By John Ninfo

Primarily because of the" Great Recession" and the fact that cars are now generally more reliable, Americans are keeping their cars longer, an average of 11.4 years.

I am not sure that is true in the Northeast, but my wife, Judith, and I both drive 13 year old cars. That means many Americans are not burdened by a car loan payment. If thatís you, I hope you are saving for your next car.

On the other hand, as of 2012, the average car loan was up to 64 months (5.3 years), in large part because new cars are getting pretty pricey and Americans have been brain washed into focusing on the monthly payment, rather than the interest rate and term, which drives what you actually pay in the end.

Get this ó there are even 97 month car loans (thatís more than 8 years). Does anyone remember the days when you could only get a 36 month car loan and you had to prove that you could afford it?

The problem is that in many cases, depending upon the model and whether you "rolled in "the unpaid balance on a prior loan, the car can be "upside down," (you owe more that the car is worth), after 3 Ĺ or 4 years.

This was first explained to me in my bankruptcy court by an attorney whose client had owed $30,000 on a car that everyone agreed was worth $12,000, and because of a default, the bank picked it up and sold it for $10,000.

So he owed $20,000 against a car he didnít even have anymore. You see it every day.

So consider this proposition. No American should have a car loan after they have had one car with a loan.

You buy a reliable car that you intend to take care of, keep for more than 8 years, and put money aside for car repairs as it gets older.

You take out a 4 year car loan, and when it is paid off, you take your car payment, which you have been paying all along and is in your budget, and you put it into a separate interest bearing bank account. Donít use it to go out to dinner more or to go on vacation.

When you are ready to get rid of the car, you will have the money to buy a new one, or close to it, in cash.

Keep doing that, and .. no more car payment!

More on cars and finances in a future column.

ó John Ninfo is a retired U.S. Bankruptcy Judge and the Founder of the National Credit Abuse Resistance Education Program. To suggest topics, email him at