Middle class income & new car prices

[Schwerin]

About a year or so ago most finance mangers would tell you that based on the average income in the US that most people cant buy a new base Civic while staying financially responsible. (aka, following the recommended rules for how much you should be putting down, and how long you SHOULD be financing.)

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[S7N]

Everybody always thinks they have all the answers. If people want to have debt and spend thousands wether they can afford it or not that’s there business and If you wanna live like a hermit and nickel and dime everything go for it.

People are too busy worrying about other people’s shit that doesn’t pertain to them. Live your life and buy the shit that makes you happy cause you never know what tomorrow might bring.

 

[TricarboNate]

Also goes for houses......if I can't write a check, then I can't afford it!

Not everyone is buying $50K plus cars and trucks.

I would say a lot of them are. The majority of vehicles I see on the road today are very large pickup trucks and SUVs that are 40,000+. At least in my where I live....

 

[Cobra Jet]

Most of the people that I know with more car than they can otherwise afford have them leased. It has a ROI of exactly zero, but you can drive a nice car foe 2 or 3 years with a reasonable payment.

If you’re a driver like me, 500+mi a week (excluding any weekend driving) will kill ANY possibility of the smallest chance of doing a lease.

 

[Balr14]

I guess I am an outlier as well. My income is good, but can be very uneven. So, I pay cash for everything. If I had to commit to payments every month for years I would be absolutely paranoid.

 

[TheSnowmanMafia]

Also goes for houses......if I can't write a check, then I can't afford it!

That would leave most everyone without a home in Denver.

My wife and I bought our first house last year and it was 440k + 10k closing and then we dumped another 35k into renovating it.

Every home in Denver that's worth actually buying is over 300k.

 

[1MEAN18]

Interesting that their discussing American cars and not including the Honda Accord, Toyota Camry, Subaru Legacy, Hyundai Sonata, & Nissan Altima. All "made" in America and all within the monthly payments of those buyers discussed in the news clip. Not everyone is buying $50K plus cars and trucks.

I agree, a lot of manufacturers who do make cars here in America were left out. anyone can get a brand new Honda civic for under 25k but lets face it, for some reason Americans want a huge vehicle whether they need the utility of it or not, kinda like a status symbol, and most of those cars and trucks are in the 40k+ price range. I think another huge issue is people having negative equity in their car and still feeling the need to buy another one with the ability to turn over that loan for another one that is even more "upside down" than the last. And these automaker finance companies are encouraging such bad behavior. We don't tell people in America any more "hey you just can't afford that!" what they do now is to find a way to make it appear more affordable, while fleecing people who have no sense or impulse control even more. It's sad, I actually know a few people who are in the trap with their loans...driving vehicles they really cannot afford..

 

[1MEAN18]

Note that Ford is right in the thick of this. They dumped their car line with the specific intent that they were going to move those buyers into larger, more expensive CUVs that they can make more money on.

It seems to me that it's a relatively recent phenomenon that middle income families would even consider a new car as a good use of their money. Never mind buying one (or two) that that are more than they can afford and rolling that debt forward loan after the loan the way some people do today.

There seems to have been an abject failure in the last two generations to teach kids some common sense about money management and planning for the future. The same problem is a big part of why student debt has exploded. Spend it today, worry about it tomorrow and then complain about the people that you just stupidly gave all your money to.

When I read what you wrote, it felt like I could have written the exact same words! A shift in society towards debt (piling it up) has happened, and I do think its generational, with us older consumers being the one's most likely to only pay cash for things we want and wondering why this lack of planning for the future seems to be getting much worse. I also noticed Ford IS IN THE THICK OF THIS ENCOURAGING BAD BEHAVIOR....enticing and encouraging (I always take flack when I say this but oh well its true) millennial buyers into buying trendy stuff (like a bastardized E version of a Mustang) that they cannot afford for a second.

 

[Robracer]

You know giving loans without the proper credit is how the last big recession started! I know this about buying a new cars, new cars have terrible depreciation, you can get a 3 or 4 year old car with CPO plan some what low mileage sometimes 40% off new car purchase price. so is it worth buying a new for the new car smell and keeping up with the Joneses?
.

 

[green97probe]

Everybody always thinks they have all the answers. If people want to have debt and spend thousands wether they can afford it or not that’s there business and If you wanna live like a hermit and nickel and dime everything go for it.

People are too busy worrying about other people’s shit that doesn’t pertain to them. Live your life and buy the shit that makes you happy cause you never know what tomorrow might bring.

Exactly. My Mustang is a toy for me. It's what I do. I've cone to the conclusion that most "financial advisors" are the nosy children of rich parents.

Now, having learned from my own mistakes, I know to avoid negative equity because that's a hard thing to overcome.

When I was younger, I traded a car in on another and carried over $8,000 in negative equity. Huge mistake.

Learning from that, when I traded in my first 2018 GT for my current one, I was fortunate enough to be able to put enough cash into the deal to offset the would be negative equity and then some.

People would say that the cash would be batter in a bank account. We only live once and anything can happen at any time.

 

[green97probe]

You know giving loans without the proper credit is how the last big recession started! I know this about buying a new cars, new cars have terrible depreciation, you can get a 3 or 4 year old car with CPO plan some what low mileage sometimes 40% off new car purchase price. so is it worth buying a new for the new car smell and keeping up with the Joneses?
.

The other side of this though is that if people don't buy new vehicles now, there won't be preowned vehicles later.

I do get this viewpoint though because buying preowned can get you more car for less money.

 

[Bikeman315]

That would leave most everyone without a home in Denver.

My wife and I bought our first house last year and it was 440k + 10k closing and then we dumped another 35k into renovating it.

Every home in Denver that's worth actually buying is over 300k.

Actually I think that would be true just about anywhere in the US. Cars are one thing, housing is another. There are a lot of people today that still cannot come up with the 20% down payment much less pay for the entire purchase.

 

[tcman54]

Kind of reminds me an side bar story, my mom used to baby sit for people in these huge expensive houses with big expensive cars in their drives which is all great until she walked into the house of many of these people and was shocked to see nothing inside, these people had no money left to even buy furniture, why anyone would live like that is beyond me, but to each their own I guess.

TC

 

[BuckeyeBOSS]

I'm also thinking of all these years that automotive journalists have continually harped on how it's so worth it for foreign cars (sometimes at 2x or greater the price) bc of their "fit and finish" and exotic interior materials. But all that costs money. I still see people like Matt Farah, Motor Trend, Car & Driver, etc. complain about the Camaro's plastic dash. I honestly don't think I've ever touched my dash except to clean the dust off it, why on Earth would I want to pay more money for a world class sports car simply to have White Rhino foreskin interior? I'd rather have the performance at AFFORDABLE prices than America's version of a BMW at now BMW prices, instead of Pony Car prices.

 

[1MEAN18]

Kind of reminds me an side bar story, my mom used to baby sit for people in these huge expensive houses with big expensive cars in their drives which is all great until she walked into the house of many of these people and was shocked to see nothing inside, these people had no money left to even buy furniture, why anyone would live like that is beyond me, but to each their own I guess.

TC

I have 2 empty rooms in a house that's much bigger than I actually need. So although I resemble that remark a little, the money I'd have spend decorating an extra bedroom that stays empty/heat off/door shut and an empty office space got spent on my suspension and front skinnies on the GT this summer. LOL. I'm like Hack described in his post, I'd rather spend my extra money on my cars anyways. Don't get me started on still wearing concert tee shirts from shows I saw 15 or 20 years ago...LOL. I don't spend much money on clothing either.

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