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47% of new cars are financed in Germany [1] [1] https://de.statista.com/statistik/daten/studie/1065113/umfrage/anteil-der-per-kredit-oder-leasing-finanzierten-

by jupp0r 3y ago

47% of new cars are financed in Germany [1] [1] https://de.statista.com/statistik/daten/studie/1065113/umfrage/anteil-der-per-kredit-oder-leasing-finanzierten-privaten-pkw-in-deutschland/#:~:text=Rund%2035%20Prozent%20aller%20privaten,27%20Prozent https://de.statista.com/statistik/daten/studie/1065113/umfra....

recvonline 3y ago
That's new cars. Which is mostly what employers buy for their employees. It's 35% alltogether. Just wanted to highlight the different mindset. I am a German living in Canada with my family. The mindset is very different. Based on feeling, 70% of Canadians I know have car debt, whereas I know one person in my German friend circle who took out a loan. It's just not very common to take on debt for cars.
beowulfey 3y ago
My impression of Germany is people are generally very anti-debt. Credit cards were barely used when I visited back in 2019 (although that changed by the time I went back in 2022)
- Xylakant 3y ago
  The primary reason credit cards were rarely used is because Germany already had an electronic payment system (Maestro, formerly eurocheque), so there was no need and credit cards often came with a fee. Online shopping and a huge push by Visa/Mastercard to replace maestro changed this to some extend.
onetimeuse92304 3y ago
I have noticed that in the US people have much more tolerance for debt. Even relatively poor people in the US are much more likely to buy a new car (or even multiple of them!) than in most of the Europe. For example, the proportion of financed new cars to all new cars sold is 84% in US vs 47% in Germany. But that does not say anything how expensive are the cars, how expensive compared to income, how long they are being used or what is the proportion of new cars sold to used cars sold. In Europe people tend to use the cars for longer after they buy them new and then the cars tend to be used for longer after they are sold used. Also, in Europe people tend to buy smaller cars. And, historically, we preferred cars that use less fuel which means a lot of older cars are still very viable compared to older US cars.
- TylerE 3y ago
  In the US at least it has often (although not at present) been true that the interest rate on a new car loan with good credit is less than one could return from relatively safe investments. Thus the financially smart thing to do was often to finance the car, even if you could buy it outright. Too much debt is a bad thing, but so is being excessively debt averse. I would also say, historically, a dollar now is worth a lot more than a dollar 50 years from now, and your quality of life is probably better, too. I see lots of people from my parents generation who saved their whole life… and now they have money but nothing to do as their health doesn’t permit the sort of travel (or outdoor activity, or whatever) they wanted while a 20 or 30-something.
  - onetimeuse92304 3y ago
    > Thus the financially smart thing to do was often to finance the car, even if you could buy it outright I think the financially smart thing is to avoid debt as much as possible. Also, if you absolutely need to take on debt and decided to buy a car, the financially smart thing to do would be to buy as cheap a car as possible. But that's not what really is happening, isn't it? The reality is that taking debt changes how you think and make decisions and has far more reaching consequences than just the financial cost of the debt.
    - fragmede 3y ago
      The avoidance of as much debt as possible is an irrational, emotional attachment to avoiding debt. Excessive amounts of debt is also financially unsound to collect, but the financially prudent thing is some debt, after which you end up with money, or equivalent, than if you not had taken on that debt.
    - TylerE 3y ago
      Taking on debt at 3% so you can stick the money into a index fund reliably returning 5%... is what is smart. This sort of knee-jerk debt avoidance on principle is not smart.

by jupp0r 3y ago

recvonline 3y ago

That's new cars. Which is mostly what employers buy for their employees. It's 35% alltogether. Just wanted to highlight the different mindset. I am a German living in Canada with my family. The mindset is very different. Based on feeling, 70% of Canadians I know have car debt, whereas I know one person in my German friend circle who took out a loan. It's just not very common to take on debt for cars.

beowulfey 3y ago

My impression of Germany is people are generally very anti-debt. Credit cards were barely used when I visited back in 2019 (although that changed by the time I went back in 2022)

Xylakant 3y ago
The primary reason credit cards were rarely used is because Germany already had an electronic payment system (Maestro, formerly eurocheque), so there was no need and credit cards often came with a fee. Online shopping and a huge push by Visa/Mastercard to replace maestro changed this to some extend.

onetimeuse92304 3y ago

I have noticed that in the US people have much more tolerance for debt. Even relatively poor people in the US are much more likely to buy a new car (or even multiple of them!) than in most of the Europe. For example, the proportion of financed new cars to all new cars sold is 84% in US vs 47% in Germany. But that does not say anything how expensive are the cars, how expensive compared to income, how long they are being used or what is the proportion of new cars sold to used cars sold. In Europe people tend to use the cars for longer after they buy them new and then the cars tend to be used for longer after they are sold used. Also, in Europe people tend to buy smaller cars. And, historically, we preferred cars that use less fuel which means a lot of older cars are still very viable compared to older US cars.

TylerE 3y ago
In the US at least it has often (although not at present) been true that the interest rate on a new car loan with good credit is less than one could return from relatively safe investments. Thus the financially smart thing to do was often to finance the car, even if you could buy it outright. Too much debt is a bad thing, but so is being excessively debt averse. I would also say, historically, a dollar now is worth a lot more than a dollar 50 years from now, and your quality of life is probably better, too. I see lots of people from my parents generation who saved their whole life… and now they have money but nothing to do as their health doesn’t permit the sort of travel (or outdoor activity, or whatever) they wanted while a 20 or 30-something.
- onetimeuse92304 3y ago
  > Thus the financially smart thing to do was often to finance the car, even if you could buy it outright I think the financially smart thing is to avoid debt as much as possible. Also, if you absolutely need to take on debt and decided to buy a car, the financially smart thing to do would be to buy as cheap a car as possible. But that's not what really is happening, isn't it? The reality is that taking debt changes how you think and make decisions and has far more reaching consequences than just the financial cost of the debt.
  - fragmede 3y ago
    The avoidance of as much debt as possible is an irrational, emotional attachment to avoiding debt. Excessive amounts of debt is also financially unsound to collect, but the financially prudent thing is some debt, after which you end up with money, or equivalent, than if you not had taken on that debt.
  - TylerE 3y ago
    Taking on debt at 3% so you can stick the money into a index fund reliably returning 5%... is what is smart. This sort of knee-jerk debt avoidance on principle is not smart.