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.
Thats 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 nations 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 familys gross income.
The [average] household cant 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 isnt just about the price of cars. Its 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 arent [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 dont 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 cant afford, and thats 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. Its a vicious circle that is not likely to end well for manufacturers or consumers.
The only downside for me was that the prior owner had no idea what he was doing with a Jeep and was using it apparently for road use only. At 14k miles the stock MTA tires should have been rotated 3-4 times and weren’t so the rear tires had substantially more wear than the fronts.
I have not purchased a used car in decades. I am fortunate enough to be able to afford a new car, but that didn’t just happen because I have a good paycheck. My wife and I live within our means, we have disposed of as much debt as it is possible to do, and we try to provide for our future.
I get a new car every four years, when I get up to around 100K miles on a vehicle, I sell the car cheap to someone who needs a good vehicle, or give it to people. (Interestingly, the people I ended up giving the car to, in both cases, completely destroyed it through neglect, doing is so quickly it was disconcerting. There is a lesson there...)
Up until the age of 30, I had used cars, and had to get them repaired, worry about them breaking down, etc. When I began to make enough, I took loans and paid them off. As I got older, I paid cash for a new car. I take care of my vehicles. I don’t baby them, but I make sure anything gets fixed, and do my best to keep them clean and intact.
I am fortunate. Many people cannot handle car purchases this way.
But I did live through the Seventies, and anyone who did knows the state of cars on the highways throughout this country was appalling...even new cars rusted to pieces and turned to mechanical junk in alarmingly short time intervals. And I was always working on cars. I grew to detest it, and hated driving unreliable vehicles.
When my livelihood depended on my being able to drive to work, and I had to spend a rainy weekend pulling an engine out of a car mired in the mud underneath a maple tree with a branch to anchor a hoist, it sucked any enjoyment I might have gotten out of doing it with my own hands and getting it done right.
I don’t buy a car as an investment, for the resale value, or anything even approaching that. I buy a car that will be reliable, and allow me to drive in comfort and safety. I am utilitarian about this. I don’t even give a second thought to “resale value”...I think that is a fools errand. For me, it is a tool, if I can enjoy driving it, even better.
I think average people can afford average new cars. But they might not be able to afford a family vacation in the Caribbean, the newest large screen television, the 128 GB iPhone, or the newest computer. And a lot of people want all those things AND a new Lexus. They might be able to do it if they purchased a new low end KIA or something like that with a minimum or no frills.
In the 1920s higher end cars were shipped as chassis with engine and drive trains and then custom bodies and interiors were added by coach builders like Fisher, LeBaron, Ghia, and Park Ward.
Denominate those car prices in ounces of gold or silver.
We do that, too. Let somebody else take that depreciation hit driving a new car off the lot.
I just bought (well, in January) a two year old V8 Expedition with 26k on the clock. Saved about 40% compared to new. We bought the extended warranty and it’s a good thing we did...the sunroof just broke and it’s a $3,000 repair! That’s nearly 10% of what we paid for the vehicle. That alone is more than the warranty cost, so we are money in the bank.
Disappointed that a sunroof broke, though. That’s never happened before.
Fyou liking your doctor and Fyou keeping your doctor.
The author is a hypocritical lib.
Libs don’t like private car ownership anyway. You are supposed to submit to mass transit and skyrise living.
I can afford a new car, but choose not to.
Wasn’t Emperor Obama supposed to buy a Chevy Volt when he left office?
Simpler answer...government tried to “fix” everything and instead totally effed up everything as is their wont.
Yeah, maybe the punk that wrote this drivel would like a few more government mandates rolled in.
$500 is cheaper than the property tax I owe on the 3 year old Mini Van that I bought a couple of months ago.
My wife and I each have cars that are over fifteen years old, and are still in perfect order. They are a pleasure to drive, dependable, and cost less than 500 a year to maintain. The trick is to look around and see what old vehicle model is still on the road in great numbers. Buy a good one, use synthetic oil, and be alert to even the smallest sign of trouble and have it looked at right away.
I stopped reading after that little insult to our POTUS.
Ya know, sometimes I think that young people believe they should get all the perks that older people have. When hubby and I first married, and especially after we had kids, we were both driving Ford Escorts. Our cars are now larger, and more comfortable, and --- more expensive. We have more disposable income after both our children left and started their own lives.
Everyone wants a champagne life IMMEDIATELY.
Considerable. So many things are mandated now. The electronics bill and assembly is staggering on a new vehicle. Do you really need a computer to tell you about your tire pressure? Well, you don't have a choice anymore.
The basic Civic hatch is very nice, turbocharged, 40 MPG, and <$20K.
Can’t afford a car? Ride public transportation with the ferals. Problem solved.
Capitalism is freedom in business
If these companies make it unaffordable like they have in auto, homes, health, university, and everything else then people are going to say, “let’s give socialism a try” because what do they have to lose? I think companies are going to have to be careful that they don’t out price themselves for most Americans. Even going to the grocery store is incredibly expensive. Something has to give and if it’s not capitalism then something will come in to replace it and we may not like it. If everything is from and our taxes are 50 percent or we have 25 percent taxes but can’t afford anything....what are people going to pick???? Wake up because you are sleeping.
I set two big goals in life: 1) getting the kids through college and 2) saving enough to retire. We achieved both through careful finance planning, frugality, and a commitment to saving. If you don’t fall prey to keeping up with the Joneses next door, it is doable. For us, buying low mileage CPO used cars has been a key component to our strategy.
Remember when car odometers only went to 99,999.9 miles? Remember how rare it was for a car to ‘turn over’ 100,000 miles?
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