Why Americans Are Falling Behind On Car Loans
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- čas přidán 30. 05. 2024
- More than 100 million Americans have an auto loan and auto loan debt in the U.S. is at a record high of $1.56 trillion. Between the Covid-19 pandemic, supply chain issues, alleged predatory lending practices, inflation, and the Federal Reserve's interest rate hikes, getting an auto loan is getting increasingly difficult and costly. CNBC spoke with Chase Auto and Toyota Financial Services to learn what's happening in the auto loan industry and what consumers can do to make sure they're protected.
Chapters:
00:00 - Introduction
01:51 - How auto loans work
05:49 - Market changes
08:19 - Alleged predatory lending
13:19 - Consumer protection
Produced and Edited by: Emily Lorsch
Animation: Alex Wood, Jason Reginato
Senior Managing Producer: Tala Hadavi
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Why Americans Are Falling Behind On Car Loans
Nothing screams freedom like not having to pay a car loan.
Unless the loan and all associated costs are cheaper than the cost to run an old paid off car. I have a 50 year old mustang. At 8 mpg and needing premium gas with California gas prices it’s been significantly cheaper to take a loan on a new prius with fuel and insurance included than driving my mustang. It’s saved me a decent amount every month.
Depends on situation, I had enough to pay for new car but who wants to waste 20k to the drain. Not me, took a loan with low interest around 5% and will invest the rest.
- will make principal payments
- Toyota which is reliable
- over 5 years can make more from capital gains than interest payments
- large down payment
Made more sense than buying used
Or living in a house with no HOA ... 😅
@@Bonanzaking 3 year old hyundai without a loan 8000 to 9000 dollars. (Uk 8000 pounds). You are totally ripped off in the Usa. Just saying.
@@_Meng_Lan I already own a fleet of used cars. Prior to my new one I had never spent more than 1500 USD and a few hours of elbow grease on a vehicle. I haven’t sold my stable because I like them and they’ve appreciated well beyond what I picked them up for.
On the new Prius yeah it’s expensive being new. But my cost to operate is dirt cheap compared to a 50 and 20 year old gas guzzler if you drive several thousand miles every month. Im not worried about depreciation or interest. Like another guy pointed out, despite having a payment you do better not blowing all your capital and investing the difference.
A loan on a vehicle is a win win under certain circumstances. And unfortunately a lot of people are brainwashed into thinking a car is a depreciating asset, the problem is most people don’t keep them 25 years or more. The vintage car market has been a thing for a century, since the ford model t became a classic. Generally they appreciate to above their msrp after a quarter century. Even econo cars, think the old steel Volkswagen bug, or boomer muscle cars.
i swear some people need a 2k dollar repair on their car but they go out and replace it with a 30k loan instead
That’s because they can’t afford the repairs and go finance a new one. It’s a horrid mindset but that’s reality.
You are 99% wrong. You don't need to spend 2k all at once. It can be done 200-400$ at a time. Just like a car loan. But with interest free maintenance. @@bang2020
I’m one of those people, and I don’t regret it. I bought a “cheap“ 1-year-old car that I didn’t like because it was supposedly an inexpensive option. Four years later, that car started having transmission problems, no joke, _4000 miles_ after the warranty expired. If I start dumping money into transmissions at 50k miles, I guarantee that car is going to have other problems, and it will end up being a surprise money pit. At least with a new car, I know what my payments are in advance, I have a lifetime new car warranty, And most of all I finally bought the car I actually _wanted_, and the experience of driving makes me so much happier now.
Of course this is only my specific situation, but after plenty of experience with the inexpensive option turning out to be expensive in the long run, I’m really happy to finally just have something that feels better quality, and has the right coverage so I won’t have to ever worry about it again. That feeling of relief is worth the financial delta, to me personally.
Most ppl can’t cover an emergency over $500. People blame the auto industry and salespeople but it’s the consumer that doesn’t plan for emergencies 🤷🏽♂️🤷🏽♂️🤷🏽♂️
@luism7545 well I'm not gonna act like i have much of an emergency fund but even in the worst case scenario there's still mechanics that offer financing right
The REAL reason people are falling behind - people that cannot afford a car are still buying one because they have no alternative like public transit or bike infrastructure.
Yup agreed, it’d be nice not having to rely on a vehicle to get to places
It's difficult in the USA to go long distance without a car. It's possible with a motorbike, but it's more hazardous.
Buy older/used??? That’s what I did. Much lower payment.
@@supplyequalsdemand2739 It's not just the cost of buying a car that's the issue. There's the maintenance cost and insurance to worry about in turn.
Keep an older vehicle. Save your money save your money. Budget budget . Pay yourself
Man, i have a coworker that just bought a $75,000 car and is paying $1100 per month. That's insane to me.
Sounds as if he plans on living in it ! 😮
😂
Manopause
Yo dude will never get tha money back ever, that’s the sad part after the new wears off😮
🤯
The dumbest thing I saw during the car buying frenzy near the end of the pandemic was people taking out EIGHT YEAR, $80k+ loans on SUVs which were priced $20k over msrp after dealer adjustments and lame add ons like nitrogen gas in tires. They were tens of thousands of dollars underwater as soon they signed the contract and that isn't even factoring in depreciation.
And the tragedy about this is that helps stealerships and manufacturers normalize the overall price increase of their vehicles. In other words, continuing to move the goalpost.
Lies again? Champions League
Let’s ban STEALERSHIPS
I had to buy a car during that time period. The pricing over msrp is why I bought a cheaper car that met my minimum needs. I remember looking for any car with a 7" ground clearance that was affordable. It just happened to also have good gas mileage and was fairly comfortable.
@@P2B_JClol you’re either scammy car salesman or a sucker who paid over msrp
In 2018, I bought a used 2015 Honda Civic with 34,000 miles for $12,500.... I got a loan from my bank at 4%...and paid the car off. Looking at loan prices and car prices today blows my mind at how INSANE it's gotten.
Buying a new car unused is basically fiancially stupid nowadays for folks who are working class or middle class
That’s a good deal on that car
It will last u at least 1.5 decade or more
Its dealer greed
I did some quick craigslist searches there are still cheap, good econo cars available. I just think people aren't buying them because of image concerns. Everyone is buying trucks and suvs and not cheap cars. Which is crazy to me because I think these newer corollas, Yaris, civics, Nissans and Mazdas look good.
It's only financially stupid if you buy from a brand and car model that loses half value in first year.
And also if your finance interest is through the roof.
I bought mine at interest of 5.9% with 10k deposit, looking to finish paying it outright next year.
I went to a Nucar Toyota dealer , wanted to buy a Corolla Cross . The price on the website for the car on the lot was $370 a month . Excellent credit . Good trade in . They come back with over $500 a month nowhere near the advertised price . We left , left a bad review . They called me back and said they could do the advertised price , only because we left a bad review and corporate saw it . Dealers are scummy , be careful
My dad once told me "Son, never buy a vehicle that cost 50 percent or more than your yearly salary" I'm auto loan debt free to this day and afford to buy a decent home. Thanks dad!
My parents were like that too but the problem is that parents don't always teach that responsibility. This should be taught in high schools since all parents don't teach that.
Very wise advice
The money you save is the money you earn, graduated in 1986 and entered the high tech industry. Sold the Ford Maverich 1975 which bought $500 in 3rd year in university. Bought Toyota pickup 1987 paid cash and keep it until 1995 with another Toyota pickup (fuel injected) with cash, gave the old truck 1987 to brother in law, sold it in 2022, because I no longer need it. And only keep Toyota Prius V 2015 because high miles per gallon of gas because of hybrid technology. Money for investing in houses, stocks, gold, silver, ...
I prefer the 3x rule. Don’t think you should be buying a 100K car on 200K income.
@@macsc5497 must be nice to make 200 thousand an year. Majority of us don't make that not even 100 thousand.
I sold my car. No more payments, no more accidents, no more theft, no more insurance, no more gasoline, no more inspection, no more oil change, no more fixing car or flat tire, no more registration fee....I feel free.
Then you shall sell everything and live in woods. And use solar power
How is it possible to live in USA without a car? Accept Ny or maybe Boston
@@SerpkoBakotiiniiyou can in cities like DC, and Chicago as well. Just live in a densely populated area
@@SerpkoBakotiiniiyeah I don’t see how. I’m a hard core cyclist and I still have to drive lots of places where I need to go and don’t want to get ran over going there.
@@karld1791it’s almost like different cities are different
Crazy idea: whatever amount you would spend on a monthly payment, save it and pay cash. I decided no more auto loans and bought my last car in cash. People need to be more realistic with their budgets.
I just love people like you who say stuff like that, let me ask this: What does that person do in the meantime? A vehicle isn’t a “luxury” for most but a NECESSITY.
The bigger issue is that.. why are cars allowed to be a luxury? Why are we allowing basic necessities and simple luxuries cost us every waking hour of our working life? People needed to stand up years and years ago.
This can all be avoided by monthly budgeting, saving up, then purchasing a USED vehicle IN CASH. People love to impress strangers at a stoplight
As an ex car sales man, 90% of the people who walked into the dealer had no business buying a car and knew NOTHING about finance at all. There were many times I straight up told people they can't afford a car. So glad I got out of that Industry.
Edit: Thanks for all the comments and likes, I never knew my comment would blow up like this! 😂
If you have any other questions let me know.
I wish there were more like you in the industry.😊
But I gotta have this Hellcat man....My friends will clown me if I come back with a ScatPack! LOL
So you asked 100 why they came to the dealership and 90 of them said we were lost and don’t know why we are here. Honest man.
@@Money_bagz😂😂
@@leedaniels7196Those people will just walk out of that dealer and go to another and another until someone approves them.
Not a single mention that consumers need to be more responsible. Do not buy more car than you need. I see so many people driving new cars that they simply cannot afford. There is a reason I continue to drive my 16 year old truck. The math isn’t hard, I think a lot of consumers are just not making good financial decisions.
Amen!
I agree mate. I told my sisters I don't need a new car until my car is actually dying. I have a 2020 Toyota Corolla and yet they asked me, "When are you getting a new car?" Excuse me, my car is almost paid off and it's 3 years old. This car will last me 20+ years with preventative maintenance.
What to take a guess who is more financially stable at 30? (High credit score, low debt to income ratio, home owner, stable career field, proper emergency fund, and proper retirement). Never take advice or even waste your breath from people who are financially or uneducated in that topic - never rush your decision and research your ultimate goal for every major purchase. Small decisions lead to larger changes
Yes. Stop buying luxury cars and stop rolling old debt into new loans. Pay off the car you have.
Ditto. So many people buy new or very new cars that they can't afford, and then they can't sell them when something goes wrong. Or they don't figure out and stress-test their budget before they go shopping and then fall in love with something they can't afford long-term. There's plenty of online calculators to help you figure out what kind of payments to expect. I bought mine when it was 7 years old for less than $10k, it was well-taken care of but had some minor scratches. Since then, I've stayed on top of the maintenance so it lasts me longer. It's not the flashiest thing, but it's reliable, in mostly good shape, and is paid off.
I agree, but I will say the quality of autombiles has gone down. So your 20 year old truck is probably more dependable then most 2018 sedans. I noticed this first hand in my own life. I still largely daily drive a 1994 truck. I bought a 2014 kia cadenza back in 2017. Its been zitting for almost 2 years with a blown head because I haven't been able to replace it. Recently decided to do the work myself because the dealer quoted me at 6k, which was more than the car was worth. To replace that we got a 2018 vw. I was sorely disappointed witb the quality when i started to do maintenance on it. I can tell it was not designed to last more than 10 years.
Yes, the auto industry is terrible, can we also cover the auto insurance industry. They always seem to escape scrutiny.
I think auto insurance industry is mad cause they aren’t raping us for as much as the health insurance industry.
I think you're asking for a critique on capitalism. All of these terrible fill in the blank industries are the result of capitalist practices.
@@jpablo700 what's your alternative?
@@hankhill6469we can share just trust me bro
Yep! Auto insurance is just as bad!!
I was buying a new motorcycle about 2 years ago and I had excellent credit. The dealership was offering a 0% interest for 3 years promotion if your credit was good enough. I applied and they told me I was denied for the promotion and that my rate would be 11%. I literally laughed at them and said I'd be back tomorrow.
Went to my credit union where I bank and applied, and got approved at 3.75%. the dealership is never your friend.
I worked in auto collections for a bank so I was well aware of the scams that dealerships play. So when I went to buy my car I read over everything. The dealership kept talking to my husband and he would defer to me, ‘she knows more than me and it’s her car’.
I graduated from college 4 years ago, and instead of a big trip, my parents helped me buy an 05 Corolla all cash. Easily the best gift of my life. The money that I saved on car notes ended up being saved while I was an entry level worker. I now live in a city with excellent public transportation and don't drive at all. Being debt free, to me, is better freedom than "owning" a car
So you own a rapidly depreciating asset with significant fixed costs, yet you "don't drive at all"?
@@shirtlesslager "rapidly depreciating" it was already only worth 3.3k when purchased in 2019, I believe I got great use out of it. insurance ran me about $85/month, yearly registration was a couple hundred dollars like it would be for any other road car, and it got 34mpg. Hardly significant. I live in a city now, and accomplish my tasks with public transit. My name is still on the title but a younger cousin drives it now and pays what it would cost to operate the car
@@CalmSnivy14 I did the same thing! After college, I bought my first car (Ford Mustang) from a rental company for $5,000 (cash). Drove it for 3 years. When I bought my second car (new) the dealer gave me $3,000 for it. Good deal all the way around.
@@ellennewth6305
Bought myself a 15 year old, low miles corvette. It was my fun car. Already had a good small suv. But saved and always wanted a corvette. Drove it for 4 years… sold it for the same price I paid for it 👍🏻
You are debt free because your parents made wise financial decisions on your behalf. Not everyone is gifted a car so congrats on the privileged life!
The dealerships don’t want to tell you how much the car is, they want to tell you how much the car payment is 🤦🏾♂️
Indeed
Stealerships
627 dollar car payment I had no choice at the time. Worst mistake I’ve ever made. Work 7 days a week, and barely can afford to eat. I’m in college for another year. It seems impossible. All I can do is hold out until I start my new career. I feel for anyone who is in a similar situation. Landlord decided to sell my house that worth around 100k and in need of repairs. He told me 160k. So at least I’ll have my car to sleep in. Land of the free home of the brave. I’d rather live off the land and ride a horse everywhere at this point….
I’m a lender at a credit union, no one ever complaints when they’re asking for money only when circumstances change in their life is where they blame us. No one holds a gun on your head to sign the contract. Most contracts are signed electronically with no pressure. For the True in lending act we disclose everything, Interest, rate etc. if you can’t afford it don’t buy it that simple.
Say it louder for the snowflakes that complain.
Banks r corrupt businesses scamming for the elites. Hope your proud of yourself for turning against your own people. Sell out. Yea I bet u like ruining lives and all the cash that comes with it. May God have mercy on your soulz
Exactly 💯
This is no different to the student loan crisis, where they are complaining afterwards how unfair it is
i was going to say this. i bought a total of 5 cars in the last 10 years (2 were for my mom). i negotiated everything over the phone, filled out the forms for credit history checks, credit, spec/option lists (for custom orders), etc and sent them back by e-mail. i didn't see the inside of the dealership until it was pick up day. no one forced me to do anything. why does no one want to take responsibility for their own choices? if your take home pay is $750 a week and you sign a loan that's $500 a month (on top of insurance, gas, oil changes, etc) and default IT'S ON YOU. why would you take out a loan like that?
Agreed. There is a toxic victim mentality in which people choose to blame banks and other financial institutions for irresponsible decisions that they made. You can blame car manufacturers, dealers, banks, the economy, your employer or simply blame yourself for spending irresponsibly and over leveraging.
My parents always told me that they never made enough money to pay for interest on ANYTHING. That lesson has served me very well in life and I have always been far more financially secure because of it.
loans are a scam to keep people trapped
The thing is, America is becoming more and more unfriendly to people without a car, especially on the west side: less walkable cities, less developed public transport; I've even seen some IT job descriptions requiring the applicants to have a driving license. Basically you are very limited if you don't drive; while the financial illiteracy situation keeps people making bad purchases, including cars. That's truly capitalism at its finest.
@@Suku1509buy second hand. Buy an affordable sub 20k. I think you have a lot of options.
@@Suku1509 Ofcourse you need a car but that doesnt mean you need to finance a $50K car. There are plenty of cars that are in the 2000-5000 dollar range in the private market that are great and will last many years. Ive bought a 2007 Ford crown vic for $2000 that gave me many years of reliable service. Was it perfect? No it required some basic maintenance and repair every once in a while that anyone can do. Especially with a source of infinite knowledge called the internet. I currently own 3 vehicles and none of which Ive ever financed or payed a single penny in interest to any bank. Capitalism is great, what isnt great is stupidity and lack of education.
@@Potatorqyeah that's why I wrote the second part. There is nowhere near the sufficient amount of financial education in school, so young adults tend to make financial mistakes like buying a car they can't afford, or financing unnecessary things like overpriced phones or laptops.
I had a friend who was studying to become a lawyer, and as part of his studies, agreed to take part in a "sting" operation for car dealers. He was of Mexican descent, and spoke English and Spanish and looked Mexican. He would go to the dealers and pretend to only speak Spanish. They would present him with loan papers, in Spanish, that they then compared to the same paperwork provided by the same dealers in English. As you might guess, the terms given in Spanish were markedly worse than the ones given to English speakers. It got written up in the local newspapers.
But did he agree? Not discrimination if he agreed, knowing the terms offerred. This is why you NEED to learn the countries local language to not be "taken advantage of" then crying.
@@UpcomingJediagree a tiny bit. Have you heard it's illegal to be discriminatory? The dealer should either provide the exact paperwork in Spanish or state sorry they only have it in English. Changing terms due to a language barrier is literally illegal. Past that all driving tests etc should be English only as our signs are only to be in English. Aka why I agreed partly to your comment.
@@UpcomingJedi His part was gathering information. Your take on this is flatly offensive. We are done.
So the Spanish speakers at the dealership were more crooked than the English speakers??
@@UpcomingJedi Maaan shut up....
In 2018 I bought a 2018 Kia Soul + with a few thousand miles for $16k. I saved to buy it… no loan. There are plenty of quality vehicles for under $20k, in particular if people buy used. From my view too many people want to live beyond their means and they sucker themselves to do it.
I will drive mine just like in Africa until everything fall apart and then tape and fix and drive more 😂
Bought all my cars with cash, never had a payment.
When negotiating the deal I always really grind the sales reps on the price and tell them I'll finance it and they can make their commission on the financing. Most dealerships have several financial products they can sell. I tell them "pick the one that's best for you". Then I pay it off on the 3rd month which is often the first time you can pay off the loan in full without penalty. This strategy is a little better than paying cash because there's always a cash price and a lower, financed price that can get approved by the sales manager. I don't really pay any interest and the lower price is even better because my registration TAX is based on the price of the car.
Congrats to you.
@@beach4me2007 . Pretty smart. That what I was thinking.
How? The average working American doesn’t just have $20-$30,000 lying around.
@@keithmorgan4883 That is a problem for most American. Except for my first car before I have a real job. I always pay cash for the cars. Everything costs more when you are poor .
2 huge lessons to learn here to avoid getting screwed, and they are pretty simple to follow:
1. Don't ever buy a brand new car, unless you are absolutely prepared for what it's going to cost and then some.
2. Get a loan through your bank, not through the dealer.
Aka don’t live in USA where public transportation is a joke
Yep, get a loan pre-approved from your bank or credit union. Or save up and buy a reasonable used car and pay cash.
better off paying cash for something with a good track record (Honda, Toyota, etc) if possible. If not possible, finance something that will last you a long long time after you pay it off.
@@rando7094you cant have a big house and take public transit at the same time. Most Americans prefer living low density suburb
@@stevechance150 where can you buy a reasonable used car these days? Those prices are high now too.
That Toyota VP was dodging questions like Beast Mode 😂
This all can be summed up with: My Uber Eats drivers pulls up in a Tesla.
I’ve had that happen too.
In 2021 I bought my first car. Tip #1 I went to a credit union to get pre-approved for an auto loan (lowest instrest was at Schools First) 2. Called my insurance to see how much my insurance would be for a brand new 2021 Toyota Corolla. 3. Saved money for a down-payment. 4. Definitely did not tell the dealer I was paying with a credit union check. 5. Before going to the dealer I knew what car I wanted to buy and was honest with myself about how much car I could afford. 5. I didn't not get any add ons 6. Went to a couple of dealerships especially when they wanted me to pay for add ons or the price of the car was ridiculous
The not using th finance at the dealership is a big one. Always shop around.
Everyone thinks that car loans are like home loans and you get the same approximate deal everywhere... nope. They'll charge you as much as they can get away with because they make more money. That's why they always ask "what's your budget?"
Mooch
Few people do what you, most people are npcs in automatic mode, they need to buy the fancy car that they cant afford to impress people they dont even like, same thing applies to everything else, from groceries and clothed to housing.
Car dealers are garbage but people need to educate themselves.
6. Price of the car was ridiculous. *Do you make previous research online to get a proxy average price to use as a reference?* How to know if the price is too high? Thank you for your comment.
@@carvalhoribeiro I actually work in sales at a new car dealership. You should contact every brand dealer within about 100 miles via email. Many will give you their pricing if you request it for a specific car/trim. Some will just send you the MSRP and insist you come in, but others will actually give you a full breakdown (which will have the dealer mark up worked into it) after tax/title and out the door. If you ask a few dealerships, you'll notice they're all within a few thousand of each other for the same trim levels. It really depends on the demand for the vehicle nowadays. The fact of the matter is, it's hard to find popular models on the lot anymore. They're getting sold before they're ever put on the lot.
All the issues raised in the video is why I've purchased cars for cash. It may take a little longer to find a "good" , but its worth it!
You hit the nail on the head finding a good car
That's the way to go.
its not hard in my city they got good old cars coming in every mth for 4000-7000$
If only more people had the restraint to buy a car in cash and work on their walkout skill, stealerships will have less power to overprice their vehicles. In turn, this will be a right step for our dumpster fire of an economy.
You know what's better than a new car smell?
Having ZERO car payments.
Two vehicles zero payments my 10 year anniversary
This is why I buy 10+ year old luxury cars for less than half the price of a new Corolla. I recently bought my son a 2007 Audi A4 2.0T for just $3800 so he doesn't have to fall into debt. All paid for, no loans, drives like a dream.
Worked for a VW dealership. The markups we would hit customers with were insane. Left the company after 4 months. A lot of shady stuff.
Markups are importend and great,you make as much money in good times so its easyer to sustain bad times!
I cried at the dealership buying a car. The finance guy tried to trick me so many times by telling me monthly payments only. First time he used way higher interest rate than we had just talked about and I qualified for. During 2nd calculation he added a service, I repeatedly declined and had a right to decline, into my payment. It got so bad that they had to get the manager involved. At some point the salesman had to fess up that the finance guy is a crook. So, the manager comes over with paper explaining how the guy had looked at the wrong interest rate. He leaves the paper there and according to the paper, I qualified for even lower rate as I had great credit score. Now I have two crooks and the poor sales guy is about to see me walk out. No more dealerships for me, ever. There is no reason for it going forward.
They tried to play that game. I pulled out my phone and multiplied by 72 (months) and said no.
That's terrible. I have a degree in finance and work in the industry. The simplest way to look at your loan terms is to multiply those monthly payments time the length of the loan. That way you can compare the total cost of loan to whatever price you're prepared to pay. There are websites that have great auto loan calculators as well so you could even get the total price (cost + interest) estimate before you set foot in the dealership. This way they can't pull scams on you because you know what the vehicle should cost including interest. I would also advice to apply for an auto loan elsewhere before going to the dealership so you have an idea what kind of interest rate you quality for. I hope you have a better experience next time.
@@MrSupernova111 Well, me female and me foreigner. I have a finance degree also. I wanted to finance the car and I knew I will get a top rate at the spot (0% wasn't available at that time). He calculate and I calculate and each time his was wrong. I tried to figure out what he is adding to it. Wish I had walked but partner left me there to pick up the kid. Car is fine. Paid it off early and will drive the wheels off of it. Damn, Honda Financials Services.
@@AR-ln7ln . I'm sorry to hear that. I think, in the end, crooks will be crooks. As you said, you have to be prepared to walk in those kind of situations. Glad you got your vehicle and paid it off. Cheers!
Try to get a loan prior to walking in dealer next time. You know you’re rates and no pressure.
My car is 9 years old and my wife's 5 years. Both are paid for.. With the current ridiculous interest rates and even more ridiculous car prices we will be holding on to our cars for years to come.
2 vehicles and zero car payments. We love the freedom of not having to pay.
Save your money and buy a car without borrowing money. Problem solved.
But that makes too much sense.
My husband and I have two cars, 1 with a car payment that will be done this year. It’s tempting to get frustrated with the older car and want the newer car, but the luxury of not being tied to an expensive car payment is worth it.
We are in a market right now where the car you have is the car you need to deal with for now.
I bought by a new car in 2020 at 0% interest but I don’t love the car because it had manufacturing defects. They all got sorted out but it took the joy away. Anyway while I don’t love it, I am keeping it for now. Inflation and high interest rates are not appealing to me.
Sometimes an older car that goes to the shop every 4-6 months for something will cost more than a new/newer vehicle. Newer cars have more safety features and sometimes cost less to insure.
Drive it until the repairs cost more than the car is worth. I had a brand new 1968 VW and drove it for 22 years with over 225,000 miles on the odo. Finally, the engine quasi-died and I had to replace it. My Honda Accord lasted just as long, and I sold it to a friend of my daughter for $1. She still lives in Hawaii and the car is used daily.
@@beecnul8r I work from home thankfully, hopefully I can hold onto it for a long time.
Smart
A car you can afford is a car you can pay cash for.
I was making payments on a car a few years ago & maybe about 4 months later, i started falling behind & eventually it got repossessed. After going thru that, i paid for my next car in full & in cash.
People make mistakes. At least now you're paid for
Beside scammy dealers, biggest problem is that people are not doing homework and just gullibly going into the dealer's hands. Laziness and desire for comfort cost you moneys. You can fight all the BS fees and high APR. But you have to do you due diligence.
Best post on this thread "My parents always told me that they never made enough money to pay for interest on ANYTHING. That lesson has served me very well in life and I have always been far more financially secure because of it" His parents are very wise.
Here is a crazy idea- don’t spend what you don’t have
A more crazy idea... How about the government Make loan interest lower, Credit card interest lower, Or pay for colleges instead of dealing with the actual problem. Now there is an idea. Thanks, Biden.
i’m sitting in my 1997 Toyota lemon that I bought off marketplace about a month ago and one of my friends rolled up on me at the gas station and when I told him that I bought it, he was like oh my God you’re so smart because I’ve got a car payment on this fancy car and if I missed one month, they’re gonna take it.
You don't have to have a brand new car. Spend a year or two saving and pay cash for a used one. You'd be surprised how financially freeing it feels not having payments.
But mY NeigBor BuddiEs aLL have NeW Big cARs wiTh TouCh ScreeNs and WiFI!
Amen to this. I own three vehicles and spent less than $6,000 for all three. My first car was $0, my second $2,100, and my most recent $3,500. No payments on any, and I do a good bit of the maintenance and repair work myself.
@@williamparks2203Not everybody is fortunate enough to be gifted a car as their first car. I bought my first car last year for $8,000 with a $3,500 down payment. I’m almost done paying it off. My note is only $177 but I’ve been paying more than that
@@nsbioy😅
It’s the smarter choice on average a car depreciates 40 percent after the first 3 years. The high trim car from 3 years ago will have better features than the current base or medium model and cost lest.
I sold cars in the late 90s early 2000s. There was a couple who came into the dealership one day, they had a older Pontiac Grand Prix that they were $9,000 upside down in. We sold them a new Subaru and tacked the $9000 on the new loan.
It's terrifying to think about being upside down $50,000 on a new truck.
It's just as bad as the 2008 housing crisis.
OMG. Who does that?? What fools
@@gregorylyon1004 Friends of mine...
I have no idea why people find it the best idea that buying a 80000 car when you have to save for retirement, buy a home, and finance daycare
CNBC has one of these videos for almost every aspect of the American economy. Real comforting stuff.
Got my car in 2020 and it was definitely a negative experience. I work in finance so they couldn't work me over with their BS in the lending department. Be sure to take the time to negotiate and be willing to walk.
I work in finance as well and have a degree in finance. In the end, crooks will be crooks. You have to do your research before going to the dealership and be prepared to walk.
@@MrSupernova111 100% it’s sad though how they try and pitch payment amount and not price. That’s where so many people get scammed.
@@rayBARInvest . For sure. Its a disgrace.
There are many morons who work in finance that finance everything lol
I was working in timeshare (not as a salesperson) when I bought my last car. Some car salespeople took that as a challenge, others you could tell relaxed. It also helped I started the shopping process long before my old car gave out so I wasn't stressed. Even still, I came across an old timeshare coworker who worked at a dealership in the process and they still tried to pull the sales tactics on me. Like, c'mon...
I work in management in the auto industry... here are the facts:
1) dealerships need to make money. The auto loan rate a financial institution offers is the risk the dealership takes. to compensate for that risk, the dealership has to charge to compensate for their own risk.
2) Americans aren't buying the cheaper sedans from Japanese automakers. They are buying luxury vehicles, monster sized pickup trucks, and big SUV's. That's why the average price is skyrocketing. Fittingly, these are the highest margin vehicles for these automakers... so you're not getting the best value. honda and toyota make low margins so those are the two best vehicle brands you can buy for value. BMW, Mercedes, etc.,... those auto companies are making a killing selling you a high margin vehicle with lower value. essentially, you are paying for the marketing and branding. The actual vehicle isn't that valuable. That's why as soon as you drive it for one year, you can expect to lose 20-30% off of that vehicle. Imagine buying a $60k BMW and losing $18k in just one year but your income is only $70k... after taxes, you're bringing in $50k so you just lost 40% of your income just on depreciation of your BMW. and that's not even including the interest payments you still have to pay. By the time you finish paying off your car loan with interest, your $60k vehicle is probably worth $20-25k but your interest payments is probably $10k so that $70k payment leads to a vehicle worth only $20-25k after 5 years.
3) so what is the solution if you're looking to retain as much value from your vehicle? buy a used honda or toyota... get a car rep to inspect the vehicle. pay them a few hundred dollars. Once you have the vehicle, pay cash if you can. Because it's a used vehicle, most of the depreciation has already happened by the original buyer who took the huge loss so let's say after five years on a $18k used honda or toyota, the most you will lose is $7-9k. Compare that to the $50k you will lose buying a BMW or luxury vehicle...
in short, don't buy cars you can't afford. Just because you were approved for financing doesn't mean you can afford it. Banks and dealerships make money by offering loans... they will want to make as much money as possible so the more credit risk you are, the more you will pay. The higher your credit score, the more these institutions will want to offer you a loan because you are a less risky consumer and free $ to them.
and don't forget, BMW and luxury vehicles are prone to more repairs because these buyers are constantly abusing their vehicle causing more parts to wear down quicker and then the average car buyer has no clue how to do maintenance until their car has issues and they have to spend money to fix these issues. Honda and Toyota are efficient well-made vehicles so people are less likely going to ruin a Honda or Toyota by abusing them on the road... hence, why they have fewer repairs and because the parts are easy to replace, it's cheaper.
I live in Minneapolis, MN. I was CAR-FREE for over a decade. I bicycled & bussed everywhere.
I estimate I saved approximately $10K/year. My savings reflect that estimate.
. Good stuff! Thanks!
Spot on! I also work in management with a dealership and most people, especially younger buyers, have what I call champagne taste on a beer budget. They want the bad ass BMW, Mercedes, what have you, but are not prepared for the extravagant costs associated with maintaining such units, not to mention how they're worth next to nothing when traded in. What customers fail to realize is the reason why their approved rates are through the roof is because of their credit history. People don't want to accept that they're responsible for their dire scores and only want to blame the messenger.
I have and never will buy a new car
I also will never lease a vehicle .
I would like your input on leases ?
I see people doing this and think it’s worse than even purchasing new
They dont sell small affordable cars anymore
It blows my mind people sign up to pay $500+ a month on a car loan. I've never paid more than $200. If something happens, I can scrape together 200 bucks. $500 is a bit harder to come by. Why buy a $40k car you can't afford when a $16k car will do? 🤦♀️
So if you are a doctor and you make $250K, you can't afford a $500 car payment? What nonsense....I have a $500 car payment (not at those crazy interest rates) and I can EASILY afford it. Some people do their math right
No one makes you go into a car dealership, you do it because you want instant gratification. The solution space is 90% in the behaviour of buyers and 10% in changing laws. Discipline and delayed gratification are cultural traits, the US will lose it’s appeal as a society if everyone makes bad decisions.
I sold cars for a couple of years (out of necessity) People really have no idea how to buy one of their largest purchases in their lives. Sure there are shady dealers (mine wasn't) but the American public aren't angels either. Some advice-buy on the last day of the month, know your credit score, know what you can afford to pay for a payment, know what you can do for a down, know what interest rate you're paying, best to get pre-approved if you can by your bank or credit union, be prepared to walk away.
That last part about being prepared to walk away is the most important. A bad deal is worse than no deal at all.
@@JBM425 exactly. Never understood why people don't do that. I did one time years before I sold cars
My mother taught me to never sell/trade a paid-off car, and I'm so glad I listened ❤
i never even bought a car with a loan 😂
i even sold my 39 year old vw rabbit mark 1 in 2019 with a gain 😊
At some point you will want to upgrade though and not everyone has the space to store their old cars.
Yeah, I have traded in junkers and that is about it.
@PeugeotRocket there's always exceptions but as long as you have at least 1 car paid off you're good 👍🏽
It really depends. My wife recently traded her CRV (bought just before COVID) for a Tesla because the value they offered was almost 82 percent of what she had paid over time as lease payments and subsequent buyout. Teslas recent price cuts and rebates made the deal a no brainier. She went from a 4 year old boring CRV with 60k miles to a brand new Model Y for just $20k.
Love my 2008 F-150 (bought used in 2012 with 35k miles). Regular maintenance and it still looks great!
People need to learn to live within their means. Why we all think that we need or deserve a brand new car is nuts. I bought my car used with 75,000 miles on it, my daughter's car was purchased with 120 thousand on it. By what you can afford
Even if people live within their means, that doesn't mean that large corporations should have free rein to impose predatory lending practices/policies on American consumers.
People need to learn how to spell, that’s what they need to do
@@kenc2257Brilliant comment! Yes that end of the equation is truly the problematic end, across the board cooperations are taking advantage of the working class and have been for quite some time.
Ive bought used cars and ended up spending more money fixing it than just buying a new (or almost new) car with no issues TBQH.
I bought a car. It drove perfectly fine. Transmission went out two months later. Yeah buddy buy used good idea. The system is rigged against people do not fool yourself
Glad that I wasn't foolish enough to buy a car when my car started to breakdown two years ago. I've been riding public transportation, bicycling, taking Uber. In the mean time, have been saving for a new car to pay all cash. I may not buy a car again since I am used to not having it.
It’s great that you don’t need to. I hope there would be more businesses to celebrate/adopt car alternatives. I am hopeful about the new planned trains.
Enjoy being trapped in that big city while it goes to crap.
@@tira2145 you have a different perspective, what concerns/issues have you faced in big cities? Also, what alternative are you in favor of?
@@jakealexander6046 You have every right to not own a car. Yes, it works for you. My concern is that these big cities, not everyone, but most are starting to change rapidly. Not for the better. Essentially you are trapped there. That's what the politicians want. Trapped people are easy to control.
@@tira2145 oh for sure, I’m just genuinely curious what concerns you have with city and being involved in society of a big city. Wouldn’t the government also be able to implement better projects that serve more people if we stay in a big city and companies can grow bigger since trade and options will be more abundant. Similar to how those passed by caravans back in the day had more wealthy people. Or your concern is mostly about importance of car ownership. Cause I will not argue since I am a car owner myself.
I'm a data analyst. The issue is us auto manufacturers and corporations lobbying for protectionist laws and tariffs (this will get worse with Trump, just wait) which lets US companies not have to compete like in other markets, its why you cant import Japanese kei cars or Chinese vehicles without an astronomical import price. You can see this with Ford selling NEW trucks in EU and Asia for 20k, they have to sell them cheaper because there's more competition, however in the USA it's dominated by a few companies that don't compete, which is why a new truck cost on average 50-70k.
So when I bought my car, I was initially offered a 4.5% Interest rate. You can imagine the dealer's frustration when I went through the roof about it when other dealers offered me 3.5% interest at that time. The "deal" I got was I can get 3.5% if I tacked on another $12,000 in a warranty that was unenforceable because my car was a base model and the warranty covered a premium model.
As someone who works at a dealership, my best advice is simple: buyer beware. Do your due diligence, research the cars, get pre-approved elsewhere, shop around, know what you're getting into.
When interest rates were low I saw 0% interest rate offered. Would that be smart to skip the bank and go with 0% interest?
Also, know your budget before you walk in and don't test drive ANYTHING above that. I feel like may people haven't figured out their budget or stress-tested it before they buy things, and then get hurt by "ooh shiny."
@@Erin-rg3dw yes definitely
That doesn’t sound simple at all....
@@BryantMitchell It isn't simple. Unless you have a guardian angel or somebody holding your hand, you're gonna get scorched and maybe burned by a car lot at least once. You also need to have paperwork about the car you're interested in with you, have your own financing available, and be willing to tell the dealership/sales people to *u(k off!
These people should be buying used cars. Who the hell pays $700+ a month.
I agree, but right now used car prices are insane.
@@kylepaulo8491
With all due respect, bite the bullet on a good used car, get it paid off asap, and reap the savings. Sacrifice a bit, turn the corner. Next time, you'll be able to buy using cash.
If it is a used Japanese car, they're practically as good as new. I mean, has anyone ever seen a older model Toyota broken down on the side of the road?
@@kabysummit5801 I'm saying in this climate, depending on how used, it can be a difference of just a few thousand to get the new over used. But yes, overall used is the way to go. My dad just retired a few years ago, was making $150k a year and he has never bought a new car in his life. He could have afforded it but just knows the rate it depreciates is not worth it. His retirement is like 100k a year,no state tax, single guy one child who is well past the age of needing financial support, and he still wouldn't do it. He's become a little more "you only live once" in his way of thinking, but still smart enough to buy used lol.
@@kylepaulo8491 Your dad is in great shape! congrats. The envy of many.
I have to say, this country is all about being in financial debt. It is totally accepted way of thinking. Yet it is nothing but a vicious cycle. Do whatever it takes to not be in that position. There are so many so-called gurus selling every conceivable toy. Delay the enjoyment a little, makes a big difference. Honest, for many, just stop wasting and the finances will be better.
I’m 29 and have never equated cars with freedom. When you have a job to go to and a house to clean, a car is just something you’re forced to buy, maintain and pay insurance on just to get you from home to work.
Right now I drive a 02 corolla that I got for $2000 like 7 years ago. I had a brand new car in the past but the newness wears off a lot faster than the payments. I sold it and paid off the loan and got my corolla. I will never buy a car over $5000.
I screwed up and bought a $32,000 car I couldn't afford and got $5,000 under in equity.
I busted my butt and paid it down and traded it in for a $12,000 Camrry after I realized the horrible mistake I made.
I am paying $1,000 a month now on my car until I pay off the car, I will never borrow for anything but a house again.
The key is to learn with every step in life.. We've all made little mistakes for big mistakes early..
Funny. There are reasons why different groups pay different rates.. We just don't tend to talk about all the variables Search on any subjects. Like the so-called pay gap. But I'm guessing it's too mean to go into some of those.
Admittedly buying a car is a cool game for me. Going from one dealer to another one and having them battle against each other, even between the same brand. It's entertaining and fulfilling when one dealer says they are offering the best price and you know they are lying to your face when you already have a better offer from another dealer from the same brand
This is the way you have to approach it. It works.
Yeah right. You go to multiple dealers who are pulling your credit report. Thus lowering your score
@@SHUB281 Those are soft inquiries that don't impact your credit score; it's only when you actually apply for the loan after you have agreed on the price that you get a hard inquiry
@@SHUB281 you don't have to get that far in the conversation. You tell them your credit score and you tell them exactly that by pulling it they are going to lower it and that you don't want to do that until you lowered your options to only a few cars and brands. If they want to sell they will do it
You are the car dealerships worst customer. I don't believe that car dealers are out to cheat people but it's obvious that you do. Why don't you just save up the money and pay cash? Or better yet buy a car that is a few years old. Go find your "entertainment" in a better way.
Recently bought my first car. Had no idea how lending worked. Let’s just say, if I could go back I would have walked right out of the dealership. The finance lady, who was probably the most stuck up person I have ever met, tried to force me into adding on additional things which I am so glad I didn’t now. I was lied to on so many terms. My advice: go with someone who has experience financing MULTIPLE vehicles.
I bet u she wouldn’t do tha to her daughter/granddaughter/ or her mother I put money on tha.
Just a semi financial literate 30 year old man’s take. Go to a credit union to get pre approved. Then take the check they will give you to pay the dealer. The credit union will be more conservative on underwriting which may reduce the potential to fall prey to the extra charges that are thrown at you.
The 1st rule when going to buy a car...1. YOU WILL BE SCAMMED. 2. REMEMBER THE 1ST RULE.
Dont . Finance. A. Car.
You should never finance with interest a depreciating vehicle.
Dealership employees are liars
As a guy who works in a dealership, I can assure you misinformed Americans are the biggest problem, we get customers with some of the worst income trying to buy cars way out of their league. I’ve seen people buying cars with over 100k miles on them and walk away with payments close to 1,000$ a month. People are just not educated enough on good financial decision making.
When I sold cars, I could tell people they shouldn’t buy something and get fired by the customer. They’d go to another salesman, purchase the vehicle, I’d get a split deal, and see the customer come in six months later trying to work a deal to keep the vehicle from being repossessed. I’ve also seen a lot of fraudulent paycheck and bank statements whenever the pay needed to be “stipped.”
Stipped ??
@@AmericanTeacher-USA It’s an industry word meaning legitimately proven.
I am 38yrs old and am not into showing off with cars. My dad taught me how to work on cars as well growing up (I am a female). I have been driving since I was 16yrs old, and have never had a car loan and have owned just two cars: a 1993 Acura Integra from 16-33yrs old, and a 2012 Honda Fit from 33yrs old to the present. Thanks to not having a car payment my husband and I have: bought a home, paid off massive student loans, paid off medical debt, and invested. They have shown that you can become a millionaire by investing instead of having a car payment. Car debt is NOT worth it! A Toyota or Honda that is bought used and is well maintained will love you until its wheels fall off and then some. Gotta love the engineering of Toyota/Honda.
I love that we have twisted having a car with freedom when if you think about it, it actively makes your life harder. You sit in 40-minute-long traffic jams to get to work. You have to pay for parking, tolls, gas, maintenance items, oil changes, insurance, and new tires every once in a while, owning a car is a huge drag.
The most popular car models are now 200-280 horsepower AWD SUVs, and all cost around $47,338 to much higher than that. People complain about gas, but then the most popular car for sale in America is a heavy inefficient F-150. People on average make $60,000 a year, and they finance a car worth $47,338 because that is the average price for one today. That means that their car costs about half of what they earn in a year. That is insanity. That is why car payments are starting to look like what rent used to look like a few years ago when things were stabilized. Cars are supposed to be freedom machines, but they actually cost you money and freedom.
I would much prefer to live in a walkable small city. Places where I can walk to work, walk to the grocery store, walk to a dental office, walk to my doctor's office, walk to a park, walk to a cafe, walk to a museum, while having a car for weekend trips. That is what I believe true freedom looks like. You can have a car for fun, but it is not a burden, or a requirement to have inorder to live and participate in society.
I work in the financial industry, and I always encourage my clients to get the loan through their bank because the dealer will charge you higher interest, and it will still be a loan from your bank.
Some of the best advice made on this is: make auto loan payments to yourself for several years, then purchase. You saved the interest, already have the cash (huge down payment!), and like savings in general, you won't miss it if it's gone (or so it appears to be, anyways).
Good advice.
Public Transit, biking, and pedestrianized infrastructure. Car dependency privatized the cost of mobility.
I live in Minneapolis, MN. I was CAR-FREE for over a decade. I bicycled & bussed everywhere.
I estimate I saved approximately $10K/year. My savings reflect that estimate.
The problem is that cars became rolling status symbols instead of transportation. In Japan, kei cars cost as little as $10k brand new all in and are very cheap and easy to service. At the same time, most newer ones can happily do 70 mph all day which is all anyone really needs. If we'd just minimize cars instead of making them rolling 10,000 lb tanks it would resolve most issues without being so impractical like a bicycle that is absolutely terrible if you need to carry passengers or cargo or need to go somewhere when it's hot/cold/raining/snowing/etc. I hope the credit crisis leads to an increase in affordable cars like we had in the 90's with just basic climate control, radio, and not much else.
🤣 Try getting anywhere in California with that attitude!
@@nunyabusiness896👍👍👏👏💙💙
You will own nothing and be happy.
“Minority borrowers pay 70 basis points higher interest rates, but default less”
This describes living in the U.S. perfectly!
Lol. Leaving out a few variables... Trying to make a point
@@miragexl007 You know why you didn’t write out any “variables” in your reply (rhetorical), because there aren’t any!!
U folks at CNBC do a great job on these auto-related “series” stories - topical and informative. Please produce more.
Not really. They completely skipped out on how most of the blame is with the consumer. They fail to educate themselves and don't even bother with basic arithmetic to check affordability and cost. I'm guessing that a video that included that wouldn't get as many views and people would cut out early if it did. This is 'feel-good' America where everyone is a 'winner' and nobody can stomach being told they made a mistake and to learn from it.
It's too bad that having a car is a requirement to take part in just about all aspects of living the US. The state of the new and used auto market makes it incredibly challenging for consumers to get by
The car lobbyist are the ones pushing it, and are making money. You shouldn’t need a car to get toilet paper.
Time to change things about the built environment then… it’s harder to lower interest rates and to fix the auto market than it is to build metro lines high speed rail and have better bus service just sayin
@@pinhead35💯
Another video about public transportation talks about a politician in charge of that stuff and he was asked why don’t we have more available public transportation that’s affordable? & his excuse was ” owning cars is the American way & Americans love their cars “
Thats just what dealers want you to believe before oil runs out and youre stuck with a dead 2 ton paperweight and payments
There is crazy obsession with cars in the US in general. Most of my friends live paycheck to paycheck with zero security just to drive their desired Benz or BMW paying sometimes over 1000$ monthly payments. And guess what when they try to sell their car 3-4 years later they can’t even get half of what they paid for it. I totally avoided this madness in my life so far by just driving an old used Toyota Prius and now I’m ready to buy my first home while others now thinking to get their Cybertruck
Lifestyle inflation at its finest
Exactly. Thank you.
Cybertruck for their cyberpunk life, high tech low life
@@jsebby2284ya it's disturbing and it would be comical it it weren't the case. I have never owned a car. Too many people are car poor
@@carlgharis7948 it's crazy man.
Americans completely blur the line of needs and wants when it comes to cars. Like sure - you most likely need a car. But you don't need a 50K+ car with $1000/monthly payment lol
If more people were like me the auto industry would be a quarter of what it is. I sold my car and bought a reliable, older(2011) simple and cheap car. No more hefty repair bills and expensive parts. With the economies i made i can now finish the house and started paying the mortgage monthly with 5% of the whole credit every month. This way i will own my house and have a more financially stable future and quiet nights.
I walked out yelling. I was at the dealership ready to purchase a car. I was with my daughter as a learning experience. We learned. I was forthright about the learning activity and let them know the deal points I was willing to agree with. Even had the true car listing. The sales ass came back with ideas and numbers that seemed as if he was deaf. One look at my daughter told the whole story of disbelief and incredulity. I backed her up and leaned in with a very loud voice expressing my astonishment of what an ass he was. And the dealership. I was ready to spend money,based true car, and they just could not be greedy enough.
Having owned 4 new vehicles in my young life, my advice is to never look at financing a new car unless you know its resale value will hold or if you plan to keep it for beyond the duration of your loan terms.
Always get preapproved before setting foot in a dealership. You have 30 days to roll as many hard inquiries into your credit report as you can; they'll only come up as one. That's been a law for over 20 years.
Call around and shop pricing on vehicles. Ask for the out the door price; finance, cash, or lease should not impact the sale price of the vehicle unless there are incentives (like tax rebates on the sale). Get paper quotes and send them to dealerships across town. Make them compete for your business. I shop at least 6 dealerships in my town and 2 hours away in a big city. I only ever physically visit for a test drive. My newest car was delivered to me at my door for no additional charge because I asked.
Better yet, but a 2 year old vehicle. A new car depreciates as soon as you drive it off the lot. A 2 year old car has been driven enough to find any bugs or defective parts, and you're less likely to buy a lemon. Check repair history and look for recalls.
This sounds all too familiar. I used to play this game and I too have purchased 5 new vehicles. However, I’ve now realized how stupid having a car payment truly is. Financing a depreciating asset is one of the most counter productive things you can do. My advice is now, buy a car with cash.
@@nerdaterp Who would get rid of a well-running 2 year old vehicle?
I work in lending; the problem is that people buy more car than they can afford and then they don't keep them long enough to avoid negative equity.
That’s why I say if you can’t afford a 36 month loan, you can’t afford the car. You should be able to pay off a car in three years.
I love the people that buy the 110,000 truck. Can't pay the loan but don't do any construction work whatsoever. They just want to ride around a big truck
Most people buy cars to impress people they don't care about with money they don't have.
Problem is, it's hard to shop around with dealers because so many of them refuse to give you any numbers. I was car shopping a couple months ago, I went to 4 or 5 of them, talked to the guys, test drove the cars, and when it came time to get numbers, they refused to give me any concrete numbers unless I told them "what kind of payment are you looking to make?" Eventually I found a dealership that surprisingly enough advertised the real out the door price (minus taxes and fees) of a car I wanted and I just went with them because quite frankly I was tired of talking to salesmen and it turned out to be a very good deal. Fortunately I had my own financing arranged through my bank, which beat the dealer by 2 points, so I always had that option in my back pocket.
I went from dealer to dealer looking at vehicles and then going inside to ask for pricing before a salesman could even step out the door. At one dealership the second I stepped inside two guys in suits were buy me. Flanked on either side by these two I asked for pricing on what I’d found in there lot. Immediately thy were asking me all the questions. But not the usual questions. Where did I find those vehicles? How did I get the numbers I gave them? Well I said I got them off the windshields. They passed perturbed glances at each other. What are you looking for. Again I mentioned the ones I saw. Just hold on they said and disappeared behind what looked like a one way glass wall in the corner of the showroom. It felt like I was being watched by the FBI. That permanently sealed car dealerships fate’s in my mind. I still go to dealers when I shop. But now I go and deliberately ask all the wrong questions and refuse up selling. After shopping around for good used cars from private owners it like having dessert. My favourite poke is getting a price confirmation from a dealer on a used car over the phone and telling them I’m sending someone over with a signed cheque to pick it up. Watching them try and squirm out of it is educational if not amusing.
It’s hard to break them out of that monthly payment number. The way I handle it is to figure out ahead of time what I want to pay total and interest rate I qualify for, then break that number into what the payment should be before I hit the dealership. Just have to clarify with them the term/number of months.
@@mh-qx2mk it sounds like you're just caving in and giving them exactly what they want. Plus what if you're buying the car cash?
Yes! You found a rareity in that dealership. Also never buy a car with a loan without GAP insurance.
Yup. You have to stand firm and keep it simple. Price, taxes, total. You know you are in for a struggle when they sit you down in an office or cubicle. You don’t have to sit down to purchase any other retail items you ever buy. They just ring it up on the cash register, you pay, you take the product and leave. Next time I will take three or four friends along and have them wander around the cars outside in plain view while I waste the sails guys time inside until he just drops the up selling tactics, adds the taxes and let’s me go.
I only ever financed a vehicle once. At the age of 20 I got a decent paying sales job & splurged on a BMW. Went to my credit union with the vehicle VIN, asked for 9k for a car loan, they handed me the check & I drove over to the dealership, simple. It was a 10 year old sedan that I purchased for 11k, I put 2k down and financed 9k with my credit union which only allowed me to do so over 2 years. I payed it off early but never again financed a vehicle. My ex-wife did the same around 2016 with at the time a 4 year old Kia. That is the most I would ever finance any vehicle.
11k for the car, 20k for repairs
@@CO8848_2if they got a E36 for that price that's definitely worth every penny in upkeep
I put $2600 down on a $5000 car. The financing ended up being $6000, that was the last car I financed.
@@CO8848_2haha yeah true.
@@CO8848_2 CORRECT! I learned that the hard way and sold it only after 6 years of ownership and 30k put on the odometer. Spent another 10k on repairs in that time. I loved that car but it was a money pit. I wondered at times what was gonna break next time I turned it on. I thought I was gonna be ok because it only had 50k miles on it when I got it, boy was I wrong. Glad I experienced a luxury euro car but I will NEVER buy a European car again! They are only “worth it” if you lease it and let the stealership deal with the repairs. Funny enough, that’s the age old story. Young guy buys a used European luxury because it’s a “steal”, because they depreciate so quickly. Everyone tells you it is a money pit, but you don’t listen. They learn soon enough it’s a money pit and abandon the thing.
I paid off my car loan. Then I was unemployed for months and ran up a huge credit card bill ...
americans have car loan crisis , student loan crisis, credit card crisis.. if there are these many crisis, its something boils down to careless behavioural crisis .
Indeed. We're creating hell for ourselves.
Why to make the elites rich so they can fly private with filet mignon, while you eat bugs?!?
You will own nothing & be happy! Schwab. 4th Reich!
A car is a depreciation asset first and foremost. There is no need to buy a new car every year, but that is exactly what many people do just to have the latest and greatest and own something nobody else has previously owned. Cars spend on average most of their time parked or occupied by one person yet the best selling vehicles in America are Trucks and SUV's. If people don't want to pay ridiculous loan rates and high payments buy older vehicles and keep them longer. When the market is not buying new cars prices will retract and become more affordable it is simply supply and demand.
@@fishmarketer Yeah I always thought if you can afford to pay for the vehicle then you cant complain about gas, maintenance, or anything else that goes with it. It's what you signed up for.
You're spot on! I'm driving a 13 year old SUV. My previous car I had for 11 years. My "Sunday" sports car is 21 years old, I bought it new. I do maintenance according to the manufacturers SCHEDULE not when something breaks so my vehicles tend to last. Poor people buy a new car ever 2 or three years and don't do maintenance according to the manufactures schedule.
Im 28, earn $115k, no debt and 110k in net worth and growing. I could easily buy an expensive car. Guess what, i have a used paid for 2016 Nissan Altima. Friends make fun of me who make less than me with their Tesla's.... People love to live above their means. 72 months! Lets be honest a good chunk of the blame is also on the consumer. They get what they cant afford keeping the market hot thus leading the industry to add in extra profit makers. How about this miller dude. Did he need that 48k car?! Were those 10k he dropped part of his emergency savings?! He even stated he doesnt really need that car. Bunch of idiots. Sorry, not sorry.
@@djm2189 . That's awesome! $110k may seem like a lot to some but if someone were to take half of that savings and dump it in car and buy another car in a few years people would quickly realize money spends easy no matter how much of it you have. That savings will build on compound interest while a car is just an expense. Keep saving and turn it into $1 million. Best of luck!
@@MrSupernova111 thank you so much! And yes I grew up very poor and know the value of a dollar. Save on most things. Mostly eat at home, OfferUp good quality furniture the rich don't want etc. I actually put 30k into a CD giving me 4.2%! Cash I didn't need. Love my used car and not having a payment is amazing. Definitely looking forward to having my first million. Thanks again!
I was smart and decided that functionality is superior to luxury. I bought a 1999 Acura TL for $600, I’m grateful I’m able to keep it running. Better to spend a small $200 in maintenance every year than to spend $1000+ PER MONTH.
I just bought a new chevrolet malibu. It is my third malibu. I paid cash for it. I put aside $4k-5000 per year to have the money ready when i need a new car. I remember when i bought malibu 2 my attorney said with the kind of money u have u could buy 5 or 6 cars of anything u want. I was worth about 1m then and now i am about 2m in net worth. I dont need a lexus, mercedes or bmw to be rich. I guess i am ...meanwhile my assets produce money for me. In the 2008-09 financial crisis i bought a rental condo for about the same money as a mercedes benz. The rental prop is now worth 230k. Had i bought a lexus, mercedes, or bmw.....maybe worth 3000 now. No tears here for those who need to look rich but are broke..........almost forgot idiot "friend" who always drove lexus or bmw ......found me at lunch....and told me he needed a loan of $ 1150... I yelled at him if u got enough money to drive around like a hot shot in bmw......u must surely be wealthy. UNDERSTAND?
Don't spend the money you don't have
So true! I know someone that bought a Porsche and lives in a 2 bed room apartment,which he had to rent out a room to 3 individuals, since he was not able to make payments for his car!
I live in Minneapolis, MN. I was CAR-FREE for over a decade. I bicycled & bussed everywhere.
I estimate I saved approximately $10K/year. My savings reflect that estimate.
In Canada i make over $100k a year and drive a 2014 Hyundai Accent, bought it for $4000 five years ago and do all my own repairs (thanks to CZcams). My coworker who makes half of what I do just bought a $80k new diesel truck, and diesel is $7.48 a gallon here..... it is a beautiful truck though.....
Correction, diesel went up to $7.72 a gallon..... time to go back to horses
I just went through the car buying experience. Though dealerships are annoying and frustrating. It is not there fault you bought something you couldnt afford. A simple google search or looking at the sticker on the car listing MSRP would tell you what its worth. Not to mention every dealer i visited provided a breakdown sheet of all the options, loan durations, down payments, and monthly payments. Not the dealers fault you decided the lowest monthly payment was what you wanted to do with likely zero down. Also there were People were willing to spend 15-30% over msrp the last few years and took out 6-7 year loans and wonder why they are upside down. Should the banks or dealerships be lending those kind of loan to value ratios? No, but at the end of the day its your job to know what you can afford and to so basic math to figure out what car you could afford to put 20% down on and pay off within 3-4yrs. If you cant afford 20% down and a max 48mo loan term, then you probably cant afford the car and should look at cheaper options.
The big problem is that the majority of people don't understand "how auto loans work." They think it's just free money. Then, you have finance companies giving out loans on $50-$80k cars like it's candy. Just like they did with home loans before the housing bubble. Car repos have been at it's highest in decades recently because of this.
America is creating a massive underclass, the American dream becoming the American nightmare 😢
It has been an American nightmare for a long time now, just that Americans choose not to see it
If you’re buying a 48k car it’s your own fault if you can’t afford it.
@@individual116Exactly!.👍
But that dream is still there. Anyone can move up if they want to. There are opportunities, take them. You hear all the time about kids from the hood who decided they wanted to get out and now are CEOs and business owners.
Sold my car for an electric cargo bike. A small fraction of the cost and a much better experience. Plus it’s way easier to find parking. Even a top of the line e-bike is a small fraction of the cost of a car
If you are in SF or NYC - great idea! Any place else, not good
@@Thebrothaisback I'm in Boston... but your point is still valid. It's unfortunate that so many cities in the US are designed so poorly that owning a car is the only viable way to get around. I grew up in car-dependent suburbia and I absolutely hated it. We need to start re-designing our cities so that people who don't want a car don't have to buy one.
@@Thebrothaisback City Buses typically have racks for bikes
I live in Minneapolis, MN. I was CAR-FREE for over a decade. I bicycled & bussed everywhere.
I estimate I saved approximately $10K/year. My savings reflect that estimate.
Public transportation is almost nonexistent where I live. To get to the big city, a 1 1/2 hour drive by car, to go via public transportation takes TWO DAYS. I definitely understand why rural residents feel neglected by our government.
Pro tip: Buying a reasonable vehicle rather than a tank or a warship on wheels also helps keeping loans down.
That being said, anyone who bought a reasonable car and is still paying through the nose has my full sympathy, because there is a lot of abuse going one, regardless of the choice of car.
never to go for vanity, go for utility. got 5 year 0% APR in 2018 on brand base model new stick shift nissan versa. best purchase of my life. its paid off now, no interest paid. bargained good with the salesman. car is a good commuter car for tall guys. used the car for 5 years prior to paying the full amount.
if you can't buy a car in cash, don't buy it.
I live in Minneapolis, MN. I was CAR-FREE for over a decade. I bicycled & bussed everywhere.
I estimate I saved approximately $10K/year. My savings reflect that estimate.
@@xjarheadjohnson I really admire car free people and I do know one personally as well. However, it is not for everybody. I would rather keep maintaining my old car, my old refrigerator, my washer/dryer etc. it is costly effective and reduce pollution.
I remember years ago someone laughed at my car. It was paid for and it got me back and forth from school and if you dented it I didn't care. I learned to fix it myself. I have no sympathy for people buying a car they can't afford.
It's the fallacy people believe: that they own something they haven't paid for. Then they're shocked when they miss a couple of payments and find out who really owns the thing.
You're doing it right.
Sorry someone laughed at your car. To me a car is a utility, it gets me around
I finally graduated from college and was able to buy new cars and I love it every time I get to do it. However I buy my cars for the long term and never buy first year production anything. I have a 2005 Jeep wrangler and a 2006 Jeep Liberty still going strong. Never trade in a reliable car especially if it's paid off. @@Ryan125y
Im 28, earn $115k, no debt and 110k in net worth and growing. I could easily buy an expensive car. Guess what, i have a used paid for 2016 Nissan Altima. People make fun of me who make less than me with their Tesla's.... People love to live above their means. 72 months! Lets be honest a good chunk of the blame is also on the consumer. They get what they cant afford keeping the market hot thus leading the industry to add in extra profit makers. How about this miller dude. Did he need that 48k car?! Were those 10k he dropped part of his emergency savings?! He even stated he doesnt really need that car. Bunch of idiots. Sorry, not sorry.
That's awesome! I fix my own car as well and bought it 15 years ago. I'll be in the market for a new car soon and can probably pay for a new car in cash. But I can care less what someone thinks about my car as long as it gets me where I need to go.
One should NEVER get a car loan to purchase a car. Only pay cash even if it means buying an old used car, then save up for a new car. We are slaves to debt and cars are not worth getting in debt for.