Posted on 07/21/2017 9:06:34 AM PDT by Lorianne
Some people say capitalism and alligators have much in common — both eat their young. While the rich get richer (and will get richer still if the #FakePresident has his way), ordinary schlubs who are working one, two, or sometimes three jobs to make ends meet are finding they can no longer afford to buy average new cars.
That’s according to a new study by Bankrate.com. It finds that people living in 24 of the 25 largest metropolitan areas in the US cannot afford the average price of new cars, which was $33,000 in May according to Kelly Blue Book. In six of those cities, people struggle to afford cars cost half that much.
Only in Washington, DC, where the median income is over $100,000, are people able to afford a new car. But the statistics for the nation’s capitol are wildly skewed by all the millionaires in Congress and the $1,000 an hour lobbyists who grease the wheels of democracy.
“Affordability” is a relative term, of course. For purposes of the Bankrate study, analysts used the so-called 20/4/10 rule. It assumes a 20 percent down payment, a 48 month loan, and a total of of insurance and loan payments that does not exceed 10 percent of a family’s gross income.
“The [average] household can’t comfortably afford to buy a new vehicle,” said Claes Bell, a Bankrate.com analyst. “That means a lot of households are overextending themselves on car costs, and that can potentially crowd out other priorities such as saving for retirement.”
“This issue of affordability isn’t just about the price of cars. It’s about the stagnation of wages,” Bell said. “Car costs are not rising all that quickly over time, but things like health care and college costs are going up and wages aren’t [keeping up]. Budgets are being stretched.”
“People should prepare for a car purchase by saving for a down payment,” Bell said. “Sometimes people impulsively go to a car lot and get sold on buying a new car. But if they don’t have a sufficient down payment saved, it will be hard to fit the payment into their budget.”
The total of auto loan indebtedness now stands at $1.2 trillion — about 10% of all consumer debt according to the Federal Reserve. Late payments on car loans is rising. Nearly 4% were delinquent at the end of March according to data compiled by the Federal Reserve Bank of New York.
“People fall in love with cars they can’t afford, and that’s how they get in trouble,” said John Gajkowski, a certified financial planner and co-founder of Money Managers Financial Group.
Capitalism assumes constant growth — a model that is inherently unsustainable. Real wages for workers have been falling slowly but surely in America for 40 years. The cost of living continues its upward climb while globalization forces American workers to compete with the low paid labor in other parts of the world.
Car makers are subsidizing sales with low interest rates and extended term loans. On some high end models, it is now possible to get loans that extend out to 96 months or more. But people seldom keep a car that long, which means they find themselves owing more than their car is worth when it comes time to go car shopping again. It’s a vicious circle that is not likely to end well for manufacturers or consumers.
It’s interesting, you mock people for being poor, “Enjoy your poverty”, then tell declare how cheap groceries are. The article is about new vehicles, no?
Are cars and homes not the the most expensive purchases for most people?
Why do you continually evade the subject of the article?
Do you also agree with the articles comment on Trump? Or the #FakePresident as they call him. Seems that you think the article is correct to anyone with critical thinking skills. Or is the article only partially correct and may have some poor politically charged opinions leading to some very dubious conclusions?
How about repair costs? Those seem to have gone up exponentially. I just had to repair an LED center brake light. No bulb since, hey, LED. I had to replace the module. $125 bucks for a freaking center brake light. Had to wait a day for the part since, naturally, nobody had one in stock. Cars used to more affordable to buy, maintain, and run. Now they’re just a drain on the wallet. Sigh.
It’s interesting, you mock people for being poor, “Enjoy your poverty”, then declare how cheap groceries are. The article is about new vehicles, no?
Are cars and homes not the the most expensive purchases for most people?
Why do you continually evade the subject of the article?
Problem: wages have stagnated while car prices, repair costs, insurance, and licensing costs have not.
Just be glad you don’t have to pay an additional annual carbon tax on your car like they do in most of Europe.
And as long as Trump is president, you won’t have to. But if H*****y had been able to steal the election, you can be sure that the carbon tax would have eventually happened.
Someone gets it...Most everything is so expensive because the dollar is worth less and less and wages have been stagnant for decades.
Everything went up except wages.
How did I “mock people”? I replied to you and not “people” since you said you were “feeling” poor. I would think saying you “feel” poor is a mockery of those who are actually poor. Unless of course your are “feeling” poor because you are in fact poor. Then I unintentionally did mock you. Are you poor?
My late dad had a Model T and a Model A. Those your average Joe could repair. Part of the appeal to my mind. Now if your car throws and error code, you’re at the mercy of your dang dealer/shop. (Which is why I really like those code readers, BTW, but those ain’t cheap, and lookee, another cost.)
I know that,but it still could be done.
It would require sacrifice and a small car,but it’s doable.
Housing is something else altogether.
That said,I know many people WITH money who would never buy a new car-—they always buy quality used cars.
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Don’t forget, you replied to my reply to someone else. Their reply to the initial post included groceries. If you wish to join our replies to each other your welcome to join in but remember what we are discussing. I will try to keep up as you jump around.
Sorry. I shouldn't yell, but this is a huge, freaking pet peeve of mine. I have a 34" inch inseam. Please, direct me to the inexpensive car of my dreams that I can sit in, chum, because clearly I haven't found it yet.
Is it all lie, because groceries are cheap? Hell, if people can afford all those cheap groceries, everything else must be cheap cheap too...Right?
Tell me, how did groceries get so cheap cheap, when most everything else went through the roof?
how did groceries get so cheap cheap, when most everything else went through the roof?
Take your time here.
34” inseam isn’t especially long legged, I’m 32-33” and have no problem with a Toyota Corolla, although it really needs a telescopic steering column, that took some getting accustomed to. I’d imagine any of the midsize SUV’s as well as smaller, car-based CUV’s would have high seating position, which adds to a sense of legroom. Even a Kia Soul has a high seating position, they’re fairly cheap new in lower spec and a couple of years old can be had for $10K or so, know two people who have them and they both have no regrets, solid reliable vehicle.
$125 for a bloody center break light.
Nuff said.
Many moons ago, we owned a Corolla. Really liked it. Then they shrank it. I’ve tried sitting in them since, but head and legroom are both an issue for me. My days of scrunching up in a car (we owned a Chevette, for example) are long gone. Literally.
Now THAT’S a problem that I cannot address.:-)
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