8 ms·

Low-income households are falling behind on car bills

34 points by remote_phone 4y ago

raspyberr 4y ago
I live in the UK. I own a house with a long term partner. We live outside a city. Neither one of us drives. I feel like we've saved an incredible amount of money over the years. I think you can get by and do very well without a car in the modern world especially now that WFH is common.
- nerdponx 4y ago
  > I think you can get by and do very well without a car in the modern world It very very heavily depends on the part of the modern world that you live in. A lot of ostensibly well-off, relatively dense areas in North America are completely unlivable without a car. Public transit isn't reliable enough, distances between your house and various amenities (parks, shops, transit) are too far, and roads are too narrow for walking (no sidewalk or shoulder and travel speeds of 60+ km/h in many places).
  - webnrrd2k 4y ago
    To add to your point, it also depends on whether you have kids or other dependents, too. Very often there isn't any real choice in owning a car. Yes, it's possible to go without, but it's so difficult, or requires such a different lifestyle that it's just not practical. The choices have already been made, and there is no going back. I was raised by a single mom, and there is no way she could have provided for us as well as she did without a car. And she went through some real difficulties to have a working car. [edit: I should have added that this is in the US. It may be different in different places]
- SoftTalker 4y ago
  If you can make it work, that's great. No car payments, no insurance payments, no maintenance expense, no fuel expense. I need a car, but I don't buy them new. I buy used cars that may have some cosmetic flaws but are fundamentally sound. I pay cash so I don't have a car payment or interest expense. Insurance is lower, and if it gets dinged or scratched in a parking lot I don't care.
  - deleted 4y ago
    [deleted]
- vanilla_nut 4y ago
  As an American, I envy you. I've spent much of my adult life trying to life car-free but it's really, really hard in the USA. The infrastructure is simply nonexistent or needlessly dangerous, and the few places you can live car-free have become ludicrously expensive.
  - ActorNightly 4y ago
    Eh, with decent income, you can definitely uber/ebike in developed places. Generally though, one thing of public transport that gets overlooked is that a) you schedule becomes tied to public transport, and b) you have to deal with people. Because of noise and labor regulations, public transport for short trips does not run at night. Also you can get delays due to passengers causing holdups, and so on. I honestly personally much prefer driving over public transport.
    - earthling8118 4y ago
      Having to tie a schedule to public transit would indicate to me that the transit is not properly set up. It should be traveling frequently enough that this is not an issue. One of my biggest reasons for enjoying flexible working hours is that I can go out during the day when transit is most frequent and I don't have to think about the timing since it is much much more frequent then. And another major plus is not having to deal with traffic. I get delayed far more by people in cars than I ever have with transit. This is a big problem with a lot of systems, especially the north American ones, but it isn't an inherent flaw in public transit. The more it is used and the more it makes itself available and frequent the better it works overall.
- aidenn0 4y ago
  In the US, this is common, particularly among those who would need subprime car loans: 1 A job where WFH is not an option (either because it's physically impossible (e.g. service industry), or because even if it is physically possible they are at the whims of their boss) 2 A long commute 3 Poor mass transit; even if there is "okay" mass transit both where they live and where they work (already unlikely) there is unlikely to be mass transit connecting the two. 4 Multiple jobs, at least one of which doesn't fit any available mass transit designed around 9-5 commuters.
- Adraghast 4y ago
  You live in a very particular bubble, friend.
- throwaway22032 4y ago
  I live in the UK. I own a car that cost me 700 pounds. My annual insurance and tax are 500 pounds. The car basically requires 0 maintenance. It will break in approx. 5 years and I'll buy another one. I can go to the countryside, visit friends and family that do not live near train stations, go to large supermarkets and buy in bulk, and generally just go everywhere more quickly. I like this. It's nice. I'd pay 500k over a lifetime for it. It allows me to do many things I couldn't otherwise. Thankfully it only costs me something like 50-100k.
twblalock 4y ago
The contents of the article show that subprime loans are increasingly delinquent. While there is definitely a correlation between having a low income and taking out subprime loans, it's not 1:1. Having a bad credit score is what pushes people into subprime rates. Lots of people with higher incomes and bad credit end up with subprime loans, and many people with low incomes qualify for "normal" loans. What this article basically says is "people with bad credit scores are increasingly delinquent on their high-interest car loans compared to the same time last year."
- mrinterweb 4y ago
  There is enough correlation between income and credit scores to speak in generalizations. Of course there are exceptions, but generally speaking, there is a greater percentage chance lower income people have lower credit scores. It makes sense. Many people with limited financial resources are put into situations where they need to take riskier loans more frequently than those with greater financial resources. One link of many: https://www.creditsesame.com/blog/credit-score/the-relationship-between-income-and-credit-score/ https://www.creditsesame.com/blog/credit-score/the-relations...
- deleted 4y ago
  [deleted]
- beiller 4y ago
  The trend has been that people are using bailouts, stimulation, and low interest loan consolidation to pay down high interest credit accounts since the pandemic started. I worked in underwriting for a few years, into the pandemic. The FICO scores have been steadily climbing ever since the beginning of the pandemic, and even years before, despite the fact that consumer behavir was not changed. It's only my hypothesis of whats going on. Thankfully I don't work with credit anymore. I think this jives with your statement, but doesn't mean the article is meaningless overall.
  - twblalock 4y ago
    I suspect that quite a few people used the stimulus, the rent forbearance, and the student loan repayment pause to spend money on things they couldn't otherwise have afforded. Unfortunately in some cases they used debt to do it. But now that money is running out, and gas/food/rent got more expensive, and I bet some people who bought new cars they couldn't really afford are not making their payments on time. However I also would bet that a decent portion of the people in that situation are not on a low income, but are just people who overspent on their car. I've seen people with six-figure salaries get too deep into car payments before. It's a really common problem.
cronix 4y ago
I think we will be seeing a lot more of this across all sectors too. On the local news last night, I saw the city of Portland is owed some $28M in back water bills by residents from the last 2 years as they suspended cutting people's water off for non-payment during the pandemic. Now they're owed a lot and no one's paying, so they're shutting a lot of people's water off and talking about raising rates on everyone else to make up for the loss. https://www.msn.com/en-us/news/us/post-pandemic-portlanders-owe-city-28-million-for-unpaid-water-sewage/ar-AA182BpC https://www.msn.com/en-us/news/us/post-pandemic-portlanders-...
diordiderot 4y ago
Subprime auto loan crisis would be neat. Small chunk of labour unable to commute, unable to earn. Less earning snowballs into less demand snowballs into recession. Whatever triple leverage cronenberg security monster wall street has secretly shoved up everyone's ass wrapped in 4 layers of derivatives goes bust causing the fed props up asset prices (obviously) while low income areas turn into the god damn purge. But hey, used cars will be cheap again
- klyrs 4y ago
  $10K loan forgiveness for everybody?
  - kelseyfrog 4y ago
    Unconstitutional.
    - klyrs 4y ago
      Since when has that limited campaign promises?
    - rootusrootus 4y ago
      Is the emergency declaration still in place? Can it be left in place forever, like the war on terror? It's looking like the SCOTUS may be leaning towards deciding that the loan forgiveness is in fact constitutional. For better or worse.
      - pseudo0 4y ago
        It's unconstitutional, everyone knows it's unconstitutional, but this way in 2024 they can blame the Supreme Court for striking it down. The executive branch can't spend money without the approval of Congress, and HEROES Act does not apply.
        klyrs 4y ago
nateb2022 4y ago
I currently make ~$12k a year as a student. Bought my first car, a 2013 Scion FR-S almost a year ago for $4k. Had about 150k miles on it. I do oil changes myself, twice a year, for $50 a pop. It's a reliable car, and I haven't needed to do any big repairs. I'm planning to take it to 250k, or further. Bottom line: find a reliable used car. Don't take out a loan you can't afford. E.g. Toyota Camry/Corolla, Honda Civic. For about the price of a typical down payment, you get a functional vehicle that will cost you <$500 in maintenance a year.
- stonogo 4y ago
  Or you get a car that needs a cylinder head replacement four months later. Or you accidentally bought a flood car. "Buy used" is good advice, but at the low end of the market it's a risky maneuver. If you have the mechanical aptitude to evaluate the car, and you have space to perform your own maintenance, and other stars align for you, have at it. For others, it's worth buying a car with some warranty, especially if your livelihood is tied to having a functional car. I don't think the survivorship bias involved in these recommendations makes for a good one-size-fits-all advice blurb.
  - JohnFen 4y ago
    Nearly all of the cars I've purchased have been inexpensive used cars, and only one of them has ever given me any real trouble. That's the one I bought from a used car dealer. The rest I've purchased from individuals. So my approach is to never buy a used car from a dealership. And, of course, always have a mechanic look it over before you buy, even (or especially) for the cheap ones.
  - Klonoar 4y ago
    Not to mention there is not quite the abundance of used cars that there used to be, as during COVID the market went absolutely insane.
- datavirtue 4y ago
  [flagged]
- 4y ago
fisherjeff 4y ago
Hard to be sure without the data but it looks to me an awful lot like there’s a spike in delinquencies every December, and the graph is through… December 2022. That final spike is also in line with 2017-19.
black_13 4y ago
[dead]
sciencesama 4y ago
Buy a tesla
Incipient 4y ago
Low income everyone is falling behind in everything. Call it over dramatic, but it's essentially true.

34 points by remote_phone 4y ago

I live in the UK. I own a house with a long term partner. We live outside a city. Neither one of us drives. I feel like we've saved an incredible amount of money over the years. I think you can get by and do very well without a car in the modern world especially now that WFH is common.

nerdponx 4y ago
> I think you can get by and do very well without a car in the modern world It very very heavily depends on the part of the modern world that you live in. A lot of ostensibly well-off, relatively dense areas in North America are completely unlivable without a car. Public transit isn't reliable enough, distances between your house and various amenities (parks, shops, transit) are too far, and roads are too narrow for walking (no sidewalk or shoulder and travel speeds of 60+ km/h in many places).
- webnrrd2k 4y ago
  To add to your point, it also depends on whether you have kids or other dependents, too. Very often there isn't any real choice in owning a car. Yes, it's possible to go without, but it's so difficult, or requires such a different lifestyle that it's just not practical. The choices have already been made, and there is no going back. I was raised by a single mom, and there is no way she could have provided for us as well as she did without a car. And she went through some real difficulties to have a working car. [edit: I should have added that this is in the US. It may be different in different places]
SoftTalker 4y ago
If you can make it work, that's great. No car payments, no insurance payments, no maintenance expense, no fuel expense. I need a car, but I don't buy them new. I buy used cars that may have some cosmetic flaws but are fundamentally sound. I pay cash so I don't have a car payment or interest expense. Insurance is lower, and if it gets dinged or scratched in a parking lot I don't care.
- deleted 4y ago
  [deleted]
vanilla_nut 4y ago
As an American, I envy you. I've spent much of my adult life trying to life car-free but it's really, really hard in the USA. The infrastructure is simply nonexistent or needlessly dangerous, and the few places you can live car-free have become ludicrously expensive.
- ActorNightly 4y ago
  Eh, with decent income, you can definitely uber/ebike in developed places. Generally though, one thing of public transport that gets overlooked is that a) you schedule becomes tied to public transport, and b) you have to deal with people. Because of noise and labor regulations, public transport for short trips does not run at night. Also you can get delays due to passengers causing holdups, and so on. I honestly personally much prefer driving over public transport.
  - earthling8118 4y ago
    Having to tie a schedule to public transit would indicate to me that the transit is not properly set up. It should be traveling frequently enough that this is not an issue. One of my biggest reasons for enjoying flexible working hours is that I can go out during the day when transit is most frequent and I don't have to think about the timing since it is much much more frequent then. And another major plus is not having to deal with traffic. I get delayed far more by people in cars than I ever have with transit. This is a big problem with a lot of systems, especially the north American ones, but it isn't an inherent flaw in public transit. The more it is used and the more it makes itself available and frequent the better it works overall.
aidenn0 4y ago
In the US, this is common, particularly among those who would need subprime car loans: 1 A job where WFH is not an option (either because it's physically impossible (e.g. service industry), or because even if it is physically possible they are at the whims of their boss) 2 A long commute 3 Poor mass transit; even if there is "okay" mass transit both where they live and where they work (already unlikely) there is unlikely to be mass transit connecting the two. 4 Multiple jobs, at least one of which doesn't fit any available mass transit designed around 9-5 commuters.
Adraghast 4y ago
You live in a very particular bubble, friend.
throwaway22032 4y ago
I live in the UK. I own a car that cost me 700 pounds. My annual insurance and tax are 500 pounds. The car basically requires 0 maintenance. It will break in approx. 5 years and I'll buy another one. I can go to the countryside, visit friends and family that do not live near train stations, go to large supermarkets and buy in bulk, and generally just go everywhere more quickly. I like this. It's nice. I'd pay 500k over a lifetime for it. It allows me to do many things I couldn't otherwise. Thankfully it only costs me something like 50-100k.

twblalock 4y ago

The contents of the article show that subprime loans are increasingly delinquent. While there is definitely a correlation between having a low income and taking out subprime loans, it's not 1:1. Having a bad credit score is what pushes people into subprime rates. Lots of people with higher incomes and bad credit end up with subprime loans, and many people with low incomes qualify for "normal" loans. What this article basically says is "people with bad credit scores are increasingly delinquent on their high-interest car loans compared to the same time last year."

mrinterweb 4y ago
There is enough correlation between income and credit scores to speak in generalizations. Of course there are exceptions, but generally speaking, there is a greater percentage chance lower income people have lower credit scores. It makes sense. Many people with limited financial resources are put into situations where they need to take riskier loans more frequently than those with greater financial resources. One link of many: https://www.creditsesame.com/blog/credit-score/the-relationship-between-income-and-credit-score/ https://www.creditsesame.com/blog/credit-score/the-relations...
deleted 4y ago
[deleted]
beiller 4y ago
The trend has been that people are using bailouts, stimulation, and low interest loan consolidation to pay down high interest credit accounts since the pandemic started. I worked in underwriting for a few years, into the pandemic. The FICO scores have been steadily climbing ever since the beginning of the pandemic, and even years before, despite the fact that consumer behavir was not changed. It's only my hypothesis of whats going on. Thankfully I don't work with credit anymore. I think this jives with your statement, but doesn't mean the article is meaningless overall.
- twblalock 4y ago
  I suspect that quite a few people used the stimulus, the rent forbearance, and the student loan repayment pause to spend money on things they couldn't otherwise have afforded. Unfortunately in some cases they used debt to do it. But now that money is running out, and gas/food/rent got more expensive, and I bet some people who bought new cars they couldn't really afford are not making their payments on time. However I also would bet that a decent portion of the people in that situation are not on a low income, but are just people who overspent on their car. I've seen people with six-figure salaries get too deep into car payments before. It's a really common problem.

cronix 4y ago

I think we will be seeing a lot more of this across all sectors too. On the local news last night, I saw the city of Portland is owed some $28M in back water bills by residents from the last 2 years as they suspended cutting people's water off for non-payment during the pandemic. Now they're owed a lot and no one's paying, so they're shutting a lot of people's water off and talking about raising rates on everyone else to make up for the loss. https://www.msn.com/en-us/news/us/post-pandemic-portlanders-owe-city-28-million-for-unpaid-water-sewage/ar-AA182BpC https://www.msn.com/en-us/news/us/post-pandemic-portlanders-...

diordiderot 4y ago

Subprime auto loan crisis would be neat. Small chunk of labour unable to commute, unable to earn. Less earning snowballs into less demand snowballs into recession. Whatever triple leverage cronenberg security monster wall street has secretly shoved up everyone's ass wrapped in 4 layers of derivatives goes bust causing the fed props up asset prices (obviously) while low income areas turn into the god damn purge. But hey, used cars will be cheap again

klyrs 4y ago
$10K loan forgiveness for everybody?
- kelseyfrog 4y ago
  Unconstitutional.
  - klyrs 4y ago
    Since when has that limited campaign promises?
  - rootusrootus 4y ago
    Is the emergency declaration still in place? Can it be left in place forever, like the war on terror? It's looking like the SCOTUS may be leaning towards deciding that the loan forgiveness is in fact constitutional. For better or worse.
    - pseudo0 4y ago
      It's unconstitutional, everyone knows it's unconstitutional, but this way in 2024 they can blame the Supreme Court for striking it down. The executive branch can't spend money without the approval of Congress, and HEROES Act does not apply.
      - klyrs 4y ago

nateb2022 4y ago

I currently make ~$12k a year as a student. Bought my first car, a 2013 Scion FR-S almost a year ago for $4k. Had about 150k miles on it. I do oil changes myself, twice a year, for $50 a pop. It's a reliable car, and I haven't needed to do any big repairs. I'm planning to take it to 250k, or further. Bottom line: find a reliable used car. Don't take out a loan you can't afford. E.g. Toyota Camry/Corolla, Honda Civic. For about the price of a typical down payment, you get a functional vehicle that will cost you <$500 in maintenance a year.

stonogo 4y ago
Or you get a car that needs a cylinder head replacement four months later. Or you accidentally bought a flood car. "Buy used" is good advice, but at the low end of the market it's a risky maneuver. If you have the mechanical aptitude to evaluate the car, and you have space to perform your own maintenance, and other stars align for you, have at it. For others, it's worth buying a car with some warranty, especially if your livelihood is tied to having a functional car. I don't think the survivorship bias involved in these recommendations makes for a good one-size-fits-all advice blurb.
- JohnFen 4y ago
  Nearly all of the cars I've purchased have been inexpensive used cars, and only one of them has ever given me any real trouble. That's the one I bought from a used car dealer. The rest I've purchased from individuals. So my approach is to never buy a used car from a dealership. And, of course, always have a mechanic look it over before you buy, even (or especially) for the cheap ones.
- Klonoar 4y ago
  Not to mention there is not quite the abundance of used cars that there used to be, as during COVID the market went absolutely insane.
datavirtue 4y ago
[flagged]
4y ago

fisherjeff 4y ago

Hard to be sure without the data but it looks to me an awful lot like there’s a spike in delinquencies every December, and the graph is through… December 2022. That final spike is also in line with 2017-19.

black_13 4y ago

[dead]

sciencesama 4y ago

Buy a tesla

Incipient 4y ago

Low income everyone is falling behind in everything. Call it over dramatic, but it's essentially true.