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$2k is $10k at a 5 year loan (+ ongoing!), so a considerable part of the economic equation for most car buyers (avg US car purchase is $47k).
by d3ad1ysp0rk 5y ago
$2k is $10k at a 5 year loan (+ ongoing!), so a considerable part of the economic equation for most car buyers (avg US car purchase is $47k).
- vel0city 5y agoInterest rates on cars can be stupid cheap. $2k on the loan on my car works out to $2,046 after 5 years at the 0.9% rate.
- epistasis 5y agoThat's $2k/year, which works out to $10,230 on a five year loan. Plus the $2k/year savings every year after that when the car is still in service. It's a classic stock versus flow problem in economics. People irrationally over-weight the pain of a big lump sum, and under rate the pain of ongoing monthly payments. They misevaluate even as they convert a stock into a flow with an auto loan. Similarly, people underestimate the cost of driving everywhere, when they have already sunk so much into the units investment. I swear that there's something about cars that turns people's brains off. They are so deeply ingrained into our way of life that we basically refuse to consider costs and alternatives.
- maxerickson 5y agoThere's no way the median vehicle purchase is $47k. I'd buy that the mean new car price is $47k, but that's not the right average if you are trying to estimate typical vehicle acquisition costs.