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.
Good friends of mine shopped and shopped for a car that would be economical to own and operate, as well as not break the bank to purchase. Married couple, she’s had issues with her knees for over a decade, both replaced but still has some limitation on her mobility. So, ease of getting in and out, high seating position was high on the priority list. They got a Kia Soul, some sort of sporty model, bigger wheels, two tone leather although they really would have rather had cloth. I’ve ridden in it numerous times, it’s a well-constructed, roomy car, surprisingly since it doesn’t look as if it would be. Only odd thing I noticed was that the air coming out of the A/C vents in the dash smelled like Play-Doh. Not entirely unpleasant, just odd.
My Corolla is an ‘07. Other than the long-arm driving position it’s a very quiet, comfortable, solid car too. I’ve also got a Subaru Legacy GT wagon, love that car but the seats are low. Not an issue for me, not yet at least.
Wow. We are onto everything else. As a trial run can you state whether gasoline is cheap or not and why you believe this to be so? Just one item.
Still waiting to see if you agree with the article re. Trump. You know since anyone with critical thinking skills can see that the article is correct.
I’ve heard of people spending hundreds of dollars on a freaking tune up nowadays..lol
Did you change out the center brake light yourself? Believe it or not, I recall changing out a center light on a truck years ago. Instead of $120.00 it cost me .20 cents for a bulb... And even nowadays, when ya got to get a bulb, it cost 200x more they try to sell you an entire package of them for even more $$...Can’t just buy one. It’s just greed on greed.
You don’t answer questions with a question slick. Stop evading the questions.
How is it food got cheap cheap, according to you, yet most everything else has gone way up?
How does work professor?
I know. :-)
But with an taller, wider, aging population, car manufacturers might want to. At least, if they wanna sell more cars.
We looked at a Kia Soul. Liked it. But we live in a depopulating part of Upstate NY and no longer have a Kia dealer that isn’t less than an hour away. The dealer we’d have to use for routine maintenance in order not to void the warranty. Aaaargh.
They not only shrank cars, they shrank most all products we buy. I went to get some ice cream recently, and the freaking container seemed 20% smaller. I got to the register and told the cashier I must have grown, because the container seemed so small...She smiled and said, you’re not imagining anything.
They used to be 2 quarts or half gallon, now it’s like 1.7 quarts and cost nearly double what it was just a few years ago....lol
That’s what I do, and I stick to Acuras and Hondas (Odyssey to fit the fam in now). I hate making payments.
When it comes to cars, though, the problem is they're no longer fun. Government regulations and huge corporations that don't want to have to compete have taken all the joy out of owning a car. Now car ownership is just an expensive, anxiety-inducing pain in the a$$. And good luck marketing THAT.
Boy, would I like to talk to some corporate types. I’d love to enjoy owning a car again.
I'm trying to imaging all these dweebs sitting in the back seat of their driver-less cars, blankly staring at each other in traffic.☺
And btw, speaking of fun. I recall driving years ago in CA. It was really fun. Now? Traffic has increased 10 fold with half the drivers being from foreign countries where the only rules of the road were only 2 goats can be tied to the hood at one time, and the requirement to honk horn often.
Have rarely bought “new,” but several certified pre-owned, or slightly used cars.
Best and most enjoyable car ever was a 1986 BMW 528e, with 7,000 miles by a company regional executive. Saved a lot.
Now 31 years later, just bought a BMW X1, certified pre-owned with 33,000 miles. Wife loves her them BMWs. Me too.
The worst is to lease new, and have nothing 3 years later. The best is to buy cheap, pay off quickly and have several years of payment free use of a fine car.
Nissan sent me a flyer. The local dealer has new cars for $10-15,000.
I couldn’t afford a new car when I was in my twenties either (late 70s, early 80s). I used a motorcycle one winter in northern Utah. Welcome to life!
But the article didn’t say anything about people in their twenties...The title says, “Average Americans” can no longer afford new cars.
This exchange started with me asking you a question which you said you could not answer and you responded instead with a question. According to you the article makes the fact that “average Americans cannot afford new cars” obvious to anyone with critical thinking skills. Let me guess that you have critical thinking skills and so you agree with the article including their snide comments about Trump. You also wish to debate food prices and the affordability of everything.
I am lost. Are we still discussing the affordability of everything to the average young person or are we now discussing how is it food can be cheap cheap while everything else has gone way up? Or can you just answer the first question asked? Which was my question to you.
How is it food got so cheap cheap, according to you, yet most everything else has gone way up?
How does this work?
I very much agree with the article regarding new cars and the obvious difficulties for average Americans to buy purchase them.
Once again, How is it food got so cheap cheap, according to you, yet most everything else has gone way up? Lets see if you can answer this without evading the question yet again.
It says average cannot afford average cars. So what?
I’m nearing 60, but hell will freeze over before I pay for some inflated price vehicle with leather seats, 20-speaker sound system, satellite something or other, etc. I’ve NEVER bought a $33,000 car. My wife just bought a new Toyota Camry - for $23K including taxes, license, etc.
I don’t know where they get the $33,000 for an average car. But you can buy some mighty nice cars for well under $30K.
If some people CHOOSE to pay more, that is THEIR business.
Average Americans CAN afford new cars. You can get a decent new car for under $20K, and buy one that would content me for under $15K. If you can buy a Toyota Camry for $23K including taxes and license, then new cars are NOT very expensive. Unless, of course, the buyer CHOOSES to spend more.
You stated, "I couldn’t afford a new car when I was in my twenties either" As if to imply the article was referring to only people in their twenties when the artlce was referring to "Average Americans".
That's what.
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