Stripper cars going extinct? Blame the seven-year loan

The days when a bare-bones "stripper" car came with vinyl seats, rubber floor mats and no air conditioning are long gone.

Today, convenience and cold air come standard for all models, along with a long list of niceties that were once the sole domain of the loaded vehicle. A base Chevy Spark, as one example, offers aluminum wheels, ten standard airbags, power windows — even six months of OnStar service, in case you lock your keys in the car. On the surface, the new car market is offering better values than ever.

There is just one small problem with nearly all entry-level models of the modern day: You can't ever find em', and when you do, they usually come loaded with surprises. We may learn about that teaser of a price from the manufacturer's advertising, or the dealer supposedly suffering a bone-headed overstocking whose pain can be your gain. But actually finding that car is another matter entirely.

Recently, I searched for an absolute bare bones 2014 Nissan Versa S, base model. How many were there for the genuine manufacturer's drive-out price of under $13,000 in metro Atlanta? One. Just a single car to serve a metropolitan population of six million people.

Two weeks ago I walked over to a Mitsubishi dealer near Myrtle Beach, S.C. There were 20 Mirages on the lot, and out of those 20, there was one basic car with that ever so rare five-speed manual. The price: $12,500, before a whopping $1,995 surcharge for window tint. The old days of stain guards for carpeting and VIN etchings on the windows have been replaced with $700 processing fees, $800 destination charges, and $2,000 aftermarket trim packages with low-quality leather and fake wood made out of real plastic.  

Is it any wonder that the average new car transaction price now tops $30,000?

These days it's the bad-credit finance customer that rules the roost. Why? Because new car dealers can easily make thousands of more dollars from financing these vehicles to sub-prime customers.

The $30,000 average price only makes sense because the average new-car loan hit an all-time high of $27,612 in March, according to Experian Automotive. More than one third of new-car loans, and two-thirds of used-car deals, are going to people with subprime credit.

Often times finance customers are looking only at the monthly payment instead of the overall cost and the duration of their loan. This "shopping for the payment" mindset has lead to longer loans with lower monthly payments that give far higher overall returns to banks and finance companies. For the first time, Experian found the average car loan now covers 5 1/2 years — with the biggest growth in car loans that stretch six or even seven years.

And it gets worse for those looking to buy a bare-bones model. Since customers are stretching out their loans for longer periods of time, manufacturers can more easily sell their higher-end models for lower monthly payments.

For many manufacturers, the base model is nothing more than a legal technicality and a loss-leader that gets gawkers off the street for the pricier model. Is there a saving grace for those of us that simply want a nice, reliable, low-cost car to get from A to B?

Yes: Forget about the popular car. If you do want to get a good deal, look for those moderately less popular cars that are in their final year of production.

That teaser of a low basic price that was heavily promoted when a car debuted usually vanishes into thin air during the last years of production. The good news for the cheap-car buyer is that rebates and incentives usually more than make up for that price gain. I have seen a better-equipped Mazda 2 with an MSRP that was $2,000 higher than the dull Nissan Versa sell for the exact same price out the door.

The difference? Popularity. The Mazda 2 will be replaced in the next six months and has a negligible advertising budget, while the Nissan Versa remains relatively popular and has an advertising budget to match the demand.

A lot of less popular, but very good vehicles are overlooked. The ones with the fewest options among them are almost always the most challenging for the dealers to sell.

So you still want a stripper with four wheels? My advice is to find that unpopular, but well-made car, in its last year of production. The key to getting a good deal in this new car market is to be observant of those rebates and incentives, and always try to hit em' where they ain't.