I think that really depends on what part of America. At least where I grew up around a bunch of middle class conservatives listening to eg Dave Ramsey (who has other problems IMO) most people think of you as reckless/irresponsible for doing that sort of thing.
And you'd never know until the family divorced and their lifestyle drastically decreases.
Dave Ramsey has to be relatively new because debt was extremely extremely common among conservatives in the US (no idea about liberals didn't live among them)
Cars are a depreciating asset. It usually does not make sense to go into debt to get one
Of course, in markets that don’t have plenty of inventory of both empty lots and lots with old houses, it can be hard to value the house by itself.
Has relocating an old house even been done? (Assuming the house wasn't built to be movable.)
See https://patch.com/massachusetts/lexington/historic-house-mov... as an example
It seems there's a whole spectrum from lifting houses to put a new first floor below them, to moving them a bit, to moving them several blocks in a city. (to big building projects too, historically)
I saw a house in progress being moved, 30 years ago. Great thing to take a kid to see!
Most other debts people incur personally are to buy things they could save for, which go down in value. Like cars.
But in general, and in the larger suburbs yes you would be pretty inconvenienced without a car. But that is true of suburbs everywhere.
I’ve heard Philly and SF as well, but have never been.
If you are forced to commute into SF for your job, then make living close to BART a top priority. (Many years ago, I met many people who suffered through that daily commute, but refused to make living near BART a priority. It was dumb to watch.) BART is a miracle train system (hybrid commuter rail/metro/subway), even if the coverage isn't great.
Now I own a rowhome in the historic district of the city, we're opening the first floor as a museum within the next year, and I walk everywhere. All forms of transit (bus, trolley, trackless trolley, subway, light rapid transit, train, ferry) take contactless payment (finally) and these days, rideshare fills in the gaps.
Wages are higher in the suburbs, but I can get to a sizable international airport in 15 minutes by car, to the Amtrak station in 20 minutes via $3 subway, and I can walk to grocery/hardware/bakery as well as bars/restaurants/galleries/venues/museums/etc.
A car used to be a very, very important part of my life, and now it's more of a luxurious convenience.
And the age of the cohort... Millennials (1980 to '95-ish) have had student loans since as far back as they can remember. What's _another_ never-ending monthly payment?
Of course I also absolutely hated being in debt and having a monthly payment to begin with so I made it a priority to solve that problem asap. Likewise, I have always paid cash for every car I’ve bought. My only never-ending monthly payment is my mortgage and the alternative to that is paying rent which I like even less.
Fundamentally it’s a mindset thing. I also don’t buy taxi rides for my Chipotle orders.
How does it not bother you? :)
A car might be necessity, but spending more than say $15-20k max on a (second hand) car is a discretionary expenses for the vast majority of people doing so.
10 grand it seems? That's pretty rough, especially with that mileage
10 grand feels steep, but for a solid car that'll easily last another ten years with minimal maintenance, good fuel economy, I don't know that you can do much better these days, and it doesn't feel unreasonable.
It's pretty unreasonable as a class of "starter car" though
I can't imagine many teens working a min wage job for a summer and having a car afterwards if they cost like this
I had to get my own job and save to buy my own first car. It was 2k
If it had been 10k it would have taken forever to afford on part time minimum wage
My parents definitely did not have a spare 10k laying around to buy me a car. And if a family has more than one child, then what?
Cash For Clunkers took a ton of used vehicles off the market
Stricter environmental standards have also taken otherwise working cars off the market, by preventing used dealerships from selling them in general, and making it more difficult/more expensive to insure them
The days of buying a used car for 2 grand are long gone
Before C4C garbage cars that ran but probably needed something were "I want it gone, $500". After C4C the same vehicles sold at the C4C price and the price point has more or less stuck. It completely turned the beater car market upside down.
So everyone has to have a car. So your social mobility is limited by the fact that you need to have the money for the expenses that go with it in the first place.
3-4 cities with decent to good transit are the exception, but the fact that they're so desirable and with such high housing prices means that they aren't really accessible either.
Cars decrease in value, very quickly. Getting a loan for a car is throwing more money away than buying a car in the first place.
Having said that, I'm immune to a lot of 'social norms' so I've been fine driving my tired-looking 20-year old Outlander soccer mum car or our 10+ year old grannymobile Nissan Leaf.
There are situations in which a loan for a car may be necessary, but I'd have to be a really tight spot to consider it, and I'd be absolutely minimising the size / length of it.
Your work requires expensive gear - maybe it's a car, or smartphone, or computer, or ebike, or HVAC tools, or camera, or musical instrument - why not pay for them over time as they help generate income?
For example a doctor or a waiter doesn't need a car to do their job, once they're at their workplace.
The US is basically forcing everyone to commute by car, except for select and limited geographies.
I could pay off my car tomorrow. But I'll have more money in the end keeping that cash in the bank. Why would I pay it off early?
Let's say I get a car that costs $30k, I put $10k down, and I take a loan out using the numbers above rounded up just for napkin math (1% APR, 4% savings account).
After one year:
```
$30,000 x 0.04 = $1,200 from savings account interest
$1,200 x 0.33 = $396 in TAXES from the interest (assuming you earn over $145k/year in California)
$30,000 x 0.01 = $300 in loan interest
Total earned = $1,200 - $396 - $300 = $696
```
Don't get me wrong, $696 isn't _nothing_ but I personally would rather have the feeling of not owing people money then an extra $696 at the end of the year. Add in depreciation from getting a new car and it's almost a wash.
> Your logic works out fine if you don't mind a dash of risk (e.g. from a job loss).
I notice that no part of your comment actually describes this risk. What is it? Assuming you have the cash in hand, and it's earning more interest than the interest on your car financing, how would losing your job affect the situation?
The only effect I see is that it will dramatically increase the amount of that extra interest you actually collect, by lowering your tax rate.
Sure, more expensive buying a new car. But I was going to get a new car anyways, the question is loan or no loan.
I don't care too much about depreciation. It'll probably be in my garage for a decade or more so that's just paper losses today, and once again I was going to buy new anyways.
They do, by a lot, if they're in desirable cities. Probably what's really increasing in value is the grandfathered permission to have built a house, but there's no way to separate that from the house.
Yes, maybe you have to renovate the interiors, such as new floors, new electrical/hydraulic, new heating system, etc., but that is usually a small expense in contrast with the price of building an house from scratch.
Meanwhile new house is cool in summer and warm in winter. It’s silent with spacious rooms. It is also not affordable for most people too. Old house is a middle ground when one doesn’t have enough money. There is no way to upgrade in sane way old house to modern standards.
That really depends on the market. There are areas near me where property prices have increased so rapidly they outpace any losses from depreciation. Not necessarily a good thing of course as it does lead to very expensive houses and difficulty with people trying to buy their first house.
The only thing stopping depreciation is regular maintenance which costs money.
Every new edition of the IBC makes my hovel worth more relatively because the cost to create an alternate just keeps on going up.
To me buying new cars is just throwing away money, simply because at the moment you brought the car out from the dealer the car just is worth 3/4 of the price you payed it, and when you have to resell it in 10 years it is worth almost nothing.
Imagine you get your first car, it’s used and a bit run down but you’re paying $250/month on a modest loan. Nothing crazy but you needed a loan and a car that was modestly reliable.
You get a couple of small raises, eventually the car is in the shop more and you feel you deserve a better car because of the hard work and long hours. You see ads for a new car at just another $100 per month on TV. $350/month would be tight, but you feel you’ve earned it.
You go to the dealership only to find the car you really want is closer to $500/month which you can’t afford.
The salesman says “let me see what i can do,” comes back from the finance office, and voila! Got the payment down to $375/month. It’s more than you initially expected but maybe you just don’t go out to eat as much. You’re sick of your old rust box, always in the shop. And you’ll probably get a raise soon too. So you sign.
And bam, you got a 6, 7, or even 9 year car loan. You don’t realize how much insurance will increase. You haven’t had a new car yet so you didn’t even think excise tax would be that much (for the first year of a new car its typically a lot) and now you’re struggling in debt with a new car that lost 20-35% of it’s value right off the lot, so you’re underwater on the loan.
Long winded story to say for many people a car is an emotional extension of themselves. Identity even, and it’s difficult to break that into a more utilitarian mindset. Thus justifying the high cost and debt is easier than if you were looking at it as just a way to get to point A and B
Why should a car manufacturer care about your preferences if you're never going to buy new from them?
It's annoying but people like us who care about things like TCO are probably never going to buy new cars under any circumstances, so our concerns about electronic components don't motivate designers.
Even if we might help residual values of leases and buy used parts, our influence over car companies is radically lower than new car buyers.
And a lot of time it isnt. Not everyone wants too or can afford to take that gamble. Sure, i've had luck with it, but that's because I can perform my own work upto and including dropping and replacing an engine if I need too.
On the other hand i've seen people who could least afford it end up with total stinkers that drained their wallets.
sure, but you'll quickly make up the difference in repair costs when the bucket of bolts you paid ~1k for starts breaking down every 3-4 months.
And, of course, you'll have to make arrangements to get to work to pay for those repairs while the car is in the shop. Which may have it's own associated costs if you're using uber or a taxi or whatever.
Better hope little Timmy has a way to get to soccer practice as well. And hopefully there's no other appointments that have to be accommodated for. It was pretty difficult getting time off to get that bum tooth checked out...
A lack of adequate maintenance and a failure to identify lemon patterns when choosing the vehicle is always something that can be trivially avoidable.
I’ve had vehicles for over a decade where the repairs on it amounted to a hundred or so a year, at most. Right now I’m swapping out a CV shaft on a 2001 Mazda 626 that has seen ZERO major work done on it in its entire life.
Do the oil changes at twice the recommended cadence, keep on top of every tiny problem, and any vehicle whose entire model line has never demonstrated systemic issues will continue to be highly reliable and low cost to operate. For example, many years of the Crown Victoria fall into this category. The 1997 and 2007 models, in particular, were absolutely bulletproof if maintained correctly.
Even when purchasing a used vehicle, there are many vloggers out there that can help you avoid lemon lines - entire model years that should be avoided - in favour of vehicles that will stand the test of time. Car Wizard is one of my more favourite ones, despite disagreeing with some of his more blanket opinions (European cars, for example).
Then they shouldn’t get a new car, full stop. Older used cars can be perfectly serviceable with some research into lemon patterns and a pre-purchase inspection by a trusted mechanic. I have found the vlogger Car Wizard to be particularly accurate in his assessments of which used vehicles are great buys and which ones you need to stay the hell away from.
None of my cars are less than two decades old, and none of them cost me more than a new one would, even after the purchase price and all repairs, maintenance, and fuel are added up. If you manage to choose wisely, it is unlikely that you would ever pay more on a used vehicle, even over literal decades, than you would with a new car.
Now sure, you will never be able to own a new shiny. You will never be able to peacock around in a brand-new vehicle. But trying to impress people via copious displays of wealth is a fool’s errand. Intentional attempts at external validation always are.
Granted, high interest rates might make this a bad deal, but the principle seems sound. I bought my previous car on a 7-year bank loan at 2.5% and didn't regret it.
Your loan is exceedingly abnormal or from a past time as the average loan % in the US is much higher on that time scale.
On the loan rate: yes, fully agreed, this was an unusually good rate, and that makes the arrangement much more attractive.
Unlike the US, if a place is 1km away as the eagle flies you can get there by walking ~1.5km max. And there are bus services and although often overcrowded or with low service, they do run and you can plan your life around them.
Yet everyone still buys a car as soon as they can afford one (or often if they can't). And they use it for commuting to work every day.
To get to the point that Europe is in where even rich people don't want cars or if they have one it is for weekend trips. You need to do a lot better than this.
Unfortunately getting the US to be like Europe in this regard is not really viable, but it could get to the point where Brazil is where the poorer people can afford to not own a car.
In some big cities in Brazil they do a lot of low-cost things like dedicated bus-lanes that actually make some high-demand trips shorter by bus. Progress in this area needs to be incremental, there is little point in investing crazy amounts of money in one big project. Instead the investing should be lower and constant.
sometimes one big project can make a big difference, like a new rail-bridge or metro. But in general getting people into busses is more efficient even if that means rich people still won't want to get into that bus.
It's not like that in all of Europe either, the further you go from Western Europe, the worse the public transit gets. The Balkans are probably the worst, you need a car if you live outside a city as rail and even busses are slow, unreliable, or just not an option in your place.
And sure taking a train sure is faster/nicer for long travel, but in practice what matters the most for the economy and people's life/health is the daily commute which mostly happens inside cities.
But you don't quite get how it is in the US (and Canada). In the US it is "if you live *inside* a city" you need a car*, no matter if small, large, or metropolis.
* Except for a few metro areas
Well, some countries are far more centralized than others. The daily commute to/from cities is a huge problem where I live, to the point that cities are flooded mostly with outside commuters. Trains and busses could solve that very elegantly, but nobody’s investing in that.
It's not really an East-West thing. Downtown Sofia for example has much better public transportation than many 'secondary' and rural towns in Germany and France.
There are 2 big factors at play:
1. Margins. Manufacturers make huge margins on expensive vehicles and very slim margins on cheap vehicles. The numbers differ, but I think even in the lead up to the 2008 crisis automakers had to sell 5-10 "econobox" cars to make the profit they made on one luxury car, SUV, or truck.
2. Normalization of debt. For many Americans, having a monthly car payment in perpetuity is considered acceptable. Car loans have their place and can be used responsibly, but due to marketing, sales tactics, and cultural sensibilities what often ends up happening is that people start from a monthly dollar amount and then work forwards to buy the most expensive vehicle they can, even if it means taking the loan term out to 72 or 84 months. It's also very normal for people to never pay off their car, instead trading in the vehicle after 3-5 years and rolling equity in the loan over to their next car. Obviously, this consumer habit is great for dealers, manufacturers, creditors and buyers of consumer debt, as well as the US Government and investors -- it's just not ideal for the consumers themselves if they're trying to preserve wealth and build savings.
These two factors create an environment increasingly hostile to the cheap entry level car. Consumer demand is low since most don't spend responsibly, and automakers don't really want to make or sell them because the margins are so slim.