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The Auto Loan industry is huge. I would be surprised if more that 20% of the population could pay 35000 cash. Most people less that 40 barely have a liquid cash

The Auto Loan industry is huge. I would be surprised if more that 20% of the population could pay 35000 cash. Most people less that 40 barely have a liquid cash of 50K. To pull out 35K and regrow that remaining 15K back to 50K would take a year for someone making 100K. Instead you could take a loan which typically go for 3% for good credit, and keep that 50K in a high interest bank account (2% or more) and pay essentially a few hundred dollars over four years to make sure you have cash available for a true emergency. Why risk that. Obviously you could argue that someone with only 50K liquid cash shouldn't buy a 35K but that is not how our economy works. A few hundred bucks so you aren't broke is not crazy. Additionally in most of the country a car is essential to live, especially in suburbs and small communities. Everyone could buy a 15K corolla but everyone wants the cooler thing

jachee 8y ago
Being poor is reading HN commentary about auto finance. [0] [0] https://whatever.scalzi.com/2005/09/03/being-poor/ https://whatever.scalzi.com/2005/09/03/being-poor/
tomjakubowski 8y ago
> Most people less that 40 barely have a liquid cash of 50K. If you're talking about the US, this is the greatest understatement I've seen in some time. I don't have a very good source handy, but for the median American under 40, try more like "$1,000".
- LandR 8y ago
  > try more like "$1,000". Wow. Given your healthcare system and the potential costs of being ill combined with having such a low amount of savings / safety money. Losing your job could potentially terrifying in the US. How do people live what that level of stress continunally? I could lose my job tomorrow and live for 4-5 years on savings and I'm not comfortable with that amount and occasionally find myself worrying about my financial situation.
  - rchaud 8y ago
    > How do people live what that level of stress continunally? Financial literacy is low, and financing is available on everything. Just tell the person that they can buy something with no money down and you're halfway to making the sale.
  - mrguyorama 8y ago
    >How do people live what that level of stress continunally? They have no other choice. Education is far too expensive to better yourself and train for a better career, everything is designed to suck every possible penny from those with less money than average, and if you don't work your ass off to pay what you can, you die on the street because we have no safety net. Being poor is a treadmill. If you were born poor and don't get absurdly lucky, you can look forward to being poor forever and passing that great experience onto your possible children. Welcome to America, land of the free I guess
madengr 8y ago
Most people under 40 have less than $500 liquid cash.
sokoloff 8y ago
> Instead you could take a loan which typically go for 3% for good credit, and keep that 50K in a high interest bank account (2% or more) and pay essentially a few hundred dollars over four years to make sure you have cash available for a true emergency. A 35K car loan at a net of 1.5% (3% - 2% + marginal tax rate on 2%) will cost over a thousand dollars over 4 years.

jachee 8y ago

Being poor is reading HN commentary about auto finance. [0] [0] https://whatever.scalzi.com/2005/09/03/being-poor/ https://whatever.scalzi.com/2005/09/03/being-poor/

tomjakubowski 8y ago

> Most people less that 40 barely have a liquid cash of 50K. If you're talking about the US, this is the greatest understatement I've seen in some time. I don't have a very good source handy, but for the median American under 40, try more like "$1,000".

LandR 8y ago
> try more like "$1,000". Wow. Given your healthcare system and the potential costs of being ill combined with having such a low amount of savings / safety money. Losing your job could potentially terrifying in the US. How do people live what that level of stress continunally? I could lose my job tomorrow and live for 4-5 years on savings and I'm not comfortable with that amount and occasionally find myself worrying about my financial situation.
- rchaud 8y ago
  > How do people live what that level of stress continunally? Financial literacy is low, and financing is available on everything. Just tell the person that they can buy something with no money down and you're halfway to making the sale.
- mrguyorama 8y ago
  >How do people live what that level of stress continunally? They have no other choice. Education is far too expensive to better yourself and train for a better career, everything is designed to suck every possible penny from those with less money than average, and if you don't work your ass off to pay what you can, you die on the street because we have no safety net. Being poor is a treadmill. If you were born poor and don't get absurdly lucky, you can look forward to being poor forever and passing that great experience onto your possible children. Welcome to America, land of the free I guess

madengr 8y ago

Most people under 40 have less than $500 liquid cash.

sokoloff 8y ago

> Instead you could take a loan which typically go for 3% for good credit, and keep that 50K in a high interest bank account (2% or more) and pay essentially a few hundred dollars over four years to make sure you have cash available for a true emergency. A 35K car loan at a net of 1.5% (3% - 2% + marginal tax rate on 2%) will cost over a thousand dollars over 4 years.