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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?
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.
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.
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.
During peak COVID, the dealer wanted to buy back my Q50 for $6k more than I paid them for it four years prior.
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.
Americans are falling behind.
FTFY.
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.
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.
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?
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.
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.
Worry not: soon it will be mortgage payments.
(How bad it will be depends mainly of the proportion of people with variable rate contracts)
Dealers are getting nervous. I have to be honest, I like them squirming after the last few years.
Do not, I cannot stress this enough, own a car.
If you must, don't buy one that costs you 1k a month, ffs
Some people just like to choose the hard path.
For instance, I have an older brother who fell into a bad situation and struggles with his financials. He had a car lease that was expiring and he was stressing over what to do. I made him an offer where he can have my 2017 prius if he moves in with me and takes a job where I work so he can get his shit together(he lives with my parents, he is 38 with 2 kids under child support). He ended up getting a fucking tesla, makes gargantuan 30% interest payments and now has to door dash every day now to make his ends meet. 🙃
The problem is that cars are needed for many people to get to where they need to go. In my case, if I didn't have a car, I wouldn't be able to get to many of my doctor's appointments and grocery shopping would be extremely difficult.
There are buses where I live, but they don't go to where my doctors are. And when I do my weekly grocery shopping, I can have 8 full (reusable) bags of groceries. Even if the buses went to the stores I go to, carrying all these onto and off of the bus myself would be extremely difficult.
Owning a car is a necessity for many people.