{"id":14442,"date":"2015-11-15T11:38:36","date_gmt":"2015-11-15T16:38:36","guid":{"rendered":"http:\/\/olduvai.ca\/?p=14442"},"modified":"2015-11-15T11:38:36","modified_gmt":"2015-11-15T16:38:36","slug":"the-four-wheeled-bubble","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=14442","title":{"rendered":"The Four-Wheeled Bubble"},"content":{"rendered":"
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The Four-Wheeled Bubble<\/a><\/h3>\n

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Bubbles are always obvious \u2026 in retrospect.\"bubble<\/a><\/p>\n

Here\u2019s one you might not see coming.<\/p>\n

The Car Bubble.<\/p>\n

People are taking out\u00a0eight-year<\/em>\u00a0car loans.<\/p>\n

This\u00a0is \u2013 or ought to be \u2013 alarming. The automotive equivalent of the zero-down, no-doc, adjustable rate mortgage on a $500,000 McMansion circa 2004.<\/p>\n

You know \u2013 just before the housing bubble popped.<\/p>\n

New car loans used to be 36 months (three years) and then 48 months (four years). Back when the economy was sane.<\/p>\n

Today, the\u00a0typical<\/em>\u00a0new car loan is 72 months (six years). This is almost double the formerly typical length of a new car loan.<\/p>\n

But even that is not \u2013 apparently \u2013 enough\u00a0to keep the music playing.<\/p>\n

Enter the\u00a0eight-year loan.<\/p>\n

Which might be ok, if cars were not\u00a0appliances<\/em>.<\/p>\n

Very expensive toasters, basically.<\/p>\n

\"depreciation<\/a><\/p>\n

Though modern cars are longer-lived than the cars of the past, they are\u00a0\u2013\u00a0like any other appliance\u00a0\u2013\u00a0something you eventually throw away because eventually, it will wear out. Or cost too much to fix \u2013 relative to the value of the car itself.<\/p>\n

This is why cars\u00a0always<\/em>\u00a0decline in value over time. It is the nature of the thing.<\/p>\n

With an eight-year loan, the odds are high that it\u00a0will begin to wear out \u2013 and cost you money to fix \u2013\u00a0before<\/em>\u00a0you\u2019ve paid the thing off.<\/p>\n

Then you\u2019ll have a car payment\u00a0and<\/em>\u00a0repair payments.<\/p>\n

On a car that\u2019s not worth very much anymore.<\/p>\n

Are people stupid?<\/p>\n

Desperate?<\/p>\n

Or,\u00a0on dope?<\/p>\n

Actually, they are on\u00a0credit<\/em>\u00a0\u2013 and\u00a0debt<\/em>.<\/p>\n

Just like before.\u00a0\"under<\/a><\/p>\n

Stretching out the loan from four to six (and now\u00a0eight) years is a way to make a car you can\u2019t afford\u00a0seem<\/em>\u00a0affordable. To hide from view just how much a new car\u00a0really<\/em>\u00a0costs.<\/p>\n

Consider:<\/p>\n

The average price paid for a new car this year\u00a0was about $35k, a record high. The year prior, it was $33k.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Four-Wheeled Bubble Bubbles are always obvious \u2026 in retrospect. Here\u2019s one you might not see coming. The Car Bubble. People are taking out\u00a0eight-year\u00a0car loans. This\u00a0is \u2013 or ought to be \u2013 alarming. The automotive equivalent of the zero-down, no-doc, adjustable rate mortgage on a $500,000 McMansion circa 2004. You know \u2013 just before the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[1806,10621,10620,10622,827],"class_list":["post-14442","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bubble","tag-car-bubble","tag-car-loans","tag-eric-peters-autos","tag-united-states"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14442","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14442"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14442\/revisions"}],"predecessor-version":[{"id":14443,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/14442\/revisions\/14443"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14442"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14442"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14442"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}