It’s Over: The Middle Class Can’t Afford New Cars
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- เผยแพร่เมื่อ 1 มิ.ย. 2024
- 🐪 Hump Days Newsletter ➭ humpdays.substack.com
New Cars Are Now Only Reserved for the Rich, or Top 10% of Incomes - based on popular affordability rules of cars and the latest data.
According to the automotive group Cox, the average transaction price of a new vehicle in the U.S. last month was $47,244 dollars. And according to LendingTree, the average car payment for a new vehicle hit a RECORD HIGH $738 per month in Quarter 4 of 2023. These days, the ability to buy a new car affordably is now a privilege that seems to be reserved for those seemingly in the top 10%.
According to a popular car buying rule - the 20/4/10 rule - it suggests that you should not get a car loan exceeding 4 YEARS, thats the 4 in 20-4-10.
The 20 by the way, just means that you should always try to put 20% down on the car, and the 10 referred to the idea that your monthly transportation costs should NOT exceed 10% of your gross monthly income.
So how realistic is this rule for the average person earning the average wage? We answer that today.
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⏱️ Timestamps:
0:00 - Start Here
0:44 - How We Got Here
2:32 - Affordability Rule No. 1
5:33 - Salaries & New Car Prices
7:09 - Affordability Rule No. 2
9:29 - What Can You Do Today?
10:40 - Used Cars and Depreciation
11:18 - Luxury Maintenance
Get up to date news & finance tips in the 🐪 Hump Days Newsletter ➭ humpdays.substack.com
I’m really glad I decided to buy a car when Donald Trump was still president. I’m about to finish up my 5-year loan in October on my 2019 Escape at 0% 😂. I don’t mind financing a car out for a 5 or even 6 years if it’s 0%! It’s basically a free loan. If you can get 0% never pay cash because that money in your savings account is better spent invested somewhere else.
Please interview TedSpeaks channel.
8:50 Hey @humphrey , I work in the auto industry market and I can attest to the BLS info here. One of the biggest issues is finding parts and finding them timely. The global manufacturing supply chain has never really recovered fully from the pandemic and this results in a plethora of major parts being on constant backorder. Especially because the manufacturers mostly order these parts "as needed" and do not have a large number of on-hand stock. This adds a lot to the cost of the repair itself and associated expenses.
As an example, think about if you rear ended another driver in an accident and you're at fault. An integral part of their vehicle is then warped and must be repaired to bring it back into working condition. But the part is on backorder and no shop in the region can get it for an estimated 1-2 months. That's 1-2 months that your insurance is liable for providing adequate transportation for the other driver in the form of a rental, ride share reimbursements, etc. And if that vehicle is a Tesla (one of the worst offenders) they could be waiting for a very long time and have extremely high repair costs due to the sensors and upcharge for using a Tesla certified shop. All these things and more add up very quickly.
bro, you look like the protagonist from the movie, the man from nowhere.
167$ for insurance?
You are REQUIRED to have full coverage. And sometimes gap insurance. In LA it would be 400-500$/month
I swear 6 year old cars with 100k miles are only like $4k less than a new vehicle nowadays...
Yep. Currently yes. They should be a lot less though.
$4001 to be exact, don't complain, is cheaper😂
Considering a person has to sink a thermostat, water pump and other parts into them soon after buying them makes this scary!
When you take into consideration the warranty and wear & tear, it is cheaper to buy new for many smaller cars.
Lots of ads for 1.9% so not bad at the moment.
More people need to recognize this folly. A Toyota Camry Hybrid is $29k. Great mpg, great reliability etc but people buy $50 SUVs that they can't afford.
Yep and a Corolla hybrid starts at $23k. Then there’s all the awesome models that Japan gets we don’t anymore like the Honda Fit, Toyota Yaris, Nissan Note. Then there’s all MPVs they get we don’t like the Toyota Voxy/Noah, Honda Freed for example which offer more space than SUVs and crossovers can provide (all of which are hybrids now).
The other day i checked the price difference between a 2014 and 2024 Honda Civic. Adjusted for inflation they were the same. This despite the improvement in safety and other technologies. A large part of the problem is that many people convince themselves that they "need" more when an objective analysis would say otherwise.
Almost nobody needs an SUV. Cars are safer, more affordable and more maneuverable
40K for a vehicle is insane
You are 100% right, it's totally insane.
Yeah like your average new vehicle cost is outrageous….for the first time ever in my life I think it might be more fiscally responsible to just lease a car.
You can get a toyota corolla 25k
@@hpickettz34out the door that’s a lot more. 😂
@hpickettz34 I'm still envious of Americans and their car price. If I am to convert with purchase power, I would be earning 100k in USA but a corolla will start at 87k for the entry level model 😢
My favorite feature on a car is the "paid off" feature
Exactly, the “I have the title” option is the most luxurious one.
Pink slip mod definitely increases performance of the car too
Same! Millennial theft deterrent is a close second, though... and I'm a millennial. :3
Everything that requires you to take a loan to purchase is unaffordable.
trueeeee but america runs on debt lol
@@humphrey 90% of the world does sadly, bank loans should be forbidden.
Yes and no.
Depending on the interest rate, money could be better used elsewhere. Also, getting a mortgage (debt) could still be useful for gaining equity, as opposed to waiting until you've saved up hundreds of thousands to buy outright - at the age of maybe never.
Can you afford it? Maybe not, but maybe you also can't afford not going into debt - if you want to start building equity in a responsible manner.
@@nickstark8479 You do realize that they price houses based on how big of a loan two average salaries can get right? (In the age where people are more single than ever on top of that).
The reason everything is as expensive as it is, is because they expect you to take a loan.
@badass6300 You mean the market (people, sellers) price them higher? That is true that if people didn't have access to loans, price valuations would be lower because few would be able to afford property. Would also mean less equity for your average retirie looking to sell their property to live off of.
Just as likely that even more properties would be bought up by the rich (the ones that can actually afford it), since ROI would be greater, leading to a populous whereby 90% of all homes are rented out and only the "rich" are able to be home owners.
Only reason many people are able to compete with them now on property bids is thanks to low interest loans. Yes, loans CAN be predatory (e.g., credit card interest rates), but low interest loans can also be leveraged to our advantage.
I agree that interest rates now are seem out of control, but the entire reason they are increasing rates is to IN FACT reduce borrowing.
I drive a 17 year old Toyota with 230,000 miles. People constantly ask when I'll get a new car. I enjoy no car payments. Plus I work from home so there's really no point to buy a new car to have it sit in the garage most of the time.
Yep. No point in getting a new car if the current one runs fine.
dude i JUST bought a 99 Maxima with 228k miles that had a carfax with all the service records. I get you
That but with a 22 porsche
@@ruffrydasean It gets to a point where you take a weird pride in seeing how long you can make a car last.
I have a 2013 Prius. Pay halve if the road tax in Europe as it has
An adult bus pass where I live is $40 per month INCLUDING gas and insurance.
Unfortunately, there are a lot of us that don't have access to mass transit.
@@fredgilbert2032"what is the kilometer" kind of jokes.
Apart of this, seriously, I feel sorry for US comrades that needs a car like shoes. I think even shoes are optional in this case.
I have seen police footage where cops just taken a girl that had to right on bycicle via the bridge without pedestrian way- no other way around.
Similar things happen here in Europe, but it is where you wouldn't expect bycicle because more than 100Km between towns, obviously car or bus.
Social Transport is developed, but only in large rich cities. Outside of them again car-only.
In post-soviet countries underground and buses are everywhere
I've had several friends and relatives asking me to cosign new vehicles for them because they can't afford it and need my help, it's more like they wanted me to pay for the vehicles because I make six figures. They wanted vehicles that were priced around 70k.
That is hilarious… and sad… and so true…. Do NOT do it for any reason.
That's exactly what they're doing, they're just sponging off you.
They ain't friends or your relatives, especially when money is involved.
I always refuse. I can't afford to pay for someone else's car that they can't afford let alone have credit for
I own four cars, newest is 09', oldest is an 89'. All run and drive. I have no intention on buying a newer car. You can't work on newer cars! I can still do all the maintenance on mine.
YOU can't work on newer cars. I can still swap an engine, trans, axle, ECM, seat, bumper, dash, etc.
@@RKmndoanyone with enough time and money can do anything to a vehicle. Newer or older. What this guy is saying is older cars are simpler and usually have a plethora of How-to’s on how to do things. Getting that kind of information on a newer car requires YOU do it and that is one HELL of an expense
@@valcandestr0yer Buy a service manual...auto parts store, dealer, eBay, Amazon, etc.
Buy a cheap OBDII reader and a multi-meter.
It's generally not rocket surgery.
I drive a 2007 Toyota Camry with 217000 miles and still going, doesn't look brand new, but gets me from point A to B reliably, and my maintenance costs are minimal.
I drive a 2006 Saturn Ion. Pretty much same situation
Different people have different needs and desires.
You have no desire of driving a new sports car however some people do love driving,I mean you live young only once
@@dearcoolz test drives are free, and some good deals can be found on Turo to rent for a few days of fun.
It sucks that’s what people have to buy now
Buy a Toyota or Lexus and keep it till the wheels fall off.
Problem is.... they arent depreciating. I know a guy who bought a 2021 Tundra. Paid around 48k for it several years back new. Its now 3 years old. It's deprecated right? Nope. He can turn around and sell it for almost what he paid for it, despite having almost 50,000 miles on it. That's the big issue right now. New cars are unaffordable, yes. But the good used vehicles aren't depreciating like they used to, and are also costing a fortune
@@theelite1x721987Even better.
Also Toyota and Lexus prices are very high now they're not cheap anymore
@matw1x only if you already own it. I don't. I'm looking to buy a Toyota but the 3 to 4 year old used ones are not far off new prices.
@@theelite1x721987Get a new one then and keep it even longer. I don't fuck with used cars because 68% of drivers forget to do basic maintenance such as oil change in a timely manner.
Me: 56 year old single teacher, 815 credit score, 62k - 70k gross. Debt free and live on 40% of my income. The other 60% is for aggressive retirement savings.
Last month (March 2024) I decided to buy a new 26k Toyota Corolla hybrid. I put 8K down. It will take me 7 (seven) months to pay off the rest.
My insurance is ridiculous 175/month Florida . And believe me I shopped around.
Gas is awesome: $40 because the hybrid barely uses any gas.
People need to start looking at economy vehicles and get out of these oversized SUVs and trucks. You need to live ridiculously under your means.
I live in 840 sq ft condo I purchased in 2020 that's paid off. The condo now sells for 200k.
You need to think economy everywhere in your budget. That's the new world order 😢😢
.
Sorry to hear that.
People buying these giant suv's that are terrible on gas are definitely not helping their bank accounts
When the debt crunch happens, the government will need a source of bail out funds. All that money locked in your retirement account could become an easy cookie jar. Be very careful with investments where it’s super easy to put your money in but really hard to get it out (early). A simple rule change before your retirement could separate you from your money. Imagine the early withdrawal penalty being raised to 90% and the retirement age raising to 85. Change 2 numbers and your money is gone.
@@RedShiftedDollarat that point, society will collapse and money will be worthless
you can get away with no insurance, you can't be willing to pay that kind of price, they need to lower it.
Just bought a new car cash…but was saving for 10 yrs lol. Just started another 10 yr plan for the next one.
Smart
I drive a 2003 Toyota Echo with 109K miles on it. Going to drive it until the wheels fall off 😂 no car payment is the best car payment.
That’s what my dad did!! Bought a 99 echo new, and I got to drive it in high school. Dorkiest car ever but I loved that little thing
@@matthedge22 cool 😎 I love my car. Gets me from point A to point B.
Those Echos are good and simple cars to maintain. Even if the engine ever blew you could just get a cheap salvage engine to swap it.
@@evoman44 this is the way 😎
I had a 2002 Toyota echo. I drove it 365,000 miles and the only reason I stopped driving it, was because I hit a deer.
My rule is it can't be more than I make in a year, payment can't be more than 500 a month, and I need to put at least 10k down. Also, it needs to be at a low rate. Safe to say, I'm not buying a new car anytime soon.
That’s a rule I can get behind
I wanted a Tesla until I found out that they record the interior of your vehicle. Not a chance that I'll ever buy an electric vehicle now. Too many privacies have already been invaded.
They all do it. I'm sorry but your government wants to sit in your vehicle at all times.
Hahaha. And you aren’t tracked by onstar
Dude get over yourself. You aren’t a celeb so what are you doing that you’re worried about. You aren’t special and they wouldn’t even bother looking at your “video” 😂
Secondly the cameras are fed to the computer for eye tracking as far as I know. They don’t even have video data in crashes. Only telemetry data… so no I don’t even believe you.
What you obviously don’t know is all cars have been doing that for decades. And it’s not just in your car, it’s literally everywhere you think you are alone in public and in private. I’m guessing you are either young or smart enough not to do something stupid just yet..
And they suck
Not only that but they will joke around and try to get the best camera footage in the team , one time it was with 2 escort and a lot of white powder. You can be assure all the recording is not going public so your somewhat safe... Until someone will steal everything on a USB and blackmailing people with it
I have always bought used cars with cash but to be honest, the "buy a lightly used car to get a deal" thing is mostly dead these days. Yes the 3 year old car costs less than the new one, but it will also last you 3 fewer years (do you think car prices will be lower in the 2030's when you need to replace it?) And you get the usual downsides of a used car (limited selection, higher interest rates if financing, hoping the original owner took care of it properly). So many people can't afford new cars at all that supply of used cars is limited (people are hanging onto their older cars longer) and demand is extremely high because thats all people can afford and this has driven up prices.
The depreciation curve on reasonable cars like Hondas and Toyotas is a lot more aligned than it used to be. The typical used car depreciation curve shown in the video is woefully out of date when you look at actual prices. You aren't getting a 3 year Honda Accord for 60% of its original value anymore. I never thought I would say it but, if you can afford the up front expense, buying a new car makes good financial sense in the current market, provided you will keep it for most of its useful life (10-15 years). The payments are high for the first 4 years but then your cost of ownership falls off a cliff for years 5 through 10 and it will still be a perfectly good car in year 10, unlike a used car that was purchased at the same time. With new cars becoming increasingly unaffordable for many, I also expect there to be deals coming for those that can afford them once the sales slump becomes unavoidable for the manufacturers.
Yep. I bought a Honda Civic 2021 with 45k miles this year and I don't feel like it was an amazing deal. I hope I can at least maintain it for years.
If you consider how poorly most individuals maintain their vehicles you would never buy used unless it is from someone you know. It is like rolling the dice and betting $15K+ you will get lucky.
Probably the most sane and logical comment I have read about getting a new car and why I chose to get a new car. I'm going to discuss your comment on my TH-cam channel. I absolutely love it!!! It is exactly why I chose to buy a new Toyota Corolla hybrid last month. It will be paid off by October.
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Car insurance is such a scam, good drivers subsidizing the baddies
insurance in general is a scam . auto, health, home, etc - all these companies are evil and should not exist
And the uninsured. Where I’m located, it’s estimated that 33% of all drivers are driving without insurance. So when someone uninsured hits you, often times you’re stuck with uninsured/underinsured motorist coverage on your own policy.
Blame the lawyers becoming millionaires by taking every accident to suit...Someone's gotta pay for it...Insurance would be more affordable if a lot of folks weren't trying to stick it to the insurance companies. Guess who pays for all that? We all do!
@@nattiefreeze2079 I challenge you to find 10 lawyers who are millionaires taking carcrash cases. That ain’t where the money’s made in that profession. Oh, and many of those claims are settled well before suit. And many those that go to suit are settled well before trial.
Home insurance is the same, normal home owners subsidizing roofs for owners pairing up with roofing companies to do insurance fraud.
Here's what I'm doing. I currently drive a Jeep Cherokee with 135k miles on it which is paid off. I figure I can get a few more years out of it. I created a sinking fund account for a new/newer car. In about 2-3 years I will have enough saved to buy another vehicle and pay cash for it. Interest rates and monthly payments mean nothing if you don't finance. I'll buy what I can afford at the time.
I use the 50/3 rule idk if this existed before I made this rule up or not but basically my rule is if I can't put at least 50% of the car price as down payment and pay the rest on the next 3 years, then I can't afford it.
Buying an EV is probably the least financially responsible thing you could do. They come broken brand new. Seriously. Look into it. Tesla quality is TERRIBLE.
Never will understand the hype over buying a new car. My 2007 accord with 275k miles and a lawn chair for a passenger seat gets me around just fine! 😅
How much 💵?
Because dealerships won't make better deals over used ones here at my local dealerships amd when new is only a little more, I'd buy new lol
I was falling into the “mainstream” thinking of getting a new car. Thanks for saving me from a possible financial derailment.
you are WELCOME!
I don’t think buying a new car is bad, just make it reasonable. I know dudes buying Camaros at 23% interest. Get a corolla or civic if you want a new car.
Buying new makes sense if you can afford it comfortably and are planning on keeping the car for as long as possible because you actually really like the car and because its reliable.
@@humphrey I used to be like you---until my mom passed away 2 years before her retirement. It changed the way I saved and think about money. She never got to experience her pension and retirement. This plan works if nothing unnatural happens.
Seriously don't understand what the auto industry expects right now. Economy isn't good yet prices are increasing and interest rates on financing are insane. Hope they have fun with cars just sitting on lots🤷♂
No, vehicles aren’t sitting. People are buying them with poor financial decision after poor financial decision.
I think i will be included on this poor financial decision
Car mfrs/dealers don't control interest rates. The Fed and other banks do.
You'd think that they'd offer more simpler, cheaper, stripper vehicles though.
@@RKmndoSo the two-part problem with this which is one. We removed a lot of regulation in the United States about vehicle sizes among other things. So now we're in a weird arms, race of making vehicles way more dangerous for everyone else. So that way you hopefully don't get hit and be immediately obliterated. But the other thing is the reason why they don't offer simpler cars is the reason why guys are pressured into buying these big giant designer trucks that don't actually haul anything. It's because we're pitch trucks as this is what America means and even more importantly to get laid. He done studies of this, particularly in the Midwest where they found that essentially a guy could be like a fucking genius whose goddamn rich and good looking and get a modest solid car that does amazing mileage and saves a lot. But a woman won't even look at them because they want to get the guy with the big loud giant truck cuz they think that matches his dick size. So this is what guys have been pressured to do. Saying this is a woman's thing because even if it was everyone would have laughed it off but advertisers took that and ran with it. And so yeah it's another male insecurity just the same way they prey on women in security in order to keep buying these goddamn monstrosities so you can keep funneling the money.
Buyers also make stupid buying decisions. The most popular car is a Ford truck. And if not that then some stupid SUV.
Americans buy cars that are too big, too expensive and waste too much gas. And then complain that cars are too expensive.
Meanwhile these damn SUVs have spread to Europe where people started falling for this crap too.
The worst part to top it all off is newer vehicles are not made to last but to be disposable... Quality is at an all time low and price is at an all time high. You are better off getting a vehicle a decade old with the least amount of extra features and screens.
We are currently shopping for cars and they are extremely expensive. Granted, we are looking at luxury SUVs but they've went from being 40k~ to 50k minimum and almost 60k with taxes.
I get by on public transport and a bike 90% of the time. I hardly use my 2005 TSX. I believe the only reason it's still running now is because i only drive it a few thousand miles a year, so alternative transportation is saving me from buying an expensive newer car
I have a 22 minute commute so it's not possible to bike. 16min is 80mph toll road
I’m a teacher, and I bought a 2-year old Miata 4 years ago at an insane discount. I paid cash, and I’m still loving the car as my daily driver.
I work in auto insurance. One of the reasons Premiums have risen so much is simply that there’s no such thing as a fender bender anymore. Even on basic models, a low speed/low impact accident knocks out tons of expensive technology like lane assist, cameras, etc. kind of like how houses and homeowners insurance has risen at its rate. Houses are built with better wind/weather resistance. And also include lots more technology. Not just the electric bells and whistles, but also things like hardware, insulation, and energy efficiency.
Are insurers adjusting policies according to the the age of the car or are they just charging everyone the same regardless if they drive older cars?
@@evoman44 good question. So age of vehicle is a main variable in our actuary models.
Watching this video reminds me that i made the right decision to buy used car, just bought an infiniti sedan 2006 model for 4600 dollars on 109k miles, it’s already 119k miles now and planning to keep it until the wheels fall off
I make $135k a year I could not imagine spending $1200 a month on a vehicle
It's insane
Me neither, I leased up until the prices went wild due to supply and demand...I decided to buyout my lease which I am happy I did as I've been the only driver and drive less than 8000 miles per year. I'll be driving it for a few years hopefully until I can pay cash for the next car
What are you doing with the money ?people who lives in my country they make 7k usd per year and they are trying to afford a car
@@cataphract11they’re just crazy
@stefanoparlatore7141 we are not crazy..The cost of other items in this country is expensive. We are just saying..don't spend 1200 monthly for a car
Not only was this informational, but you also gave advice. Thank you so much for awesome video!
Rates have increased more this year than in the 15 years I’ve been in the industry. Claims cost double what they did pre 2020. Insurers don’t want to take on new risks and have gotten really tight on guidelines.
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After I raised up to 125k trading with her I bought a new House and a car here in the states also paid for my son's surgery
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The very first time we tried, we invested $1000 and after a week, we received $7500. That really helped us a lot to pay up our bills.
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I just withdrew my profits a week ago, To be honest it was an amazing feeling when the profits hits my wallet I wish I could reinvest but, too much bills
I have a close friend of mine who works for a major car insurance agency and she let me know that the added complexity and cost of hybrids and Evs are def part of it. Battery packs are expensive and full blown evs are hardly worth the cost to repair
My dad keeps telling me I should get a new car. I like not having a car payment so no thanks
Stand firm!
Why is he saying that?
Your dad must want you to be broke
I never understood people wanting you to spend money on stuff that YOU have to pay for.
you're correct to love your dad, just don't listen to him unless your current car is a money pit.
Most people I know in Canada are spending $300+/mth just on car insurance. The only people I know spending less are on their parents’ plan. Personally, I moved to a country where I wouldn’t need a car. Three cheers for decent public transportation 🎉.
My country had decent public transportation. Then I woke up. Love them United States!
300 USD?
@@matw1x $300CAD. If you live around Greater Toronto Area car insurance is very high - especially for young/less experienced drivers. This is not to mention that our salaries in Canada are lower than the US for most industries and our car prices are higher.
@@Heman88888 You’re correct, but lol I was talking about Alberta, which is supposed to be one of the cheaper provinces to live in. The entire country is like this now.
I am a car guy at my 29 and I have 2 cars that I love, one of them is my daily beater 2012 Honda Accord and the other one is a 2019 Honda Civic Type R. Both paid off, both reliable and easy for me to do the maintenance myself. Car labor is really expensive so learning to work on your own cars will be key to get an affordable used car that just need some love.
Hopefully, you’ve purchased a home and you don’t rent or live with a family member.
@@jeffersonjohns6397 yea, I have my own home and it is my only debt.
It’s cheap too, digging a hole outside and pitching a tent. Fishing for food. Bathing in the river.
Yeah I’ll just make money and afford luxuries of life.
@@jeffersonjohns6397I’d be surprised if this guy owns a home
Americans can't really afford anything, but keep buying everything. I can afford to buy a new car comfortably, but I will always buy used.
Ive heard it’s a good idea to say to yourself “can I buy this twice?” And if you can, then you can afford it…. But then still, ask yourself if you actually need it
Working in the insurance industry its very common for lawyers to send auto body shops to tow yards or even customers houses to pick up obvious total losses and hold. In the state I work in there is no limit to how much a shop can charge for storage unlike the tow yards that all have a daily limit for storage placed by the city.
It's not uncommon for me to get a claim thats a week old and the shop charges $5k for storage and other misc fees to pick up the salvage vs a tow yard would be maybe $500. The shops usually kick some of the money back to the attorneys as well.
That on top of modern cars being very expensive regardless when they total, and even when repairable have many expensive parts that werent common 10+ years ago(blind spot radars, auto parking, front ws radars) the average claim cost is typically very high before even factoring in any bodily injury(i only handle property damage).
As a young man (25) I have owned 2 cars since my first car purchase.
And all cars were used with 100k miles or in that range. Honestly when I see car pricess today and i think jt might be better to just get a new car. Used cars are way overpriced today. Granted save money and pay cash for a car. Paying interest on an asset that is depreciating is not worth the stress. I know $30k is not easy to save but if you really want a new car then i recommend saving and waiting. By the time you colect the money you will be able to get the next car generation from whatever manufacturer you wanted to buy.
I am actually looking at a new hybrid sonata for $27k and honestly ill wait a little bit more it might get discounted more 😂
Hot take: A 5 to 7 year old used car in 2024 is actually better looking/better quality/more dependable/safer/more luxurious and will last longer at point of sale with less problems than back when new cars were actually affordable. Technically, the current car experience and affordability is better than what it ever was- just buy used.
I still drive a 2001 Toyota that’s approaching 300k miles lol
Lucky. My Toyota died after 168k miles
I'm literally shopping vehicles with over 200k miles on them at this point. What the hell happened.
It's not just that the car prices and interest are crazy. Tack on to that high taxes, high insurance prices it's just no longer attainable for average people. Just drive what you have till it dies.
As always I appreciate the content Humphrey 🙌 Keep on rockin' it out.
PS I've really been diggin' the shorts - super digestible and easy to understand.
Glad you like them!
I had this same conversation with my coworkers. I miss living in Japan where well maintained used cars could be had for $3K to $5K USD. No way would my wife and I ever purchase a brand new car nowadays. I bought my car brand new (in cash) back in 2012 for $35K and still own/drive it, and plan to keep it until the wheels fall off.
exactly! Good plan.
Were you active duty?
bought my car back in 2006 in cash and still driving it
@@scudinferno Still am. Nearing retirement.
@@arcturionblade1077 i figured. I wonder why the cars are so cheap there? are these cars that gi's just trade between each other? cars that cant be registered to citizens under the lowered standards that GI's get? currency exchange issue?
A 2024 civic is larger than a 1994 Accord, which worked perfectly fine for soccer moms of the 90s. People are stupid.
Hi Humphrey! Love your videos and collabs with other finance youtubers! I follow the money guys rules on cars and Dave Ramseys rule about new cars. I make roughly 105k a year and only buy used cars where depreciation has already happened and will continue to do so until my net worth is over $1m! Thank you for the video!
I do pretty well for income and have no debt besides mortgage; I was surprised that I would not be able to afford a new car of the average price according to this. Personally I feel like I could/should be able to - so perhaps perception is one of the biggest issues we are currently facing (being convinced by society that we can afford things that are realistically out of our range). I truly believe that what we need, collectively, is a resurgence of DIY enthusiasts. People should be spending more time learning how to maintain their own vehicles so they are less afraid of owning used cars.
I just got a new small suv 8k off msrp (for 23,000) because the dealer was getting rid of last years new models to make way for 2024 models. Be patient, search for a deal, and don’t get married to one specific car and you’ll be fine
What SUV did you get ?
@@joec8321 it’s a VW Taos SE. Not the most inspiring/reliable option, but it was a good move for our growing family, especially with the warranty peace of mind
👍🏼
Well done! I spent slightly more for a used Lexus GS years ago. Although Lexus/Toyota are reliable and cheap to own outside of warranty, their purchase price is too high. My car has held its value well but it’s not worth overpaying initially. You really do better buying a new/certified pre-owned for less than $30k with a length warranty and sell after warranty. If we made a similar vehicle comparison, you’ll likely spend less money over the 4yr/50kmi period than me despite buying German over Japanese. Maintenance, insurance, and gas matter, but the purchase itself is the biggest factor.
@@joelplatt2651 I really like the styling on the Taos. Not the most powerful engine. But otherwise solid build.
Thanks for the honest advice. I live in europe and the situation is quite similar. Going for some nice and durable used car!
I cant think of anything that improves your quality of life less than a new car. I would rather put aside money to go out to eat than buy a new car.
WTF? Why does everything keep going up except wages?
Greedflation on the part of corporations. They know people will pay for things (especially necessities) and they can get away with charging more for less (ie. reducing the volume and net weight of food and drink items but keep up-charging the same price or more).
Also, the Biden administration's war on the oil and gas industry over the last 3.5 years has driven up transport costs for all goods and services. Now everything costs more to transport and those costs are being passed on to the customer. Shrinkflation (smaller burgers, less chips in the bag, etc) has also largely been caused by this.
@@arcturionblade1077that's probably somewhat true but also negates the obvious inflation due to crazy government spending programs and expenses. It's a mixture of both I think sadly
Need a union
Welcome to any 3rd world country lifestyle
Ohhhhhh Brian from money guy show would argue with you about that car rule. He goes by 20% down, no longer than 3 years and no more that 8% of your income. I love your content and you always have very good quality.
He said, "20/4/10” and my brain went, "Shouldn't that be 20/3/8?” haha
@@rayzerotall of these are arbitrary rules, but they beat 10 year mortgage on a hellcat at 20 APY
I have fixed everything major on my car that I have owned for almost 15 years. No point buying anything new until market corrects.
I'll be in the market for a new car in the 1-2 year timeline~ As always, a timely video and well done! I forgot about the lifetime car value bit of data, so thank you for the reminder~
This is why I purchased an electric scooter. $2K for the scooter, goes over 40mph , 60 mile range , no insurance required and maintenance is super cheap (just brake pads and tires) . It pays for it self in 6 months
Be careful out there
@deh5tarr69 will do, I purchased extra lighting (front and back), motorcycle helmet, gloves etc...
@@x14inchdubsx30People go around trying to steal those from people in bigger cities. What brand did you go for? I might consider buying one.
@KillerofGods I went with the Nami Klima max , I also signed up for doordash to do deliveries so I can write the scooter off on my taxes and make a few extra bucks in the process. I hid some trackers inside the scooter and use a hiplok d1000 when I ride places and it's not within sight. No lock is perfect but most thrives just want something quick and easy(plus where my job is the bike rack is sorta hidden and away from the general public so that helps)
@KillerofGods Nami ! kaboo is also good as well, I would say it does about 70% of what a car can do for my purpose. In bad parking lots where finding a parking spot is a pain the scooter is great!!!! At work the bike rack is in the lower level of the parking deck (less likely to be seen) plus some employers allow you to bring inside and fold it up(maybe even charge It under the desk)
If you are not a high income buyer, buy a low priced, easy to maintain vehicle. Toyota Corolla, for example, not Grand Highlander. Only buy the Grand Highlander after following Humphrey’s advice makes you wealthy. I bought VERY used cars the last 3 times for cash and drove them (literally,
at least in one case) after the wheels fell off. This year, for the first time since the turn of the century, I finally allowed myself to buy a gently used Ram Pickup, for $16,000. Finally, an anecdotal observation: when I bought the used vehicle, I was the ONLY customer in the dealership and there were several salesmen sitting around playing on their phones . In a community that is booming right now.
Some people have large families so a bigger car is more practical. I just drive a old used minivan but its paid off.
@@AmericanRefugee212 I see your point, and can’t you get family vehicles for less than 48K? Seems a matter of where your priorities lie.
Driving a VW Golf 2, 1988, here. No car payment, is the best car payment. 👍
very nicely done!
I would never want to be in debt to anyone for 68 months for a vehicle that depreciates as soon as it gets off the lot . Forget it!
Somebody's always trying to separate from you and your money
I'm amazed by the number of new cars I see around me. I've always driven old cars until they essentially are worn out. Not because I want to, but because of the points made in this video. Frustratingly if more Americans were like me, new car prices would plummet because of weak demand. We've done this to ourselves. I still don't get how people can service this debt. And I also don't get that in the event of defaults...which should theoretically be MASSIVE when the economy turns, we still don't see deals in the secondary market. Great video. Subscribed.
My wife and bought new cars. 2020 and another in 2022. Today we only have around $5k left in debt
There's a reason why EVs aren't selling...as a Northerner, terrible investment idea because of our winters.
That's why I go around on a motocycle now! And not to make a bad situation worst, you actually forgot to mention TAXES in the maths. Also, some models have a significant mark up on the MSRP.....crazy car market!
Why buy new car? You drive away from the dealer is used. 😂
There needs to be an automaker that comes out with the most basic no frills car possible for $10k or less.
Mitsubishi tried something like that with the Mirage and it was called one of the worst cars possible, and an insult of an automobile. Issue is we'll say "build cheap cars", but then either nobody buys them or people aren't buying them enough for dealers to feel they're profitable. That's the tough reality. Cars are insanely expensive, we say this, and yet some people are willing to pay more.
Nissan Versa? Kia Rio?
@@RKmndo nobody but maybe rental car companies buy them.
@humphrey, great video as always! I was watching Inside Edition and you were featured on the show - about Costco gold bar, so cool to see you on tv!
Awesome! Thank you!
Im a car guy in Europe but no way im spending more than 30k on a car.. I bought my used ND in 2020 for 25k with 9000km (6k miles or so) when prices went down and im planning to keep it until the wheels fall of.. i will never understand people that buy some BMW or Mercedes SUV just to look rich when interest rate are crazy and that they are paying these cars on 84 month.. for something that will depreciate anyway
Poor management will lead first world country to collapse
I've seen 72 months which sounds crazy
yes
Only a matter of time before 84- and 96-month auto loans become the norm.
@arcturionblade1077 at that point you can't afford a squash and just living beyond your means.
The type of people that come to mind with those lengths of loans are fake moneyballers who have absolutely nothing and will buy a 12 year old Mercedes with
>100K miles and pay 24%APR Just to flex on people.
I feel like 72 month is the average for people now days. And they even have one that goes past 72 I forget exactly how many months but when I saw it I was like omg how tf are people choosing to do this
@@arcturionblade1077 7 years. I can't even imagine
A new car is a waste of money, especially the last 3 years.
If anything, the only thing you get when buying a new car is the rights as the first owner and get the honor of getting SMACKED with that depreciation.
Yep you get it
@@Madchris8828no. You have new car warranties up to 100k miles and lifetime on engine and transmission for Toyota. You don’t get that with used cars. Also what does depreciation matter if you intend on driving it into the ground?
I do the 35% rule but with super cheap and clean vehicles. 8k for a truck and 5k available just incase for repairs.
I bought a new Nissan 370Z in 2019 for about $33k, paid $20k down and financed the rest at a very low interest rate for 3 years. I really like driving a nearly new looking car without having to make car payments.
There are also way fewer entry level models left on the North American market
Right its just the "disposable grade" cars (the Mirage and thr Versa)
We used to have some actual choice: Toyota made the Yaris and Yaris IA (Mazda 2), Honda had the Fit and Ford had the Fiesta-- actual OK cars. Plus the next class of cars (Civic, Mazda3, and Corrola) have drifted further up market and dealers only carry higher trim levels with immense markups.
so true! it's sad! very few affordable new cars in the use!
How about the Chevy trax? In the low 20s
@@steveguillory7568 there are multiple options in the low twenties (in theory-- without dealer markups). I'm talking about new cars in the mid-teens... The only model I forgot was the Kia Rio. I would strongly advocate for getting a better used car in that price range. A 10YO Corolla with 100k odometer has more life left, will require less maintenance, and will be much nicer than a brand new Mitsubishi Mirage.
Why is everything always based off gross income? You don’t get to keep all the money you earned especially those in HCOL states.
Gross income is always the same across someone earning X amount but the net income can vary drastically. Someone making 100k will be earning $8,333 gross per month regardless of their location, habits, or other circumstances. The net incomes will vary, are they living in California, NY, Texas? How much is being taken out pretax for your 401k, health insurance, etc. Using Gross income is the most general metric to use to give an estimate on what someone can afford. But that's why they call it personal finance. It's your responsibility to look at your situation and figure out what's right for you. I use my net income to determine what I can afford but for videos like these and websites with calculators they can reach a broader audience using gross income.
@@connorwelch6265 makes sense! I, too, always take financial advice with a grain of salt and do my own homework to make sure it’s the right choice for our situation. Thank you for your reply!
I paid $1850 for my 2007 Chevy Cobalt 5 years ago (private party), and it only had 39,000 miles on it. It still runs great and is in almost like new condition. I have no car payment and enjoy having more money to spend on other things. If and when I do upgrade to something nicer, I won’t spend more than $10k. You can easily buy a really nice 8 year old used car with low mileage for under $10,000.
No dealer financing, and few banks, calculate interest using "simple Interest" .. usually only credit unions or captive lenders. Bank loans front load the interest and very little of your payment goes toward the principal for the first few years. This is how you end up underwater for so long on your car.
I work in the insurance industry and 2022 was the worst financial year in our company's history. It took forever for parts to come so we're paying for months on rentals and storage. We started to total cars for minor fender bender since it was cheaper but car prices were inflated due to supply chain issues. 2023 we still loss money and 2024 we are projected to break even.
We just bought a 2020 van with a $200 monthly payment. It's low mileage and feels new to us with lots of bells and whistles.
This is one of the many financial decisions we make to afford having five kids on one income.
As a mechanic, im blessed in the fact that I know which cars rarely break, how easy they are to repair, and what I personally enjoy driving. Im actually selling my 2012 car (Honda CRZ 6MT) to buy something older because theres so much less things that can break or cause problems, and because I know how to work on them. If some silly communication error ever came up on the 2012, i wouldnt really know what to do with it.
which car are you buying?
I picked up an EV last September; there are much cheaper options for used right now, but I got my EV for $22,500 out the door no taxes on it in NJ and free charger installation. My fuel and maintenance costs went down enough to cover the cost of an EV and I put less wear and tear on my F150 or my wife's Subaru so we can likely end up keeping those vehicles longer for cheaper by putting the burden of majority of our driving on the EV. Our insurance went up about 23% this year for the 3 vehicles so that cut some of the savings, but overall happy with an EV as a daily use vehicle.
Alright small critique as I'm watching the video; The Nissan Cube is not a 47k car. If there is anyone out there paying $738 a month for a Nissan Cube you have been scammed and you should remedy that situation however your conscious can bear it. I don't know if I could ask someone to pay even $150 for a mint Nissan Cube. I'll leave my soapbox now ty
Because my credit score was low at that time, I had to make $9,000 down payment for my 2021 Corolla XSE in order to be eligible for the 0% APR. I’m planning to drive this car as long as possible. I would love to see a video on unnecessary add ons we should avoid when buying a new car. (Example: extra $25 a month for tire replacement) Luckily, I had my uncle with me to help guide me through the whole process.
We bought a 2024 Honda pilot in San Diego. We put 9k down and the payment with extended warranty is a lil over 600. The thing that pisses me off is I can't apply my payment to the principal. I have to pay the 600, and if I wanna put some to principal, it's extra money. I've financed cars and this is a 1st
I’m having trouble understanding…you pay your $600 monthly payment and you can add more money to pay extra towards the principle. That’s normal.
Yes this is true indeed. My base pay is $72k per year. I have a two kids and a wife. My wife only works part time. So combined, we make a round $100k. There's no way we can justify even if a $30k new "cheap car". Thats just way too much of our take home pay indeed. We prefer to have savings, investing and paying off our mortgage which we still have about $97k left. I just buy good used reliable vehicles between $10k and $15k. I just make sure that those vehicles have a good track record of being reliable land that they were taken to care of. I do most of the maintenance myself since I used to be a car tech, so all that helps me drive a used vehicle. Good luck out there! The irony is that my current used vehicles are so good, that they have outlasted several new cars that are way more expensive. I've seen it with friends and family. And strangers. Their newer vehicles fell apart and are less reliable thanks my used vehicles 😮
I was thinking that especially with Kia’s and dodges.
The issue, in my point of view, is how much people are willing to pay for cars. Personally, I make more than $350k, and got a new Tucson for $38k, and perfectly happy with that. You don’t need to pay $40k - $50k for a RELIABLE car.
People forget that different people have different priorities. If you love cars you’re probably allocating more of your budget towards cars and less towards other things like eating out or travel. Personal finance is called personal finance for a reason.
I just leased a Kia seltos which was 35k. I’m 20, and I don’t know how any of the people my age are going to make it financially, unless you’re rich enough to buy anything in cash. To lease this car, with 2500 down, it’s still costing me 420 a month plus 300 in insurance on a 4 cylinder, SUV. The insurance is almost the same as my 8 cylinder charger was. It’s insane. They’re crushing us, and it’s on purpose.
This is nothing new. I’m 56. When I was 19 I owned a newish Toyota pickup. I paid $4,400 for it. My insurance was $1,600 a year. I made $6/hr at the time. Basically, you just have to endure those young years paying car insurance. It’s definitely best for young drivers to pay cash for a vehicle and carry liability, no collision, and carry a high deductible. Oh and don’t get any tickets and don’t wreck.
Went car-free 9 years ago. Saved the money. Used it as a down-payment on a house. End car dominance.
You'll own nothing and be happy.
I want to go for a 24k loan for a car repayments $650 a month ….. that’s insane … Australia here
I wish so bad that I had shopped around for something like a used Lexus or a well maintained Toyota sedan. In December 2022 I bought a new Kia forte. My previous car’s transmission died right at 101k miles (love ford). But my payment is roughly $565 for 48 months. My problem is I do a ton of driving for my work/personal life. The car isn’t even 1.5 years old and has 51k miles now. I just want the car to last until it dies. At this rate it’ll have 175k ish miles by the time it’s paid off. I just wish I had something Toyota brand or maybe even used Honda/acura that i could rely on hitting at least 200k miles
Thank you, Humphrey 😊
You're welcome 😊
I bought a 23 Mazda cx5 turbo for 31k otd in February, monthly payment of $443 after 10k down. I'll have it paid off in October and enjoy another 10+ years of no payment. Can't recommend Mazda enough, they're cheap, reliable, and very well engineered.
The middle class shouldn’t be buying new cars. New Cars are for the upper class. The lower class should not even own a car in urban areas.
Bought a used 2015 civic with 45k kms in 2021 and just paid it off last month. No better feeling than having no car payments!
What did you pay? I'm just curious, I bought an '08 Civic 125k miles for $5500 last summer
I don’t have 25-40k for a new car. Why are new corollas 25k? That is insane
Not sure if I missed it, but in your scenario did you mention that it didn’t include a trade in?