return2ozmaAmericans Are Falling Behind on Their Car Payments
BombOmOmdata 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.
thedevisinthedetailsWhile 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.
wrath_of_grungethere are a great many cars to be had for less money.
maybe people shouldn't buy cars that cost half their yearly wages?
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.
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.
Exactly. “Not cars” is a solution to a ton of problems.
Uranium3006fuck cars
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
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.
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 inside the car 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.
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.
For ordinary cars, they’re not meant to. They’re meant to be driven. That naturally involves wear and tear.
IHeartBadCodeThat 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, a 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.
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!
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.
uhhhh car go vroom vroom tho
Holy shit. That’s mortgage territory. I would master the public transportation system and buy an electric bike before spending that much per month.
Apathy TreeThat’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.
HexareiAnd 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
SkybreakerWell, 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.
amniotic druidHonda 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.
Vanlife YouTube got to them.
Wait till you see FJ Cruisers selling for $20,000+ with over a quarter million miles on em.
Elements are enjoying a Renaissance more than a lot of other cars out there
During peak COVID, the dealer wanted to buy back my Q50 for $6k more than I paid them for it four years prior.
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.
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. I’m 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 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.
Ep1cFac3pa1mDon’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
SuiXi3DI'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.
KingJalopy My buddy was just bragging to me how he just bought a brand new Sequoia with all the bills 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.
Holy shit, that’s so stupid lmao.
My accountant does that because home mortgage interest is tax deductible and car interest is not. But he can afford his luxury car.
Ghostalmedia“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
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.
jordanlundReduce 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.