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>$15k is serious business to a middle class household >If you can afford that, you are well off, and very much above the median household income for the US. A

>$15k is serious business to a middle class household >If you can afford that, you are well off, and very much above the median household income for the US. Agree on point #1, disagree on point #2: one of my points is that you don't need to have 15k cash-on-hand to drive a car worth 15k, but driving said car makes you appear to be much wealthier than you are. >Ancestor post shows a serious lack of knowledge of the economy outside the Bay Area. Not at all. SF is just a good example because of the prevalence of "luxury" cars and "rich" people who don't actually own their surprisingly low-cost cars outright. >If they make shit decisions in their personal life This was my point exactly. Appearances can be massively deceiving, and in many cases, they actually are. Judging someone's financial situation based on the car they drive doesn't factor in their income, how much they're willing to spend each month on a car, and how much debt they're willing to take on for it. People do silly things. I think the combination of easy access to credit (i.e., debt) and "keeping up with the Jones" is to blame.

logfromblammo 11y ago
And a great point it is. Given the nature of financing, and the nature of an automobile as an asset, I have to question the sanity of anyone obtaining a loan to buy any new car, which drops in resale value the instant you drive it off the dealer lot. If the car in question, new or used, retails for more than $25k, I no longer need to question; at that point, I know the person is insane. If you can make a $25k down payment on a $100k car, you could pay cash for a $25k car and own it outright. The only reasons anyone should be taking a loan to buy a car are as follows: 1. Owning the car would increase that person's potential to earn disposable income to a greater extent than the loan costs would reduce it. 2. The person has no realistic means for saving up for the purchase price of any acceptable car without having such a car already. The traditional, rational means of buying a new luxury car is to first buy the best beater you can afford at that moment, run it into the ground, and repeat that step until the money saved by driving beaters and junking them is enough to buy a reliable car that can eventually be resold. Then, you continue saving and trading in your old vehicle until you finally achieve the quality of vehicle that you desire. The best trade-in point is right at the end of the flat part of the maintenance cost bathtub curve for that car, at which point you buy the best car you can afford that is still a few years/miles away from that point. In that light, all those people buying used BMW 3-series instead of new luxury cars are showing themselves to be somewhat prudent car buyers. But you still don't know if they gradually built up to it, paid in cash, or took a loan. Even so, just about everyone middle class or lower will look at someone driving an obviously expensive car and instinctively think, "what an asshole." It's probably related to the deep-rooted primate instinct for judging fairness in social interactions. All the other monkeys hate the monkey that gets more bananas and doesn't share. That's really the primary reason to avoid ostentatious displays of wealth in public, especially in the wrong social contexts.

logfromblammo 11y ago

And a great point it is. Given the nature of financing, and the nature of an automobile as an asset, I have to question the sanity of anyone obtaining a loan to buy any new car, which drops in resale value the instant you drive it off the dealer lot. If the car in question, new or used, retails for more than $25k, I no longer need to question; at that point, I know the person is insane. If you can make a $25k down payment on a $100k car, you could pay cash for a $25k car and own it outright. The only reasons anyone should be taking a loan to buy a car are as follows: 1. Owning the car would increase that person's potential to earn disposable income to a greater extent than the loan costs would reduce it. 2. The person has no realistic means for saving up for the purchase price of any acceptable car without having such a car already. The traditional, rational means of buying a new luxury car is to first buy the best beater you can afford at that moment, run it into the ground, and repeat that step until the money saved by driving beaters and junking them is enough to buy a reliable car that can eventually be resold. Then, you continue saving and trading in your old vehicle until you finally achieve the quality of vehicle that you desire. The best trade-in point is right at the end of the flat part of the maintenance cost bathtub curve for that car, at which point you buy the best car you can afford that is still a few years/miles away from that point. In that light, all those people buying used BMW 3-series instead of new luxury cars are showing themselves to be somewhat prudent car buyers. But you still don't know if they gradually built up to it, paid in cash, or took a loan. Even so, just about everyone middle class or lower will look at someone driving an obviously expensive car and instinctively think, "what an asshole." It's probably related to the deep-rooted primate instinct for judging fairness in social interactions. All the other monkeys hate the monkey that gets more bananas and doesn't share. That's really the primary reason to avoid ostentatious displays of wealth in public, especially in the wrong social contexts.