Feds Want To 10% Down And Max Of 72 Months On All Auto Loans - How Will That Affect The Industry?

Over the past two years the government has been working on a proposed rule to change credit risk retention requirements. A part of that overhaul includes sweeping changes to automotive loans, changes that are leaving many commenters asking: do regulators have any idea how people actually buy cars today?

On April 29, 2011 the Comptroller of the Currency (OCC) posted a proposed rule to implement Section 941 (Regulation of Credit Risk Retention) of the Dodd-Frank Wall Street Reform Act.

The goal of this rule is to establish new risk standards to prevent asset backed securities from being built on poorly written loans. In other words – prevent the financial calamity that broke America.

MattDarringer - 1/2/2014 3:19:42 PM

+1 Boost

10% down is very reasonable, but if you need to finance to 72 months to buy a car, you cannot afford the car to begin with. Even at 60 months, interest is a big chunk to pay.

monster - 1/2/2014 7:37:25 PM

+4 Boost

Matt, I don't think you can beat a deal of 0.9% or 1.99% interest. These are simple interest loan. I would rather get these than pay off all at once.

MattDarringer - 1/2/2014 8:45:36 PM

+1 Boost

@monster but not all 72 month loans are 0.9% or 1.99%. Usually they are a multiple of that.

jeffy210 - 1/2/2014 10:20:16 PM

+2 Boost

Only if your credit sucks and then you shouldn't be buying a car in the first place. I got 72@1.9% on my A5 and have no qualms about the interest which only costs me about $14/mo.

MorePower - 1/2/2014 10:35:19 PM

+1 Boost

@jeffy210

There is no relation between having a good credit score and one's need/want to purchase a new vehicle or make a large purchase.

The housing crisis demonstrated that there were plenty of people with good credit that made horrible decisions in buying homes they could not afford.

TauronB2G - 1/2/2014 10:26:26 PM

+1 Boost

A 72 month loan IMO is a bad move you will almost always owe more than the car is worth. They are even doing 84 months now...not for me. Not even with a really nice or expensive car. Can't be that upside down on anything.
T

MattDarringer - 1/2/2014 11:31:16 PM

+1 Boost

Any financial advisor will say 60 month or less

icjo61 - 1/3/2014 11:46:00 AM

+1 Boost

@jeffy210
How about all the fools that knew that they could not afford the house they were actually buying. But the government made it a right instead of a privilege. All us fools that bought houses that we could actually afford now were bailing those idiots and the government out of this mess. All while we were or are still upside down in our mortgages. At the end of the day you know damn well whether you can afford what you are intending to buy. Whether it be a house, car or gum!!!

iamdabest1 - 1/3/2014 2:27:12 PM

+1 Boost

i have never finished a lease in my life, thank god for swapalease... usually after 18 months in a car i go nuts .. the most i have ever been in one car was like 30 months ( e46 m3) i cant imagine financing a car for more than 60 months, 5 years in one car ?? shoot me !!!

CarCrazedinCali - 1/5/2014 3:59:22 PM

+1 Boost

Well if you don't put money down on a vehicle purchase regardless of term, you are pretty much screwed and will be upside down when you are ready for the next car, so money down is smart but don't think it needs to be required. If it is required, we will ahve an easier job getting people out of their current cars and into the next, though 10% down isn't a lot and may still not be enough to counteract depreciation and damage