More Than 80 Percent Of Americans Can’t Afford New Cars
Experts say you should earn $100K before buying a new car so you don’t spend more than ten percent of your monthly income on payments
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Experts say you should not spend more then 30% of your income on housing (shelter, heat, water, sewer and electricity). If you need a car (live outside a city, have bad city planing, etc.) then this is one more pressure on people.
The current “normal” world exists now only for people making a lot more then the average.
Oh and to better illustrate the gap between prices and wages: https://en.wikipedia.org/wiki/List_of_countries_by_average_wage Compare to an average price of 48k https://www.caranddriver.com/news/a43611570/average-new-car-price-down-still-high/
Honestly you shouldn't even spend that on a car. Cars lose value overtime and are a bad investment.
Take your money and put it into a emergency fund or retirement
This is bad financial advice I hear all the time. People don't buy cars as an investment, they buy them as a consumable item or a form of entertainment.
Nobody says you shouldn't go to the movies because it doesn't generate a return.
It's not really bad financial advice, and people will absolutely tell you to skip some of the frivolity in the idea of generating a return. I don't think most people think of a car as an investment, but I do think that it's entirely common to spend way, way too much on a car for basic transportation. Giant trucks and SUVs that start at 40k are like the most popular cars in America. Most people probably really do need to be told that they're over-spending on cars. Like, the last time we bought a car, I had to talk my wife out of a monster SUV because she was like "well what if our kids want to take friends [on the two trips we take a year]?" Like, the other 50 weeks of the year, she's solo commuting 10 miles... I'm not making fun of her, this is sort of the default mentality in this country. In the end we settled on a smaller crossover for half the price ( < $20k) and the agreement if we wanted we'll use the money we save to rent an escalade or whatever if we want to take a big trip.
I have seen entire families with kids going to school on a moped. Mom dad and three little ones. You don't have to take it to that extreme but you are right. For all but the biggest families a regular sits 5 car is enough.
I also don't understand the whole "it depreciates in value" angle. Yes, everything I buy new depreciates in value once it is no longer new. I'm not buying a car to immediately sell it. So who cares?
Are there people out there flipping cars like they do with houses? Maybe tell those people.
I bought my car new and people told me the same thing. I'm still driving it 13yrs later and have had no major maintenance issues; only regular maintenance like oil, tire rotation, lube etc. The most expensive thing I've put into it are new tires.
I'll buy my next car new again and do the same thing.
“Are there people flipping cars like they do with houses?”
Yes. Dealerships. Used car lots. People who offer you $3,000 on trade in and turn around to sell the vehicle for $9-11,000 after a detail and oil change.
People should never trade in or sell their car to a lot/dealer, because they are almost always settling for about a quarter of its value. But the convenience of not having to find a buyer is awfully tempting.
I don't disagree with anything you're saying, but I'm talking about new cars. Outside of profiting off of EV rebates as someone else mentioned, I don't know of anyone buying new cars to flip. Which is why talking to people about immediate depreciation seems silly to me.
I think you're missing the point. Purchasing a utility item for its utility is fine, just don't splurge on a car when that money is far better put into housing, healthier foods, education, etc.
The movies don't cost as much as a car (hopefully). If you want to save money stop dropping it on useless things. You may need to cut back and actually budget. I'm still surprised at the number of people who don't even track there spending
Good. Now tell everyone who owns a house that. Do you have a house that you live in? Congrats! You own an asset. One day you might get very lucky and get slightly more than what you paid for it, after inflation, but don't count on it.
Thing is, if you need a car you cant afford to not have one. My options are buy a used car or a new car. Used cars are difficult to gauge reliability. And anything less than 5 years old is only ~5k under the price of a new car.
Mf subaru people had the gall to show me 2018 forester with 20k miles on it and be like "$29,000". For reference, a new, 2023 forester with no miles costs $31,000. Insane.
Your choices are currently: buy a reliable used car for the MSRP of a new car and less warranty, buy a very old, unreliable used car for 2x-6x what it was worth 3 years ago, or buy a new car at or above MSRP.
Shits fucked yo.
My car cost $5,000. It a old Subaru with some hail damage and I do most of the work myself. It leaks oil but that can't be helped.
Don't go buy a modern car. They are made cheap and overpriced.
Ok, so there is no public transit here and even though I walk and use my peddle powered bike for in town whenever I can, I would not be able to make a living without a car like thing. No one with half a working brain is thinking that their daily driver is an investment. Hell a lot of people (me in the past) spend more working time in that car then not. A car like device is not a optional luxury for most people in North America. This is sadly the world we live in outside of major (and even not all major) cities.
A car doesn't need working heat and doesn't need to be cosmeticly pleasing. All it needs to do is get from one point to another
And nether of those things are needed for a car to be unaffordable. It is like you don't know what a car costs that works. used prices for absolute garbage is high due to the fact most of the market can not even think of buying new cars. Less new cars means less used cars later.
I guess my experience has been different
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