Six-year car loans used to be in the minority.  Now, as new car sales are booming in America, loans of seven or eight years are even becoming popular.  Nearly a third of new loans are now 74 months or longer.

Ed Kim, an analyst with AutoPacific, says that one thing driving the trend is the cars themselves.   “Consumers are demanding a lot more technology in their vehicles, infotainment technologies,” he says. “There’s also (sic) a lot more safety features in vehicles. Emissions and efficiency technology that are in vehicles right now, that are making vehicles cost a lot more.”. But Kim says the main reason is that many consumers haven’t recovered from the recession, so new car payments have to be stretched out over more years. (adapted from an NPR article March 19, 2015)

You’ve heard of the subprime loans that helped bring the US economy to its knees.  Well, you now have sub-prime car loans, a sign that no one has learned a lesson from the 2008 debacle .  If you can’t afford something, don’t worry.  There is always someone out there willing to lend you money to get what you want – at a price, of course.  The country suffers from the idea that you cannot deny anyone a single thing, whether they can afford it or not.  The quaint idea that you should only buy what you can afford is just that – quaint.  So we will lurch from one financial crisis to another, with more severe hardship and foreclosures .

No car loan should be for over a  48-month term.  Honda Executive Vice President John Mendel says loans beyond five years are just too long to pay off a car. He is quoted as saying,  “I don’t know what the average marriage lasts in the U.S. today,” he says. “[It] might be less than the average car loan.”

Epicurus would say that living beyond your means is not a route to peace of mind.  On the contrary,  as you wait for the proverbial axe to fall, it breeds anxiety and nervousness.  For peace of mind, buy only what you really need and forget the Jones’s next door.