kelly8875
Pearl Clutcher
Posts: 4,391
Location: Lost in my supplies...
Oct 26, 2014 17:02:56 GMT
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Post by kelly8875 on Feb 13, 2019 23:03:10 GMT
, I would lease so I would not be responsible for the repairs. I leased twice and was definately responsible for repairs. I also had to keep up with the scheduled maintenance. The window stopped going up and down and I had to pay for the repair. The only things they would cover were things like engine and transmission, and then only if it wasn't wear and tear. I’m in a leased vehicle, my second one. I’ll do it again in a year and half when this lease is up. I only pay for fuel. Maintenance is covered in my lease.
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freebird
Drama Llama
'cause I'm free as a bird now
Posts: 6,927
Jun 25, 2014 20:06:48 GMT
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Post by freebird on Feb 13, 2019 23:07:30 GMT
What else is shocking is how many people have these luxury vehicles but can't pay the $500 deductible when they get in an accident. I worked for a collision center for 6 years and at least once a month we would have a high end car sit in our lot for weeks because the person couldn't pay the deductible.
You would (or not) be surprised by the amount of ppl that don't even have insurance. I once took a call for a guy that had a newer escalade, needed a windshield, no insurance *at all*. wtf.
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Deleted
Posts: 0
May 11, 2024 9:21:08 GMT
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Post by Deleted on Feb 13, 2019 23:10:30 GMT
There's a lot that stuns me in this article. I can't believe the average new car loan is over $36,000 dollars. That is absolutely nuts to me. I know the cost of new cars has risen far faster than wages have, but even with that, I know there are more reasonable options for purchasing a car than spending nearly $40,000 on one! I think this is good evidence that we are far too in love with vehicles more than just reliable transportation and rather see them as luxury or status symbols in this country.[/]
Americans Behind On Car Payments
But not everyone sees vehicles as a status symbol. I had a 2003 Corolla S and after 10 years traded it in for a Sienna. Sure we could have bought a small car again BUT we needed the space. We have 2 special need, medical kids. One who was on oxygen and tpn. Our loan was for $29,000ish after the $6,000 was taken off for the trade in. We have the base model. We can easily afford out payments. We also added a 2nd car loan almost 2 years ago when dhs truck was dying. It was 13 years old. He has a nice base model Camry that was $24k. And that is after dealer incentives. He only got $4000 for his truck. Again we can easily afford 2 car payments. The Camry is 0% the van is at 2.9% apr. We can easily afford a 3rd loan payment which we will need in a year for dds car. Cars cost a lot more even for base models. Heck little kias start at $15k! Would I love an Audi or BMW? Yes but I have no need for a luxury car. But I do want specific features and there isnt anything wrong with that.
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Deleted
Posts: 0
May 11, 2024 9:21:08 GMT
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Post by Deleted on Feb 13, 2019 23:12:12 GMT
And we pay more on our insurance, full coverage for a low deductable ($250) and super high payout for an accident (300k/500k).
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Post by Merge on Feb 13, 2019 23:15:07 GMT
What else is shocking is how many people have these luxury vehicles but can't pay the $500 deductible when they get in an accident. I worked for a collision center for 6 years and at least once a month we would have a high end car sit in our lot for weeks because the person couldn't pay the deductible.
You would (or not) be surprised by the amount of ppl that don't even have insurance. I once took a call for a guy that had a newer escalade, needed a windshield, no insurance *at all*. wtf.
We can't register our cars in Texas without proof of insurance. Is it not like that up there?
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naby64
Drama Llama
Posts: 5,927
Jun 25, 2014 21:44:13 GMT
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Post by naby64 on Feb 13, 2019 23:17:50 GMT
You would (or not) be surprised by the amount of ppl that don't even have insurance. I once took a call for a guy that had a newer escalade, needed a windshield, no insurance *at all*. wtf.
We can't register our cars in Texas without proof of insurance. Is it not like that up there? Same here. BUT in my neck of the woods, people grab insurance to get the registration and then drop the insurance. Time for renewal? Rinse and repeat.
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inkedup
Pearl Clutcher
Posts: 4,837
Jun 26, 2014 5:00:26 GMT
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Post by inkedup on Feb 13, 2019 23:31:25 GMT
I was an executive at my last job. The executive parking area was full of luxury vehicles and my little Saturn. Everyone - even some of our warehouse employees - liked to tease me about my car.
I would smile and not mention the fact that I paid cash for my car. When I quit that job, I had enough money in the bank to live off of for at least two years.
That was so much better than driving a luxury car to work every day.
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keithurbanlovinpea
Pearl Clutcher
Flowing with the go...
Posts: 4,267
Jun 29, 2014 3:29:30 GMT
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Post by keithurbanlovinpea on Feb 13, 2019 23:38:13 GMT
DH manages two auto repair shops and has been in a industry for over 30 years. It baffles him the number of people who will walk away from a $3000 repair and buy a new car and sell the old one. People figure out a way to fork out a few hundred bucks every month for the payment but aren't prepared for the repair bills $3000 is likely a pretty decent percentage of the overall value of the car and spending that much may be throwing good money after bad. Often, once cars start needing huge repairs like that, they're usually older, and they continue needing other significant repairs. To have an unreliable car that you're constantly sinking money into may not only be financially questionable (OF COURSE there are a lot of variables there), but most people need their car to get to work and if it's routinely in the shop, it can be trouble. Anyway, I can see why people may sometimes decide not to pursue a big repair like that and go with a newer, more reliable car. But... a lot of people probably don't really run the numbers to be sure which makes the best financial sense. True in many aspects. DH is really honest with people about the future of their car. He'll tell them exactly what is wrong, what it will cost, what's critical and how long they will likely go before they have another issue. So he will tell someone if they're likely to be able to go another 100 miles or 30,000 miles before another obstacle. I'd gladly spend $3000 if it gets me another 12 to 18 months to be able to save for another car.
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likescarrots
Pearl Clutcher
Posts: 2,879
Aug 16, 2014 17:52:53 GMT
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Post by likescarrots on Feb 14, 2019 0:48:19 GMT
I agree with a lot of what's been said here, but I will say that some of you all think that this is a young people thing and I have to say that of the people I know in various age groups, it's the older people that are spending like there's no tomorrow. Most of the people I know in their mid 20s-early 30s are driving used priuses (low gas costs), honda fits, small fairly inexpensive, but reliable cars. Most of them cook meals and bring their lunches to work. I know a lot of people in their 40s, 50s + that are buying insanely expensive cars, live in insanely expensive houses (not always due to housing costs, many due to 'i need a 4k sq. foot house for my two kids'), eating out all the time, vacations, etc. and a lot of them are doing it AFTER they went bankrupt or got foreclosed on during the last financial crisis.
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Post by jeremysgirl on Feb 14, 2019 0:59:54 GMT
likescarrots I'll get on board with that idea. It's been my experience as well.
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Post by Spongemom Scrappants on Feb 14, 2019 1:24:25 GMT
We have a sweet ride- a 2004 Chevy Venture I had a 2000 Chevy Venture and they had to pry it out of my hands in the fall of 2017. I was sooo attached to that vehicle. Lol.
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Gennifer
Drama Llama
Posts: 5,002
Jun 26, 2014 8:22:26 GMT
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Post by Gennifer on Feb 14, 2019 1:42:16 GMT
There's a lot that stuns me in this article. I can't believe the average new car loan is over $36,000 dollars. That is absolutely nuts to me. I know the cost of new cars has risen far faster than wages have, but even with that, I know there are more reasonable options for purchasing a car than spending nearly $40,000 on one! I think this is good evidence that we are far too in love with vehicles more than just reliable transportation and rather see them as luxury or status symbols in this country. Americans Behind On Car PaymentsSo, if your point is that it’s scary that so many are behind on car payments, sure. I totally agree. If it’s that you think that spending $40K makes a vehicle a luxury or status item: nope. We just bought a used truck a couple of weeks ago. We put down $20K, and financed $35K. This is a 2017 truck, with 30K miles on it. It’s certainly not luxury. The reality is that vehicles are expensive, and getting more so every day. Last fall, we bought a vehicle for our teenage drivers... a Jeep. It was ten years old, with something like 105K miles. We paid $13K for it. Twenty years ago, I also bought a used Jeep for $13K. It was only 3 years old, with less than $30K miles on it.
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melissa
Pearl Clutcher
Posts: 3,912
Jun 25, 2014 20:45:00 GMT
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Post by melissa on Feb 14, 2019 1:43:56 GMT
Another illustration that the economy is not what people think it is.
I've never understood the pricey new car thing. I think many Americans do not understand frugality. Just because you can afford the payments doesn't mean you can afford the car. Look at the interest you are paying and see how much it really costs.
I've only financed a car once and it was my only new car ever. We had been saving to get me a new car when dh heard an ad for 0 down, 0 percent financing. Well, when you have the cash saved and it's making interest, this is a deal! The catch was that it was a 2 year financing plan so high payments and you needed an excellent credit rating.
Otherwise, every car we have bought in the last 25 years was a certified used car which comes with a warrant, etc. My current car was 3+ years old, but most of our others were a year old or less and bought for far less than new! And all bought in cash. No financing. If you need to finance to buy a 50k or whatever car, perhaps you really cannot afford that vehicle and would look at certified pre-owned cars. Just a thought.
The Millionaire Next Door should be mandatory reading in high school or college.
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AmandaA
Pearl Clutcher
Posts: 3,502
Aug 28, 2015 22:31:17 GMT
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Post by AmandaA on Feb 14, 2019 1:56:37 GMT
I would cut someone a lot more slack for financing a car than financing some of the other things that you can. It boggles my mind when I see commercials for furniture with 4-5-6 years financing and often with no payments for the first year. And not high-end stuff either. It will be showing its age a lot worse than a car in 4 years.
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Heathen
Full Member
Posts: 427
Feb 12, 2017 6:05:44 GMT
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Post by Heathen on Feb 14, 2019 2:00:13 GMT
I would cut someone a lot more slack for financing a car than financing some of the other things that you can. It boggles my mind when I see commercials for furniture with 4-5-6 years financing and often with no payments for the first year. And not high-end stuff either. It will be showing its age a lot worse than a car in 4 years. It's pretty hard to drive a couch to work, too.
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Gennifer
Drama Llama
Posts: 5,002
Jun 26, 2014 8:22:26 GMT
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Post by Gennifer on Feb 14, 2019 2:27:25 GMT
If you need to finance to buy a 50k or whatever car, perhaps you really cannot afford that vehicle and would look at certified pre-owned cars. And what about when the pre-owned cars are $50K? Are you really saying that if someone doesn’t have cash to buy their car, they can’t afford it? That’s pretty extreme. From someone who always buys used cars, and often pays cash (or a significant down payment.)
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Post by ntsf on Feb 14, 2019 2:33:33 GMT
we always buy new cars... but we also drive them to death.. like 10-15 yrs. our mechanic is not the cheapest, but he can tell me over the last 10 yrs, I have spent x per month on that car.. and you are doing good or.. it is time to get rid of car while you can.. I love to have his advice and support and they stand by their repairs for 4 yrs. and I know if I am in a pinch they will be help me if they can. I am very careful to do the required maintenance.. and don't let crap go. we bought two new subarus. (one was a choice, one was my 14 yr old honda died). because as retired folks, it is much harder to get a loan, etc)..
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Post by lisacharlotte on Feb 14, 2019 2:56:19 GMT
We've always been frugal car shoppers. Last year we splurged on a luxury new car. For someone who has never spent close to $30K for a car before, this was a big deal for us. But, we are in our 50s and 60s, we're not in debt, house is almost paid off, retirement is funded. Our spending these days is pretty much all discretionary. So, spending that money wasn't taking away from our needs. It was a pure want and we could afford to indulge. I feel no guilt whatsoever.
Ive been in the position that I needed to drive a crappy car, because funds were going to pay for our needs. It's not always easy to forego the fun stuff to make sure you can afford to be comfortable in your older years. However, it was worth it to make those sacrifices in the early years and enjoy the payoff now.
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Peal
Pearl Clutcher
Posts: 2,524
Jun 25, 2014 22:45:40 GMT
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Post by Peal on Feb 14, 2019 3:52:36 GMT
DH manages two auto repair shops and has been in a industry for over 30 years. It baffles him the number of people who will walk away from a $3000 repair and buy a new car and sell the old one. People figure out a way to fork out a few hundred bucks every month for the payment but aren't prepared for the repair bills We just did that. My car needed $3500 in repairs (including labor). It was 11 years old, bigger than what our family needed anymore, and the things that needed to be repaired were very significant issues. The car wasn't worth more than that bluebook. We took it as a sign that it was the beginning of the end for that car and got a new to us one. We could have afforded the repair. We didn't want to have to afford the next one, and the one after that...
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Post by Crack-a-lackin on Feb 14, 2019 5:19:24 GMT
Listening to Dave Ramsey you hear callers every day that owe $35k+ in a car and only make $35k/year. It’s unbelievable the amount of money people spend...money they don’t have so they end up with $500-800 car payments and wonder why they’re broke.
BTW, his guidelines for vehicles are pretty good: all of your cars, and anything with a motor, should not equal more than half your annual salary because you don’t want your money tied up in things that go down in value.
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Heathen
Full Member
Posts: 427
Feb 12, 2017 6:05:44 GMT
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Post by Heathen on Feb 14, 2019 5:22:12 GMT
We've always been frugal car shoppers. Last year we splurged on a luxury new car. For someone who has never spent close to $30K for a car before, this was a big deal for us. But, we are in our 50s and 60s, we're not in debt, house is almost paid off, retirement is funded. Our spending these days is pretty much all discretionary. So, spending that money wasn't taking away from our needs. It was a pure want and we could afford to indulge. I feel no guilt whatsoever. Ive been in the position that I needed to drive a crappy car, because funds were going to pay for our needs. It's not always easy to forego the fun stuff to make sure you can afford to be comfortable in your older years. However, it was worth it to make those sacrifices in the early years and enjoy the payoff now. So what kind did you get?
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sassyangel
Drama Llama
Posts: 7,456
Jun 26, 2014 23:58:32 GMT
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Post by sassyangel on Feb 14, 2019 5:51:11 GMT
If you need to finance to buy a 50k or whatever car, perhaps you really cannot afford that vehicle and would look at certified pre-owned cars. And what about when the pre-owned cars are $50K? Are you really saying that if someone doesn’t have cash to buy their car, they can’t afford it? That’s pretty extreme. From someone who always buys used cars, and often pays cash (or a significant down payment.) We priced new trucks about 6 months ago. A base model Chevy Silverado was close to $70k. Its insane how expensive even base models are now. The more computerized they get, the more expensive they are, I guess. We went for a certified used, lol. He drove his last car into the ground, so got very little in trade in for it as a result. We put some money down and financed $15k which was affordable for us. We couldn't have financed the whole thing with cash, though.
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sassyangel
Drama Llama
Posts: 7,456
Jun 26, 2014 23:58:32 GMT
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Post by sassyangel on Feb 14, 2019 5:53:32 GMT
Listening to Dave Ramsey you hear callers every day that owe $35k+ in a car and only make $35k/year. It’s unbelievable the amount of money people spend...money they don’t have so they end up with $500-800 car payments and wonder why they’re broke. BTW, his guidelines for vehicles are pretty good: all of your cars, and anything with a motor, should not equal more than half your annual salary because you don’t want your money tied up in things that go down in value. I'd agree with that. You lose money on them (especially brand new) the minute you drive it off the lot.
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PrettyInPeank
Pearl Clutcher
Posts: 4,691
Jun 25, 2014 21:31:58 GMT
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Post by PrettyInPeank on Feb 14, 2019 7:32:49 GMT
Listening to Dave Ramsey you hear callers every day that owe $35k+ in a car and only make $35k/year. It’s unbelievable the amount of money people spend...money they don’t have so they end up with $500-800 car payments and wonder why they’re broke. BTW, his guidelines for vehicles are pretty good: all of your cars, and anything with a motor, should not equal more than half your annual salary because you don’t want your money tied up in things that go down in value. We like Dave Ramsey's advice. I was in agreement with his car-debt advice for years until it hit me one day...my paid-for Dave vehicle was nowhere near as safe as newer models (5 years and under). So my new stance is, at what point do we consider a newer vehicle safety "insurance?" Is it an investment in your own life? I read a statistic recently that said something like 70% of auto fatalities are from vehicles older than 2005 or something. In other words, modern technology has come a long way in safety, and in my opinion it's foolish of Dave to look at it only as a depreciating asset and not consider how important the safety aspect is (even if that means financing part of it). Watch this video. Toyota Corolla 1998 vs 2015 youtu.be/xidhx_f-ouU
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Post by ExpatBackHome on Feb 14, 2019 9:23:53 GMT
Another illustration that the economy is not what people think it is. I've never understood the pricey new car thing. I think many Americans do not understand frugality. Just because you can afford the payments doesn't mean you can afford the car. Look at the interest you are paying and see how much it really costs. I've only financed a car once and it was my only new car ever. We had been saving to get me a new car when dh heard an ad for 0 down, 0 percent financing. Well, when you have the cash saved and it's making interest, this is a deal! The catch was that it was a 2 year financing plan so high payments and you needed an excellent credit rating. Otherwise, every car we have bought in the last 25 years was a certified used car which comes with a warrant, etc. My current car was 3+ years old, but most of our others were a year old or less and bought for far less than new! And all bought in cash. No financing. If you need to finance to buy a 50k or whatever car, perhaps you really cannot afford that vehicle and would look at certified pre-owned cars. Just a thought. The Millionaire Next Door should be mandatory reading in high school or college.Totally agree, great book!
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pyccku
Pearl Clutcher
Posts: 2,817
Jun 27, 2014 23:12:07 GMT
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Post by pyccku on Feb 14, 2019 12:18:12 GMT
The thing is that many people don't really care what the out the door price cost of the car is, or how much the total cost with interest will be at the end of the loan. They care about the monthly payment. If it gets to a certain amount, they feel they can 'afford' the vehicle. So if a salesperson can get that monthly amount down by extending the loan a couple of years, the customer will be thrilled. A customer who might realize that they can't afford a $40K vehicle can be convinced that they can afford a $500/month for 80 months vehicle.
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PrettyInPeank
Pearl Clutcher
Posts: 4,691
Jun 25, 2014 21:31:58 GMT
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Post by PrettyInPeank on Feb 14, 2019 12:33:28 GMT
The thing is that many people don't really care what the out the door price cost of the car is, or how much the total cost with interest will be at the end of the loan. They care about the monthly payment. If it gets to a certain amount, they feel they can 'afford' the vehicle. So if a salesperson can get that monthly amount down by extending the loan a couple of years, the customer will be thrilled. A customer who might realize that they can't afford a $40K vehicle can be convinced that they can afford a $500/month for 80 months vehicle. That is a really, really good point. We purchased new a couple years ago when we realized dealer incentives and dealer .05% apr after a substantial down payment was a better deal than certified used (we paid the remaining off within the next year). We were asking what our payments would be based on X or Y down, and the salesperson would not answer! "What monthly payment can you afford?" he'd ask instead. We threatened to walk after asking a few times because it's not about how low you can make the payments by stretching the loan! It was a simple math question. If we put X down for 2-year loan period, what's the payment? Period. Really difficult to get a straight answer. Now it makes sense why so many people think they can "afford" an expensive vehicle--it's literally how they frame the question.
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Gennifer
Drama Llama
Posts: 5,002
Jun 26, 2014 8:22:26 GMT
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Post by Gennifer on Feb 14, 2019 13:29:58 GMT
The thing is that many people don't really care what the out the door price cost of the car is, or how much the total cost with interest will be at the end of the loan. They care about the monthly payment. If it gets to a certain amount, they feel they can 'afford' the vehicle. So if a salesperson can get that monthly amount down by extending the loan a couple of years, the customer will be thrilled. A customer who might realize that they can't afford a $40K vehicle can be convinced that they can afford a $500/month for 80 months vehicle. That is a really, really good point. We purchased new a couple years ago when we realized dealer incentives and dealer .05% apr after a substantial down payment was a better deal than certified used (we paid the remaining off within the next year). We were asking what our payments would be based on X or Y down, and the salesperson would not answer! "What monthly payment can you afford?" he'd ask instead. We threatened to walk after asking a few times because it's not about how low you can make the payments by stretching the loan! It was a simple math question. If we put X down for 2-year loan period, what's the payment? Period. Really difficult to get a straight answer. Now it makes sense why so many people think they can "afford" an expensive vehicle--it's literally how they frame the question. Ugh. I hate that! I want to know how much you are selling the car for. Not how much the payment will be! We actually walked out of a dealership because they kept playing stupid games. After “dropping the price” twice and saying that’s the absolute lowest they could go, they left us alone to talk it over. I looked up the truck on their website to confirm the mileage (we had been considering two, and couldn’t remember which had which) the online price was $2K lower than their “absolute lowest.” We walked out, and told them if they’d been honest with us, and given that price to begin with, we would have bought the truck hours earlier.
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johnnysmom
Drama Llama
Posts: 5,682
Jun 25, 2014 21:16:33 GMT
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Post by johnnysmom on Feb 14, 2019 13:44:26 GMT
Listening to Dave Ramsey you hear callers every day that owe $35k+ in a car and only make $35k/year. It’s unbelievable the amount of money people spend...money they don’t have so they end up with $500-800 car payments and wonder why they’re broke. BTW, his guidelines for vehicles are pretty good: all of your cars, and anything with a motor, should not equal more than half your annual salary because you don’t want your money tied up in things that go down in value. We like Dave Ramsey's advice. I was in agreement with his car-debt advice for years until it hit me one day...my paid-for Dave vehicle was nowhere near as safe as newer models (5 years and under). So my new stance is, at what point do we consider a newer vehicle safety "insurance?" Is it an investment in your own life? I read a statistic recently that said something like 70% of auto fatalities are from vehicles older than 2005 or something. In other words, modern technology has come a long way in safety, and in my opinion it's foolish of Dave to look at it only as a depreciating asset and not consider how important the safety aspect is (even if that means financing part of it). Watch this video. Toyota Corolla 1998 vs 2015 youtu.be/xidhx_f-ouUITA with that (though I think cars up to 10-12 years old are still reasonably safe). We're car shopping for ds right now (he hit a deer last month) and he was finding 1989 Jeep Wranglers (his dream car), I was like no way in hell. Anyhow, we gave him a budget ($8k), mileage max (125k), age (newer than '11) and distance from us. Gotta say, there's not a lot out there with those perimeters. One we went to look at, drove 2 hours, got there and the mirror was taped up with duct tape.....this was a large dealership, wtf. I can see why people take out car loans, we do (though we try to keep it to one loan at a time) but you gotta keep it reasonable. Btw, thank you OP for posting this article. Each week I have to find an economics/business article for my economics class, this week I'll be adding this one to the discussion forum. I'll be curious to see if I get any comments from the typical college kids and how they feel about this. If I do, I'll share. ETA: here's what I posted in my economics class forum:
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Post by jassy on Feb 14, 2019 13:57:40 GMT
I think the reason most people are behind on their car payments is that they are financing too much - I read another article that the average car loan is $450 over 6 years. That is crazy for something that depreciates so rapidly. If the average household income is $65K, and the average car payment is $36K there is an unsustainable imbalance. Car prices are definitely growing faster, but there are still utilitarian choices that can be made, but I think fewer people are interested in that.
I think there are choices here, and yes, I'd say a $55,000 truck may very well be a luxury (yes, I know sometimes in some places, and in some professions a big truck is a necessity) My educated guess is that the many giant $55k+ trucks I see driving around the very flat, urban/suburban Cleveland area, are not as much about utility as they are about status and luxury.
My husband and I make a decent wage, and are comfortable. He drives a 2004 Honda Civic with 250,000 miles that still runs like a dream. He gets teased mercilessly for that car. I drive a 2012 Chrysler Town and Country, that we bought when our kids were a bit younger, and we carpooled a lot for soccer. We bought it used with 20K miles on it and it's the first and only car payment we've ever had over $200 (and that kind of made me sick lol) . We also bought the teen a car recently - we spent $10K for a Hyundai Accent with 10,000 miles on it - excellent safety rating, and still subject to a 100,000 mile warranty. It seemed like a good choice both in the short term and the long term.
Given the high $ loan rate, how long loans are for , how many are defaulting, it seems that not the best choices are being made - bells and whistles seem preferred over utility.
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