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It sucks that you need to own a car to get anywhere in most of the US. When my wife and I moved to Southern California from Chicago, we had a single car and tri

by gensym 1y ago

It sucks that you need to own a car to get anywhere in most of the US. When my wife and I moved to Southern California from Chicago, we had a single car and tried to make that work for a while, but it was just not doable. We have a grocery store 2 miles away, but any other services are further than walking distance (and even the grocery store requires walking on the shoulder of a busy arterial road at a couple points. I used to bike everywhere in Chicago, but doing so here is too risky). That said, the problems of car loans are far beyond that - From the article: " The average monthly repayment now stands at more than $750.". That's nuts! I make a solid upper middle-class income, and I can't imagine spending that much on car financing, regardless of the loan length. When we needed a second car, we bought a 6-year-old Volvo station wagon in good condition, it it's still serving us well. Many of my neighbors, who make about half what I do, think we're poor because of it.

oblio 1y ago
If the Volvo us well taken care of, it will probably last decades more.
ryandrake 1y ago
Exactly. This is going to come off as incredibly privileged, but I'm not a huge fan of car loans. In fact, I'm not a huge fan of leveraging to afford any asset unless it's appreciating in value or generating income. I buy and drive old, nearly junker cars because I can't afford a $40K new car. I can "afford" the monthly payments on a $40K car, but it's just a terrible financial idea. Totally nutty. A $750 monthly payment (I don't even want to know the term) for something that is losing value every day is absolutely bonkers. The amount of debt Americans routinely and causally take on is honestly ridiculous.
- raw_anon_1111 1y ago
  The problem with old junkers is that if you don’t have the money in cash, how do you fix a major car repair? You can get a loan for a new car with money. The car “generates income” because it allows you to get to work and hopefully make more than your car note.
  - _heimdall 1y ago
    Old car repairs generally don't cost as much as you'd expect, especially when you aren't paying $750/no on a loan plus higher insurance premiums. My mechanics often perk up when I bring in my 80s era pickup. It has very low miles, they can generally diagnose it with very basic tools, and parts are cheap. When I have the time to work on it myself I appreciate it for those exact same reasons.
    - raw_anon_1111 1y ago
      And when you buy the car hypothetically and the motor goes out or the transmission within three months? And it’s one thing if your car breaks down on a side street, it’s completely different if it breaks down on an interstate. If you have a daughter would you be comfortable with her driving an unreliable car? Your wife? Your mother?
      - _heimdall 1y ago
        Sure, your motor or trans can go out on any vehicle and unless you still have a warranty its your problem. It sucks if you spend $3500 on a car only to spend another $2000 because the transmission went out and the timing was bad luck. I wouldn't recommend anyone buy an old car I'd they have no emergency fund left after the purchase though. My wife does regularly drive our old cars. If it dies on the highway we'll deal with it. I don't have a daughter, but I wouldn't worry about my kid driving the kind of old cars I pick up - I'm patients picky, and able to work on them myself. The car would be the least of my worries if I had a young daughter with a drivers license.
      - smileysteve 1y ago
        A car that averages 15k miles/year, has a maintenance record, and appears in good condition tends to be less likely to be a lemon than most brand new cars. For an anecdote, consider that Jeep just bricked thousands of new cars, including on interstates 2 weeks ago. That GM recalled most 6.2l engines made in the last 5 years; ... Toyota engine castings, bmw chain tensioners, Ford Ecoboost coolant passages, Porsche bearings... Most of these problems became apparent before a long term first owner sold (yes, you should do research) A pre purchase inspection, and all around maintenance (brake, coolant, oil, transmission oil, and differential oil) will get you a long way; a $2k suspension refresh will take you even further.
- adriand 1y ago
  It’s not ridiculous, it’s how the whole system works. People need to live their lives, and if they only way they can get around (or throw a birthday party, or have a funeral, or some other human thing) is to borrow money, they borrow money. Which in turn props up a huge proportion of the businesses that make up the economy.
- _heimdall 1y ago
  The standard recommendation of taking out sent so you can invest your money and "make it work for you" frustrates me to no end. Yes, on paper I can accrue more wealth if I mortgage my house and invest that same amount elsewhere. No, I would not trade owning a house outright for having a house that will be taken from me if I can no longer pay, strict insurance requirements, and a pile of someone else's debt that I call money and ignore the risk implied in investing in someone else's gamble.
  - supertrope 1y ago
    I don't think gp comment is advocating doing a cash out re-finance, but to exploit leverage when first financing the purchase. I used to be very debt averse. Owing a six figure sum seemed like a huge burden. Now I understand that mortgagees are non-callable. If you put 20% down that removes a lot of risk of being underwater. Fannie Mae is eating inflation risk for you. It's a way of smoothing expenses over multiple life stages. With a 30 year mortgage you can get a smaller payment when you're younger, earning less, and paying for daycare. When you're older you're earning more, might be an empty nester, and inflation has made each payment easier. By not rushing to pay off low interest debt you've effectively transferred money from 50 year old you to 30 year old you. If you stayed employed, locked in a 3% mortgage, and contributed to your 401k, you won the wealth re-distribution game of 2020-2022.
    - _heimdall 1y ago
      Respectfully, you're effectively describing the argument I take issue with. > Now I understand that mortgagees are non-callable. How are you defining non-callable? If you stop paying on your mortgage that sent will eventually be called and you will be kicked out. > If you put 20% down that removes a lot of risk of being underwater That removes the risk of being underwater for any market correction sub-20%. Real estate prices in any areas have grown more than that ovwr the last few years, the risk of a 20%+ correction is on the table. > With a 30 year mortgage you can get a smaller payment And a 40 year loan would be even smaller. Where do we draw the line, and why? 30 year loans weren't always the norm, you don't have to go too far back to find an average mortgage on 10 or 15 year loans. > When you're older you're earning more, might be an empty nester, and inflation has made each payment easier. Income doesn't always move up, and inflation only makes payment easier if you (a) secured a fixed rate loan and (b) stay in the same home long term. > By not rushing to pay off low interest debt you've effectively transferred money from 50 year old you to 30 year old you. Or if it doesn't work out, 30 year old you has a home at the expense of 35 year old you. > If you stayed employed That's a big if, and you not only need to stay employed, you need wages to at least keep up with true inflation. Your 401k won't matter until you are at an age where you can withdraw, or we have another pandemic-style response where we allow people to cash in 401ks without the early withdrawal fees.
- chneu 1y ago
  Americans finance things to keep up imagery. This country is insanely ego and pride focused or fixated. Capitalism exploits this in advertising. Americans throw money at everything and then wonder why they're broke. Or in the case of cars, people finance a new car and throw money at repairs instead of doing what folks like you and I do. Buy a reliable older car that's cheap to work on. But that takes "learning" and most Americans are convinced that learning is a waste of time, just throw money at the problem.
  - supertrope 1y ago
    A common advertising technique is to exploit peoples' problems. Buy Product(tm) and your problem(s) will be solved! Sometimes this problem doesn't even exist but the advertiser will exploit your fear. If you don't buy Product(tm) for your family you don't love them/are putting them in danger/you are not a real man!
- baubino 1y ago
  > I can "afford" the monthly payments on a $40K car, but it's just a terrible financial idea. I like to say that I can afford it, I just don’t want to and refuse to afford it.
bowmessage 1y ago
> Many of my neighbors [...] think we're poor because of it. How do you know that? They told you outright?
dehugger 1y ago
Our solution to this was two cars, with one being a tiny well used EV (2015 Fiat 500E) where the range boils down to "dont leave town". Its a fantastic city car. 50% to full is about 3 hour on a 120v wall charger, and that's enough juice to run around our town for a ~week for all kinds of errands. The other car is a 2023 Leaf with the extended range trim, which is sufficient to get us all around the PNW, although I would hesitate to take it east of the Cacades.

by gensym 1y ago

oblio 1y ago

If the Volvo us well taken care of, it will probably last decades more.

ryandrake 1y ago

Exactly. This is going to come off as incredibly privileged, but I'm not a huge fan of car loans. In fact, I'm not a huge fan of leveraging to afford any asset unless it's appreciating in value or generating income. I buy and drive old, nearly junker cars because I can't afford a $40K new car. I can "afford" the monthly payments on a $40K car, but it's just a terrible financial idea. Totally nutty. A $750 monthly payment (I don't even want to know the term) for something that is losing value every day is absolutely bonkers. The amount of debt Americans routinely and causally take on is honestly ridiculous.

raw_anon_1111 1y ago
The problem with old junkers is that if you don’t have the money in cash, how do you fix a major car repair? You can get a loan for a new car with money. The car “generates income” because it allows you to get to work and hopefully make more than your car note.
- _heimdall 1y ago
  Old car repairs generally don't cost as much as you'd expect, especially when you aren't paying $750/no on a loan plus higher insurance premiums. My mechanics often perk up when I bring in my 80s era pickup. It has very low miles, they can generally diagnose it with very basic tools, and parts are cheap. When I have the time to work on it myself I appreciate it for those exact same reasons.
  - raw_anon_1111 1y ago
    And when you buy the car hypothetically and the motor goes out or the transmission within three months? And it’s one thing if your car breaks down on a side street, it’s completely different if it breaks down on an interstate. If you have a daughter would you be comfortable with her driving an unreliable car? Your wife? Your mother?
    - _heimdall 1y ago
      Sure, your motor or trans can go out on any vehicle and unless you still have a warranty its your problem. It sucks if you spend $3500 on a car only to spend another $2000 because the transmission went out and the timing was bad luck. I wouldn't recommend anyone buy an old car I'd they have no emergency fund left after the purchase though. My wife does regularly drive our old cars. If it dies on the highway we'll deal with it. I don't have a daughter, but I wouldn't worry about my kid driving the kind of old cars I pick up - I'm patients picky, and able to work on them myself. The car would be the least of my worries if I had a young daughter with a drivers license.
    - smileysteve 1y ago
      A car that averages 15k miles/year, has a maintenance record, and appears in good condition tends to be less likely to be a lemon than most brand new cars. For an anecdote, consider that Jeep just bricked thousands of new cars, including on interstates 2 weeks ago. That GM recalled most 6.2l engines made in the last 5 years; ... Toyota engine castings, bmw chain tensioners, Ford Ecoboost coolant passages, Porsche bearings... Most of these problems became apparent before a long term first owner sold (yes, you should do research) A pre purchase inspection, and all around maintenance (brake, coolant, oil, transmission oil, and differential oil) will get you a long way; a $2k suspension refresh will take you even further.
adriand 1y ago
It’s not ridiculous, it’s how the whole system works. People need to live their lives, and if they only way they can get around (or throw a birthday party, or have a funeral, or some other human thing) is to borrow money, they borrow money. Which in turn props up a huge proportion of the businesses that make up the economy.
_heimdall 1y ago
The standard recommendation of taking out sent so you can invest your money and "make it work for you" frustrates me to no end. Yes, on paper I can accrue more wealth if I mortgage my house and invest that same amount elsewhere. No, I would not trade owning a house outright for having a house that will be taken from me if I can no longer pay, strict insurance requirements, and a pile of someone else's debt that I call money and ignore the risk implied in investing in someone else's gamble.
- supertrope 1y ago
  I don't think gp comment is advocating doing a cash out re-finance, but to exploit leverage when first financing the purchase. I used to be very debt averse. Owing a six figure sum seemed like a huge burden. Now I understand that mortgagees are non-callable. If you put 20% down that removes a lot of risk of being underwater. Fannie Mae is eating inflation risk for you. It's a way of smoothing expenses over multiple life stages. With a 30 year mortgage you can get a smaller payment when you're younger, earning less, and paying for daycare. When you're older you're earning more, might be an empty nester, and inflation has made each payment easier. By not rushing to pay off low interest debt you've effectively transferred money from 50 year old you to 30 year old you. If you stayed employed, locked in a 3% mortgage, and contributed to your 401k, you won the wealth re-distribution game of 2020-2022.
  - _heimdall 1y ago
    Respectfully, you're effectively describing the argument I take issue with. > Now I understand that mortgagees are non-callable. How are you defining non-callable? If you stop paying on your mortgage that sent will eventually be called and you will be kicked out. > If you put 20% down that removes a lot of risk of being underwater That removes the risk of being underwater for any market correction sub-20%. Real estate prices in any areas have grown more than that ovwr the last few years, the risk of a 20%+ correction is on the table. > With a 30 year mortgage you can get a smaller payment And a 40 year loan would be even smaller. Where do we draw the line, and why? 30 year loans weren't always the norm, you don't have to go too far back to find an average mortgage on 10 or 15 year loans. > When you're older you're earning more, might be an empty nester, and inflation has made each payment easier. Income doesn't always move up, and inflation only makes payment easier if you (a) secured a fixed rate loan and (b) stay in the same home long term. > By not rushing to pay off low interest debt you've effectively transferred money from 50 year old you to 30 year old you. Or if it doesn't work out, 30 year old you has a home at the expense of 35 year old you. > If you stayed employed That's a big if, and you not only need to stay employed, you need wages to at least keep up with true inflation. Your 401k won't matter until you are at an age where you can withdraw, or we have another pandemic-style response where we allow people to cash in 401ks without the early withdrawal fees.
chneu 1y ago
Americans finance things to keep up imagery. This country is insanely ego and pride focused or fixated. Capitalism exploits this in advertising. Americans throw money at everything and then wonder why they're broke. Or in the case of cars, people finance a new car and throw money at repairs instead of doing what folks like you and I do. Buy a reliable older car that's cheap to work on. But that takes "learning" and most Americans are convinced that learning is a waste of time, just throw money at the problem.
- supertrope 1y ago
  A common advertising technique is to exploit peoples' problems. Buy Product(tm) and your problem(s) will be solved! Sometimes this problem doesn't even exist but the advertiser will exploit your fear. If you don't buy Product(tm) for your family you don't love them/are putting them in danger/you are not a real man!
baubino 1y ago
> I can "afford" the monthly payments on a $40K car, but it's just a terrible financial idea. I like to say that I can afford it, I just don’t want to and refuse to afford it.

bowmessage 1y ago

> Many of my neighbors [...] think we're poor because of it. How do you know that? They told you outright?

dehugger 1y ago

Our solution to this was two cars, with one being a tiny well used EV (2015 Fiat 500E) where the range boils down to "dont leave town". Its a fantastic city car. 50% to full is about 3 hour on a 120v wall charger, and that's enough juice to run around our town for a ~week for all kinds of errands. The other car is a 2023 Leaf with the extended range trim, which is sufficient to get us all around the PNW, although I would hesitate to take it east of the Cacades.