> Some consumers are taking on 6,7,8 year auto loans to pay $50k-$80k for vehicles
which is absolutely insane in my opinion, to have a shiny quickly depreciating status symbol. the amount of interest paid over the life of a 72-84 month loan is nuts. but people are short sighted and look at the monthly loan payment amount only. dealerships of course know this, and start naive people off in the negotiating with "how much do you want to pay a month?". they'll never show an amortization table.
What's wrong with taking an 8 year loan for an asset that you will possess and use every day of those 8 years? As long as the interest rate is good (less than 4%, say) it sounds like a prudent decision that frees up cash flow.
A car is not an asset, but a liability. It doesn't generate money, it costs money.
If your 8-year-car is going to make you substantially more money than a cheap car that maybe doesn't require you to take a loan, you have a point. But since cars are about to go from A to B and the status symbol itself doesn't pay for anything, a cheaper car would do.
Unless you consider the status utility worth paying for. Some people think it is. I think they're wrong, but who am I to say how they spend their money?
Why do people by expensive clothes that are no better than clothes a fraction of the cost?
There’s evidence that people make decisions about others based on their clothing, even when directly informed not to during studies, so it appears there might be some utility in more expensive clothing.
I'm with you. I bought my first car last year and while I had moved some money into my checking account and even got a few checks for the first time for the down payment, they offered me 0 down with 2.9% interest which I took without hesitation. At that rate, they are barely beating inflation and I just moved my money back into vanguard ETFs.
which is absolutely insane in my opinion, to have a shiny quickly depreciating status symbol. the amount of interest paid over the life of a 72-84 month loan is nuts. but people are short sighted and look at the monthly loan payment amount only. dealerships of course know this, and start naive people off in the negotiating with "how much do you want to pay a month?". they'll never show an amortization table.