Need a new car? Better have deep pockets.

[smithra_66]

A number of recent threads on here have expressed shock and dismay at the prices of new vehicles. The average transaction for a new vehicle today is something daft like $48k. It's made worse by the Big 3 pulling out of the low profit end of the market. They just don't make small, economical, low-cost vehicles any more. Gosh, wonder where oil prices are likely to go just now?

Read something today that puts the whole horror of this in easy to read terms. Article in Motor says that nearly 18% of new car buys involve a monthly car payment of $1000 or more. Yes, one thousand dollars a month plus any servicing and repairs to own a depreciating asset. Oh, and if you are a multi-car household, with prices and credit "working" as they are, don't ask to have more than one loan running unless you make a six figure salary.

How much of this is the new economics of production, and how much is down to "gotta have it" trampling good sense in people's household budgets I cannot say. What do y'all think?

Access Denied

Just ignore the "Access Denied" rubbish, the link works just fine.

Hold onto your wallets because it's going to get even more expensive with the environMENTALISTs pushing CAFE standards and banning internal combustion engines.

EVs are way more expensive but hey, we need to "save the planet!"

 

[SMSgt]

I don't need any of the fancy electronics. I made it through most of my life without them with no more than an AM/FM radio. I don't need vehicle avoidance--the other drivers do. I don't GPS and Maps. A $3 paper map will do. Take all of that overpriced junk out.

 

[LoboGunLeather]

Purchased the new car in 2015. Wife has now rolled the odometer to 62,000. Still in exceptional condition.

Purchased the new truck in 2018. Now sitting at 66,000 miles. Still in excellent shape.

Both are fully paid off, cost us nothing beyond insurance, fuel, occasional routine maintenance.

I doubt that Mr. Car Dealer will be seeing us again, except in the rear view mirror.

 

[boykinlp]

Another thing that I don’t think was brought up in this thread is the length of new vehicle loans. When I was growing up, you NEVER heard of anyone getting a new vehicle loan for more than 48 months. In 2023, according to Experian's State of the Automotive Finance Market Report , the average new-car loan length in the first quarter of 2023 was 68.6 months, while used-car loans averaged 67.4 months. That's close to six years of making monthly auto loan payments. While shorter term lengths are more ideal, the most common term length in the American auto market is 72 months, according to Edmunds. As car prices rise, 84-month auto loans are becoming more popular. To me, that is unbelievable!
Larry

 

[llowry61]

Another thing that I don’t think was brought up in this thread is the length of new vehicle loans. When I was growing up, you NEVER heard of anyone getting a new vehicle loan for more than 48 months. In 2023, according to Experian's State of the Automotive Finance Market Report , the average new-car loan length in the first quarter of 2023 was 68.6 months, while used-car loans averaged 67.4 months. That's close to six years of making monthly auto loan payments. While shorter term lengths are more ideal, the most common term length in the American auto market is 72 months, according to Edmunds. As car prices rise, 84-month auto loans are becoming more popular. To me, that is unbelievable!
Larry

Modern financing is a big part of the problem.

When cars got too expensive for the traditional financing bankers came up with leasing so people could afford the cars so prices go up.

When the individuals couldn't afford the buyout on a lease they rolled the residual on to the next one once again prices inch up.

Now that they can't afford a 1300 a month payment they just amortize the loan out another 12 months to bring it down to a thousand.

I remember when I was a kid and my dad went to buy cars you couldn't finance more than half the cost of the car. You had to have either 50% down or a trade in to equal that amount and the max loan was 48 months.

Financing allows people to purchase things they really can't afford or shouldn't buy.

Don't get me wrong financing large purchases is a tool you have to use in the modern world, however after spending 32 years in the Financial Services Industry a lot of people do NOT understand the responsible use of their purchasing power.

 

[lihpster]

Why? Because they can get away with it. And why can they get away with it? Because America runs on spending money you don't have. Let me say that again, America runs on spending money you don't have.
Don't believe me? Apply for a job, or an apartment, or have a background check run on you. One of the things they are gonna check is your credit score. Because this country values you more on how you borrow money than anything else.
Live within your means, buy everything cash, and you're a second class citizen who isn't doing his part to grow the economy. So, when it comes to buying something big ticket, like a car, you're the outlier if you're not willing to mortgage the next 6-7 years of your life away. You're a "bad risk". And you should be sent to the Island of Misfit Toys.

 

[llowry61]

I remember in 1996 I wanted a stripped-down Chevy S-10 pickup truck. The only way I could get one was to purchase one from their fleet sales lot that was a leftover from a deal for a fleet purchase. It had a manual transmission no radio no power anything but it did have AC.

I paid $9500.00 OTD. I drove it until 2012 when the timing chain or belt not sure which it was broke and the pistons beat up all the valves.

I sold it to a buddy for $400.00 since the body, frame brakes axles etc. were all well maintained.

I paid cash for it and put all the money I would have paid in payments into the 401k. It was the smartest thing I ever did.

My friends who were driving higher end cars made fun of me called me cheap etc. Even my wife gave me a hard time about it, but I am now comfortably retired and just turned 62. I am getting the last laugh.

 

[steelslaver]

Couple things. The national debt, pales to the amount of city, county, state and personal debt

The 3 million richest people in America have more wealth than the 290 million in the bottom 90%

Why be surprised that many people can't afford new cars or homes.

It is not just that what $5 bought in 1990 now takes $11.75 to buy now, but the percentage of wealth owed by the bottom 50% has dropped from 4% of the total to just 2.5% of the total. Wealth has trickled up, NOT down.

PS, IF you are earning 2.35 times as much to have the same purchasing power, you are being taxed at a much higher rate both in income tax and sales tax or property tax due to inflated values.

News flash, the guys working in an auto plant and trying to get ahead aren't the real problem, nor is the guy at McDs who wants $15

 

[Old cop]

Our 2013 Toyota Avalon has a little over 100K & I was thinking of trading until I saw how prices had skyrocketed. Nothing wrong w/the Avalon, it’s big & comfy and I plan on driving it awhile longer.

 

[BKLooney]

That’s why I only buy vehicles that are at least 10 years old.
I can have a lot of repairs done if needed for the amount of money that 3 or 4 payments on a new truck would be.

I save a lot of money on insurance, too.

One thing always gets me about most, seems like they're not happy unless they are working through a payment book!

They will drive their vehicles into the ground, curse their vehicle everytime they get in it, and only spend enough on them to keep them rolling..but will throw money at a payment book without so much as a second thought...

If you take half of what a new car monthly payment is and put even half that into the vehicle they have...in short order there won't be anything left that the vehicle needs...but no...

 

[coltle6920]

2006 F-150 5.4L XLT with 91k. Only issue is paint chipping in bed or cab roof. Seems Ford never could do a reliable paint job in blue colors and stupid me keeps buying that color. Anyhow at 17yrs of age it still passes emissions with flying colors with nothing more than an oil change and new air filter.

I'm a 72yr old single male with no ex, no kids and no bills other than insurance, taxes and utilities. I could go out tomorrow and plop down cash for any vehicle I want. Not bragging. Just stating the way I was raised was to have what I needed and work for what I want.

I've decided that the next vehicle I'm seen in will have either flashing lights and sirens or flowers. My only request is that the vehicle be any color but blue.

 

[Racer X]

Either Americans are wealthy enough to spike demand for luxury cars (these would have been luxury cars a decade or two ago), or something’s just really askew. We’re told the economy sucks, but preople are buying $50k vehicles, living in $2k apartments, and buying $500k homes. Well, someone is. I’m sure not doing that.

They won’t be selling us Beetles because dealerships make their money on maintenance, simple as that.

I'm in Seattle. People are driving $75k+ vehicles, living in $3k apartments, and can't find $850k homes to buy.

Not everywhere is middle America.

 

[LVSteve]

I'm a 72yr old single male with no ex, no kids and no bills other than insurance, taxes and utilities. I could go out tomorrow and plop down cash for any vehicle I want. Not bragging. Just stating the way I was raised was to have what I needed and work for what I want.

Yep, and you'd be penalized for it. No financing means no backhanders for the dealership, so all of a sudden the price gets firm.

 

[DWalt]

I have bought only two new cars in my life. Paid cash for both. Every other vehicle was used or a company car. I had a job for about eight years that came with a company car I could drive for personal use. That was about the best fringe benefit anyone could ask for. Company paid all operating expenses, not me. No gas, no service, no insurance, and no depreciation. And at that time, no taxable benefit to count as taxable income.

 

[BigBoy99]

When I bought my 2016 truck, the dealer offered an additional $7500 discount if I financed the truck through them. That didn't sound bad so I let them set up the 5 year loan and got my $7500 discount. I made the first loan payment and them paid off the loan as I had intended to pay cash for the vehicle.

 

[Telecaster]

When I bought my 2016 truck, the dealer offered an additional $7500 discount if I financed the truck through them. That didn't sound bad so I let them set up the 5 year loan and got my $7500 discount. I made the first loan payment and them paid off the loan as I had intended to pay cash for the vehicle.

I’ve heard that’s the way to go, as long as there’s no pre-payment penalty.

 

[Alton]

36 months for a new vehicle 40 years ago was normal because they didn't last much longer. My 1978 and 1983 trucks were a perfect example. I kept the 83 for 6 years and replaced the transmission at 90K, engine was failing a little over 100K, sold it for 1,000. My 89 went 200K miles before I sold it and that person drove it till after 300K miles. My 2001 Silverado has 300K miles and I drive it two to three times a week. My brother has a V10 Ford and he has 400K miles same engine. My C8 financing is at 1.95%, why would I take money out of my savings/retirement that was making 4 to 6% plus a couple years ago. Don't ask me about the last couple years. Like some one said walk into a dealer today and offer up cash and they will run away. With the latest price increases I am not sure I will ever buy another?

 

[oldbrownhat]

...It's pretty unbelievable what they get for vehicles nowadays, especially trucks that usually get parked in town, never get dirty and never pull anything. ...

When I lived in the city 20+ years ago, I saw lots of shiny clean Jeeps that had never seen a dirt road, driven by Smart Young Things.

British ex-pats here like LV Steve may know the term "Chelsea tractor", used to describe pristine Land Rovers being used to ferry posh kids around the city, Chelsea being a very upscale part of London.

 

[rockquarry]

I’ve heard that’s the way to go, as long as there’s no pre-payment penalty.

This varies from one dealer to another, at least it did. I buy new and pay cash, but keep vehicles quite a while. The last one I bought, seven years ago, there was no difference in financing or cash. The one before that, they came off the agreed upon price a bit more if I would finance and not pay off the balance for at least sixty days, so that's what I did; no penalty.

 

[johngalt]

I always figured that if I could afford to make a car payment, I could afford to set aside the equivalent and pay cash for the next one.