than the car is worth.
0% financing means the loan has no interest rate for the promotional period. It can lower the cost of borrowing, but you still have to qualify and the overall deal can have other costs.
Ford is the car company being discussed. They’re mentioned because their financing/approval practices can affect who qualifies for deals like low- or zero-interest loans.
Underwriting is the bank’s way of deciding if you’re a safe bet to lend to. They look at your risk and then decide whether you get approved and at what interest rate.
Full coverage insurance is the more complete type of auto insurance that protects the car itself, not just other people. If you finance the car, the bank usually requires it so the car is protected.
“0% advertised” means the financing offer is advertised as having no interest. But you should still check the full deal for fees and any conditions that could change the real cost.
A “lease” is like renting a car for a few years. You pay for the car’s expected loss in value during that time, plus some fees, and then you give it back.
A “36 month term” means the lease lasts three years. The lease price is calculated based on how long you’ll keep the car, so the term affects your monthly payment.
Due at signing is the money you have to pay right when you start the lease. A low monthly payment can still be a bad deal if you have to put a lot of cash down at the beginning.
The chip shortage was when computer chips for cars were hard to get. When that happens, car companies can’t build as many cars, so availability and pricing get weird.
A down payment is the cash you pay upfront for the car. Paying more upfront usually means you borrow less and can sometimes qualify for better financing.
It’s how long you have to pay back your auto loan. A longer loan usually means smaller monthly payments, but you may pay more money overall because interest has more time to add up.
A manufacturer warranty is the car maker’s promise to cover certain repairs for a limited period. If your loan is longer than the warranty, you could be paying for repairs out of pocket later.
An 84-month loan means you’re paying for the car over about seven years. With older used cars, that can be risky because big repairs might happen before you finish paying the loan.
A major repair is a big, expensive problem that can cost a lot to fix. The concern is that older cars may need these repairs while you’re still paying off the loan.
Catastrophic repairs are the worst kind of expensive breakdowns. The worry is that if something major fails, you may still owe money even if the car is expensive to fix.
The Audi A8 is a luxury car from Audi. The point here is that luxury cars can get expensive to fix, so you should look at real maintenance and repair cost data instead of guessing.
This means the money you spend to keep the car in good shape and to fix things when they break. The host is saying you should plan for these costs using actual data, not just opinions about reliability.
An extended warranty is extra coverage after the original warranty ends. It can help pay for repairs, and the host is saying you should decide based on expected repair risk, not just buy it automatically.
A used car is one that someone else already owned. Because it’s older and has been driven, it can be more likely to need expensive repairs than a brand-new car.
LIVE
It's noon here in Ventner City, New Jersey, and our nation's capital, Washington, D.C.,
and this is Courage Live for Monday, June 6th with your host, me, Ray, here in my living room
in Ventner, Zach Hangand in his middle-filled office in D.C. How are you today, handsome?
How did you survive the Fourth of July weekend? I'm doing so well, yeah. I had an awesome Fourth
of July. It was really cool here in Washington, D.C. We had flyovers, we had fireworks,
all sorts of fun stuff going on. We also had some thunderstorms which made it a little bit
chaotic, but an awesome Fourth of July. Again, happy Fourth of July to everyone here in the
United States. What an awesome celebration. We had 250 years as a country. Now, if CarEdge makes
its 250 years old, well, my dad and I, we will never have a clue. CarEdge.com, the sponsor of
today's program. We are not about longevity here. I don't think either of us will make it to 250,
and that's A-OK. If we can help you save money when it comes to buying a car, please,
give us the opportunity to help. Back at CarEdge.com, we have a car search. We have a car buying
service. We have Ask CarEdge, our research center, dealer reviews, and more. A friendly reminder,
we are hiring, been reviewing applications all morning, so excited and grateful and humbled
by those of you who take an interest in joining our team here at CarEdge. Now, the big story we're
going to talk about today is the affordability crisis. There are a handful of different places
we can go. First, we'll turn our attention to the Edmunds data. Nearly one in four new vehicle
buyers in Q2 stretch loans to 84 months or longer a record according to Edmunds. We also have data
from Experian that we're going to look at here today as well. Let's start, dad. The number of
people who are taking out 84 month or longer car loans has hit a record level. What does this mean?
We can see the numbers a little bit below. I guess I'll give that context a minute. I'll give you
the bike. Fires are lengthening their loans past 72 and 84 months at record levels. A record,
36.5% of all finance new vehicle purchases in Q2 took on a loan of 73 months or longer,
up from 27.3% a decade ago. What's going on here, man?
People are enslaving themselves to death happily, apparently,
because otherwise I can't explain why they do it. But cars have gotten so expensive
that the only way dealers, automakers, and banks can figure out to make them more affordable
is to continue to extend loan terms. Loan terms, once you start getting beyond 72 months,
you start getting to 84 and 96 months. And 120, we've seen credit unions go up to 120 months,
10-year car loans. Once you start doing that, once you start normalizing that,
you are cannibalizing your existing car market. And what do I mean when I say that?
People can't trade out of cars quickly enough to sustain the future market if they're in an 84
or 96-month note. They would bring too much negative equity to the table if they decided
that they wanted to get out 36 months or 42 months into their 84-month or 96-month car note.
The amount of negative equity would be so crushing that any bank that would look at it would go,
that's more than we can afford to roll into the next loan. So you are effectively keeping your
customers, the ones who are currently buying cars, you're effectively keeping them out of the market
longer. So two or three years down the line, that's not going to bode well for dealers.
Can we start somewhere slightly different that? Because while what you're describing is absolutely
true, can we talk about why people are being forced to take out 84-month car loans to begin with?
And I want to lead with this comment from our community from Joseph. 84 months means you
can't afford the car. Let's start there. Let's start even simpler here, please. Why are people
turning to 84 and 72-month car loans? Not the fact that then them getting into it hurts the car
industry out. We will get there, I promise you. Why are people having to take out 84-month car
loans? Because cars have gotten too expensive. The average asking price for a new car today
is $52,040. That's up $2,500 from a year ago. The average family income for someone buying
a new car today is $150,000. Well, that's almost double the national average for family income.
So the reason that loan lengths have grown as much as they have is because the price of cars
has gotten out of hand. In 2019, the average new car cost like $37,000. In 2025, that number
became $48,000. That's an $11,000 swing in 67 years. Well, that means that you're taking
people from relatively short terms, 48, 60, 72 months, which is the longest I would ever suggest
to anybody that they finance a car. But that extra $11,000 is what's forcing people to look at
loan terms longer than 75 months. I think it's 24% of all new car loans today are 84 months or longer.
84 months. That's seven years, ladies and gentlemen. That's four years longer than most
of the warranties run. It's just the price of cars. That all started during COVID when there
was a shortage. A couple more data points to back this up, and then we'll get into, okay,
so what are the implications of 84 month loans becoming the norm? I want to turn our attention
there in just a second, but before we do, a couple more bullet points. Monthly payments
reached an all-time high for the third consecutive quarter. Even though we're extending the term,
actually, yeah, can you spend a second on this? What dictates a monthly payment?
What makes up a monthly payment? What are the variables at play that can make a monthly payment
higher or lower? Interest rate is one. Whatever interest rate you might qualify based on your
previous credit history, trade equity or cash down on the vehicle that you're purchasing and
the purchase price of what it is that you're purchasing.
So the amount of finance, so interest rate, the amount of finance, what's the other variable?
Cash down, yeah. No, loan term length.
Loan term length, yeah, but we've talked about that.
No, no, but I'm just trying to set the table. Those are the three variables, right?
What's your interest rate? How much are you financing and how long are you financing?
So even amidst all-time record high loan term lengths, we still have monthly
payments going up. That means one of two things, either the interest rates have gone up or maybe
the amount that people are financing is higher because we know that the loan term length is longer
and you can see it right here. Consumers have never financed as much on a vehicle
purchase as they did in Q2 of 2026.
And so what are the reasons for that? In many cases, it's because they're rolling a tremendous
amount of negative equity into their new car purchase. In many cases, they're not putting
down as much trade equity or in a lot of cases, they don't have any trade equity or the equivalent
cash down. Can't afford to put as much cash down on a more expensive purchase than it just means
you're going to finance more money, and in this case, for a longer term at a higher payment,
which is financial suicide. Yeah, 100%. So I think that's the point to make to everyone,
is that Edmunds data paints a very clear picture here. Loan term lengths are longer,
the amount financed is higher, and the amount people are putting down is lower.
This is essentially the playbook for what you should not do. So if you're part of the car
edge community and you need to buy a car right now, the thing you should be thinking to yourself is,
shorter loan term length, I'm going to put more cash down, and I'm going to finance less.
That's the financially responsible approach. So how do you do that? And the answer to that
question would be, you look for a less expensive vehicle. You take care of needs instead of once,
okay, because needs are a hell of a lot cheaper than once. I hear you. So maybe you go and you
look in the used car market, but the used car market is getting squeezed too. Used vehicle
buyers are feeling the squeeze as well. The share of used car purchases with monthly payments of
$1,000 or more rose to a record 6.3% in Q2, while the average amount financed for a used vehicle
climbed to $30,414 from $29,000 a year prior for context here. Yes. You share of $1,000
payments for new cars is over 20% 1 in 5. So you've got 6% for used cars, which is crazy.
And yeah, I agree with this used car prices are insane. So fiscally responsible smart consumers
might not necessarily buy these new cars, but you're not necessarily finding the value
in the used car market as well. So then what are the implications of this? This is our reality.
What are the implications of it? You were speaking to one earlier, which is it keeps people out of
the market in the future. That's going to have a negative impact on demand. We talk about supply
and demand as like the fundamental aspects of car prices in the United States of America.
So that's one thing. One impact is there's going to be less demand for new and used cars
12345 years from now because people are going to be even more
significantly upside down on their car lines. Yes. Absolutely. And so what does that translate into
345 years from now? Well, we already see that many automakers have figured out
that they can make as much money profit wise or more than they did in the past by building
fewer vehicles because the vehicles that they're building are high profit margin,
high priced vehicles that appeal to the 11 to 13% of the population out there that can afford to
buy new cars. My suspicion would be as that market contracts even more moving forward.
And we've already seen the high water mark for new car sales in this country was 2016
at 17.3 million new cars that were sold that year. Last year it was 16.2. This year they're
forecasting between 15.6 and 15.8. I guarantee you three years from now that number will be even
lower. That number might be 15 million because that's all the market can support because all
these people that are going into 84 months and 96 month loans won't be able to trade out of them
even if they wanted to. And trust me, the buying habits of many people in this country are
they want to get out of their car sooner than they should. I experienced that for 43 years
when I was in the industry. For sure. So one of the implications will be fewer people in the market.
One of the implications of that will be these dealers are going to be feeling the pain, man.
I know we say that often on this show, but there are some manufacturers and some car dealers that
are just going to be really, really, really in the red, not making money. And the reason they're
not going to be making money is because their inventory is just sitting. They're not able to
sell their cars. That has to happen at some point here. And we already have seen waves of this. For
example, maybe it was 12 years ago with Stellantis. A lot of their inventory was priced
too high. No one was shopping it. They lost a bunch of money. They've had to completely revert
how they're approaching the market. So that's another implication here is that this will create
buyer's market opportunities as so many people have find themselves priced out of the market. It
absolutely has to. Well, I hear what you're saying, okay, but I don't know that I can buy into it.
And here's the reason that I'm not sure I can buy into it. Even if it creates a buyer's market,
if the buyers can't afford it, it doesn't really matter. I think what you're going to see debt is
banks continue to extend out loan-to-value ratio. So that's another part of this story that we
should touch on. Loan-to-value, let's explain what that is in the simplest terms possible because it
can get confusing and we don't need it to be. Loan-to-value is how much money you're getting
on a loan based on the value of the vehicle. So for example, if I'm buying, I'm going to use
around numbers, $100,000 car. The bank, if they lend me $100,000 to purchase that vehicle,
that'd be 100% loan-to-value ratio because the value of the collateral is the same price as the
loan. Great. Yes. What banks can do and will do and have done is increase that above 100%. Now,
you might be thinking to yourself, well, what's the collateral that it's nothing. There is no
collateral. As you like to say, it's air. It's The first 100,000 is covered by the
vehicle. Anything above that is, well, it's covered by the air that you breathe. And maybe someday
that will become more valuable than what it is at the moment. But right now, that's free.
Okay. So when banks increase their loan-to-value ratios over 100%, that's when you start to see
markets where some wonky things can happen. And we're talking upwards of 150%, 160%. Meaning,
I'm buying a $100,000 car. Well, the bank will give me $150,000 to buy that car. Why would I need
$150,000 to your point earlier? Maybe I'm bringing $50,000 in negative equity to the table from my
prior transaction, my prior car deal. That's where I think the market goes, that is you see the banks
get even more aggressive, loosening up their standards, rating riskier and riskier auto loans
because, as we like to say, the merry-go-round has to keep going around. Someone's got to keep the
horses spinning, and this is one way to make that happen. I bet you we see in December, Deb. I bet
you we see a huge, huge number of 0% financing offers. I bet you we see what we saw last year,
Ford extending who they approve for those financing offers. That was one of the craziest
stories of last year. If we did a roundup of 2025, one of the craziest stories could and should be
the fact that Ford at a certain point last year came out and said, we're going to approve pretty
much anyone for our subvented lower interest rates. That was absurdity. That had never happened
before. I bet you we see more of that this year. December is going to be crazy with financing
offers and just trying to convince people that they should buy a car and underwriting it with
crazy interest rates, approving anyone for those crazy interest rates. But that's even riskier.
At a certain point, I don't know what that point is, but at a certain point,
the foundation for this house of cards is so flimsy that it'll just have to collapse under its
own weight. There's always so much debt someone can take on. There's only so long that people can
continue to make payments with money they don't have. What do I mean by that? It's not just a car
and the car note. It's the expense of maintaining that car or truck. It's the expense of fueling
that, whether it be electricity or it's gasoline or diesel fuel. It's the cost of maintaining
that car. The cost of parts has continued to rise. The cost to repair cars is higher than it's ever
been. Then it's the cost of insurance to ensure that car. Because you're financing the damn thing,
you are required as part of the bank agreement to keep full coverage insurance on your vehicle.
If you let that lapse, the bank will put it on there for you and not look for the best possible
weight and they're going to charge you for it. If I may, back at courage.com, under research here,
click on ownership costs. That's going to take you to a page that looks a little something
like this. We have pulled together the five major costs of vehicle ownership for over 250
models of vehicles, depreciation, insurance, premiums, maintenance and repairs, financing costs,
and fuel. If you come down here, dad, let's just look at an example. We'll click on, I don't know,
an Audi A8, a vehicle that most certainly loses a lot of value. You can see here,
five years of owning an Audi A8 is going to cost you almost $100,000. I can see the breakdown
right here. A lot of that's depreciation. We have some insurance expense, fuel costs,
interests, and obviously maintenance as well. I can come down here and I can see so much more
depreciation, insurance costs, maintenance, financing costs, fuel, etc. Spend some time
back at courage.com. We've got all sorts of great data that'll help you feel more informed
as you're taking on what you said, which is way more than just the car payment
every single month. Dad, that's my guess as to what's going to happen here. The data from Edmund
shows it. We're getting longer loan terms with less money down and somehow cars are still being
sold. I'm calling it right now. Q4 2026 will go down in history as one of the best buyers markets
for pretty much every brand, with the exception of Toyota and Lexus. It's going to be underwritten
by banks who are doing crazy, subvented interest rates on behalf of Ford, Stellantis,
on behalf of General Motors. You're going to see 0% advertised everywhere and more people,
this is my guess, than ever before. We'll get approved for those loans because they're going to
need to move the metal. My suggestion would be that, and I know a lot of people are going to hate
me for saying this, but it is almost time that as consumers, we accept the fact that we don't
actually own the vehicle that we drive. My suggestion would be if you're willing to accept
that premise, lease a vehicle, lease a less expensive vehicle for a 36 month term, 15,000
miles, 18,000, you can lease a vehicle. I think most vehicles you can lease upwards of 30,000
miles a year if need be. So lease a vehicle, you know what your costs are going to be for the next
three years other than the fuel and you won't find yourself buried in a vehicle. If you are someone
that has a lot of negative equity in your current vehicle that you're financing and you want to know
how to get rid of all that negative equity fairly quickly, roll that negative equity into a three
year lease. Yes, at the end of three years you'll have nothing, but also at the end of three years
you'll owe nothing. You can start fresh again and bury yourself once again by buying another,
but these are ways to take advantage of a situation in order to be able to get a car,
but leasing is less expensive because you're mostly paying for the depreciation and you're
paying a little bit in fees and interest over the length of the lease. Leasing may become more and
more popular. That is a very slippery slope, however, because for example we captured the best
and worst car deals for the month of July, manufacturer incentives, negotiability, etc.
Some of the best ones, $18,000 in lease cash on 2026 Hyundai Ionic 9th. What that actually means
is the manufacturer is giving you $18,000 off the selling price of that vehicle just if you lease it.
That being said, you might see some things out there. Where was it here? Duick and Vista in
Angkor. There's a teaser lease promotion going on right now, $159 a month for those. You've got
to bring nearly $6,000 in cash down to make it happen, not a deal. With leasing comes a little
complexity, a little more opportunity to get out over your skis, not necessarily on a payment
basis, but am I actually getting a deal? I think we'll be very busy the remainder of this year,
dad, helping people make the decision between financing versus leasing because there are going
to be so many lease incentives out there, so many lease advertisements out there. It does make
sense for many people, but it also is a touch more confusing and not as traditional and opportunity,
but also an area where people might end up screwing themselves and not even realizing it.
Leasing is a bit more nuanced for a lot of people because the concern is you're making this payment
for whatever amount of time it is and you own nothing when you're done with it. It's not paying
rent for your house or an apartment. You had a place to live and you had a roof over your head.
You had a car to drive or an SUV or whatever it is to drive and that's it. You're paying for the
privilege of having something to drive. You're not necessarily paying for the privilege of owning.
I encourage everyone, we're not going to make this show all about leasing. There's too much
that we need to capture. Just go to Google, CarEdge, leasing. We've got lease deals,
how to read your lease contract, the community forum, so the consumer's guide to leasing in
2026. A quick Google search with CarEdge plus leasing will get you all sorts of good info. We
got to come here to the chat. Some really kind and thoughtful contributions have come through.
Our photographer, thank you. How much of it is people who are buying outside their budget? They
might be able to afford a Centra for $30,000, but insist on getting a Pathfinder for $50,000.
I think a lot of people find themselves realizing, hey, the market looks different today, so why
don't I just stretch a little bit more? I had a conversation this morning with a
disc jockey in Cincinnati. I was doing a radio interview. One of the things we talked about
is people stretching for cars. Cars are not what you stretch for. Real estate is something that
traditionally you might stretch for because historically, real estate tends to appreciate.
We know for a fact that historically, automobiles depreciate. I think there are a lot of people
in this country that buy outside of their budget, that insist on getting all their wants as opposed
to just their needs. The banks help to encourage that by extending loan terms to make it appear as
if people can actually afford more than they can. I think the word that I would use today,
if somebody asked me, well, what should I do? You need discipline. You need the discipline
to look at the price and look at the equipment and go, I can live without this, this, and this,
which would lower my payment $150 a month and perhaps shorten my loan term. Just buy what
you can live with as opposed to what it is that you would like to have.
I think our photographer just read in between what my dad said. We agree with you. A lot of
people are out there buying outside their budget. That's absolutely happening right now.
From 9mN, thanks for the appreciate. I just found 12,000 brand new cars under $25,000 within 500
miles from me in Georgia. Maybe Americans should just buy what they can afford. Exactly the same
comment right here. Again, a lot of the finger pointing go to the automakers during the chip
shortage when there was a new car shortage. A lot of these vehicles went away for a period of time
there. Many of these manufacturers now that are saying they're going to bring back more affordable
options. It does seem like it's oscillating back and forth. It just takes a bit of time
for those new vehicles to make it onto the ground.
Yeah, they say it. From Dale in progress, thank you, Dale. I gave him a chance there. From Dale
in progress, we appreciate it. OEM financing should allow customers with 20% or more down to buy
into whatever special rate they're offering, not just credit score. That's an interesting idea.
If you put down 20% down payment, give me the 0% financing. It'd be interesting if they ever did
something like that. Well, you would certainly think that the lender would look at it that way
and say the buyer who's putting money down is a better risk than the buyer who's not putting
money down. Because if you put 20% down on a $50,000 vehicle, so that's what? $10,000.
There's 10,000 reasons right there why you probably won't go bad on that loan. If you had
put zero down, do you have any reasons to make sure you make your payment other than, well,
I want to keep driving this car? Cashdown does influence approval, so that is something.
It is. Well, it should. Yeah, I think if lenders want to figure out ways to offer
the incentivized rates to more people, then perhaps they should insist on more cashdown.
Because I think that makes perfect sense. Now, one of the other things I wanted to bring up on
today's show, used vehicle loan term links. This data comes from Experian. Q1, that first column,
lock your eyes in on this column right here. This is last year and this is seven years ago.
30.1% of used car loans are over 73 months and lower than 84 months. I'm in the 1.4 up here.
We're talking almost 32%. 31.5% of all used car auto loans are over 73 months. Compare that to where
we were seven years ago. It was 20%. We're seeing a huge increase. Now, talk about what's unique here,
dad, with extending loan terms for used vehicles. You mentioned it earlier. A lot of these manufacturer
warranties don't even go so long as a lot of these new car loan links. But what about with used cars
where there isn't a manufacturer warranty? What are the considerations for people out there when
they're sitting across from a finance manager who says, congratulations, you got to prove for an 84
month loan on this 2019 used car? I'm going full screen for you here. Please preach from the pulpit.
What do we need to know thinking about buying used cars when that happens?
Go to Car Edge, do the research, find out what the expected maintenance is going to be on whatever
vehicle you're looking at. You'll find in most cases that between eight and 10 years of age
is when you can expect some type of major expense, some type of major repair that's going to be
required on a vehicle. Some vehicles, that major repair is going to cost a lot more than it is
on others. If we're extending the loan terms on older cars, we are just asking for trouble down
the road. I get that cars today are meant to be able to be driven 100, 100, 50, 200, 300,000 miles.
But it requires maintenance to do that. And there can be catastrophic repairs
in many cases that will be required. And so you have to factor that in
when you're buying a 2019 and you're financing it for 75 or 78 months, six and a half years.
But you have to look at these charts and go, oh, well, in three years I can expect a major
repair. How am I going to pay for that? Maybe perhaps you start putting away money now,
extra money that goes into a specific savings account for expected repairs for your car,
future repairs. But if you don't do that, you're not going to have the money to take care of the
repairs that are going to happen. So the longer we finance older cars, the greater the risk there
is that we're going to have to make a choice one day between repairing, paying for, or just leaving
it somewhere. And you can't just bare your head under the pillow or put your head in the sand
and say, okay, it's not real. Go to research. Go to ownership costs. Let's go back to that
Audi A8. Or we could search for any make and model right here, but we're fixated on the Audi A8
right now. Click on Audi A8. You're going to land on this stage. I'm going to click on maintenance
and repairs. I'm going to click on all of the data for maintenance and repairs. Here is your
breakdown of maintenance and repair costs for an Audi A8. And this is new, so you can start to extract
some information from this. And Audi A8 will cost about $10,619 for maintenance and repairs during
its first 10 years of service. There is a 27.69% chance that an A8 will require a major repair
during that time. By come down here, this chart shows me each year, the expected annual maintenance
and repair costs and the likelihood of a major repair. So you can see here, for example, from
your 7 to 8 of lifespan, there's a huge increase from 16 to 21% for a major repair. I can scroll
down here. I can see if an extended warranty might make sense for this vehicle based on the
information. I can see all those maintenance costs at a table. And I can see the maintenance
milestones and expected costs here as well. So much good information. You can't just say,
you know, I hear the reliability of this is good. So what? No, do the research. Do the research. And
that's the scary, scary, scary thing about the Experian data is almost a third of people out
there getting 73 months, excuse me, or longer car loans on used cars, which are prone to have these
types of issues. There is, with the advent of the Internet, there is no excuse today for someone
to not do the research. It's there. And if you don't, it's just because you were lazy.
And then if and when you have a problem, it's all on you. So if and when you have that problem,
look at yourself in the mirror. You might not like what you see at that point. But there's
absolutely no excuse today to not do the research. It's out there. It's available. It's free.
And that free research that you can do could end up saving you tens of thousands of dollars.
So I don't know. Use the Internet for something that might actually ultimately save you some money.
I love it, Bob. So all right, folks, we're back tomorrow with more Car Edge Live,
really fun episode today, Deb. So thanks for taking the time to talk it through with me.
Thanks, Experian. And thanks, Edmonds, for the data. We're back tomorrow, 12 p.m. Eastern time,
9 a.m. Pacific. Enjoy the afternoon, Deb. And catch you back here then.
Well, you know, I'm just going to do a little laundry today, buddy, because that's what I do.
But absolutely, looking forward to being back here tomorrow and seeing if we can help a few
people tomorrow as well. Can't wait. Enjoy your laundry. Yeah, thank you. Love you, handsome. Love you, too.
About this episode
Ray and Zach break down Edmunds data showing the affordability crisis worsening: record shares of new-car buyers are stretching loans to 73+ months, with 36.5% taking 73+ month terms in Q2. They connect it to higher prices (average new car up to about $52k) and explain how longer terms don’t prevent payment pain—monthly payments still hit highs due to higher amounts financed and more negative equity rolled in. They also discuss knock-on effects for trade-in liquidity, demand, and dealer profitability, plus pressure on the used market.
Today on CarEdge Live, Ray and Zach discuss the latest data from Edmunds on vehicle affordability. Tune in to learn more! Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com
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