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  1. #1

    People are paying too much for new cars

    I just came across an article that said the average price of a new car is now $34,264.

    This article sourced its information from Kelly Blue Book. Which makes me feel it is pretty accurate.



    This seems like a lot of money for a car.

    So why are people paying so much?

    The article has some ideas:

    Several factors are pushing car prices higher than they’ve ever been: cheap gas, super-low interest rates, longer loans and new features, including costly technology the government is forcing automakers to adopt to improve fuel efficiency. With gas prices barely above $2 per gallon for much of the year, buyers are more comfortable opting for large gas guzzlers. Sales of full-size pickup trucks and SUVs are up about 6% this year, while overall sales are only up about 1.4%. That’s why General Motors (GM) and Ford (F)–heavily reliant on such vehicles–rank second and third in average price. Volkswagen is No. 1 on account of its Porsche and Audi luxury brands.

    Low interest rates and friendlier types of financing help buyers keep monthly payments manageable, even as they buy more expensive vehicles. The average loan on a new car now lasts 69 months, up from 62 months in 2010, according to Experian. Some loans last as long as 96 months–eight years–with rates below 5% for borrowers with the best credit. The average monthly payment on a new car crept up from $462 per month in 2010 to $503 this year, which means buyers aren’t taking advantage of favorable financing to lower their financial burden. Instead, they’re buying more car.

    To me, this just seems crazy to dump so much money into a car.
    Current Fico Scores: 710 TU, 732 EQ
    My Goal for 2016: 750+

  2. People are paying too much for new cars
  3. #2
    Registered User Senior Member
    Posts
    190
    What!

    Who would pay that much for a car? That is before gas (i don't care if it's $2/gallon) or insurance. And the bigger the car, the bigger the gas and insurance bills.

    No wonder no one can save money. As soon as they spend a little less in one place, they find another place to spend a whole lot more.

  4. #3
    Registered User Enthusiast
    Posts
    51
    The worst part is that the used car market also is very expensive. No bargains anywhere.

    I just want to be able to get work. Not have to work for my car.

  5. #4
    Registered User Junior Member
    Posts
    49
    The car companies are offering super low interest rates or crazy easing deals. Gas is cheap. So instead of using this as an opportunity to spend less, people are going big. Like my neighbors with their Tahoes and F-150s. To drive carpool.

  6. #5
    Registered User Senior Member
    Posts
    101
    Don't forget that people are now taking their depreciating asset and financing it on the cheap, but then turning around and using it as a source of revenue. All thanks to Uber, Lyft, et al. You can own a much nicer car and cover the cost of ownership by just driving around.

  7. #6
    Registered User Senior Member
    Posts
    190
    Quote Originally Posted by Twilight1 View Post
    Don't forget that people are now taking their depreciating asset and financing it on the cheap, but then turning around and using it as a source of revenue. All thanks to Uber, Lyft, et al. You can own a much nicer car and cover the cost of ownership by just driving around.
    That is a great point. And I wonder how much that has driven sales over the last few years, and sales to bigger cars.

  8. #7
    Registered User Junior Member
    Posts
    41
    I was just in new York for the first time in several years. There were taxis, Ubers, Lyfts and even other ride sharing services available. May just be my perception, but traffic also was worse than ever. Just scores more people causing for passengers on every block. And everyone was causing around in very new looking cars. And not tiny smart cars like you see in Europe.

    Which is a long way of saying that Twilight's thesis makes a lot of sense.

  9. #8
    Registered User Junior Member
    Posts
    41
    We just took an Uber again last night. Our driver said she is doing it to meet car payments - on a car that is much nicer than what she would otherwise be able to afford. She works just a couple nights a week covers payments and insurance, and leaves a little extra in her pockets to boot.

    So the car manufacturers definitely benefit from the sharing economy.

  10. #9
    Registered User Semi Pro Member
    Posts
    271
    What happens when Uber invests in self-driving vehicles to ferry us around town?

  11. #10
    Registered User Senior Member
    Posts
    171
    Quote Originally Posted by credital View Post
    What happens when Uber invests in self-driving vehicles to ferry us around town?
    That seems a long way off still.

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