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> ... [to] borrow money to buy _a car_ is a huge red flag ... Hi Jeff Just a polite reminder that a) there's nothing wrong with financing, it's essential to th

> ... [to] borrow money to buy _a car_ is a huge red flag ... Hi Jeff Just a polite reminder that a) there's nothing wrong with financing, it's essential to the buildup of the US and b) the average US citizen doesn't have the same income distribution that the average HN reader does. The median price of a car in the us is $35K [1] and the median household income is $59k [2]; For most families in the US the car is absolutely essential for work, life (kids) and basic necessities of life. The median American has less than $5000 in a savings account. This is especially bad for marginalized minorities [3]. It's practically impossible for most Americans to walk in and buy a car with straight up cash, and even if they could, I would consider that unwise. Back to debt: there's nothing wrong with debt, and some of the smartest richest people I know use debt carefully to manage cash flow. [1] https://www.researchgate.net/profile/Till_Stowasser/publication/295859167/figure/fig4/AS:411667432263684@1475160572644/Distribution-of-car-prices.png https://www.researchgate.net/profile/Till_Stowasser/publicat... [2] https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United... [3] http://apps.urban.org/features/wealth-inequality-charts/img/Retirement.jpg http://apps.urban.org/features/wealth-inequality-charts/img/...

Maakuth 8y ago
Not to counter you, but why would a low-income household consider buying a new car? A properly maintained ten year old car these days is normally quite reliable and safe.
- emiliobumachar 8y ago
  Key expression is "properly maintained". And there's no reasonable way to know. https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons
  - Maakuth 8y ago
    Not a fool proof way, but when you buy, say, a $10 000 car, you should budget some thousands for repairs. Then if it breaks down soon after and it's too expensive to repair, your downside is $10 000, which is how much your $40 000 new car would depreciate in a very short time. If you don't have especially bad luck, this doesn't happen for every second hand car you own, but the depreciation is guaranteed to happen for every new car.
- rchaud 8y ago
  They would not. When I was a teen, my parents had a joint income of just about $100k (definitely not low-income). When I began working, I got their hand-me-down '97 Accord. Bought for $3000 in '04, the car lasted 8 years before we sold it for $1500. Great value for money, and it had a relatively classic look that belied its price. That's the kind of car I intend to buy again in the future.

Maakuth 8y ago

Not to counter you, but why would a low-income household consider buying a new car? A properly maintained ten year old car these days is normally quite reliable and safe.

emiliobumachar 8y ago
Key expression is "properly maintained". And there's no reasonable way to know. https://en.wikipedia.org/wiki/The_Market_for_Lemons https://en.wikipedia.org/wiki/The_Market_for_Lemons
- Maakuth 8y ago
  Not a fool proof way, but when you buy, say, a $10 000 car, you should budget some thousands for repairs. Then if it breaks down soon after and it's too expensive to repair, your downside is $10 000, which is how much your $40 000 new car would depreciate in a very short time. If you don't have especially bad luck, this doesn't happen for every second hand car you own, but the depreciation is guaranteed to happen for every new car.
rchaud 8y ago
They would not. When I was a teen, my parents had a joint income of just about $100k (definitely not low-income). When I began working, I got their hand-me-down '97 Accord. Bought for $3000 in '04, the car lasted 8 years before we sold it for $1500. Great value for money, and it had a relatively classic look that belied its price. That's the kind of car I intend to buy again in the future.