https://www.fool.com/the-ascent/personal-loans/articles/americans-are-falling-behind-on-their-car-payments/
A record number of owners spend more than $1,000 on their monthly car payments. Read on to learn how to cope with payments that are too high.
data from Edmunds says a record 17.5% of borrowers have payments of $1,000 or more
That is a crazy high number. You are approaching mortgage territory there (yes, mortgages can be that price outside of cities). People need to stop spending so much on cars. They do not retain value.
While I agree cars themselves are just insanely expensive. A $25k car has you at $450+/month and this is if you have excellent credit.
We need other options besides cars and unfortunately they're the only option for many people.
People choose $80k cars on 5-7 year notes because “they can afford the payment” thinking that means they can afford the car.
there are a great many cars to be had for less money.
maybe people shouldn't buy cars that cost half their yearly wages?
There are some people in the US financing cars for 7-10 years. Half their yearly salary is actually more like 2x their yearly salary for many of them.
Drive a Prius, all the cool kids are. Gen 2 makes you look kinda poor, but you still get green points. Gen3+, ur golden
I actually have a mirage. The only neighbor who makes fun of me is the guy next door, he has a truck, maybe if he tries real hard it will run one day.
Someone picks him up for work in a gen-2 Prius.
My mortgage is that price inside a major city. Quite a few cars today -- and not just hypercars or ultra-luxury ones, either -- are approaching the same price I paid in 2009 for an entire 3-bedroom house. That's just pants-on-head crazy!
i'm really not sure why so many people worry about the value of a car. it's not some super-expensive, incredibly rare car. most are average commuter vehicles. they're a tool. buy them, use them, keep them until they're wore out, and repeat the process.
i never really had a problem with car debt. i currently am driving a Cadillac Escalade with 430k miles on it. i bought it 7 years ago with 160k on the odometer, for $12k. it's been a fantastic vehicle. no telling how much money that truck has made me over the years. it was a replacement for my beat up Tahoe that had about 325k on it when i traded it in.
270k miles in 7 years‽ Unless you're a contractor or something and it's part of your job, you drive way too fucking much.
I used to commute 1k miles per week. The wage differences, home prices, money saved by being close to family, and job market is such that this made financial sense. And the time in transit was about the same as when I commuted 350 miles per week when I lived near DC.
COVID and work from home has been such a quality of life improvement it's insane. On the other hand, the house we sold when we left DC for the Midwest has appreciated about $500k in 8 years (we check every once in a while on Zillow) so maybe that was a mistake. I certainly haven't made up that difference in salary.
Cars are so expensive now that you could probably sell it for more than you paid for it.
You spent somewhere around $54k in gas over 7 years @15 mpg and $3/gal. I wouldn't take an Escalade for free if I drove that much.
I make pretty good money and own my own house, no kids, and don't have crazy monthly expenses. But 1000 dollars a month would scare me.
I bought mine with 0% interest for 36 months, best believe I’m paying that 1k bill in order to not have to pay interest lol
36k for a new car is a lot for me but that's not the worst deal. The problem is people are paying over 1k a month for 6-7 years.
Yea that’s crazy to pay that for 7 years. The last car payment I had for 7 years was ~200 a month and I was 18 so credit was nonexistent.
36k isn’t crazy for a hybrid AWD SUV in todays market, I paid a little more for the hybrid and AWD to get 45 mpg instead of 20s and the AWD is a safety feature since my part of the world gets severe winter weather.
I’d love to have paid less but this is market is deranged
That’s $400/mth more than my 2013 mortgage, and you can get a property at the same I paid for mine in 2013 now, just in Indiana instead of Wisconsin.
I’ve thought about relocating because my property is now worth 3x what I paid, and that’s about the only option I have to net any perk from selling, but I don’t want to move somewhere that gets droughts in the best of times, much less with climate change.
But for someone who just wants a place? There are some, and they all come with drawbacks.
You think people can get $600/month mortgages in this economy? You seeing a ton of homes in Indiana for 75k?
Because at 8% interest, that's all you're getting for $600/month
Yes, that’s my point. Look at the housing market in Indiana. There are lots of properties under 75k.
They aren’t better than the place I live now, but they also aren’t worse.
The only kind of place you're getting for under 75k in America is gonna be 100% pictures taken from the outside by a bank representative as they try to foreclose on a very poorly located hovel.
But sure, gl with your mystery box fixer upper.
Holy shit. That's mortgage territory. I would master the public transportation system and buy an electric bike before spending that much per month.
For ordinary cars, they're not meant to. They're meant to be driven. That naturally involves wear and tear.
That naturally involves wear and tear
Houses have wear and tear as well, they unsurprisingly do not suffer the same evaluation by the market as cars do. That doesn't tell the whole story because a lot of the depreciation of cars is how the market itself views that asset. Some cars even lose up to 20% their value once driven off the lot for pretty much the same reason an iPhone loses value so quickly when a new model comes out or isn't fresh out of the box.
The entire point is that while the argument of "They're meant to be driven" and "wear and tear" are valid arguments they are valid because of how the market views that "wear and tear" as a massive negative. Some of that is spurred by the difference between rehabilitation of a used house versus rehabilitation of a used car, that's including the logistics of how a motor for an early 2000 model vehicle is much harder to find than say a replacement HVAC system. There's a bit of the logistics of how cars are made and how you cannot just drop XYZ transmission into a random car unlike say how you can just drop ABC model hot water heater into your plumbing.
There's a deeper reason why that wear and tear on a car is so vastly different and thus treated differently than wear and tear on other more repairable things.
Exactly. Homes retain their value because repairing wear and tear is quite affordable. Even expensive repairs like a new AC or roof is still only a fraction of the cost of the home. And those repairs will last for 2+ decades.
Meanwhile, an expensive repair for a car, such as a new engine, will often result in the car being sold to a junkyard due to the price relative to the value of the car being extremely high.
Houses have wear and tear as well, they unsurprisingly do not suffer the same evaluation by the market as cars do.
that's because you're not buying the house, you're buying the land the house sits on and the house is a nice bonus that's thrown in. sometimes "houses" get bought to be demolished so some rich asshole can build an even bigger house on the lot.
And this is why I own my car out right. Bought it for $11k in 2013 and plan to drive it till the wheels fall off
Well, yeah, when people are spending $30K-$80K on a car, they're likely gonna miss payments eventually. The car market, including used cars, has been over-inflated for years.
We had a 2003 Honda Element that we bought in 2008 for $8000. It had less than 50,000 miles on it. We saw that same exact model in a car lot this year, with over 150,000 miles and they were selling it for $10,000. Over 15 years later and over 100,000 miles more on it and it's selling for more. There is a serious problem with the car market right now.
Honda Element isn't the best car to illustrate overall inflation. They're kind of in trend right now, so the price is higher than similar cars of same era/mileage.
During peak COVID, the dealer wanted to buy back my Q50 for $6k more than I paid them for it four years prior.
The price of cars was relatively flat from about 1998 until covid, actually. In 2019 cars were a bargain compared to the 80s and 90s.
You're also comparing 2003 prices to 2023 prices. Inflation occurred in the last 20 years. Like, this is just what happened to all goods and services.
It hurts to agree with you. Like I wanted to downvote you but then I checked an inflation calculator. The problem is wages haven't kept up. In a normal period of inflation nobody notices because their purchasing power is unaffected. But if prices go up while wages stagnate then everyone notices.
I'm in Austin, TX. It BAFFLES me how many folks own these huge trucks and SUVs. My wife and I bought a used Ford Fiesta for $12k, payments are about $225. Even that's tough to swing sometimes. Still, it's been worth it for the gas mileage alone. Currently sitting at about 34mpg. I can't imagine what some of those huge trucks get. Not to mention that I don't understand how they're practical to drive much of anywhere in. Just so damn huge and unwieldy. I'm happy with my tiny car. Would be happier with a train.
My buddy was just bragging to me how he just bought a brand new Sequoia with all the bells and whistles and only had to do was take out the equity on his home and he paid cash for the whole thing... Somehow I couldn't get him to understand how fucking stupid it was to take the equity out of his home to buy a fucking fancy car.
“All I had do to was take money out of the thing that appreciates and put it into the thing that immediately depreciates 20% after I drive it off the lot!”
*depreciates 20% the moment the money changed its owner. Another 20% when you get the key and another 20% when you use the key for the first time to unlock it
My accountant does that because home mortgage interest is tax deductible and car interest is not. But he can afford his luxury car.
Holy shit, what a dumb way to spend the equity from your home. My wife and I have a HELOC and it all goes back into the house in the form of improvements.
Reduce value in an asset that increases to buy an asset that decreases in value... brilliant!
You do understand that mortgage interest rates are often half that of a car loan, right?
Yes. Cars have gotten more fat throughout. I used to drive for less than that on an 80s corolla. 90s ford got to 5.something. My NA v6 Mercedes even got 7-9 in "daily" use.
It’s better than the 8mpg I was getting in an old truck I had inherited. Hated driving that thing.
I'm in southern California. Been wanting an old truck to enable a woodworking hobby, but it's hard to find listings for 20 year old trucks with standard bed for under 10k. 20 years old...
I just rent a truck from home Depot or turo when I need it and it's not often. I have a roof rack on top of my car that handles 99% of larger buys. I hope you know of Bonhoff lumber in Vernon, they've always hooked me up with scraps.
34mpg that's like 14.5km/L....that's really not very good, it's a bit poor actually for that size of car.
It’s a lot better than the 8mpg I was getting in the truck I had inherited before it died.
The 34 is also an average, on the highway it’s closer to 50-60.
That's quite high for a Ford fiesta. My hyundai of the same size gets 42 mpg, but it's a european model.
I was shocked... My wife totalled my car 3 weeks ago. It was a 2013, but it was paid for.
I was COMPLETELY unprepared to go shopping for a car and I'm really not interested in having a car payment again.
So $12,000 down thanks to the insurance payment, even financing a small amount through my credit union and having an 800 credit score was getting rates in the 7-8% range. I saw some silliness and nonsense of 12.25%. On a CAR loan.
Called in some markers so I'll be able to pay the rest in cash.
My current car is 14 years old and fully paid off, but likely won't survive for much longer. I really want an electric car, but the prices on these are beyond what I can afford. So I looked at hybrid cars and even these were going to be extremely pricey. Finally, I looked at some regular gas cars, but even those would stretch my budget to the breaking point.
If my current car goes, I'll need to buy another one, but I'm not sure how I'll afford it.
Yeah, we're going to invest in electric bikes at some point. Eventually drop down to one vehicle paired with two electric bikes. It's just too expensive to buy a car any more.
If my car dies my job is gonna be in for a hell of a surprise when I can’t travel to events around the state anymore. I’ve been asking for a raise and trying to get them to understand that I’m struggling to survive even with working a second job.
Chevy Equinox EV will have a Trim under 35k 2024 Equinox The money you save from gas would help with the car payment, plus GM has a deal with getting a L2 charger installed in your home.
A $35,000 car (with what I could afford for a down payment, what I think I'd get for my trade-in, and at 8% interest), would be $655 a month. That's budget busting for me.
Even ignoring costs to install a charger, I spend about $80 in gas a month, so that wouldn't be a huge savings. I'd still be spending an additional $575 a month which would be enough to put me in the red every month.
The hybrids I was looking at cost $21K to $29K and even those would stress my budget out.
If this thing is anything like the ICE Equinox, you're better off buying literally any other vehicle.
Your situation is your own, but I was able to lease a phev for less than what I was paying for gas + maintenance on a car I had paid off. It may not be exactly what you want, but lease deals still come around occasionally.
And that's not even discussing the damn price these days. I wasn't prepared for the price. Luckily, I found a damn minivan for $3k used with only 70k miles. I hate driving the thing, but for $3k, buckle up.
I've been to US and it's really hard to use public transport in places without sidewalks... Seriously, I once parked on the other side of the road from a cinema and discovered there's no way to cross the road without driving. The way everything is car focused goes way beyond poor lines and timetable. You would have to not only completely rebuild lots of infrastructure but also change culture and habits of most people living there.
Most American cities aren't built around the idea of taking public transit or even walking to your destination. There's a few that do it fairly well like Boston but there's also the issue that lots of people live in suburbs which require people to own cars to get to work.
Instructions unclear. We made driving more difficult and now the city is bankrupt.
-every city planner
I don't think that someone who owns a 80k pickup truck that he can't afford is just waiting for that new tram line to use.
I expect you're not wrong.
But in my mind, the real goal is to get people used to public transportation being an actually viable option before they get an over priced truck. Get them used to living without a car bill and then watch them never get a car because of how much it'd cost in car bills, ya know?
agreed. thankfully my city's been doing expansions of the rail transit system, but we've got a lot of ground to cover still
Supersized SUVs aren't because Americans want big cars. They are due to poorly crafted emissions standards.
Engines are expensive and complex. Transmissions are expensive and complex. Body panels are simple and cheap. So, when manufacturers were told that they needed to tighten up emissions standards, regulators expected them to do R&D on engines and drivetrains. Instead, they just stamped longer and wider body panels, bumping their model up into a larger class that allowed greater emissions.
Don’t get me wrong, car companies absolutely jacked the price of their cars up, and lenders absolutely loaned money they shouldn’t have, but Americans bought $60k trucks with no money down on 7 and 8 year loans. FFS stop doing this shit! I bought my truck when it was 4 years old, for $16k, it’s now 13 years old, and I still have it. You probably don’t need a brand new car, and you almost definitely need to trade in the one on which you still owe money.
This is why people are saying they're not confident in the economy despite "trusted" measures like inflation, fed rate, and Dow Jones.
Because there's something more going on and no one's doing enough about it.
The low interest for years has made people far too willing to just pay it back over years. Credit, credit, credit. Who cares, you can afford it!
Now the interest rates are up again, nobody has any fucking money to buy anything. The billionaires have stolen your wallet, and are now holding out the begging bowl for more so their precious lines can go up.
Hopefully this will be the end of supersized SUVs everywhere.
I thought I was being financially responsible by getting my car with a 4 year repayment instead of 7 at 1%. But because of all the inflation that happened right after I would be making money on that loan right now. :'( oh well, you can't plan for extremes
Now the interest rates are up again, nobody has any fucking money to buy anything.
To be fair, this is the entire reason for raising interest rates.
I mean, you're not wrong.
It's just a bit of a kick in the bollocks when the wealth has to trickle down, but the poverty somehow has to trickle up. And neither are trickling very fast.
No disagreement from me there. Frankly, we're lucky it wasn't bad enough to kick off a real depression. A worldwide depression right now would be a very, very different place. Idk how we'd begin to climb out without war, and wouldn't ya know it there's a few good global Cassus Belli floating around.
It's ugly though, for sure. Inshallah, the worst bits are over and we come out ahead. Sounds like you're UK(?)/Aus, but I hope worker pay is rising there the way it is here in the US.
I buy cars in cash. I have purchased a single vehicle in my life with credit and that was paid back in 3 years, it was solely because my then 8 months pregnant wife and me broke down in our old car. Still have that car, 15 years old Honda Civic trying for 30 years on it.
No sympathy
I bought my last three cars with 0% interest deals over six years. Brand new cars (last year's model), good price, dealer's trying to just make room for new inventory. With low payment I was able to invest extra money. Why spend cash you don't have to? If someone offers low interest on something you need, it's a no-brainer.
No sympathy? No thinking maybe.
Subaru offers deals on their last year's models all the time. I drive a 2018 Subaru Legacy, and before that a 2013 WRX, both had 0% interest financing. I paid about $250 a month over 60 months on my last car. You know how I get that? Because I build my credit by not paying cash for everything. When I bought furniture for my home, I opened a credit card with the furniture company because they offered 18 months no interest. It's always a no-brainer (if the price of goods is right).
And I know interest rates are crazy now, but Subaru is currently (or was in the last month or so) offering 0% financing on their cars again. If you're in the market for a new car and can stomach the ridiculous cost of everything these days, getting 0% makes it much easier. Just makes sense.
I feel like the ven diagram of people who are getting behind on their car payments and people who could use any of the tactics listed in the article is essentially two non-intersecting circles. The only one that had a chance is "sell your expensive car and buy a cheap one" but that only works if you're not to far gone.
It also avoids the question of "who's going to buy your expensive used car in this market?" The middle class is shrinking every year.
No shit, all you had to do is look at the litany of patents for ways to bully and punish people who miss payments that the car manufacturers have been filing and you could have figured out that people were struggling to pay.
Yeah I mean who doesn't just regularly keep tabs on patents that car manufacturers file?
First bookmark I check every morning!
Dude, there are posts regularly on here about them, you don't have to look them up. People do that for you. Ford is making self-driving cars that repossess themselves. Or how about deactivating the radio or making loud obnoxious sirens while the car is on but not moving because you are a few days late? Maybe you would prefer a Lexus that enables a governor at 45mph because you are late?
I don't have a car payment, anymore. Bc I own my prius and will until I can no longer fix it.
Worry not: soon it will be mortgage payments.
(How bad it will be depends mainly of the proportion of people with variable rate contracts)
I doubt it. Rates were so low that variable rate mortgages weren't very popular, additionally after 2008 rates have a lifetime cap on the increase. There also aren't mortgages that were issued either no chance of repayment, so the default risk isn't as large as 2008.
While there could be an increase in foreclosures and a puase/decrease in home prices, it likely won't be a massive crash like 2008.
Well, good for you in the US.
Here were I live - Portugal - salaries are low and the house prices bubble has been unbelievably massive for almost a decade, so a majority of mortgages have variable rates: it really was the only way they could afford paying such house prices with the low salaries they get.
I'm quite curious which countries will turn out to have large mortgage powder kegs and which don't.
Per market data, ARMs were very unpopular prior to 2021. I'd have to think that the generation stomped by 08 is the reason why. They're recently up from 3% to around 12%.
Do Americans predominantly buy new cars then? Seems like a really weird thing to do if your cash strapped couldn't you just get a second-hand car?
They car I've got his third hand and other than a minor electrical issue it works fine and I paid the equivalent of about 1000 dollars for it
The used market is terrible. A used crossover or sedan (Camry sized) from 2019 is like $25000. In 2020, it would have been more like $15000 for that SAME year vehicle.
New cars are limited to drive prices up. Also, in the US everyone thinks they need a pickup, Wrangler, or Bronco which are ridiculously marked up.
In 2015 I had a beater I got for $2500 from a third party used car salesman. Those seem to be gone in my area and a beater is now 3x that price.
There are big used-car buying corporations like Carvana that buy up used cars by offering better prices than dealer trade ins.
This means way less used inventory on dealer lots and higher prices across the board, so that means a lot more people need loans to buy cars, and loans are longer with higher rates.
Most Americans live paycheck to paycheck. It's pretty hard to save up enough to buy even a used car cash anyway.
A used car in the US will run you 10k easily. And that's just for the oldest stuff they're willing to sell instead of junk.
In a country where people have trouble scraping together an extra few hundred dollars for an emergency expense, that's going to hurt.
And it's not like you can just not have a car. In most of the country having a car is pretty much a requirement.
Very true. The days of cheap beaters are gone. A car from 2009 can cost $10000 it it just looks decent.
I had no idea the used market was this bad in the US. I've never paid more than 3000 Euros for a car here in central Europe and most were in pretty solid condition. Hell, one just cost me 100€ and I drove that thing for 4 years with zero issues.
They're primarily talking about cars from used car lots or dealerships. You can find cheaper cars all day on Facebook. The real cheap beaters are pretty much gone these days but cars are also a lot better built than they were in the 80s and 90s where those uber cheap beaters originated.
It's a covid thing, the lack of new cars caused a supply shock that made everythingmore expensive. The used market is getting better, but there's still really low inventory all around, which is causing higher prices.
I've seen them as low as £500 but never dead get one as I've always assumed that they're secretly some kind of final destination style death trap.
Some definitively are, which is why I do a thorough inspection before I buy. The one and only time I bought one without inspecting it first, it had a hole in one of the front control arms that I could almost stick my hand through...
Used market used to be better-priced, but I felt it was sketchy unless you were handy or "knew a guy" who could repair it. I decided years ago to only buy new so that I knew it was well-maintained and not abused. I make payments into a savings account and pay cash, or if the best offer is a financing offer, I'll take the financing and either make payments or pay it off right away, depending on whether my savings interest is outperforming the rate of the loan. I only buy pretty basic things. Last car was a base model 2010 Mitsubishi Lancer. I'm in a 2022 Honda HR-V now. My next car will probably be something that takes advantage of the EV tax credit before it expires in 2032. Wife and I share one car, for what it's worth, since we work in the same place.
This, and a lot of young adults getting enlistment bonuses and buying Dodge Chargers. Seems like in Maryland, everyone 18-22 had one with their instagram handle on it.
Used car prices skyrocketed during/post COVID. Still bad now compared to before, but better.
I have no idea why I found this so interesting, but here are some car facts:
average vehicle age in the US is 12 years (but I believe this counts commercial vehicles, which would skew the number)
40 million used cars were sold in 2021-22
new us cars sales are steadily dropping, a trend started before the pandemic, and are hanging out around 12-14MM per year
most new sales are trucks
https://autoleap.com/blog/how-many-cars-are-sold-in-the-us-each-year/
https://www.marklines.com/en/statistics/flash_sales/automotive-sales-in-usa-by-month-2022
There’s a sizeable portion of Americans who are obsessed with making sure people know just how rich they are by purchasing the newest, most expensive toys to show off, even if they aren’t rich. In fact, especially if they aren’t rich. Then when they implode, it’s someone else’s fault.
Yeah I feel bad for people struggling right now making payments on some beater.
The people who decided during the pandemic that they needed a $80k truck and suddenly can't afford it. Yeah, I'm not losing sleep.
Us d cars have also skyrocketed. I bought a used NV200 in July with 36,000 miles on it and it's costing me 465 a month for the next 6 fucking years. And I got a really good interest rate.
I buy new which is against the overall trend, but I also tend to drive my cars into the ground and want something functional and warrantied, I don't want second hand issues in the event someone didn't do the regular maintenance and I live in the boonies now where reliable transportation is a must. I'm not interested in "new" just functional.
Last car before this I drove for 14 years and I only traded it in because I needed a CUV crossover to handle light off-road use after moving to a rural area (my old car was a small sedan style hatchback with a fixed suspension). I'd otherwise still be driving the old one I bought in 2006.
My "new" car (bought in late 2020) was fairly cheap as these things go (I got the 2020 model instead of the new 2021) and I paid a third of it cash down and got a 0% APR on it due to a financing deal, so zero interest at all. I'm also paying well above the monthly payments and expect to have it fully paid off within the next year, just because I hate having a car payment. Currently the car costs as much or more on the used market than I paid for it new, and with many more miles on it than I currently have.
Also, in fairness, I can 100% afford it and if needed could pay it off lump sum right now. I don't buy or finance things I can't comfortably afford.
Exactly. Every time I've had an auto loan, the vehicle was still worth quite a bit and ran fine when the loan was paid off. Meanwhile, I was able to get to work and other places.
Not them but every vehicle in my life except one in cash. I don't trust banks and credit is evil.
I would disagree with a 15-year-old car that is well maintained. New cars go wrong all the time too.
The same way your mechanic does, manufacturers have a weird habit of putting specs on everything. Even doing easy things like keeping on top of tyre pressures and oil is enough to make the vehicle run well and for a long time as those two things have a big knock on affect to the rest of the components. But I think maybe with that question you're prob not that bothered and just want an old contrarian Reddit like argument.
That's very helpful when you're buying second hand, and the previous owner DIYed the maintenance.
How does this help you at all when buying used? The number of 15 year old cars with maintenance records at all is abysmally small. And usually it's an enthusiast car that's not gonna be reliable anyway. Being on top of tire pressure and oil changes is definitely not nearly enough to keep a car maintained for 15 years. It really sounds like you're not familiar enough with cars and just have a contrived idealistic view of the car market.
Not sure about where you live, but it's common here in the UK to expect a folder with a load of service history as well as MOT records being public.Additionally, you have a V5 which tracks ownership. I think every vehicle I've brought came with a Haynes manual to boot
" Being on top of tire pressure and oil changes is definitely not nearly enough to keep a car maintained for 15 years" I don't get this logic, I make a point about even the easiest maintenance jobs being a big contributor to keeping a car going, and you take it as I should have listed every single job you would need to do? I think everyone can do a basic service and use a good mechanic for yearly checks and services, something you'd do and pay for with a new car, too except you'd have to use their shops and parts what a win!
"It really sounds like you’re not familiar enough with cars" Already stated I've kept a Ford Fiesta on the road for over a decade to add to that I've restored a 1987 Honda 90 and ran that for another 20k before swapping out the engine for something a bit more peppy which isn't saying much for those. I'm not an amazing mechanic but I like to think I still have the skill set my parents generation had.
Ultimately, the new car market is in a bit of crash at the moment and people are having to wait months to years for new cars. Do what makes you happy, but it doesn't undo my very first comment that it's not financially smart to lease a car with all their terms & conditions. They've done a good job convincing people they can afford things that should be a once in a lifetime purchase of passion to shift stock, that's my opinion it's been really fun discussion all the pros and cons with you all.
... is normal.
Look inside any manufacturing facility. All the pieces of equipment are depreciating assets, often purchased after issuing debt.
Not really the same thing. The manufacturing equipment generates revenue greater than its financing costs
If you use a car to commute to work, then the return on a car far exceeds the financing costs.
Yeah except that equipment will last over half a century or more. I have worked on metal presses that were almost 19th century and know people who have worked on ones from the days of wood computers of the 1870s. Heck the OEM I work for was originally running everything off belts. One motor moving energy around with belts in the floor and ceiling.
You can't compare the two intelligently. Especially since safety standards keep rising and there isn't practical methods to make those old vehicles safe. Metal presses for example, gates and light curtains. No big deal. Try taking some car from the 1950s and adding airbags and a crumble zone. I imagine it is remotely possible to do it but not widespread.
Useful life depends on the type of equipment. I'm sure there are some metal presses that last a hundred years, but there is plenty more equipment that has a useful life measured in years, especially high-tech equipment.
The iPhone is only 15 years old, how much of the equipment used to build the original model do you think is still in use?
Same is true of non-manufacturing sectors. For example, a hospital might issue bonds in order to build a new clinic or hospital wing. Much of the hospital equipment bought with those bonds will be replaced within ten years.
Well yeah it depends, I always tell my clients that the moment we have to add a touchscreen they have to prepare to have a problem within 5 years. Which is why I push them to consider the extra warranty if they go that route. Most do some don't.
It's still not a great comparison. Individuals aren't too big to fail.
The point is that depreciation is not the most important consideration when considering whether to finance something.
The most important consideration is the return on investment. If the equipment will allow you to make more money than you pay in financing plus depreciation, then you should buy it today even if it requires financing. You're not buying it because you expect it to appreciate.
And if you use a car to get to work, then the return on investment is your entire income. So if you need to finance a car to get to work, then finance it.
Right but people don't work the way businesses do. If everyone bought a car only when they needed a car to get to work and back the world would be much much different.
So many people at my work make a third of what I make and I see their giant pickups. Me? I drive a small economy car.
Mine paid off about 18 months ago after 5 years at 2.42%. I feel like that was the better move even if I'd had all the cash to put in.
Dealers are getting nervous. I have to be honest, I like them squirming after the last few years.
Step 1: don't buy the largest possible vehicle. Buy at or near at what the minimum will work for you is.
Step 2: enjoy a vehicle you can afford
Thanks but I really want to wait until Dec 25th before I open it. Hope gas prices triple ;)
Oh no! Not some random person I've never met trying to insult my dick size. What ever will I do?!?
Learn some self control and don't speak out loud every thought that pops into your brain. This is called "self control" as is a sign of a mature and developed persoanlity.
Oh boo, did calling that other poster disconnected from economic reality for most Americans make you feel something bad? I'm sorry I'll make sure to use my self control to do it again in the future.
Rich. Rich to have a car, any car, you can afford. Half of all Americans are below 37k a year in income. If you're missing the reference, McDonald's published a suggested budget for it's employees that was hilariously out of touch and included a second job.
It didn't make me feel bad, it made me feel very sad for you. I still feel that way as I type.
Again the lack of self-awareness needed to admit you couldn't fill in the blank with anything is astonishing.
Perhaps you aren't just giving off small dick energy, you're a moron and an asshole too.
Are you having a stroke? No really, the best you could come up with is a hamfisted description of Dunning-Kruger?
Shocked.
Who said a car is supposed to be a source of joy. A car moves you from point A to B, you might be able to find joy in either of those two places but the consumerism of financing a larger than necessary purchase is pretty fleeting.
LOL you just had happen to you what the country did to Jimmy Carter who dared to say that people might spend a little less since the economy wasn't' happy. It's why Reagan got elected and we've never recovered.
LOL this isn't like the 1950s which were filled with propaganda films touting freedom on the road. No, we're in a world that is slowly collapsing economically and people have to stop chasing the shiny and focus on what they need. Let the monkey brain rest for a while, it will always want more shinies.
Very true that is why it is so sexy when a woman is completely covered head to toe vs say a short skirt.
I have a Gotrax, no complaints, altho in hindsight I should have got one with dual wheel suspension