Why The Average U.S. Household Can't Afford The Average New Vehicle

JD Fri, 06/03/2016 - 09:33
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Auto sales are on track for another record year despite a dip in May. But consumers are also spending more on cars and trucks than ever before, and racking up larger monthly payments and loan terms than they ever have.

In fact, the average U.S. household today can’t really afford the average-priced new vehicle. So, instead of buying new cars that are consistent with their means, consumers are piling on huge long-term debt for that new-car smell.

http://www.forbes.com/sites/davidkiley5/2016/06/02/debt-debacle-why-the-...

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Ron Johnson's picture
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If my son learns only one thing from me, it will be my mantra "avoid debt." I have made many mistakes in my life, the worst of them being using borrowed money to finance the things I have. I am now slowly digging out from the pile of debt.

Not to dish on my dear wife, but she has much less tolerance for doing without than I do. But I have very little tolerance for disappointing my wife. Therefore, I made poor decisions, and we are paying for it dearly every month.

Hope to be debt free in 18 months. I hope the economy can hold on that long.

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13's picture
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But that would take most if not all of my savings. I don't think I could justify paying so much even if I had a million dollars...but perhaps I'm being too conservative. I'm so worried about the economic future of this country that I'm really in a quandary as to how to allocate the money I possess. Buy a car? Buy a house? Keep it saved? Invest? Put it into a trust? Buy gold? I feel like being in my late 20's I should have this all figured out, but I simply do not.

gearhead's picture
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I have never made a car payment!! If I don't have the cash, then it's like they say in the Russian army "Tuff shitsky".

jay's picture
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My sentiments also. The only time I borrowed money was when I came back to the States after a long stint overseas. Most of my savings was tied up in investments I didn't want to liquidate, so I bought this used Mazda pickup on credit $3800. The bank treated me like poison! Not because I had bad credit, but because I had never used credit before. They hassled me endlessly for more info, come do this come do that. We need your grandma's maiden name. Finally, I sold some stock and paid off the loan in a fit of anger. It was the first and last time I ever bought on credit. And it taught me an important lesson about how evil and bureaucratic banks are. They are just like the government. They are just like the insurance companies.

I'll be buying a new car this fall and will pay cash. The dealerships sometimes charge extra to cash borrowers. I'll pay it just to avoid dealing with the banks.

The Pen's picture
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and going! Paid for...nothing but gas and oil and infrequent maintenance.

New = Inflated

Patriots Unite!

Libera_me's picture
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, we've had to do some minor 'adjustments' to keep it running, but it still does. If it weren't for the doors, I wouldn't consider replacing it at all. If and when we do, it will be with another not-so-new car.

Speak up for those who cannot speak up for themselves, for the rights of all who are destitute. Speak up and judge fairly, defend the rights of the poor and the needy.~~ Prov.30: 8 & 9

13's picture
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Or Truck when I graduate, but the prices are absolutely insane. 40-50k brand new and the rubicon isn't that much cheaper used. Oh well...I guess i'll be doing all my off-road adventures in my 2005 Civic