Why Americans are suddenly paying $550 per month for new cars

[K-ice]

So what’s are you paying per month to drive your car?

The formula I am using is purchase price/months driven.

I’m at $370 for a Subaru I bought new. But it needs pretty serious repairs which will bump this price up if we want to keep driving it.

If I had more meticulous maintenance receipts you could have a fancier formula.
Adding an estimated sale price might be necessary if you haven’t owned your car long. I never consider mine in my net worth.

(Purchase price + maintenance - estimated sale price)/month’s driven.

Cars are expensive. I really hoped to get 12 years out of mine but we will see.

Next time I will pay more attention to the true monthly costs.

[Montecarlo]

Considering a car as part of your networth, no matter how fancy it is or what the market value is, is stupid.

Sure, you can exchange it for cash (I did with my clown SUV and bought a Honda fit).

But until you do that, it's a depreciating liability and not an asset.

[JLee]

Considering a car as part of your networth, no matter how fancy it is or what the market value is, is stupid.

Sure, you can exchange it for cash (I did with my clown SUV and bought a Honda fit).

But until you do that, it's a depreciating liability and not an asset.

You could largely say the same thing about a house, except sometimes it doesn't depreciate.

[Montecarlo]

Considering a car as part of your networth, no matter how fancy it is or what the market value is, is stupid.

Sure, you can exchange it for cash (I did with my clown SUV and bought a Honda fit).

But until you do that, it's a depreciating liability and not an asset.

You could largely say the same thing about a house, except sometimes it doesn't depreciate.

Yes, and you would largely be right.  I'm not sure if we are agreeing or disagreeing?

[Montecarlo]

Actually the more I extrapolate that concept, the more I realize it kind of applies to stocks as well.

I just realized we all have zero net worth.  Fuck.  I need another mimosa.

[PDXTabs]

I had no idea car loans lasted for so long. I thought a car loan was typically 2-3 years?

It's commonly available. I don't know how many people actually take that option (see above, mean loan is 67 months). When I financed my 2014 Ford Focus I could get 0% APR if I financed for 60 months, so I financed for 60 (instead of 72) months.

[zolotiyeruki]

The formula I am using is purchase price/months driven.

I’m at $370 for a Subaru I bought new. But it needs pretty serious repairs which will bump this price up if we want to keep driving it.

Heh, that's a fun calculation to run.  I bought my car 16 years ago for $4500, which makes my monthly cost a bit under $24/mo!

[Buffaloski Boris]

All this talk of $30k cars is insane.

I'll stick with my 2 week rule. Never spend more than 2 weeks (after tax) earnings on  a car, and just replace them every 2 years when they get scrapped

I like that rule, even if it’s a bit spendy. 😁

[scottish]

Wonder what the average used car payment is? Yea, $550 is bad but at least you are getting a car that could last awhile and is nicer. Used car payments are usually inflated due to bad credit.

About half a year ago the average used car payment was $378.
https://jalopnik.com/the-average-used-car-payment-is-now-378-per-month-1828725332

I think it's important to note the inherent statistical bias in these numbers. The $550/month figure is an average of Americans that buy a new car and finance it. That number doesn't go down when more people buy their cars in cash. Or when fewer people buy new cars (new vehicle sales are up 20% over the last five years so maybe we should ridicule that instead). Because those people are not part of the dataset. It will only go down when the people choosing to finance their new cars choose cheaper cars. And inflation obviously is working against that. Even a new Corolla is $300+/month now.

Ironic, I was just telling someone similar yesterday.  Manufacturers keep jacking the cost up at a crazy rate, adding new trim lines to really jack up the cost, and diminish previous trim lines value (looking at you Mazda), and extending the loan term to keep asses in new leatherette seats.  "C'mon man, what monthly payment can you swing"...  Fucking madness, and cash does nothing for you/no cut for the dealer via their financing/financing provider. 

I know about all of the great 'tech' (blech), and safety BS new cars come with...  But a base new RAV4 AWD with steel wheels, plastic hubcaps, no pwr seat anywhere, and a 4 cyl engine is $30k...  $30k for that shit?  Hey, at least you get a urethane gear shift knob to enjoy for the next 8 years of your loan.  Oh well, record number of folks 90 days or more late on their payments, maybe my cash can get spent soon for pennies on the dollar.

I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?

I'd say about 10 years is when the road salt starts tearing at the frame. cosmetic rust is one thing but stick your fingers through the side wall is another

And repairs become far more difficult and expensive due to rust seized parts that break off, rather than unbolt.  Oh yeah, ask Toyota about frame rust.  I have seen several times behind a Toyota service building, stacks of new frames ready to be installed for their trucks.  Literally a frame up replacement, where all parts are stripped from the old truck, and bolted to the new frame.  Man, did Toyota eff that one up.

I had one of those new frames installed.    I regularly oil-spray my vehicles to keep the rust at bay, so the old frame lasted 10 years before it had a rust perforation and was eligible for the warranty.

I think it was a pretty good deal.   That was 5 years ago and the new frame should be good for another 5-10 years.

[FIREstache]

I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?

They "start" to rust before you ever buy them.  I live in an area that uses salt on the winter roads, but my car is over 150 months old, and it's not rusted out at all.  It does seem to be more of an issue with trucks - I see a lot more of them rusting out than cars.

[2sk22]

I just spotted this reader submitted question on the Jalopnik website:

https://jalopnik.com/whats-the-best-way-to-get-a-car-loan-if-i-have-the-inco-1835003025

...Now I have an extra $2,000 per month to spare. I have been driving a 2011 Honda Accord for the last 5 years, that thing is still working flawlessly (mind, just a couple noises here and there), however, I do want to upgrade to something nicer. I really like the Volvo XC40 and the Mercedes Benz GLA 250. My budget can go up to $40k for a new car, however, my main issue is that my credit score is just not the best at the moment...

So he has a perfectly good car and a terrible credit rating but still wants to buy an expensive luxury car - gah!

[Alternatepriorities]

I just spotted this reader submitted question on the Jalopnik website:

https://jalopnik.com/whats-the-best-way-to-get-a-car-loan-if-i-have-the-inco-1835003025

All three of those questions could qualify for the wall of shame and comedy. At least the first comment contained technically sound advise on screwing his credit score further...

[John Galt incarnate!]

I've never lived up north in the salty states but after 84 months or 96 months, aren't cars starting to rust away?

I live in a snowy state with lots of salt on the road.  We consistently keep our cars 10-15 years. And the dealers happily take them as trades.
We just rinse them off at the end of the season.

One of my friends used to live in Chicago.

He had a  "good car" that he drove in spring, summer, and fall.

 In the winter when the roads were salted he drove his "junk car."

[Just Joe]

I just spotted this reader submitted question on the Jalopnik website:

https://jalopnik.com/whats-the-best-way-to-get-a-car-loan-if-i-have-the-inco-1835003025

All three of those questions could qualify for the wall of shame and comedy. At least the first comment contained technically sound advise on screwing his credit score further...

I liked the comment that questioned why he was going from a car he could afford straight to luxury vehicles. That fellow is driving a Honda a decade newer than one of our cars.

[Goldielocks]

The formula I am using is purchase price/months driven.

I’m at $370 for a Subaru I bought new. But it needs pretty serious repairs which will bump this price up if we want to keep driving it.

Heh, that's a fun calculation to run.  I bought my car 16 years ago for $4500, which makes my monthly cost a bit under $24/mo!

I'll bite.

Bought my highlander 6 years ago, for $13k.   Maintenance has been around $3000 so far (brakes, tires, radiator, plus small stuff). $222/mo.   And it is still running so hopefully no repairs over $2k per year and that number will go down.   

Bought the mazda 11 years ago for $24k.  Maintenance (tires, small stuff) $3000.  $204/mo. 

It's the insurance at close to $150/mo/car that is the killer for me.