With headlines about stock market highs and a rebound in house prices, more people are treating themselves to a new set of wheels.

According to CNBC, auto leasing activity is the highest it’s been since Experian began tracking it in 2006.

Auto sales are strong this year as well, aided by buyers who are signing up for long-term loans in order to keep monthly payments “in check.” That means an average monthly payment for a new vehicle of $459, which is actually a few dollars less than the average at this time last year.

How have car buyers kept monthly payments from edging higher? In part they’ve done it by spreading out the length of their auto loans over a longer period of time.

In the first quarter the percentage of auto loans stretching out 73-84 months jumped 27.4% and now makes up 19.5% of all new vehicles financed.

“Loans of six plus years have become extremely popular, especially those that are 75 months,” said Experian’s Melinda Zabritski.

Recovering From Financial Bulimia

I’ve written before about people’s tendency to financially binge and purge, racking up debt when times seem good and becoming frugalistas when times are tough. Many people appear to be in binge mode again.

At the risk of stating the obvious, or sounding like the Grinch who stole everyone’s financial fun, wouldn’t it be better to always give, save, and invest portions of all that we make and then use a plan to divvy up what remains on all of the spending categories?

One problem may be that many of us are simply car crazy, and that can make us financially crazy as well. According to a survey cited by Juliet Schor in her book, “The Overspent American,” “nearly half of car owners saw their car as a reflection of who they are either ‘a lot’ or ‘some.’”

A number of years ago, I spent several weeks developing recommended spending guidelines for various size households across various income levels. One of the conclusions that jumped from the pages was that, except at the very highest edge of the income spectrum, if we are to live generously and save and invest adequately, it’s impossible to have any debt (or lease payments) other than a reasonable mortgage. Impossible. A $459 car payment (or one of any amount) just doesn’t work for the average household.

Turning Onto a Smoother Financial Road

For some people, breaking the cycle of financing vehicles may take some time. Early in the journey of recovering from my own Prodigal Son story, I leased a car. The car I had been driving had over 120,000 miles on it and was spending more time in the shop than on the road. At the end of the lease, I paid off the car, drove it until it had nearly 200,000 miles, and have never financed or leased a vehicle since.

Our vehicles may not elicit admiring stares or compliments, but they get us where we want to go—both physically and financially.

What’s been your experience with vehicles?

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.


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  • Tony Naples Fl

    Praise God I think Larry Burkett said “Drive it till it rusts apart, sweep up the rust and drive it a couple of years more”

  • James

    Because cars depreciate, I have picked a trustworthy brand, Subaru. I have bought 3 used Subaru cars with about 100000 miles since 2006 on each for a total of $10000. One of them my son wrecked, they other two are driving strong. The only things that ever generally go wrong on a Subaru is: change the timing belt at 105000; head gasket at around 150,000; and front axles. Once the head gaskets are changed, the engine is good for another 150000!

  • Bruce D

    Our family always busy used. My 4 kids drive late 90′s Jeep Grand Cherokees with the 6 cyl engine; they can be bought pretty cheap, are easy and inexpensive to repair (I taught them how to do all their routine maintenance) and we have 225,000 miles or more on all and expect to get to 300K. Parts available everywhere in US, and anyone can work on them. My wife and I buy 3-4 yr old used, drive 5 years to almost 200k, then trade up. No payments!

  • Kathy B

    In our household we have run through all possible car buying scenarios. My husband and I both bought new cars in our youth but drove theme till they dropped. We lease once because the payments were low but learned that we had to pay a fee for the dealer to take the car back at the end of the lease.. We have also had the good fortune to have Grandma’s 20 year old (rust bucket) with a good engine. That had almost 200K miles on it before our daughter had an accident that did enough frame damage to make it unwise to fix and keep driving.
    The best thing we learned is to do your homework and research our next used vehicle and be patient for the right vehicle to come along. We found a 2003 Honda civic with 77,000 miles on it that looks like a brand new car.
    We expect to keep it for a good long time.

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