Americans owe $1 Trillion on their cars

[Denny347]

Well, there are 260+ million registered vehicles in the US so it's not that surprising. There is 100% nothing wrong with loans, if used responsibly. My grandfather retired from Ford so we get them 15% under dealer cost+incentives. He bought his current Ranger in 2001 for 0% interest+the discount. Nothing wrong with that. My current car is now paid for but when I took out the loan I looked at the interest paid for the life of the loan and it was $1,200 or something close. I considered that a reasonable amount. I do know people who get upside down in a car or who get screwed in a lease. But those are not good reasons to crap on loans in general. Now my car is paid for and I'll drive it for years to come. Fixing it is still cheaper than buying another. Used cars are highly sought after these days, people are keeping them longer. I wonder if the 241 Trillion dollars is decrease from previous years?

 

[Fizzerpilot]

This is true, the average car is 11.5 years old. The AVERAGE, so there are some old cars out there.

 

[hoosierdoc]

This is true, the average car is 11.5 years old. The AVERAGE, so there are some old cars out there.

I hear people say "I need a new reliable car, mine is 8 years old" or something to that effect. I point out how old the AVERAGE car is, and suddenly there are more excuses for a new car (payment)

 

[Route 45]

I hear people say "I need a new reliable car, mine is 8 years old" or something to that effect. I point out how old the AVERAGE car is, and suddenly there are more excuses for a new car (payment)

Nobody needs an "excuse" to spend their money any way that they see fit.

Why do you hate freedom?

 

[BehindBlueI's]

Unfortunately I drive 3,000 miles per year, and I cannot ride my bike to the airport... owning a home I do believe can increase wealth, but one has to also include maintenance costs and interest. A new roof, new HVAC, flooring... those quickly add up.

On a 30 year note, one pays as much in interest as they paid for the home. $200k home, $200k interest, plus property taxes, plus maintenance...

You don't need a car. You choose to buy a car. You absolutely could get to the airport with a bicycle and a bus pass, or you could move to somewhere that would allow you to. Based on, wait for it, emotion and bias, you chose to live where you live and you chose to buy a car. Neither were the results of just doing what the math told you.

Humans do not make decisions that way, and would be stupid and miserable to do so. You used a combination of logic and emotion to determine where to live. You made a set of value judgments on how much you value intangibles when you bought a car. You value the time savings and comfort of the car. Neither have any input in "the math" but offer great utility. That's how we make decisions. An attempt to maximize utility. Of course we are fallible and sometimes decide incorrectly. Logically, no one would eat unhealthy food as we all say we want to be healthy and logically we mean it...but our brain is a committee and sometimes the guy who wants the cookie overrides the guy who is worried about pre-diabetes. It is *always* a combination of logic and emotion. Our brains will not work any other way.

So, you did the same thing I did. You wanted something and you took the route you deemed the least offensive to your net worth that would still meet your wants. Now here's the kicker, you also did what makes you happy based on what you value. You value more money in the bank and the feeling of being logical and frugal. Your brain gooses you with a little bit of endorphins when you think about how smart you were to buy your used car and how superior you are to the morons buying new vehicles. You get to feel good (emotion and bias). I wanted something and took the route I deemed least offensive to my net worth but still met my wants. I am satisfied with my current rate of savings and net worth just as you are satisfied with your current car. I get a little blast of endorphins every time I turn the key and hear the 6.2L rumble to life, every time I drop two gears and pass a semi instantly, etc. It is simply different values, not that you're some paragon of logic and I'm an emotional bouncy ball. We are both maximizing utility based on our own emotions and using logic to further that.

As for the home, right. However, what's your alternative? It's not free to not own a home. The math says live with your parents and sponge off them your entire life, I guess, but that's got little emotional appeal for most of us. The feeling of sponging is not pleasant, plus the desire for privacy, to feel like the head of your own house, etc. At least today, with low interest rates and relatively high rents, what's the wealth building alternative to buying a home? My mortgage is less than the rent for nicer apartments with the same number of bedrooms.

 

[hoosierdoc]

Nobody needs an "excuse" to spend their money any way that they see fit.

Why do you hate freedom?

why do you want to start fights? People here are speaking about general concepts, you are pointing out individuals for attacks.

pointing out someone's lies to themselves is hating freedom? Hah. Ok.

 

[Tanfodude]

In simple words, we're humans. Otherwise, we're synths.

You don't need a car. You choose to buy a car. You absolutely could get to the airport with a bicycle and a bus pass, or you could move to somewhere that would allow you to. Based on, wait for it, emotion and bias, you chose to live where you live and you chose to buy a car. Neither were the results of just doing what the math told you.

Humans do not make decisions that way, and would be stupid and miserable to do so. You used a combination of logic and emotion to determine where to live. You made a set of value judgments on how much you value intangibles when you bought a car. You value the time savings and comfort of the car. Neither have any input in "the math" but offer great utility. That's how we make decisions. An attempt to maximize utility. Of course we are fallible and sometimes decide incorrectly. Logically, no one would eat unhealthy food as we all say we want to be healthy and logically we mean it...but our brain is a committee and sometimes the guy who wants the cookie overrides the guy who is worried about pre-diabetes. It is *always* a combination of logic and emotion. Our brains will not work any other way.

So, you did the same thing I did. You wanted something and you took the route you deemed the least offensive to your net worth that would still meet your wants. Now here's the kicker, you also did what makes you happy based on what you value. You value more money in the bank and the feeling of being logical and frugal. Your brain gooses you with a little bit of endorphins when you think about how smart you were to buy your used car and how superior you are to the morons buying new vehicles. You get to feel good (emotion and bias). I wanted something and took the route I deemed least offensive to my net worth but still met my wants. I am satisfied with my current rate of savings and net worth just as you are satisfied with your current car. I get a little blast of endorphins every time I turn the key and hear the 6.2L rumble to life, every time I drop two gears and pass a semi instantly, etc. It is simply different values, not that you're some paragon of logic and I'm an emotional bouncy ball. We are both maximizing utility based on our own emotions and using logic to further that.

As for the home, right. However, what's your alternative? It's not free to not own a home. The math says live with your parents and sponge off them your entire life, I guess, but that's got little emotional appeal for most of us. The feeling of sponging is not pleasant, plus the desire for privacy, to feel like the head of your own house, etc. At least today, with low interest rates and relatively high rents, what's the wealth building alternative to buying a home? My mortgage is less than the rent for nicer apartments with the same number of bedrooms.

 

[olhorseman]

This is true, the average car is 11.5 years old. The AVERAGE, so there are some old cars out there.

My "newest" vehicle is 10 years old and the other 2 are 20+ years old. I view vehicles as only a means of getting from point A to point B. As long as they continue to perform that function, I see no reason to replace them.

 

[Fizzerpilot]

You don't need a car. You choose to buy a car. You absolutely could get to the airport with a bicycle and a bus pass, or you could move to somewhere that would allow you to. Based on, wait for it, emotion and bias, you chose to live where you live and you chose to buy a car. Neither were the results of just doing what the math told you.

Humans do not make decisions that way, and would be stupid and miserable to do so. You used a combination of logic and emotion to determine where to live. You made a set of value judgments on how much you value intangibles when you bought a car. You value the time savings and comfort of the car. Neither have any input in "the math" but offer great utility. That's how we make decisions. An attempt to maximize utility. Of course we are fallible and sometimes decide incorrectly. Logically, no one would eat unhealthy food as we all say we want to be healthy and logically we mean it...but our brain is a committee and sometimes the guy who wants the cookie overrides the guy who is worried about pre-diabetes. It is *always* a combination of logic and emotion. Our brains will not work any other way.

So, you did the same thing I did. You wanted something and you took the route you deemed the least offensive to your net worth that would still meet your wants. Now here's the kicker, you also did what makes you happy based on what you value. You value more money in the bank and the feeling of being logical and frugal. Your brain gooses you with a little bit of endorphins when you think about how smart you were to buy your used car and how superior you are to the morons buying new vehicles. You get to feel good (emotion and bias). I wanted something and took the route I deemed least offensive to my net worth but still met my wants. I am satisfied with my current rate of savings and net worth just as you are satisfied with your current car. I get a little blast of endorphins every time I turn the key and hear the 6.2L rumble to life, every time I drop two gears and pass a semi instantly, etc. It is simply different values, not that you're some paragon of logic and I'm an emotional bouncy ball. We are both maximizing utility based on our own emotions and using logic to further that.

As for the home, right. However, what's your alternative? It's not free to not own a home. The math says live with your parents and sponge off them your entire life, I guess, but that's got little emotional appeal for most of us. The feeling of sponging is not pleasant, plus the desire for privacy, to feel like the head of your own house, etc. At least today, with low interest rates and relatively high rents, what's the wealth building alternative to buying a home? My mortgage is less than the rent for nicer apartments with the same number of bedrooms.

Im not saying that I live AS CHEAPLY AS HUMANLY possible, or that I believe that I do. I never made that argument, you did. But if you want to ignore the MASSIVE middle ground between a bus pass, and financing a $30k-$40k vehicle, that is your choice. But it is an ignorant argument. Again, if you take a couple extremes, and a few exceptions to the rule, you can justify almost anything. Like, murder. Of course I chose comfort over a bicycle, I am an emotional, touchy feely mess!

Agian, we are injecting feelings. It doesn't matter how a purchase makes you feel, that doesn't change the numbers. I never said that purchases don't make us feel good. I didn't say that emotion and bias doesn't affect choices. In fact I stated the opposite. But feelngs don't change cost. They are separate. I make choices based on feeling and bias, of course! What matters is what balance is struck between WANT and NEED. We sometimes let want vastly overpower need.

My motorcycle, a complete waste when looked at in terms of financial gain. It's a big zero. It was thousands washed down the drain. I love the bike, and I won't part with it, but at least I'm willing to admit the truth, it was simply burning cash. I have my vices, like I said. The $4000 spent on firearms last year... not making me wealthy. I love them, I built a couple in my own garage, but they are just cash burners. Financial negatives. Get this, I ACTUALLY BUDGET MONEY TO BURN each month. I actually promise to burn money every month! GASP!

Im also not saying that owning a home isn't a good idea. I own a home, and I'm very emotional about it, but some have the idea that rent and mortgage payments are created equal, when they are not. On the surface, rent looks like a complete waste. However some don't take into consideration the items I listed previously. Those are big numbers to ignore. Owning a home in retirement is an excellent hedge against increased housing costs and monthly payments. It creates privacy. It's better for raising children (they actually studied this).

But again, it will cost you hundreds of thousands in interest in some cases, $100k in property taxes, $50k in upkeep... over say a 30 year period. That is $350k in expenses that are above and beyond the purchase price of the home. It's just something folks need to consider. I don't think my home will make me money... it has appreciated 27% in the past 10 years, but I've already spent half of that in property tax alone. The rest was chewed up by the 6 years of interest we paid. Moving forward, the appreciation will pay for HVAC, and a roof... so the gains are not as impressive as simple appreciation would indicate.

 

[Fizzerpilot]

I hear people say "I need a new reliable car, mine is 8 years old" or something to that effect. I point out how old the AVERAGE car is, and suddenly there are more excuses for a new car (payment)

Id think it would be the opposite! Or, I get free oil changes for life! Um, those aren't free buddy...

My 2004 and my wife's splurge 2006 have been very reliable. Both are just north of 100,000 miles, but we typically don't replace until our emotions overwhelm us, and we buy her a newer vehicle. Then her old vehicle becomes mine.

The typical scenario is that she gets a 7 year old vehicle. She drives it for 5 years, then hands it down to me. In 5 more years I receive her vehicle, and sell mine, which we bought at 7 years old, and owned for 10 years.

 

[hoosierdoc]

My car is 9 years old, about to sell a 12 yo one. My wife is parading around all fancy in her five year old car.

Buy them two years old for 50% of their initial value but 85% of their mechanical use left

 

[mom45]

And then there is also the factor of lower insurance and license plates on an older car.

Yet another money saver that needs to be factored in to the decision to buy a new car.

 

[BehindBlueI's]

Im not saying that I live AS CHEAPLY AS HUMANLY possible, or that I believe that I do. I never made that argument, you did.

You missed the mark. I actually never made that argument, just pointed out the flaw and lack of self-awareness in your claim to be governed by math and eliminate emotion.

But if you want to ignore the MASSIVE middle ground between a bus pass... Of course I chose comfort over a bicycle, I am an emotional, touchy feely mess!

Now you're getting it.

Agian, we are injecting feelings. It doesn't matter how a purchase makes you feel, that doesn't change the numbers. I never said that purchases don't make us feel good. I didn't say that emotion and bias doesn't affect choices. In fact I stated the opposite. But feelngs don't change cost. They are separate. I make choices based on feeling and bias, of course! What matters is what balance is struck between WANT and NEED. We sometimes let want vastly overpower need.

Right. Which is why it's completely BS to say you do the math and eliminate emotion. You even used emotional language (I like to...) to describe eliminating emotion. You WANT to retire early, valuing leisure over work. If you worked one year longer, how much of that nasty ol' depreciation could you cover? You WANT to send your kid to college. Same argument. You're lying to us and yourself if you think you do the math and that's that.

But again, it will cost you hundreds of thousands in interest in some cases, $100k in property taxes, $50k in upkeep... over say a 30 year period. That is $350k in expenses that are above and beyond the purchase price of the home. It's just something folks need to consider. I don't think my home will make me money... it has appreciated 27% in the past 10 years, but I've already spent half of that in property tax alone. The rest was chewed up by the 6 years of interest we paid. Moving forward, the appreciation will pay for HVAC, and a roof... so the gains are not as impressive as simple appreciation would indicate.

Hey, you're getting there. You probably won't make money on your house, but you won't eat decades of rent. It's the least damaging option. A house isn't an investment alone, it's also a place to live. It just happens to, generally, be the best financial solution to shelter.

That sounds familiar, though...sort of like...financing a car at a lower rate than what your investments are getting?

 

[BehindBlueI's]

And then there is also the factor of lower insurance and license plates on an older car.

Yet another money saver that needs to be factored in to the decision to buy a new car.

This is true. Right up until you need ball joints on your cheap to insure/plate F-250 and that's $1k. Stupid ball joints.

 

[Fizzerpilot]

I think I'm cured. I'm going out to finance a new truck tonight, simply to increase my wealth. This Saturn has been holding me back from reaching my true potential!

 

[Fizzerpilot]

And then there is also the factor of lower insurance and license plates on an older car.

Yet another money saver that needs to be factored in to the decision to buy a new car.

My buddies Mustang runs $200/mo. I insure two cars and a motorcycle for $562/year.

 

[mom45]

This is true. Right up until you need ball joints on your cheap to insure/plate F-250 and that's $1k. Stupid ball joints.

Ball joints are no problem! I just tell hubby and he replaces them!! Being able to work on your own stuff is also a huge money saver! I swear it doesn't matter what happens to our trucks...he just fixes them right up. Our 1988 needed the whole front end rebuilt when we bought it...not wrecked but was worn out. New tie rods, idler arm, ball joints, brakes...the works was around $400 in parts. This was an excellent bargaining tool and knocked almost $1,000 off of the asking price. We paid about $4,000 for the truck and have been driving in for almost 20 years so I think it worked out just fine. Plates and insurance combined run about $300 a year.

 

[mom45]

This is true. Right up until you need ball joints on your cheap to insure/plate F-250 and that's $1k. Stupid ball joints.

Oh...and none of that F-250 crap...not in my yard. Fords do not live here. Bow ties only.

Insurance on three motorcycles is $154 a year...just paid that bill.

Trucks - Two daily drivers run about $500 a year for both of them. The two on Antique Auto policies are a total of $275 a year with full coverage with zero deductible.

I can easily afford to pay for repairs with the savings on insurance and plates and no payments.

 

[jamil]

I think I'm cured. I'm going out to finance a new truck tonight, simply to increase my wealth. This Saturn has been holding me back from reaching my true potential!

Why the binary thinking?

I made a decision in 2012 it was time to replace my 19 year old jeep with 200K miles on it. I wanted something that didn't beat the **** out of me on my 70 mile round trip to work every day. We settled on a brand, got a sweat end of model year deal. Could have paid cash for it. But the interest rate I could get from my bank on a loan was lower than what I could earn with that money by investing it.

Now. If I were only going to buy a new car by financing it, and I would otherwise have bought a used car, then I would agree with you. My outcome would not be bettered by doing that. But either way, the decision was made on which vehicle to purchase, and the deal was already struck on how much we were going to pay for it. It was just a matter of paying cash, or financing.

To me, and the thing you keep ignoring, is the value I put on the new vehicle over buying a used one. That's my call to make on how much value that provides for me. I'm not going to project my values on you. So you're welcome to value that differently.

 

[Fizzerpilot]

What is binary about it? Big words confuse me.

If I buy a new car on a note, I can invest. That's the argument. Having money tied up in a paid for vehicle is ridiculous.

Value needs to be defined. Monetary is different than perceived. I value my life, ISIS operatives do not. Feelings of value don't affect monetary value. Again, we are all talking about different things. I've admitted that of course "feelings" come into play... for some much more so than others.