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.
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.
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.
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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.
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.
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.
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.
Holy shit, that’s so stupid lmao.
I’m sorry for your loss.
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.
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.
Americans are falling behind.
FTFY.
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.
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
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.
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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.
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
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?
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.
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.
Worry not: soon it will be mortgage payments.
(How bad it will be depends mainly of the proportion of people with variable rate contracts)
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%.
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.
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.
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.
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.
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
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.
This is also true. No disagreement at all.
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.
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.
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.
Financial literacy is often lacking amongst the populace.
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:
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average vehicle age in the US is 12 years (but I believe this counts commercial vehicles, which would skew the number)
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40 million used cars were sold in 2021-22
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new us cars sales are steadily dropping, a trend started before the pandemic, and are hanging out around 12-14MM per year
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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
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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.
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.
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.
Dealers are getting nervous. I have to be honest, I like them squirming after the last few years.
