Many Car Owners Owe More Than Car Is Worth
Thursday March 31, 9:47 am ET
By Eileen Alt Powell, AP Business Writer
Many Car Buyers Find They Owe More on Their Car Loans Than the Vehicles Are Worth As Trade-Ins
NEW YORK (AP) -- A growing number of new car buyers are finding they owe more on their existing car loans than the vehicles are worth as trade-ins.
The phenomenon, known as being "'upside down" on a loan, is the result of a confluence of changes in the ways Americans buy and finance their vehicles.
To begin with, the prices of new cars and trucks have been held down as manufacturers offer incentives and rebates to lure purchasers. As new car prices flatten, so do resale values. Buyers, meanwhile, are choosing increasingly longer-term loans, sometimes extended over 84 months, to reduce monthly payments.
首先，因为制造商提供刺激和折扣去吸引购买者，使得新的小汽车和卡车的价格已经被抑制. 随着新汽车的价格被压低的时候，旧车再卖的价值也被压低。 同时购买者们为了去减少每月的还贷，正在选择越来越长期的贷款，有时候贷款期超过84个月。
The result is that a consumer who trades in a car that isn't fully paid for can end up wrapping the loan hangover into the financing for a new car, greatly increasing the cost. Or, if a car is destroyed in an accident before it's paid off, the insurance settlement may not fully cover the outstanding loan.
The amounts consumers are upside down are substantial, experts say.
"More than a quarter of buyers are upside down when they come in, and the average is nearly $3,800," said Bob Kurilko, a vice president with Edmunds.com Inc., an auto information publishing company based in Santa Monica, Calif.
位于加州Santa Monica 的汽车信息出版（Edmunds.com）公司的副总裁Bob Kurilko说，当他们买新车的时候，超过1/4的购买者有上下颠倒的贷款，这个平均数差不多是3800美元。
This loan overhang has implications for both trade-ins and insurance recovery, he pointed out.
Here's the math: Say a consumer buys a $25,000 car and begins making payments of about $500 a month, based on a 6 percent interest rate. A tree blows over in a storm, flattening the vehicle. The insurance company agrees to pay, but values the car at just $22,000; the consumer is still on the hook to the finance company for $3,000 more, which must be paid out of pocket.
Scott Jones, 43, a New York free lance photographer, said he was aware of the risk of becoming upside down on a car loan when he went shopping for a new vehicle last spring.
一名纽约自由撰稿报摄影记者, 43岁，Scott Jones说，当他去年春天去买一个新汽车的时候，他才意识到他的这个汽车贷款可能变为“上下颠倒”的风险。
"I read about it on some of the Web sites, and I tried to shop carefully to avoid that trap," Jones said. His strategy, he said, was "to buy a reliable car and pay it off as soon as possible."
Jones' choice of a vehicle was a Honda Odyssey minivan, which he believes will hold its value better than some other vehicles. He made a cash down payment to reduce the size of his loan, and then financed the balance over six years, though he said he may try to pay it off earlier than that.
"I figure I'll be driving it for at least 10 years -- long after the loan is finished," Jones said.
Brian Reed, a vice president at Capital One Auto Finance, based in Plano, Texas, said a major contributor to the problem is that consumers have sought longer loans to hold down their monthly payments.
设立在Plano, Texas 的COAF公司 的副总裁Brian Reed说，对于这个问题的一个主要促进因素是消费者寻求更长期的贷款去压低他们每月的还款。
"In the late 1970s and early '80s, most loans were for 36 months," Reed said. "Now, the average term is about 58 months, and some lenders go as long as 72 months or 84 months."
Consumers with long-term loans who trade their cars frequently will have built up less equity and be more likely to be upside down, he pointed out.
The best strategy, Reed said, is "to try to match the term of the loan to the time you intend to keep the vehicle."
Rob Gentile, director of automotive information products for Consumer Reports, based in Yonkers, N.Y., said consumers who know they're upside down on loans often don't bargain well for new cars, since they're distracted by how that unpaid loan is going to be handled.
设立在Yonkers, N.Y. 公司的客户报告的自动信息产品的主管Rob Gentile说，知道他们在贷款上处于上下颠倒的消费者，经常不能在买新车上很好的讨价还价，因为他们被怎么样去还未付清的贷款而分心。
"Consumers should settle on the price (of a new car) before anything else," Gentile said.
Gentile also recommends consumers finish paying down a loan before they trade a vehicle, especially if it's been a good, reliable car.
"If you roll what you owe into the new car loan, you're financing the old car at the same time you're financing the new car," he pointed out. "That will cost more in interest -- and your monthly payment will have gone up, too."
听笑话学英语:I'm sure it is fresh 我保证它很新鲜英语听力训练营
【好歌放送】You and I--Chris August英文音乐
- 1F ~笑笑~ 2009-07-06 03:41:54