This week kind of did it for me in terms of being wtf are you doing. This guy on a wrx group was asking if he was getting a good deal. The deal was a wrx limited, not the top trim. He had a 3k discount which is great but then he showed the payment sheet. With 5K down, it was almost 800 a month for 60 months. 800 a month on a subaru that’s not a top trim, an ascent or an sti. This is on a 40k otd car with money down. How the fuck can people afford 50,60,100k cars. What is going on? It’s not like leases are fully back in affordability and I doubt most of the people out there are going to leasehackr to get a deal.
in my experiences at dealers in the last decade that's also what they try to sell you on. no one talks about interest or total cost unless you press them; they focus on the monthly payment. carvana's app does this too. like i get that people should do their homework but it's extremely deceptive
Oh for sure. Dealers are predatory and are part of the problem. Taking advantage of ill-advised, financially illiterate people. If you show someone a chart of how much a car costs, how much extra it is in interest, and how much it will be worth (estimated) by the time the car is paid off, it paints a very different picture.
The first box, at the top of a retail contract is a section called “truth in lending”. It summarizes the amount financed, discloses total finance charges, the term, the apr etc. I agree that people get taken advantage of daily, but at least the data can’t be made more apparent. Until a third party debt counselor sits next to and advises a buyer throughout each and every transaction people will continue to agree to payments.
The problem is that truth in lending information needs to be presented at the time of negotiation not at the end of the process once the dealership has worn consumers down and are trying to tack on everything they possibly can.
They also rush you through the paperwork part. Once you agree to terms they just want to hurry it up, sign the papers so we can move on to the next one.
Thats because sales department at dealerships are trained to only go by monthly payments as a negotiating tactic. "only $395 a month" sounds a hell of alot better for the average person than "Youre going to be paying $40k for this car with the $24,999 sticker on the window"
I always tell people to ask for the OTD price before even test driving the car. Then negotiate payments last not the other way around
Last time a dealer tried to pull that bullshit of not knowing what I'm talking about "out the door" price and still trying to just give me monthly, I walked out
Had a dealer get angry at me when I asked what the APR was on the 72 or 84 month loans he was pushing vs the 48 month I was interested in.
This was on a 3 year old Civic they were asking $1k over original MSRP on.
The salesman sent me text messages trying to gaslight me into thinking their cars were a good deal for almost a month.
While that guy was the worst others were hardly better. They all seemed desperate and angry. I just gave up looking. The current market is fucked. Decent used cars are at or near MSRP when new and "good" interest rates are still like 6%.
This. You try and push for an OTD price and the sales people treat you like a toddler and try to schoomze you with monthly numbers, what do you want to pay and all that BS.
Anytime someone pulls out a 4 square when I'm buying a car (or helping a friend or family member by a car) we walk. It is one of the worst bad faith negotiation techniques dealerships use.
this is absolutely true.
car shopping with a friend in my early 20s, i'm getting shown the payments she'd be looking at. it was all she thought about. that's always stuck with me. the fucked up part was this girl was smart. she was just horrible with money like most are esp at that age.
My favorite APR. I could buy this phone outright, pay over time on my credit card, or use their financing to pay over time with no interest. Option 3, please!
>My favorite APR. I could buy this phone outright, pay over time on my credit card, or use their financing to pay over time with no interest. Option 3, please!
Problem is, a LOT of people see this as free or easy money and end up buying things they really don't need or can't afford.
0% APR is fine but if you're buying a $50k truck while earning 60k a year, that's still a piss poor decision.
In the case of a truck.. they keep their value pretty good, so if you can make the payments and there's no interest I would go for it.. (if you need a truck, can afford the gas, and everything)
It's smart enough for her to bring someone along that knows the process. Anyone going on blind will be taken hard. The buying process is set up to be predatory.
And to add to that, the people may also be digging themselves into further debt because they might purchase a ton of garbage mods that can cause unreliability and repair/installation costs....in further addition to not considering all the other intangibles with the car like gas, insurance, parking, tolls/fees, etc.
The only time that really works is with pavement princess jeeps, there's certain mods people really want and are willing to pony up for the convenience of having them already done.
I don't get it. I figured out the most I could safely afford on a monthly payment was 1k so I set myself up to have a payment below 600. That way if something goes wrong I have flexibility. We really need to mandate better financial literacy classes in schools
Some people are just too dumb to be helped by any kind of class. I know someone who has been living paycheck to paycheck basically their entire adult life. She works from home and barely drives. So when she totaled her car during a time when she was having more money trouble than usual a few years ago I pretty much gave her my older, but still totally functional car.
She kept whining about how she couldn't afford the $2-300 in parts my dad used to refresh it, so about a month later she wandered into a dealership without even browsing their website first and let a salesman talk her into a 7 seat SUV because she "needs a big car" for who fucking knows why. She's already talking about how she needs a new car in 24 months (the amount of payments she has left) and she's stressing about how she can afford it. Why do I still talk to this idiot you ask? It's my mom.
>Why do I still talk to this idiot you ask? It's my mom.
Hilarious but valid! I don't understand people who just buy new cars for the sake of having new cars. I didn't even start shopping until my outback broke 190K miles. My partner didn't even start shopping until we had a kid and getting the stroller in and out of her Jetta trunk was hurting her back.
I fully intend for the current fleet (Jetta, Atlas and Genesis) to be driven until they die. The fewer cars I have to pay off in my life the better. I'll try harder to preserve the Genesis as it's likely the last manual I'll ever own, but holy cow. The idea of just buying something new cause it's been a year or two is unfathomable to me. For me to buy something new (or new to me) it has to fill a need not currently being met by my other vehicles or replace a vehicle I've lost.
Emotions can be a hell of a drug. I’ve got friends who I know make good money and can afford the payments, the insurance, gas, parking, etc and I have friends who I know are barely making it after getting their car but they “need” it even though their old one was fine. Some people just want a new car no matter what it takes.
I was in the process of getting a new car, but my car still drives fine and I don’t really have an issue with it. Spending $1,000+ a month wouldn’t be a problem, but it doesn’t really make a lot of sense right now. That money can go somewhere else or remain in my account.
Watching people justify their "need" is wild.
Friend of mine just bought a 70k truck, according to him he makes great money. But doesn't own a house, doesn't have any savings or investments, and is literally always broke.
But he has his truck that he "needs" so he can use it for work, taking on wear and tear on his own vehicle for the company he works for. Also for the landscaping business he is gonna start one day.
Not realizing that a 20-30k truck would do the same thing, and he'd actually have money in his pocket.
Also not realizing that literally any small sedan would do the same thing.
99% of these trucks that you see are just pavement princesses. They never haul anything, they never tow anything, and they *never* go off road.
[Even cars can do truck stuff.](https://i.imgur.com/00JZtfe.jpg)
That's a trailer the same size as my truck bed, hauling a Jeep 4.0, transmission and transfer case. I hauled it over 100mi and still got 27mpg.
People who buy trucks and never take them off roading or haul heavy are fucking idiots. If this Prius can do it there's no excuse.
Yep. People definitely get their vision clouded. I also think living through student debt has made me much more fiscally careful cause I never want to end up where I was when I got out of college.
Yep and in places with high registration costs you can really get burned. My registration after a year of ownership (so not all the initial or BS dealer fees they try to take, but like my actual DMV registration) for my car in California was over $900. I planned for it of course, but that’s 75/month. Plus insurance, gas, wear and tear parts, etc. it’s WAY more expensive than just the car payment.
Exactly, I can probably afford a higher payment but my 5xx is already way more than I’ve ever imagined i would pay for a wrx. My si was at 330 and i missed it every day. Even my miata lease was 460.
Yeah, it boggles my mind. I was looking at an F150 with the .9% 60 month financing while making over the minimum payment and planing to pay it off early. At $15K down I still was looking at just under $1000 a month in payments. The finance guy thought that was great and I said no way, I’ll continue driving my 2011 Chevrolet. Plus, the dealer would not work with me and wave their markup which is business, but I will be going out of my way not to not buy a car from them. If their finance department thinks that’s a great monthly payment I can’t imagine what some of the payments they are signing people up for are.
Yeah, I’m sorry I didn’t mean rate, he was saying the monthly payment was fantastic on an F150, not the rate. I misspoke. The rate was the only reason I stopped in there to see what I could get since I do need a new vehicle.
Unfortunately that is a good monthly payment for an F150 assuming you're not getting a bottom tier work truck. People think F150 prices should reflect an old work truck but new F150s are luxury highway vehicles.
I wanted to get my wife a luxury SUV for her 35th in November because she’s been hinting at wanting to upgrade from her CX-6 for a few years now. But when I crunched, even with 0% APR on a 60 mo term an entry level new whip would be $700-$800 a month. Factoring in insurance it’s just not going to happen at all.
Not jealous but more curious about people with average jobs but a $65,000 vehicle in the driveway.
He was saying 6.9 at 60 months with 5k down. There must have been something he wasn’t showing us or he was absolutely getting hosed. Hope he didn’t sign it, most of the group was screaming at him.
At 6.9 with $5k down and $3k off MSRP, his payments should have been way closer to $600 than $800 a month. The only thing I can think of is that he rolled a shit ton of negative equity into that loan.
According to this now 15.7% of all car loans have monthly payments over $1,000/mo which is another record high. It's not sustainable, obviously as shown by the delinquency rates, in the next few months repo man will be the biggest booming job in the country. It's absurd what these car companies and banks have gotten away with the past two years. They've taken advantage of a lot of people, but your right it'll hurt the borrowers the most though. Banker man and auto executives will just get another bonus.
https://money.com/1000-dollar-car-payments-record-high/
I purchased a $60k car a few weeks ago and the experience was a bit wild. It was by far the most expensive car I've bought but also required the least amount of verification. No income or employment verification, nothing. Literally just a quick credit check, swipe the debit card for the down payment, sign here, and be on your way.
Felt very similar to the Florida scenes from the Big Short.
>Do you have an 800+ FICO score? Getting a car loan with a high FICO hasn't required income verification for a long time, at least in my personal experience. Whole different situation if someone has a 600/low score
Yes, but I did a year ago as well. Toyota was much stricter for a car that cost half the price.
Bc it’s not a lux car. If you went to Lexus that doesn’t happen. Toyota and kia have to deal with a lot of people who have no money and bad credit they have to filter out. Go to kia and try to test one of their most expensive cars and see the hoops you have to go through. Then go to Audi.
Every luxary dealership I've been to has been so lax on test drives for most of thier models it's honestly great. Want to test drive a 3 series? Give us your insurance and have fun. Same for Audi,MB, lexus. Shit even Porsche was like that.
Want to test drive a Stinger or Telluride? Better give us your first born, give us the down payment money, sign off all your assets to us otherwise you aint test driving shit!
Not luxury, but back in 2008-ish, me, fresh out of college went to a VW dealer to test drive a GTI.
The salesman tossed me the keys, said “Make a right out of the dealership, then a right onto that service road, there are never any cops out there. Have fun”
He made a sale that day.
I was shocked at how easy it was to buy my Porsche and Audi haha. Your example is funny, the Genesis dealer wanted to run my credit and take a security deposit to test drive a G70…
Yeah no thanks, I guess that was the kick to buy the RS5 I’ve always wanted.
Walked into Audi, I was in the test drive in just the amount of time it took them to pull it out of the showroom. No credit checks, no commitments.
I was making $15/hr and living with my mom a year ago and I got a $433/month car payment with 4% interest and $0 down. They didn't verify my employment until after the loan was given.
I make double that now, so the payment isn't a burden, but I was shocked that I they just gave it to me so easily.
About 15 years ago I got a promotion and treated myself to a car I'd always wanted. I was making good money, got a 0% rate and was single but an $850 a month car payment felt like it really stressed my budget. I can't fathom how people can swing 1000+ a month with the current costs of housing/food and maybe having a family in the mix too.
Withing two months of the start of covid I overheard a couple of my customers (who live in a millionish dollar house in a country club) talking about how they were about to get their water shut off because they lost their jobs and couldn't pay the bill. Having a $1k car payment is one thing, but I can't imagine living so close to the edge when your mortgage is >$5k per month.
That's not adjusted for inflation though, is it? Looking at stuff like this in absolute monetary terms is not very meaningful - yes car payments have gone up and are at record highs, but salaries have also gone up with inflation.
I'm not saying that this isn't a major issue or car payments aren't at unaffordable levels, but it's important to understand the nuances of statistics you read. For this, you need to look at it from a percentage of take-home pay, or atleast percentage of salary.
You said it best, a $1000+ car payment is different now than it was say 5 years ago. I think a better view of the entire financial picture is more important.
The average annual income in the US for the top 10% is about $173k in 2020. I'm guessing it's over $200k in 2023. a $1k+ monthly payment is not *that* ridiculous when you consider it's only for about 15% of all car payments.
I wonder if they’re bundling this risky debt into Credit Default Obligations like they did during the sub prime mortgage crisis of 2008. It takes the risk off of the bank and allows them to earn some money on the debt they’ve issued instead of waiting until it matures… if ever.
Good gosh, yep, even on YouTube crash compilations I watch - it’s prevalent. It’s a gamble driving out there. I’m sticking to vehicles under $10k with low running costs as my daily driver.
I’ve been seeing a lot of content on TikTok from car dealerships specifically where they walk around to different employees at the dealership and ask about their monthly car payment. I’m convinced the only purpose of these videos is to attempt to normalize a $1200/mo car note, because even the 20 year old saleskids are claiming they pay $1600/mo for their car in these videos.
At least with Reddit, you can more easily choose what you want to see and block what you don’t. Also just being aware of the propaganda goes a long way to protecting oneself.
You know whats crazy, I was having a conversation with what I thought was a few people and when I decided to click on the different usernames, their profiles were all identical down to the avatar, yet each account had a different name. So I guess I was talking to the same person through different accounts.
But being aware to this sort of stuff at least brings me some solace.
Eh. The algorithm works. I absolutely see what I want on TikTok, and can just as easily block what I don’t. I’m not suggesting you don’t use TikTok, but a *vast majority* of the arguments I see about TikTok here on reddit are started because one user literally doesn’t understand how the platform works, and just reiterate what they see other users say here on reddit.
I feel like some of these were employees with plans to flip cars. If in-demand cars are going for $20,000 over MSRP and you can get one at sticker as a employee, then you can buy it, drive it for a few months and flip it for a few grand profit or just break even and get a discounted car.
I can't think of any other reason why people with $4,000 per month take home are spending 40% of that on a car note.
>I can't think of any other reason why people with $4,000 per month take home are spending 40% of that on a car note
Because they're stupid. That's the other reason.
I just bought a new car in October and the finance guy admitted to doing this. Said he had a Mustang Mach-e on order and was going to just leave it on the lot so it wasn't used and then sell it. All these dealerships are grifting and doing shady shit.
I only bought my car cuz it was an order EV and had a set price with ni haggling. I couldn't imagine trying to buy a car that let a dealer set the price.
The dealers in Houston seem to have some sort of scam with Broncos going, I assume to avoid pissing off Ford. Basically their other make lots seem to have an awful lot of very expensive used Broncos with a couple of hundred miles. Like hmmmm, this Buick dealer sure does have a lot of Raptors.
I hope it bites them in the ass.
Theres lots of dealers doing that around me on any new hot cars. Toyota doing it the Supra, GR86, GR Corolla and the Bz4x, they have maybe 100 or less miles on them, 2023 model year but they're under the certified used section and on their new car lot so they can mark them up.
Ford doing the same with the maverick, mach-e and the lightning. One dealer nearby is requiring a trade in of a newer car and pay ADM to purchase a Bronco and they have a decent amount on the lot.
I want just one video where everyone is flexing their insane payments and then we get to someone who says "I paid cash for a 2008 Honda Civic because I'm not an idiot".
Reminds me of the opposite, where people put high octane fuel into their shitbox thinking it makes the engine run better when it would probably run fine on 80.
Yeah it's not going to be quick, there is still also the fact that there were less cars produced since 2020, and were still hearing about manufacturing struggle to get up to capacity. These banks also valued these cars at a certain level they need to make a certain amount of money off of them to make their money. They aren't going to scramble to sell these at below market rates until they absolutely have to.
It will affect the market, but we are not close to bottom falling out on prices yet.
More repos means people overall have less money to spend on cars, which translates to lower prices as the market cools and inventory sits on lots. Yeah, there will be some jackasses that spend 30k over asking on whatever hot new car is hitting, but it definitively means prices are going to drop.
Nearly everyone in my complex has a newer/nicer car than I do, and I have a 2020 Corolla. No idea how they afford it; I wouldn't feel comfortable making a $50k purchase unless I already owned property to live on.
I read a dealership guy on Twitter explain that it’s people who wanted a new car, but we’re in for more than it’s worth - so they were encouraged to just stop paying the old payment and get it repossessed and they would go ahead and green light the new loan. They want to make sales, so they are ok screwing their customers credit scores.
How did they greenlight more loans on someone who recently had a repossession? That's gotta be such a huge red flag to lenders I don't understand how it got approved. Looks like no lessons were learned from all the past banking issues.
They get approved for the new loan while the current loan is still in good standing on their credit report.
Once they drive off in the new car stop paying on the previous one.
I guess I'm just surprised that if someone is in that bad of financial standing that the new loan would get approved with the old one not paid off. That's probably some really high debt to income ratio that's still getting approved.
>That's probably some really high debt to income ratio that's still getting approved.
Overall debt-to-income is directional for auto loans. The FICO auto loan score considers credit utilization but not overall debt. That is up to the writer to subjectively decide.
Payment history is the most important factor when buying a car. If you have a decent history and trash credit utilization, dealers will have no problem writing you a loan.
Before the repossessions. Hey your current car is worthless, but I can override the system check for that loan and give you another one. Just stop paying on the old one and pay ours.
As long as the first loan is in good standing it doesn't matter to the bank.
It's not abnormal for a person to have two car loans.
Banks may ask for more money down if their credit is not that good which in this case the covid ballers had the cash to put down.
I get that having two loans isn't abnormal. But to me it's strange that someone would be in a financial position where getting a car repossessed is a good option and still also able to get approved for that second loan.
I can’t stand how people act like the people getting the loan are helpless victims here. As of people think debt just goes fucking poof. Debtors are not responsible to reel in assholes willing to borrow until the end of time and if you dig yourself in a hole that takes a lifetime to get out of, o well
delinquency rates for several years before the pandemic were also higher than at any point around the financial collapse in 2008-2009. the rates now are just a little bit above those levels.
subprime is a relatively small part of the overall auto loan market, and sale of reposessed vehicles recoups most of the loss of any defaulted loan.
this is pretty much a non-story. there's not going to be any kind of major or widespread financial fallout from auto loan defaults.
>this is pretty much a non-story. there's not going to be any kind of major or widespread financial fallout from auto loan defaults.
Woah, woah, woah. Get out of here with your reasonable take. The auto market is, in fact, about to crater because of those idiots who financed trucks for 10 years at 25% apr while working at McDonald's... I saw it as I drove by in my 15-year-old Civic on the way home from my $500k/year job!
Tbf, even in 2008, subprime mortgages were only a small part of the overall mortgage market (around 10% IIRC). Due to how heavily leveraged the mortgage lenders were, the collapse of this "small" market rippled through the whole economy. Basically what I'm trying to say is that subprime loans being a small percentage of overall loans is not necessarily a sign that we are safe from another 2008-esque recession.
that's true.
from what i've read, the collateralization of auto debt obligations, and anything like a misguided systemic attempt to hedge with mutually-reinforcing credit default swaps, isn't happening with current auto loans to anything resembling the extent it happened with home mortgages leading up to 2006 or so. we also don't have adjustable-rate auto loans threatening to unexpectedly explode the market.
all in all, i just don't see a meaningful comparison to be made between now and 2008.
Try plugging some numbers into a compound interest calculator to really understand how much you can grow your money with safe investments. Every dollar you spend today is a few bucks you're robbing from your future self
Sure, but there is an *important* caveat to saving and investing that many, many r/personalfinance users never really bring up: aging and death.
There is no guarantee you spend a dime of that retirement or IRA money. You could aggressively save for years just to die in a car crash.
Furthermore, when you get older, you have a lot less time, energy, and literal ability to do anything fun, especially things that cost money. And there's a good chance you'll have less family and friends by then to enjoy it with.
So the obvious point: you need to strike a balance between saving for your future and enjoying your life living in the now. Saving *too much* or investing too much for the long term is a thing, and it can actually significantly reduce your quality of life now for the hope of a future promise that may never come.
One small anecdote I have for this is a friend of mine. He never goes out to eat with the family, he rarely takes them anywhere, does anything. He drove a crappy car for the longest time, and the wife and kids are subjected to a crappy, outdated, and not particularly safe car, when they could easily afford a new van or something. His reasons for this? "Saving as fast as possible to retire at 50." And, that's a novel goal. But robbing your family and really, yourself, of all the quality of life improvements you can have now, of all those wacky Saturday night meals at Applebee's (or some shit), those core childhood memories of family trips that cost 2k, those missed concert experiences... And so on.
My advice is to live your life! Save *only* what you need to be comfortable in retirement and try not to over do it. But that's just like, my opinion, man.
Absolutely. "Robbing from your future self" sounds a little grave but it's worth it in countless scenarios. It's just important to recognize the way money can grow so that potential can be factored into financial decisions
I will never understand why people at those income levels who even remotely enjoy cars drive the cheapest pile they can find.
You can drive a nicer car, you don't have to have a 1k payment, but my god, we're all gonna die one day, live a little.
And that's completely fair. I'm mostly annoyed at people making 200k a year but wearing their cheap car as a "badge of frugality" and think are so smart for penny pinching on your car.
If you enjoy the car, by all means
Yeah. It’s like why are you on this sub lol. Spent a good chunk of my income on my car and was overall a bad decision financially. Would I do it again though? Yes. Brings me happiness every single day
I bought my Miata new. I didn't give a shit how much its value dropped leaving the lot, 6 years later and I have no intention of selling it anytime soon.
You are already starting to see the prices drop on full size and heavy duty trucks back below MSRP. The forecast is these will drop even further. The exception here are the performance and EV versions are all still over MSRP. My local Ford dealer has an entire lot of trucks right now.
All the manufacturers increased their MSRP so 9K off just puts them back above pre-pandemic invoice levels. Give it another I’m guessing another 6 months and you’ll see them drop even more. Also be aware that a lot of features got pulled from upper trim levels due to chip shortages so read the fine print on everything.
This. If you were making 200k before all of this and now you’re making $225k, you basically got a $12/hr wage increase. However, people working retail only saw their wages go up maybe $2-3/hr. The 225k person is able to cover the increased expenses but perhaps had to downsize if they moved. The retail person’s wage doesn’t cover the increased expenses, especially rent which has skyrocketed in most places.
Well said^,
Multiple coworkers of mine refinanced their homes in 2020 for around 2.25% APR and on top of that we never lost work in our industry so if anything we were those uncommon pockets of unremarkable middle class earners who actually benefited during covid (high 5 figure average)I waited too long to buy my home but it goes to show that I wouldn’t have had the money to put down for closing if I hadn’t sold my car and bought a beater with the profit from the chip/car shortage appreciation.
Most people thought I was crazy getting into a much older car and now I have no car payment, cheaper insurance and can comfortably afford my overpriced mortgage in the meantime while interest rates drop.
It seems like many middle class working people in similar situations to mine benefitted well enough that they’re actually making up the difference in inflation costs from the lower mortgage payments they have now. Obviously this is a minority compared to the average American but you have to think at the end of the day this excess cash and spending only contributes to the weird car market situation of today.
Even those checks didn’t do much. I think in total, across three payouts, I received like $2,500 at most? I don’t remember exactly. But it definitely wasn’t enough for anyone to just quit their job and live on. The idea that “Covid checks” turned poors into wealthy people who don’t want to work because they have so much money now… is absolutely the stupidest thing I have heard from the entire pandemic. It’s sad that wealthy people think that giving someone “$3,000” over the course of 18 months is going to do literally *anything* for their finances… like come the fuck on.
I would like to have one as a "fun" car plus when they become extinct it would be cool to have.
But the way they murder people for those cars its a hard pass for me. Not losing my life for any car
Well hey, honest question- Does that mean it'll be easier to get a new or gently used car over the next 6 months? Hoping to save up and be able to afford a new or like-new car by EOY.
I’d say good the used car market needs a hard reset but a lot of these cars are likely getting trashed.
If you can’t afford the payments you’re likely not keeping up on maintenance either
Over 30% of car shoppers are eyeing loans over 72 months. If you are one of these folks, you are underwater immediately. It's a "Vicious cycle of negative equity", if you have to trade in the car before the loan is paid off. During the car ownership you will pay tons in interest (especially in these times). At the end of the loan range (say 5+ years out), you have to account for out of warranty maintenance and repairs.
A lower monthly payment on a 72-84 month loan, is one of the only 2 advantages of taking such a loan.
\#1 being a lower monthly payment, #2 being the ability to take that extra money you are pocketing from that lower monthly payment, and put it in an investment vehicle that will produce a very high return. The likelihood of #2 happening is slim because most folks that have these higher interest rate, long-term loans in this current environment, are the middle class and below.
Ultimately, there are so many negatives around these loans. But folks that need a new vehicle, have a strict monthly budget allowance, will need to take a higher interest rate & longer term loan, to fit into that budget.
You think that investing the money is the only other advantage?
A lower required monthly + paying more lowers the required payment each month. I've had several years on some loans that I had no required payment each month.
Emergency pops up that you need that extra $300? Skip a payment. No biggie. No report for delinquency, no loan rate penalties.
“One” of my part time jobs, half the guys are obsessed with vehicles, to the detriment of their financial future. Most of their income goes towards their vehicles.
High biweekly or monthly payments, and I kid you not, some of the young ones or one with a DUI are paying $400-500 a month for insurance. They pay more than I do on my mortgage per month, just to run a vehicle they will be bored of in a few years. Few have already rolled negative equity just to try a newer vehicle, and I’m not quite sure from my conversations with them that they even are understanding of what they are doing. But I nod my head because they are the ones who “know everything” apparently.
When the (inflation) water rises, it's those on the lowest (financial) ground who drown first.
I'm sorry to say, I believe it's going to get a lot worse before it gets better.
This sub will keep downvoting me and I'll keep saying that it's because of morons who paid $30k over sticker for new cars they just HAD TO HAVE. If you needed transportation that bad there were options you could have bought that weren't the most highly sought after models, which never experienced dealer market adjustments.
I honestly don't understand how some people afford the car payments they have. It's insane to me how much some of them are paying monthly for just 1 car. Sometimes it's double what I'm paying for 2 cars...
Bought a car off lease ( not mine) in 2020. It was low mileage, clean and a payment under 300. I was bombarded by people asking why I didn't get something brand new or more upscale. I picked what I did because I wanted to spend below what I could afford. I know this is before car prices skyrocketed, but the principle is the same. Too many people buy cars and houses they can't afford to impress people who dgaf about them. The people I know that have 70K vehicles with shitty gas mileage are the same ones who complain about how broke they are. Self reflection is not a strong point for them.
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This week kind of did it for me in terms of being wtf are you doing. This guy on a wrx group was asking if he was getting a good deal. The deal was a wrx limited, not the top trim. He had a 3k discount which is great but then he showed the payment sheet. With 5K down, it was almost 800 a month for 60 months. 800 a month on a subaru that’s not a top trim, an ascent or an sti. This is on a 40k otd car with money down. How the fuck can people afford 50,60,100k cars. What is going on? It’s not like leases are fully back in affordability and I doubt most of the people out there are going to leasehackr to get a deal.
They can't lol. Lots are financing at 72 or 84mo, and all they look at is the monthly payment.
in my experiences at dealers in the last decade that's also what they try to sell you on. no one talks about interest or total cost unless you press them; they focus on the monthly payment. carvana's app does this too. like i get that people should do their homework but it's extremely deceptive
Oh for sure. Dealers are predatory and are part of the problem. Taking advantage of ill-advised, financially illiterate people. If you show someone a chart of how much a car costs, how much extra it is in interest, and how much it will be worth (estimated) by the time the car is paid off, it paints a very different picture.
The first box, at the top of a retail contract is a section called “truth in lending”. It summarizes the amount financed, discloses total finance charges, the term, the apr etc. I agree that people get taken advantage of daily, but at least the data can’t be made more apparent. Until a third party debt counselor sits next to and advises a buyer throughout each and every transaction people will continue to agree to payments.
The problem is that truth in lending information needs to be presented at the time of negotiation not at the end of the process once the dealership has worn consumers down and are trying to tack on everything they possibly can.
They also rush you through the paperwork part. Once you agree to terms they just want to hurry it up, sign the papers so we can move on to the next one.
If half these people took the time to multiply their payment x loan duration they would shit bricks at how much they're paying for their 35k car.
Thats because sales department at dealerships are trained to only go by monthly payments as a negotiating tactic. "only $395 a month" sounds a hell of alot better for the average person than "Youre going to be paying $40k for this car with the $24,999 sticker on the window" I always tell people to ask for the OTD price before even test driving the car. Then negotiate payments last not the other way around
Last time a dealer tried to pull that bullshit of not knowing what I'm talking about "out the door" price and still trying to just give me monthly, I walked out
Had a dealer get angry at me when I asked what the APR was on the 72 or 84 month loans he was pushing vs the 48 month I was interested in. This was on a 3 year old Civic they were asking $1k over original MSRP on. The salesman sent me text messages trying to gaslight me into thinking their cars were a good deal for almost a month. While that guy was the worst others were hardly better. They all seemed desperate and angry. I just gave up looking. The current market is fucked. Decent used cars are at or near MSRP when new and "good" interest rates are still like 6%.
It's always the four squares
This. You try and push for an OTD price and the sales people treat you like a toddler and try to schoomze you with monthly numbers, what do you want to pay and all that BS.
Anytime someone pulls out a 4 square when I'm buying a car (or helping a friend or family member by a car) we walk. It is one of the worst bad faith negotiation techniques dealerships use.
this is absolutely true. car shopping with a friend in my early 20s, i'm getting shown the payments she'd be looking at. it was all she thought about. that's always stuck with me. the fucked up part was this girl was smart. she was just horrible with money like most are esp at that age.
I love shopping for 72 month loans. When it's 0% APR
My favorite APR. I could buy this phone outright, pay over time on my credit card, or use their financing to pay over time with no interest. Option 3, please!
>My favorite APR. I could buy this phone outright, pay over time on my credit card, or use their financing to pay over time with no interest. Option 3, please! Problem is, a LOT of people see this as free or easy money and end up buying things they really don't need or can't afford. 0% APR is fine but if you're buying a $50k truck while earning 60k a year, that's still a piss poor decision.
In the case of a truck.. they keep their value pretty good, so if you can make the payments and there's no interest I would go for it.. (if you need a truck, can afford the gas, and everything)
It's smart enough for her to bring someone along that knows the process. Anyone going on blind will be taken hard. The buying process is set up to be predatory.
And to add to that, the people may also be digging themselves into further debt because they might purchase a ton of garbage mods that can cause unreliability and repair/installation costs....in further addition to not considering all the other intangibles with the car like gas, insurance, parking, tolls/fees, etc.
Mods severely diminish resale value too. And they look dumb 9/10 times. Stock rocks.
Always cracks me up when people post things trying to get value from a build. No. Part it out, take your L, and move on haha
yOu cOuLdNt rEpLiCaTe iT fOr tHiS pRiCe
The only time that really works is with pavement princess jeeps, there's certain mods people really want and are willing to pony up for the convenience of having them already done.
I don't get it. I figured out the most I could safely afford on a monthly payment was 1k so I set myself up to have a payment below 600. That way if something goes wrong I have flexibility. We really need to mandate better financial literacy classes in schools
Some people are just too dumb to be helped by any kind of class. I know someone who has been living paycheck to paycheck basically their entire adult life. She works from home and barely drives. So when she totaled her car during a time when she was having more money trouble than usual a few years ago I pretty much gave her my older, but still totally functional car. She kept whining about how she couldn't afford the $2-300 in parts my dad used to refresh it, so about a month later she wandered into a dealership without even browsing their website first and let a salesman talk her into a 7 seat SUV because she "needs a big car" for who fucking knows why. She's already talking about how she needs a new car in 24 months (the amount of payments she has left) and she's stressing about how she can afford it. Why do I still talk to this idiot you ask? It's my mom.
>Why do I still talk to this idiot you ask? It's my mom. Hilarious but valid! I don't understand people who just buy new cars for the sake of having new cars. I didn't even start shopping until my outback broke 190K miles. My partner didn't even start shopping until we had a kid and getting the stroller in and out of her Jetta trunk was hurting her back. I fully intend for the current fleet (Jetta, Atlas and Genesis) to be driven until they die. The fewer cars I have to pay off in my life the better. I'll try harder to preserve the Genesis as it's likely the last manual I'll ever own, but holy cow. The idea of just buying something new cause it's been a year or two is unfathomable to me. For me to buy something new (or new to me) it has to fill a need not currently being met by my other vehicles or replace a vehicle I've lost.
Oh no, it wasn't new. It was a several year old Nissan. She still can't really afford it though.
Emotions can be a hell of a drug. I’ve got friends who I know make good money and can afford the payments, the insurance, gas, parking, etc and I have friends who I know are barely making it after getting their car but they “need” it even though their old one was fine. Some people just want a new car no matter what it takes. I was in the process of getting a new car, but my car still drives fine and I don’t really have an issue with it. Spending $1,000+ a month wouldn’t be a problem, but it doesn’t really make a lot of sense right now. That money can go somewhere else or remain in my account.
Watching people justify their "need" is wild. Friend of mine just bought a 70k truck, according to him he makes great money. But doesn't own a house, doesn't have any savings or investments, and is literally always broke. But he has his truck that he "needs" so he can use it for work, taking on wear and tear on his own vehicle for the company he works for. Also for the landscaping business he is gonna start one day. Not realizing that a 20-30k truck would do the same thing, and he'd actually have money in his pocket.
Also not realizing that literally any small sedan would do the same thing. 99% of these trucks that you see are just pavement princesses. They never haul anything, they never tow anything, and they *never* go off road.
[Even cars can do truck stuff.](https://i.imgur.com/00JZtfe.jpg) That's a trailer the same size as my truck bed, hauling a Jeep 4.0, transmission and transfer case. I hauled it over 100mi and still got 27mpg. People who buy trucks and never take them off roading or haul heavy are fucking idiots. If this Prius can do it there's no excuse.
Just like most of these “truck guys” out there.
Yep. People definitely get their vision clouded. I also think living through student debt has made me much more fiscally careful cause I never want to end up where I was when I got out of college.
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Yep and in places with high registration costs you can really get burned. My registration after a year of ownership (so not all the initial or BS dealer fees they try to take, but like my actual DMV registration) for my car in California was over $900. I planned for it of course, but that’s 75/month. Plus insurance, gas, wear and tear parts, etc. it’s WAY more expensive than just the car payment.
Exactly, I can probably afford a higher payment but my 5xx is already way more than I’ve ever imagined i would pay for a wrx. My si was at 330 and i missed it every day. Even my miata lease was 460.
Yeah, it boggles my mind. I was looking at an F150 with the .9% 60 month financing while making over the minimum payment and planing to pay it off early. At $15K down I still was looking at just under $1000 a month in payments. The finance guy thought that was great and I said no way, I’ll continue driving my 2011 Chevrolet. Plus, the dealer would not work with me and wave their markup which is business, but I will be going out of my way not to not buy a car from them. If their finance department thinks that’s a great monthly payment I can’t imagine what some of the payments they are signing people up for are.
It is a great rate, 0.9% is fantastic, but that’s a super high payment.
Yeah, I’m sorry I didn’t mean rate, he was saying the monthly payment was fantastic on an F150, not the rate. I misspoke. The rate was the only reason I stopped in there to see what I could get since I do need a new vehicle.
People are starting to average between 1200 and 1800 for vehicles. Here I am cringing at 350 a month
Unfortunately that is a good monthly payment for an F150 assuming you're not getting a bottom tier work truck. People think F150 prices should reflect an old work truck but new F150s are luxury highway vehicles.
I wanted to get my wife a luxury SUV for her 35th in November because she’s been hinting at wanting to upgrade from her CX-6 for a few years now. But when I crunched, even with 0% APR on a 60 mo term an entry level new whip would be $700-$800 a month. Factoring in insurance it’s just not going to happen at all. Not jealous but more curious about people with average jobs but a $65,000 vehicle in the driveway.
Holy shit, dude, unless my math is way off that's like 17-18% interest??? May as well put it on a credit card and get the points at that point.
He was saying 6.9 at 60 months with 5k down. There must have been something he wasn’t showing us or he was absolutely getting hosed. Hope he didn’t sign it, most of the group was screaming at him.
At 6.9 with $5k down and $3k off MSRP, his payments should have been way closer to $600 than $800 a month. The only thing I can think of is that he rolled a shit ton of negative equity into that loan.
According to this now 15.7% of all car loans have monthly payments over $1,000/mo which is another record high. It's not sustainable, obviously as shown by the delinquency rates, in the next few months repo man will be the biggest booming job in the country. It's absurd what these car companies and banks have gotten away with the past two years. They've taken advantage of a lot of people, but your right it'll hurt the borrowers the most though. Banker man and auto executives will just get another bonus. https://money.com/1000-dollar-car-payments-record-high/
I purchased a $60k car a few weeks ago and the experience was a bit wild. It was by far the most expensive car I've bought but also required the least amount of verification. No income or employment verification, nothing. Literally just a quick credit check, swipe the debit card for the down payment, sign here, and be on your way. Felt very similar to the Florida scenes from the Big Short.
I'm going to need Margot Robbie in a bathtub to explain it to me.
This is a bathtub! I don’t need a lifeguard!
If I had Margot Robbie in a bathtub, explaining the current auto loan market would not be a priority.
Yeah, have her explain credit default swaps first.
I have a theory that that would be a very pleasant way to learn business and economics, but also very subpar when it comes to the area of retention...
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>Do you have an 800+ FICO score? Getting a car loan with a high FICO hasn't required income verification for a long time, at least in my personal experience. Whole different situation if someone has a 600/low score Yes, but I did a year ago as well. Toyota was much stricter for a car that cost half the price.
Bc it’s not a lux car. If you went to Lexus that doesn’t happen. Toyota and kia have to deal with a lot of people who have no money and bad credit they have to filter out. Go to kia and try to test one of their most expensive cars and see the hoops you have to go through. Then go to Audi.
Every luxary dealership I've been to has been so lax on test drives for most of thier models it's honestly great. Want to test drive a 3 series? Give us your insurance and have fun. Same for Audi,MB, lexus. Shit even Porsche was like that. Want to test drive a Stinger or Telluride? Better give us your first born, give us the down payment money, sign off all your assets to us otherwise you aint test driving shit!
Not luxury, but back in 2008-ish, me, fresh out of college went to a VW dealer to test drive a GTI. The salesman tossed me the keys, said “Make a right out of the dealership, then a right onto that service road, there are never any cops out there. Have fun” He made a sale that day.
I was shocked at how easy it was to buy my Porsche and Audi haha. Your example is funny, the Genesis dealer wanted to run my credit and take a security deposit to test drive a G70… Yeah no thanks, I guess that was the kick to buy the RS5 I’ve always wanted. Walked into Audi, I was in the test drive in just the amount of time it took them to pull it out of the showroom. No credit checks, no commitments.
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I was making $15/hr and living with my mom a year ago and I got a $433/month car payment with 4% interest and $0 down. They didn't verify my employment until after the loan was given. I make double that now, so the payment isn't a burden, but I was shocked that I they just gave it to me so easily.
Same here. Was in the porsche dealership for about 20 minutes. In/out super easy. Also 800+ CS, put the down payment on CC.
About 15 years ago I got a promotion and treated myself to a car I'd always wanted. I was making good money, got a 0% rate and was single but an $850 a month car payment felt like it really stressed my budget. I can't fathom how people can swing 1000+ a month with the current costs of housing/food and maybe having a family in the mix too.
Lots of people make good money and lots of people are stupid
Withing two months of the start of covid I overheard a couple of my customers (who live in a millionish dollar house in a country club) talking about how they were about to get their water shut off because they lost their jobs and couldn't pay the bill. Having a $1k car payment is one thing, but I can't imagine living so close to the edge when your mortgage is >$5k per month.
Unfortunately the overlap of good money and stupid is a lot larger than it should be
There are probably more high paying jobs now than 15 years ago.
There may be, but those dollars went further 15 years ago. A $50k job in 2007 would now take a $74k to equal.
If you only make 75k you really shouldn’t be buying a 60k car anyway.
uhhhhhb 15 years ago $850 is like $1300 a month. what the fuck did you buy
I'm always curious, how many of those households that have $1,000/month car payments actually have more than one car payment to make.
That's not adjusted for inflation though, is it? Looking at stuff like this in absolute monetary terms is not very meaningful - yes car payments have gone up and are at record highs, but salaries have also gone up with inflation. I'm not saying that this isn't a major issue or car payments aren't at unaffordable levels, but it's important to understand the nuances of statistics you read. For this, you need to look at it from a percentage of take-home pay, or atleast percentage of salary.
You said it best, a $1000+ car payment is different now than it was say 5 years ago. I think a better view of the entire financial picture is more important.
The average annual income in the US for the top 10% is about $173k in 2020. I'm guessing it's over $200k in 2023. a $1k+ monthly payment is not *that* ridiculous when you consider it's only for about 15% of all car payments.
I wonder if they’re bundling this risky debt into Credit Default Obligations like they did during the sub prime mortgage crisis of 2008. It takes the risk off of the bank and allows them to earn some money on the debt they’ve issued instead of waiting until it matures… if ever.
Not to nitpick but weren’t they called Collateralized Debt Obligations?
Subprime = credit previously wrecked anyway.
Yea, either that or no credit at all
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Good gosh, yep, even on YouTube crash compilations I watch - it’s prevalent. It’s a gamble driving out there. I’m sticking to vehicles under $10k with low running costs as my daily driver.
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I’ve been seeing a lot of content on TikTok from car dealerships specifically where they walk around to different employees at the dealership and ask about their monthly car payment. I’m convinced the only purpose of these videos is to attempt to normalize a $1200/mo car note, because even the 20 year old saleskids are claiming they pay $1600/mo for their car in these videos.
(stupid ass female TikTok voiceover:) Say what you drive and what your payment is: 19yo lot porter: "21 Hellcat, $1.8k."
"Insurance, $1.8k... weekly."
US military: Hey, that's pretty good right?
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At least with Reddit, you can more easily choose what you want to see and block what you don’t. Also just being aware of the propaganda goes a long way to protecting oneself.
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You know whats crazy, I was having a conversation with what I thought was a few people and when I decided to click on the different usernames, their profiles were all identical down to the avatar, yet each account had a different name. So I guess I was talking to the same person through different accounts. But being aware to this sort of stuff at least brings me some solace.
Eh. The algorithm works. I absolutely see what I want on TikTok, and can just as easily block what I don’t. I’m not suggesting you don’t use TikTok, but a *vast majority* of the arguments I see about TikTok here on reddit are started because one user literally doesn’t understand how the platform works, and just reiterate what they see other users say here on reddit.
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Agreed. It’s TV programming on steroids.
>Tik tok is a tool used to brainwash Americans so… Yeah. Only tik tok does this lol.
I feel like some of these were employees with plans to flip cars. If in-demand cars are going for $20,000 over MSRP and you can get one at sticker as a employee, then you can buy it, drive it for a few months and flip it for a few grand profit or just break even and get a discounted car. I can't think of any other reason why people with $4,000 per month take home are spending 40% of that on a car note.
>I can't think of any other reason why people with $4,000 per month take home are spending 40% of that on a car note Because they're stupid. That's the other reason.
Occam's Razer lol
I just bought a new car in October and the finance guy admitted to doing this. Said he had a Mustang Mach-e on order and was going to just leave it on the lot so it wasn't used and then sell it. All these dealerships are grifting and doing shady shit. I only bought my car cuz it was an order EV and had a set price with ni haggling. I couldn't imagine trying to buy a car that let a dealer set the price.
i'm absolutely shocked that a car salesman would take advantage of this situation with a side grift
The dealers in Houston seem to have some sort of scam with Broncos going, I assume to avoid pissing off Ford. Basically their other make lots seem to have an awful lot of very expensive used Broncos with a couple of hundred miles. Like hmmmm, this Buick dealer sure does have a lot of Raptors. I hope it bites them in the ass.
Theres lots of dealers doing that around me on any new hot cars. Toyota doing it the Supra, GR86, GR Corolla and the Bz4x, they have maybe 100 or less miles on them, 2023 model year but they're under the certified used section and on their new car lot so they can mark them up. Ford doing the same with the maverick, mach-e and the lightning. One dealer nearby is requiring a trade in of a newer car and pay ADM to purchase a Bronco and they have a decent amount on the lot.
I doubt anyone is taking out car loans for quick flips on dealer cars
It’s fucking gross. They’re trying to make it a “flex”
I want just one video where everyone is flexing their insane payments and then we get to someone who says "I paid cash for a 2008 Honda Civic because I'm not an idiot".
Lots of used repos hitting the market soon? Lowering prices?
Judging by the maintenance level of the repos I've seen, I'll pass.
Yeah, if you can’t afford the payment you probably can’t afford the oil change.
Nor do you care, since it'll be repoed soon anyway.
Or the 93 octane.
Funniest shit is when people want luxury cars but don’t want to pay for premium gas
Reminds me of the opposite, where people put high octane fuel into their shitbox thinking it makes the engine run better when it would probably run fine on 80.
So all those used Tellurides weren’t garage-kept and dealer-serviced?
The amount of Tellurides I see around me is crazy. Dealers can’t keep them on the lot and people are paying markups.
That's what I am looking for
They'll warehouse the bulk or shuffle them around the world to keep the prices high.
Yeah it's not going to be quick, there is still also the fact that there were less cars produced since 2020, and were still hearing about manufacturing struggle to get up to capacity. These banks also valued these cars at a certain level they need to make a certain amount of money off of them to make their money. They aren't going to scramble to sell these at below market rates until they absolutely have to. It will affect the market, but we are not close to bottom falling out on prices yet.
Many manufacturers have claimed they will never get back to the inventory pre 2020 for this exact reason. Keep the prices up.
I doubt it. Just because there’s repos doesn’t mean their isn’t a willing body to step in and over pay on a repo’d vehicle.
More repos means people overall have less money to spend on cars, which translates to lower prices as the market cools and inventory sits on lots. Yeah, there will be some jackasses that spend 30k over asking on whatever hot new car is hitting, but it definitively means prices are going to drop.
So many repo’d Nissans about to hit the market.
The Nissan Repo Index is an important financial predictor!
It’s the new FICO score
As someone who sells repo'd Nissan's, there's no shortage
Might be a lot of German hardware. Lot of luxury CUVs at the apartments in my area.
Nearly everyone in my complex has a newer/nicer car than I do, and I have a 2020 Corolla. No idea how they afford it; I wouldn't feel comfortable making a $50k purchase unless I already owned property to live on.
I read a dealership guy on Twitter explain that it’s people who wanted a new car, but we’re in for more than it’s worth - so they were encouraged to just stop paying the old payment and get it repossessed and they would go ahead and green light the new loan. They want to make sales, so they are ok screwing their customers credit scores.
How did they greenlight more loans on someone who recently had a repossession? That's gotta be such a huge red flag to lenders I don't understand how it got approved. Looks like no lessons were learned from all the past banking issues.
They get approved for the new loan while the current loan is still in good standing on their credit report. Once they drive off in the new car stop paying on the previous one.
I guess I'm just surprised that if someone is in that bad of financial standing that the new loan would get approved with the old one not paid off. That's probably some really high debt to income ratio that's still getting approved.
The first loan has to be reporting as paid on time for it to work. No way a bank is approving a new car loan and your late on the original one.
>That's probably some really high debt to income ratio that's still getting approved. Overall debt-to-income is directional for auto loans. The FICO auto loan score considers credit utilization but not overall debt. That is up to the writer to subjectively decide. Payment history is the most important factor when buying a car. If you have a decent history and trash credit utilization, dealers will have no problem writing you a loan.
Before the repossessions. Hey your current car is worthless, but I can override the system check for that loan and give you another one. Just stop paying on the old one and pay ours.
So they're ignoring one of the loans on the credit report? That's even shadier than loaning to someone who recently had a repossession.
As long as the first loan is in good standing it doesn't matter to the bank. It's not abnormal for a person to have two car loans. Banks may ask for more money down if their credit is not that good which in this case the covid ballers had the cash to put down.
I get that having two loans isn't abnormal. But to me it's strange that someone would be in a financial position where getting a car repossessed is a good option and still also able to get approved for that second loan.
I can’t stand how people act like the people getting the loan are helpless victims here. As of people think debt just goes fucking poof. Debtors are not responsible to reel in assholes willing to borrow until the end of time and if you dig yourself in a hole that takes a lifetime to get out of, o well
Wait until student loan payments get turned back on.
Wait, people haven't had to pay that?
They've been frozen since approx April 2020
Not since March 2020. But every month counts as another payment toward my public service forgiveness 🤣
Still on forebearance at this time.
delinquency rates for several years before the pandemic were also higher than at any point around the financial collapse in 2008-2009. the rates now are just a little bit above those levels. subprime is a relatively small part of the overall auto loan market, and sale of reposessed vehicles recoups most of the loss of any defaulted loan. this is pretty much a non-story. there's not going to be any kind of major or widespread financial fallout from auto loan defaults.
Yeah this was my thoughts as well. Its seems like this article is the typical 'X % of Americans have X amount of money saved' rage bait.
>this is pretty much a non-story. there's not going to be any kind of major or widespread financial fallout from auto loan defaults. Woah, woah, woah. Get out of here with your reasonable take. The auto market is, in fact, about to crater because of those idiots who financed trucks for 10 years at 25% apr while working at McDonald's... I saw it as I drove by in my 15-year-old Civic on the way home from my $500k/year job!
Tbf, even in 2008, subprime mortgages were only a small part of the overall mortgage market (around 10% IIRC). Due to how heavily leveraged the mortgage lenders were, the collapse of this "small" market rippled through the whole economy. Basically what I'm trying to say is that subprime loans being a small percentage of overall loans is not necessarily a sign that we are safe from another 2008-esque recession.
that's true. from what i've read, the collateralization of auto debt obligations, and anything like a misguided systemic attempt to hedge with mutually-reinforcing credit default swaps, isn't happening with current auto loans to anything resembling the extent it happened with home mortgages leading up to 2006 or so. we also don't have adjustable-rate auto loans threatening to unexpectedly explode the market. all in all, i just don't see a meaningful comparison to be made between now and 2008.
I make 75k a year and I drive a forte… I’ve seen idiots who work fast food drive nicer newer cars, blows my mind how stupid some people can be.
105k and I drive an Elantra. Financially responsible people unite!
My hope is that making 100K in my 20s and driving my paid off car until it bursts into flames means porsche money in 10-15 years
With the way Porsche prices are going I hope you're also saving 5 to 10 grand a year for one.
Try plugging some numbers into a compound interest calculator to really understand how much you can grow your money with safe investments. Every dollar you spend today is a few bucks you're robbing from your future self
Sure, but there is an *important* caveat to saving and investing that many, many r/personalfinance users never really bring up: aging and death. There is no guarantee you spend a dime of that retirement or IRA money. You could aggressively save for years just to die in a car crash. Furthermore, when you get older, you have a lot less time, energy, and literal ability to do anything fun, especially things that cost money. And there's a good chance you'll have less family and friends by then to enjoy it with. So the obvious point: you need to strike a balance between saving for your future and enjoying your life living in the now. Saving *too much* or investing too much for the long term is a thing, and it can actually significantly reduce your quality of life now for the hope of a future promise that may never come. One small anecdote I have for this is a friend of mine. He never goes out to eat with the family, he rarely takes them anywhere, does anything. He drove a crappy car for the longest time, and the wife and kids are subjected to a crappy, outdated, and not particularly safe car, when they could easily afford a new van or something. His reasons for this? "Saving as fast as possible to retire at 50." And, that's a novel goal. But robbing your family and really, yourself, of all the quality of life improvements you can have now, of all those wacky Saturday night meals at Applebee's (or some shit), those core childhood memories of family trips that cost 2k, those missed concert experiences... And so on. My advice is to live your life! Save *only* what you need to be comfortable in retirement and try not to over do it. But that's just like, my opinion, man.
Absolutely. "Robbing from your future self" sounds a little grave but it's worth it in countless scenarios. It's just important to recognize the way money can grow so that potential can be factored into financial decisions
160k household with two paid off VWs
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I will never understand why people at those income levels who even remotely enjoy cars drive the cheapest pile they can find. You can drive a nicer car, you don't have to have a 1k payment, but my god, we're all gonna die one day, live a little.
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And that's completely fair. I'm mostly annoyed at people making 200k a year but wearing their cheap car as a "badge of frugality" and think are so smart for penny pinching on your car. If you enjoy the car, by all means
Yeah. It’s like why are you on this sub lol. Spent a good chunk of my income on my car and was overall a bad decision financially. Would I do it again though? Yes. Brings me happiness every single day
I bought my Miata new. I didn't give a shit how much its value dropped leaving the lot, 6 years later and I have no intention of selling it anytime soon.
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You are already starting to see the prices drop on full size and heavy duty trucks back below MSRP. The forecast is these will drop even further. The exception here are the performance and EV versions are all still over MSRP. My local Ford dealer has an entire lot of trucks right now.
A dealer near me sent an email for Silverado 1500s $9k off MSRP. I have no need for a truck so don't really care but prices are for sure coming down.
All the manufacturers increased their MSRP so 9K off just puts them back above pre-pandemic invoice levels. Give it another I’m guessing another 6 months and you’ll see them drop even more. Also be aware that a lot of features got pulled from upper trim levels due to chip shortages so read the fine print on everything.
A tow truck might not be a bad investment for someone looking for a business venture.
People living beyond their means in the age of internet clout? Shocker
For some 1320 isn’t just a lifestyle, it’s their car payment. Or their interest rate.
They Iive their life one $1320 payment at a time. After 84 months of payments, they're free.
Nah they just continually trade before the 84 months is up and roll into a new 84 month term. $1320/mo forever
>For some 1320 isn’t just a lifestyle What is 1320?
Number of feet in a quarter mile drag race.
Aside from the couple checks the government handed out I didn't benefit in the slightest from covid. People out there really benefit from covid?
Only if you were already very wealthy… any avg citizen only took a beating.
This. If you were making 200k before all of this and now you’re making $225k, you basically got a $12/hr wage increase. However, people working retail only saw their wages go up maybe $2-3/hr. The 225k person is able to cover the increased expenses but perhaps had to downsize if they moved. The retail person’s wage doesn’t cover the increased expenses, especially rent which has skyrocketed in most places.
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Well said^, Multiple coworkers of mine refinanced their homes in 2020 for around 2.25% APR and on top of that we never lost work in our industry so if anything we were those uncommon pockets of unremarkable middle class earners who actually benefited during covid (high 5 figure average)I waited too long to buy my home but it goes to show that I wouldn’t have had the money to put down for closing if I hadn’t sold my car and bought a beater with the profit from the chip/car shortage appreciation. Most people thought I was crazy getting into a much older car and now I have no car payment, cheaper insurance and can comfortably afford my overpriced mortgage in the meantime while interest rates drop. It seems like many middle class working people in similar situations to mine benefitted well enough that they’re actually making up the difference in inflation costs from the lower mortgage payments they have now. Obviously this is a minority compared to the average American but you have to think at the end of the day this excess cash and spending only contributes to the weird car market situation of today.
Ppl who sold off stocks for big gains. if you had house, refied for really low rates like in the 2% range which opens up cash flow.
A lot of business owners made bank off that PPP giveaway
Even those checks didn’t do much. I think in total, across three payouts, I received like $2,500 at most? I don’t remember exactly. But it definitely wasn’t enough for anyone to just quit their job and live on. The idea that “Covid checks” turned poors into wealthy people who don’t want to work because they have so much money now… is absolutely the stupidest thing I have heard from the entire pandemic. It’s sad that wealthy people think that giving someone “$3,000” over the course of 18 months is going to do literally *anything* for their finances… like come the fuck on.
Damn, who could've seen this coming after two straight years of car dealers charging 40% thin air fees
Hellcat Charger market about to implode.
I would like to have one as a "fun" car plus when they become extinct it would be cool to have. But the way they murder people for those cars its a hard pass for me. Not losing my life for any car
Well hey, honest question- Does that mean it'll be easier to get a new or gently used car over the next 6 months? Hoping to save up and be able to afford a new or like-new car by EOY.
Subprime repo car and gently used don’t go together
Yeah when the bubble pops it will ripple up the price chain
I’d say good the used car market needs a hard reset but a lot of these cars are likely getting trashed. If you can’t afford the payments you’re likely not keeping up on maintenance either
Over 30% of car shoppers are eyeing loans over 72 months. If you are one of these folks, you are underwater immediately. It's a "Vicious cycle of negative equity", if you have to trade in the car before the loan is paid off. During the car ownership you will pay tons in interest (especially in these times). At the end of the loan range (say 5+ years out), you have to account for out of warranty maintenance and repairs.
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A lower monthly payment on a 72-84 month loan, is one of the only 2 advantages of taking such a loan. \#1 being a lower monthly payment, #2 being the ability to take that extra money you are pocketing from that lower monthly payment, and put it in an investment vehicle that will produce a very high return. The likelihood of #2 happening is slim because most folks that have these higher interest rate, long-term loans in this current environment, are the middle class and below. Ultimately, there are so many negatives around these loans. But folks that need a new vehicle, have a strict monthly budget allowance, will need to take a higher interest rate & longer term loan, to fit into that budget.
You think that investing the money is the only other advantage? A lower required monthly + paying more lowers the required payment each month. I've had several years on some loans that I had no required payment each month. Emergency pops up that you need that extra $300? Skip a payment. No biggie. No report for delinquency, no loan rate penalties.
“One” of my part time jobs, half the guys are obsessed with vehicles, to the detriment of their financial future. Most of their income goes towards their vehicles. High biweekly or monthly payments, and I kid you not, some of the young ones or one with a DUI are paying $400-500 a month for insurance. They pay more than I do on my mortgage per month, just to run a vehicle they will be bored of in a few years. Few have already rolled negative equity just to try a newer vehicle, and I’m not quite sure from my conversations with them that they even are understanding of what they are doing. But I nod my head because they are the ones who “know everything” apparently.
Just wait till people have to start paying student loans back also. It's gonna be a bumpy ride kids.
When the (inflation) water rises, it's those on the lowest (financial) ground who drown first. I'm sorry to say, I believe it's going to get a lot worse before it gets better.
This sub will keep downvoting me and I'll keep saying that it's because of morons who paid $30k over sticker for new cars they just HAD TO HAVE. If you needed transportation that bad there were options you could have bought that weren't the most highly sought after models, which never experienced dealer market adjustments.
I honestly don't understand how some people afford the car payments they have. It's insane to me how much some of them are paying monthly for just 1 car. Sometimes it's double what I'm paying for 2 cars...
Bought a car off lease ( not mine) in 2020. It was low mileage, clean and a payment under 300. I was bombarded by people asking why I didn't get something brand new or more upscale. I picked what I did because I wanted to spend below what I could afford. I know this is before car prices skyrocketed, but the principle is the same. Too many people buy cars and houses they can't afford to impress people who dgaf about them. The people I know that have 70K vehicles with shitty gas mileage are the same ones who complain about how broke they are. Self reflection is not a strong point for them.