Car Loans - keeping America poor?

I think everyone’s finances are different. I’d pay cash if at all possible obviously but I will say this, new cars probably won’t nor are designed to last ANYWHERE as long as older ones. They just suck and their quality is bad. All vendors. Buying 10th gen F-150’s or higher mileage early 2000’s trucks has been my ticket. Now I’m running a 22 F-150 with a 5.0. Just rolled 105,000 and still ticking hopefully for another 100 more at least. I also have some newer “toys” but don’t daily them. I enjoy them and don’t owe on them. Some would say that’s dumb but they aren’t “investments” they are just fun! To each their own!
 
Marbles said:
There is actually a level of logic to this. If your assets (savings accounts and such) get too much in them, you stop being eligible for assistance and start paying more for housing.

Vehicles and expenses shoes can be sold, but don't count against you. Also, ignoring ethics, why would one not buy nice things if saving the money means you have to spend it on the basics?

The current system does more to keep people poor than to help them back on their feet.

You see the same thing with disability and people not going back to work because they will end up bringing home less money. I have personally watched the change good, hard working men for the worst. It is toxic.

The hand up becomes a ball and chain. Every solution quickly gets political, in part because rather than just looking for results, there is an ethical/moral element to how we all feel about it.

Sorry, meant to just share something I found interesting, then started down the rabbit hole.
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Yep. Also keeps people from marrying. “If we get married, we’ll make too much money to get assistance”

Very detrimental.
 
Mattmann86 said:
I think everyone’s finances are different. I’d pay cash if at all possible obviously but I will say this, new cars probably won’t nor are designed to last ANYWHERE as long as older ones. They just suck and their quality is bad. All vendors. Buying 10th gen F-150’s or higher mileage early 2000’s trucks has been my ticket. Now I’m running a 22 F-150 with a 5.0. Just rolled 105,000 and still ticking hopefully for another 100 more at least. I also have some newer “toys” but don’t daily them. I enjoy them and don’t owe on them. Some would say that’s dumb but they aren’t “investments” they are just fun! To each their own!
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You're wearing rose colored glasses about the quality of cars in the 70,80,90's
 
ddowning said:
If the Joneses only make $15k/month in today's economy, they need to quit spending or get to work. My wife and I currently make roughly that (fluctuates as we run a small seasonal business). There have been periods of a couple years at a time where we made twice that and should have been investing in growth more aggressively. I have never had a new vehicle and we live on an acreage with an old house that was slightly more than $300k in 2020. We mostly take weekend vacations that are cheap to be around to run the business. The business has zero debt and the only personal debt we have is our house at 3.5% for 15 years. Even $30k/month is not really life changing. It moves you 3 meals from starvation instead of one.

There is a certain amount of money that allows you to live a modest life without financial worry. It is way less than people think if you make wise decisions. The amount of money it takes to live a very lavished lifestyle without reintroducing the worry is unfathomable to most people.

In the midwest where things are relatively cheap compared to the coasts (the south is cheaper than here by a lot) I know a couple people that make 7 figures a year. They live pretty lavished lifestyles, but they do not do it without worry. Some of that is poor decision making, but the other part is just that things are truly expensive. My guess is it takes 7 figures a year to comfortably have a new boat, truck, camper, suv, few vacations to the beach a year while paying off main house and vacation homes at beach and ski resort destinations while still investing and saving appropriately. If keeping up with the Joneses is the goal, it seems to me that it takes a hell of a lot to do it. Luckily, most of those things don't contribute much to my happiness.
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Yeah…$30k a month is definitely life changing. I’d pay off my house and retire in about 5 years of that.
 
Speaks said:
I mean mathematically there is..... I broke down a detailed example of it. But thats only true if you had the cash to start, the interest rate is low, and you invest the money and dont just spend it elsewhere. Those are a lot of conditions that most people will not meet.

General advise to most people to not take out car loans and drive a beater while they save is quite prudent. That does not mean it applies to everyone, though those that can afford to make the loan make sense generally dont need advice on it.
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Statistically the ability to take out a loan is a very low indicator of financial health. Not only are there several conditions but add in a couple of assumptions of the future. I do think for folks with significant investment in securities getting a very low interest loan makes sense. Those are fewer and farther between as the cost of money is much higher to the MFR. that is subsidizing the loan. The cost of 0% financing is just added at the factory.
 
TheWhitetailNut said:
The cost of 0% financing is just added at the factory.
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So if its already factored in and you are already paying for it why on earth would you not use the interest free money and leave your cash where you are making money with it.

Point in fact is nearly exactly what I said that you took issue with.
 
ddowning said:
If the Joneses only make $15k/month in today's economy, they need to quit spending or get to work. My wife and I currently make roughly that (fluctuates as we run a small seasonal business). There have been periods of a couple years at a time where we made twice that and should have been investing in growth more aggressively. I have never had a new vehicle and we live on an acreage with an old house that was slightly more than $300k in 2020. We mostly take weekend vacations that are cheap to be around to run the business. The business has zero debt and the only personal debt we have is our house at 3.5% for 15 years. Even $30k/month is not really life changing. It moves you 3 meals from starvation instead of one.

There is a certain amount of money that allows you to live a modest life without financial worry. It is way less than people think if you make wise decisions. The amount of money it takes to live a very lavished lifestyle without reintroducing the worry is unfathomable to most people.

In the midwest where things are relatively cheap compared to the coasts (the south is cheaper than here by a lot) I know a couple people that make 7 figures a year. They live pretty lavished lifestyles, but they do not do it without worry. Some of that is poor decision making, but the other part is just that things are truly expensive. My guess is it takes 7 figures a year to comfortably have a new boat, truck, camper, suv, few vacations to the beach a year while paying off main house and vacation homes at beach and ski resort destinations while still investing and saving appropriately. If keeping up with the Joneses is the goal, it seems to me that it takes a hell of a lot to do it. Luckily, most of those things don't contribute much to my happiness.
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WHAT? $180k is roughly the top 5-6% of Americans. I live on less than that now and do make 7 figures. The hardest thing in consulting is to get clients to accept is you cannot out earn a spending problem. There is no amount of money a motivated person cannot piss away.
 
Reburn said:
So if its already factored in and you are already paying for it why on earth would you not use the interest free money and leave your cash where you are making money with it.

Point in fact is nearly exactly what I said that you took issue with.
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That is antiquated example, there hasn't been a 0% car loan (at least on trucks) in years. The institutional cost of money killed it.
 
TheWhitetailNut said:
The hardest thing in consulting is to get clients to accept is you cannot out earn a spending problem. There is no amount of money a motivated person cannot piss away.
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True words. I remember Evil Knivel said “Julio Iglesies the singer” remarked that he made so much money he could never spend it all!” Evil said “Hey Julio I can spend all your money away, give it to me!” Evil said he loved jumping buses and women and they both broke him figuratively and literally!
 
TheWhitetailNut said:
That is antiquated example, there hasn't been a 0% car loan (at least on trucks) in years. The institutional cost of money killed it.
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You just arguing trying to prove your point.
It will be back shortly as soon they dont ship the number of cars / trucks they have been and they have a quarterly earnings dip.
Chevy is already at 2.9%. Still makes sense to finance at their 2.9% money now vs liquidating cash out of a 5% money market account.
I suspect we will see 0% again with 12 months.

Just to be really snarky if you can stomach driving an EV then you can get a chevy silverado EV at 0% RIGHT NOW.

Screenshot (62).png
 
Haven't read all the replies, but the reason many Americans buy a "new" vehicle every few years is they know they can afford $XXX per month payment, but they would be screwed if they had to make an unexpected $X,XXX repair. They just want something under warranty....they can count on their monthly payment, pay for oil/filter changes, and run their tires, brakes, and batteries until there is a problem. Most of these folks also don't know how to turn a wrench.

2016 Chevy 2500HD 6.6 Duramax here, 120K miles. Bought new in Sept 2016, paid off in Sept 2017.
 
Reburn said:
Sure. Then.

Now only if you can find parts or dont mind kicking around a junk yard on your day off picking parts of wrecked cars.
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I have a ‘84 Chevy Custom Deluxe square body in my yard that runs just fine.
If I needs parts I just use LMC Truck parts.
 
Ucsdryder said:
The mortgage thread got me thinking about auto loans. Dave Ramsey has been a hot topic and he talks about vehicles keeping America poor. My wife and I have talked about a new vehicle a few times, but dang…

Obviously these numbers are made up, but realistic. They don’t take into consideration increased fees for registration and insurance on a new vehicles, but I still think it paints a picture. Of course, everyone needs a vehicle so it’s not quite as simple.

Based on the screen shots below. If a potential buyer invests the down payment, plus the monthly payment over 84 months, it would result in $115,000 with an 8% return. If that potential buyer buys a 70k Tahoe, after paying their last payment they have a $25,000 Tahoe.

Curious how everyone balances this…

View attachment 871054
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Exactly what gave you pause is how I handle it. My kids are grown and gone. My family vehicles are bought outright. No payments.

I keep them wrenched up and maintained. They are dependable. But, I’ll never go in personal debt for another vehicle.
 
Marbles said:
There is actually a level of logic to this. If your assets (savings accounts and such) get too much in them, you stop being eligible for assistance and start paying more for housing.

Vehicles and expenses shoes can be sold, but don't count against you. Also, ignoring ethics, why would one not buy nice things if saving the money means you have to spend it on the basics?

The current system does more to keep people poor than to help them back on their feet.

You see the same thing with disability and people not going back to work because they will end up bringing home less money. I have personally watched the change good, hard working men for the worst. It is toxic.

The hand up becomes a ball and chain. Every solution quickly gets political, in part because rather than just looking for results, there is an ethical/moral element to how we all feel about it.

Sorry, meant to just share something I found interesting, then started down the rabbit hole.
Click to expand...
I agree 100%, those hud apartment folks probably wouldn’t qualify for the free house if they had 70-100k in savings.
 
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