Financial counseling should be required in high school. It would benefit the poorest the most.

I'm not surprised about the new Elantra. People who grow up poor are not socialized to make good financial decisions. (People who grow up rich often make bad decisions too, but they don't suffer as much from them.)

Unfortunately, we have a system where poor college students are able to dig themselves into massive debt. Huge student loans are given to people who have no chance of repaying them, and it's possible for someone in dire financial straits to finance a new car. It's a miracle we haven't had a mass default bring down the entire student loan system yet.

> It's a miracle we haven't had a mass default bring down the entire student loan system yet.

Low unemployment will do that. Just wait for when U3 creeps toward 7% or so, when the prospects of employing the sociology, theater, and gender studies majors for "college graduate salaries" becomes untenable for employers.

Then you'll probably see it pop.

Or not. Markets can remain irrational surprisingly long times.

For a brand new car that's not the a lot, the problem is she bought a brand new car.

Americans are being groomed to think in monthly payments rather than the total cost which leads to silly decisions like buying a brand new car instead of a getting a used car.

It's a myth that a brand new car is a bad deal. Brand new cars are way superior to used (1-2 year old). However, this is only true if you own it until it no longer works. This is where most people go wrong. If you don't own it for its entire working life (~20 years) you're better of buying a 5 or 6 year used model and saving ~40%.

I'm going to need to see a spreadsheet or something for that claim. 1 year is about 19% depreciation. but only ~5% of life of car

It really depends on the brand.

When I bought my Prius, I was looking at 1-3 year old used models that were only about $3-5k less than a new one, and came with a worse warranty. The two years of free maintenance that came standard with the new Prius covered a significant part of the price gap, and the new one had more life left than the used ones, which I think covers the other part of the gap.

On the other hand, it rarely makes sense to buy a new Chevrolet or Ford, or Mercedes, for example. The resale value on those is terrible.

I'd have to dig it up, but it's the warranty that makes the difference.

I see. I imagine that math is going to depend a lot on brand/model and one's skill at identifying and fixing problems themselves.

Jack Baruth wrote a great article a few years ago about how owning cheap used cars is a privilege reserved for people who have the skills and time to fix their own cars: http://www.thetruthaboutcars.com/2015/02/no-fixed-abode-gott...

It seems that he was partly inspired to write this by "the TTAC reader whose response to Bark’s article on subprime buyers was to straight-facedly suggest that a working father swap his own minivan transmission in his apartment parking lot."

I used to own beater cars when I was in college and shortly after. I never paid more than $3k for one, and I did all of my own work, including replacing all of the brakes on one of the cars myself. But I like working on things, I already owned the tools, and I had access to good public transit when my car broke down. I would not recommend beater cars to most normal people.

Indeed. I only mention the original post because Hyundai's warranty is better than average and their cars are cheaper than average (for new, anyway). Even though Hyundai's depreciate faster than say, Honda, the depreciation curve is a little different anecdotally, e.g. a one year depreciation for a Hyundai is a little less than a Honda in raw price since the car is already cheap, however a 5 year difference will favor Honda greatly.

if you buy certified pre-owned like I did you get the warranty without having to buy new.

Its not the same warranty with most brands - my current car has a 4-year warranty for almost everything (excludes tires and a few other things that are always excluded), whereas the similar pre-owned models have a 4-year that only covers the engine.

AFAIK for the Hyundai Elantra (the car mentioned and that I bought) it's the same minus the current years and miles on the car.

Buying new saves on the transaction costs of the resale through a dealer and the risk of buying private used.

Buying non-luxury cars is NOT expensive. Throwing away a working car is expensive.

>It's a myth that a brand new car is a bad deal.

that's not really what I was trying to argue. I'm trying to point out the mindset of someone in her position purely thinking of monthly payments.

An "extra" $100 a month doesn't sound like a lot of money and the sales people push this hard because it obfuscates the true cost of the purchase. For example my real estate agent kept trying to do this when I was buying a house, an "extra $200 a month is a small price to pay for the house you love".

The one that drives me crazy is comparing an ongoing expense to the price of a latte each day.

It's a fair comparison to make in terms of costs. But if your income temporarily stutters, you can just stop buying lattes.

I don't buy latte each day. I know no one who does.

If I would be theoreticaly buying latte each day, it would be either because I would love latte so much or because of some social reason (collegues I want to talk with are going there so I have to join etc).

Compared product is usually not needed socially and is no more appealing then daily latte I am not buying.

The people who respond to sales tactics are the sort of people who buy lattes every day, fo rhte same reason.

75% of the lifetime for 60% of the cost (your numbers) doesn't sound like a bad deal.

Yup! Personally I'd never buy a new car, but they aren't really that bad of a deal. I will say though, there's an uncertainty that exists that wasn't apparent in my simplification. Transmission failing out at 9 years would basically make your car useless, but if you had warranty you'd be good.

When you consider the time value of money it becomes an excellent deal.

Not only the new car (I will never own one), but bought it before she had the job. And then didn't get the job.

Seriously. Until last year I drove a car that was 1/3 the cost. And while not new, it was a nice car!

I'm almost middle-aged and I've never owned a new car.

My current car cost me $2,000 a few years ago. I can't imagine paying $17k for a Hyundai, of all things. I'd have to be seduced by some kind of sexy rare classic.

I have another running car, a hideous Subaru, that I bought for $100. That's my backup.

My younger cousin bought a (low-class) sports car for about a third of that price and modded it out to 200 horsepower. Any time I hear a price go over 10k I cringe.

Miata Is Always The Answer, à la GNU.