Today’s news includes stories about a recommendation for which used cars will be a stretch for most people to get a loan on, and a factor that can drive up the cost of a loan on a used vehicle to be aware of…
Here is a USA Today story that backs up a point we make in our Used Car Buyers Guide For The Practical Buyer
LendingTree®, the nation’s leading online loan marketplace, has released the findings of its study on which car makes borrowers are stretching the most to afford.
Financing a car is one of the more significant financial decisions Americans make, and even those who try to save money by buying used cars can struggle to afford the monthly car payments. A recent LendingTree survey found that 27 percent of Americans plan to purchase a car in 2018. To discover if consumers are more likely to stretch their available incomes to own certain brands, LendingTree looked at people who found auto loans on the LendingTree.com platform in 2017 to buy used vehicles.
Contrary to popular assumptions, the results revealed that people aren’t going broke to buy used luxury cars. In fact, buyers of the most expensive cars seem to handily afford them.
On the other hand, LendingTree found Buick owners have the hardest time affording their car payments — not because they’re indulging in particularly expensive vehicles but because their income tends to be on the lower side, meaning they use a larger share of take home pay to cover their monthly payments.
While the above story talks about driving up the price of your auto insurance, the greater threat to the frugal used car buyer is below:
The gee-whiz gadgets on new cars — the backup cameras, the large touchscreen controls, the blind-spot monitoring — make us all feel a little safer about navigating the roads.
But high-tech, advanced safety features come at a fairly steep price, so they’re driving up car insurance rates, too.
“If they’re damaged, they’re much more expensive to repair,” said James Lynch, chief actuary for the Insurance Information Institute. “You can’t just go to a shop and pick up a part that you can jerry-rig on.”
Fixing a bumper isn’t the same old job anymore. Repairing a bumper on an entry-level luxury car, for example, can cost about $3,550 for a 2016 model for parts and labor, compared with about $1,845 for a 2014 model, according to data from Liberty Mutual Insurance.
Why? The 2016 model has a distance sensor; the 2014 model does not. Parts are 130% higher and labor is 18% higher.
As we recommend… go into your used car shopping experience knowing at the outset what you NEED, not what you WANT, because when you go to a used car dealership, the salesperson at those other places will try to get you to want upgrades that drive up the price. We know this is hard for the customer. We hear it all the time. We suggest to be practical. One other factor to know about this problem… if you need a car today, be aware that there is tremendous technological change in vehicles coming very soon.. we are talking about the driverless car. Most experts say that is coming in 5 or fewer years. Buy being frugal today, you can time it correctly to buy a significantly more technologically advanced vehicle in the future.