Monday, July 6, 2020
News Lots Of Debt For The Love Of New Cars

Lots Of Debt For The Love Of New Cars

One of the most important factors that explain why new car sales are as strong as they are in Canada is credit. Lots and lots of credit.

If leasing moved countless new cars when it became prevalent in the late 90s and early 2000s, consumers have moved on to long-term financing. Leasing became evil (kind of) as returning a car usually involved fees, lost deposits and many other complications. Ultra-low payments kept consumers coming back for more.

The last six or seven years has seen the emergence of long-term loans. Back then, 60 months (5 years) was a long time. Today, 84 months (7 years) or even 96 months (8 years!!) are common.

In fact, the well-known market research firm J.D. Power Inc. has collected sales data from more than 1,200 Canadian car dealerships across the country and discovered that 55% of all new car loans were for at least 84 months!

The issues or downsides to loans of this length are numerous. The most obvious is the interest paid on the loan that can represent thousands upon thousands of dollars on a $25,000 car, for example. Another is negative equity in the car where the owner owes more than what it’s worth with 36 or 48 payments left to make. Then there’s an expired factory warranty and possible expensive repairs on top of monthly payments.

Apparently, we Canadians are now one of the most indebted countries in the world, if not the most… Mega long-term loans are very much part of the problem.

Trending Now

2021 Geneva Motor Show Officially Cancelled

Majority of GIMS exhibitors polled said they preferred not to attend in 2021 Show could be sold to Palexpo SA The 2021 Geneva International...

HEMI Engines Play The Star-Spangled Banner In Dodge 2021 Lineup Teaser

New Dodge lineup will be unveiled on July 2 at noon Lineup will combine for a total of 8,950 horsepower Three additional teasers...

New Dodge Challenger SRT Super Stock Is A 10-Second Car

For this round, the supercharged 6.2-litre HEMI V8 puts out 807 horsepower. The 0-60 mph sprint is gone in 3.25 seconds, the quarter-mile...

Americade 2020 Officially Cancelled, Will Return In 2021

The COVID-19 pandemic has forced the cancellation of Americade 2020 in Lake George, New York Americade 2020 organizers officially announced the cancellation of the...

There’s A Dodge Demon On Sale In Norway For $300,000

Dodge Demon for sale in Norway for nearly four times the original sticker price This Dodge Demon is everything Norway is not and it...
Matt St-Pierre
Matt St-Pierre
Trained as an Automotive Technician, Matt has two decades of automotive journalism under his belt. He’s done TV, radio, print and this thing called the internet. He’s an avid collector of many 4-wheeled things, all of them under 1,500 kg, holds a recently expired racing license and is a father of two. Life is beautiful. Send Matt an emai

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.