Middle class income & new car prices

[1MEAN18]

Yet another sign the automakers are facing trouble here in America. Can't really afford to buy a new $50k Ford vehicle? Then get an 8 year loan on it without the proper credit to even be doing so means automaker finance companies are screwing the average person who isn't savvy with money blind! You can't ignore trends. Americans may want big bloated pricey SUV's and trucks and not cars, but they sure can't afford them. My rule has always been, if I can't write a check for it, I can't afford it. Unfortunately my rule of thumb makes me almost a statistical outlier and a pretty rare car buyer. What do you think? Leave a comment on this short video, its eye opening and hopefully makes some people stop, pause, and think about what they are doing with their money.

Sponsored

 

[BuckeyeBOSS]

Yep. Developing and using more and more tech to meet tougher and tougher worldwide government regulations means more cost and higher prices for consumers. Who knew?

Not to mention the ridiculous amount that college tuition has shot up and the debt on Millennials.

 

[L8APEX]

I agree with the premise of this thread. But even on this forum, you have people spending $1000s on car modifications all on credit. Scary

 

[Gregs24]

In the UK less than 5% of new cars are bought for cash. About 5% on HP and 90% on PCP

Having said that, at the right time with the right car, finance can be cheaper than cash when you take into account deposit contributions and interest rates.

 

[Torched10]

Yet another sign the automakers are facing trouble here in America. Can't really afford to buy a new $50k Ford vehicle? Then get an 8 year loan on it without the proper credit to even be doing so means automaker finance companies are screwing the average person who isn't savvy with money blind! You can't ignore trends. Americans may want big bloated pricey SUV's and trucks and not cars, but they sure can't afford them. My rule has always been, if I can't write a check for it, I can't afford it. Unfortunately my rule of thumb makes me almost a statistical outlier and a pretty rare car buyer. What do you think? Leave a comment on this short video, its eye opening and hopefully makes some people stop, pause, and think about what they are doing with their money.

Interesting read on new car prices and why average is rising
https://www.financialsamurai.com/average-new-car-price/

 

[Cobra Jet]

Jeez... 8yr car loans and here I thought doing a 4 yr was outrageous....

 

[Bikeman315]

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.

 

[Bikeman315]

Jeez... 8yr car loans and here I thought doing a 4 yr was outrageous....

You are so right. The standard for years was 36 months. Of course cars cost a lot less then.

I took Ford up on their offer for 0%/72 months on my 19' GT/CS. Why not? My money stays invested and I can pay it off whenever I want with no penalty.

 

[L8APEX]

You are so right. The standard for years was 36 months. Of course cars cost a lot less then.

I took Ford up on their offer for 0%/72 months on my 19' GT/CS. Why not? My money stays invested and I can pay it off whenever I want with no penalty.

You usually lose other incentives when you go 0% so it ends up costing more than the cash price. It was for me when I bought my Mustang so I bought it outright.

 

[Bikeman315]

You usually lose other incentives when you go 0% so it ends up costing more than the cash price. It was for me when I bought my Mustang so I bought it outright.

Yes, absolutely, you have to be careful. I looked at the total deal and found that what I was saving in interest plus my ROI far outweighed the slight difference the cost of my car was.

 

[Jimmy]

Yup, the incentive/cashback on the Mustang was much greater when I bought it if paying in cash. You gotta look at how the incentive compares to how much you think that money could make invested (assuming you have investments). In my experience it's usually (but not always) better to pay cash rather than finance.

Anyways I'm glad cars are getting more expensive, it will motivate people to take better care of their cars if they know it'll be harder to just buy a new one.

 

[petraman]

I had no idea that an 8 year loan was even a possibility on a car... And 8% interest? Yeesh... That guy would have been underwater for years. I'm not going to act like I don't have a loan on my car... but my 48 month loan makes me feel like a financial guru, compared to the average sucker at this dealer, apparently.

 

[Qcman17]

Yup, the incentive/cashback on the Mustang was much greater when I bought it if paying in cash. .

This was what I found as well. There was an additional $2500 discount on my car if I didn't finance through Ford at their lower rates which quite frankly weren't all that lower (about 1.25%) than my line of credit was. So I used my line of credit for the transaction until I could free up the cash to pay it off shortly thereafter.

 

[lacanteen]

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.

 

[nrc]

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.

Sponsored