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.
Exactly. “Not cars” is a solution to a ton of problems.
fuck cars
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.
But if I drive a Mirage the neighbors will make fun of me.
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.
Lmao, I wish him luck with his truck.
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.
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Holy shit. That’s mortgage territory. I would master the public transportation system and buy an electric bike before spending that much per month.
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
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.
Yeah, I just spent $2,600 on a new engine for my car but my car is actually only worth $2,000. Lol
On the other hand, if that 2,600 is the biggest expense for the foreseeable future then it is far cheaper than buying a whole car.
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.
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.
Wtf, Honda elements are trendy? We used to rag on my friends element because it was like half plastic. Can’t imagine that has aged well.
Wait till you see FJ Cruisers selling for $20,000+ with over a quarter million miles on em.
Vanlife YouTube got to them.
During peak COVID, the dealer wanted to buy back my Q50 for $6k more than I paid them for it four years prior.
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.
Elements are enjoying a Renaissance more than a lot of other cars out there
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.
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, that’s so stupid lmao.
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?
Not right now they aren’t…
I’m sorry for your loss.
34mpg is 6.92l per 100km in non savage units.
Pretty unimpressive economy actually.
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…
Germans love trailers for their cars, seems like a viable solution
I’ve considered it, but my driveway is steep, and I’m dubious about my ability to back up with a trailer.
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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.
Americans are falling behind.
FTFY.
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.
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.
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.
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.
Americans are falling behind on all payments. Surprised pichachu face…
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.
Improve public transportation with good lines and timetable. People will use them.
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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.
But then car companies make less money.
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
This is a solution for today?
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.
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.
Can you get a 4 year old truck for less than 20k at this point?
Doubtful, but you can certainly get a 4 year old truck for less than a new truck
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 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.
Doubt
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.
And when things go to hell you will get a bailout
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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.
joke’s on you, I don’t have a car payment! fuck cars
I don’t have a car payment, anymore. Bc I own my prius and will until I can no longer fix it.
Quite a kink you’ve got there.
Getting a loan on a depreciating asset…
Is how most people afford vehicles. You paid for yours in cash?
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.
All 2k of it my FIL’s still dailies a £500 Citroen Picasso that’s from 2004.
Not them but every vehicle in my life except one in cash. I don’t trust banks and credit is evil.
Credit is a tool that can be misused.
is
If you rely on your vehicle to get to work, an old beater is a false economy.
I would disagree with a 15-year-old car that is well maintained. New cars go wrong all the time too.
And how can you assure it’s well maintained?
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.
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.
That’s very helpful when you’re buying second hand, and the previous owner DIYed the maintenance.
Buy new and have for 15years which is no longer being a possibility
Incorrect. You are saving a fortune on insurance and no interest in car payments.
You’re also unemployed because you can’t reliably show up to work, you absolute dunce.
Nope.
Excellent counter point, you really changed my mind.
… 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.
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 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.
