$1000 vehicle payments at record high

There's an outfit here in Indiana that specializes in rebuilding Prii. They have years of experience just with these cars, and they know just what they're doing, and they have a whole Prius boneyard out back to get good parts from.

By the time they sell you a car, it does not have a salvage title. It has an Indiana rebuilt title, which they obtain by satisfying the state they have restored it and they have the receipts to show it was not with stolen parts.

They are also completely up-front about it and show you the 'before' pictures of the Prius you're getting, and what they've done to rebuild it. It could be argued that's more up-front than you're gonna see with a lot of used-car sellers (whether private sellers or used lots).

 

Yep I wouldn't be surprised if the car loan industry makes changes to the loan options...maybe offer 7-10 year loans. And maybe 3-4 year lease options.

But the only thing better than paying off a car loan is paying off your mortgage so pay extra on that car loan to pay it off so you can, then, pump the extra money onto that mortgage!!

 

Go back and read post 16.

The banks' plan is to ignore each others' loans and use the borrowers to completely ratf--- each other. They don't care about a wave of defaults coming if they can make more of them happen to their competitors than themselves.

Defaults are still defaults from the borrower's perspective. There's going to be a big wave of them, and they're going to knock a lot of people's credit down into the basement for a long time.

 

A person that thinks like that, shouldn't be locking themselves into a $1K/month car payment - unless their long-term monthly income can justify it. Or they're going to be living out of that car, because they can't pay rent; mortgage, gas, or insurance.

 

Maybe, not a long time....
Remember the housing bust of 2008? Usually a mortgage default turned a persons' credit radioactive for a decade. People were rebuying homes within 3 years. One of my coworkers bought a second home, so he could walk away from his primary home - just because he paid too much for it. The banks never went after him, but they should of; because he qualified for that second mortgage and I knew his credit score was only in the high 600's. It sends the wrong message and makes law abiding citizens look like saps. IMHO

 

The "house always wins." The banks had a mechanism called a credit default swap that protected many of them but not all.

Those that survived usd other people's money and came out better off than many. None went to jail.

 

and people should've gone to jail for all the lie-er loans that was dumped onto Freddie Mac and Fanny Mae. At a minimum, those people should've lost their licenses to work in any fiduciary capacity. I remember janitors claiming they were making over 100k a year and no one questioned it. A simple W-2 check or 1040 form would've been enough to bounce them out.

Unfortunately "other people's money" means our collective money, because someone has to pay the bill when the party is over. I guess I'm a bit old fashion. If we keep printing money; we'll end up like Argentina or some other country - where you need a wheel-barrel full of cash to buy a loaf of bread. The only reason we aren't there yet is because most international trade is settled in USD. If some other form of reliable world currency comes into play - we're going to be toast. IMHO

 

I believe in living within my means. I almost was able to afford a downpayment on a modest house, then COVID happened and I don't see myself buying a house any time soon. I'm not going to start working more than one full time job with hopes I'll pay for a house or car.

The thing with cars is they are very close to being out-of-my budget. I often thing what car I would get if something happened to the one I have. Hopefully insurance would give me a nice wad of money so I could get something similar.

But if I had to start from zero I'd try to get the Prius running, the one that's sitting in my driveway for the past three years. And if that didn' work I might just forget owning a car for a while. When I see cheap cars I get very suspicious. I don't want or need another driveway ornament.

 

All depends on the expected rate of return for one investment versus another. I paid off my house 40 years ago and I buy cars with cash. But at certain times, I'd have been better off investing that money in an alternative investment. Like today, buy an I-bond rather than pay off that 4% mortgage. Or 20 years ago buy stocks.

The true trick is invest, don't spend.

Every time I see someone driving a car they can't afford I chuckle. Every time I see a car go by that has thousands of $ of look-at-me accessories/bling I shake my head.

 

Not always mentioned about I bonds is that they pay an inflation-based rate plus a fixed rate, and the inflation-based rate resets every six months.

I bought some last summer, when the 9.62% rate was highly touted, but those bonds combined an inflation rate of 9.62 with a fixed rate of 0%. So my six months to earn half of 9.62% are already over, and this six months I'll earn half of 6.48%, and every six months after that I'll earn half of whatever the annualized inflation rate seems to be then (which, if the Fed succeeds in their mission, ain't gonna be very often as high as it was this summer). But I can count on that 0% fixed part for all thirty years if I want it.

People who buy I bonds in this six-month window will get a lower inflation-based part (and a lower current total), but a fixed part that's actually (slightly) above zero, which is nice.

Essentially, the ones I bought last summer are a guarantee to keep my chin exactly on the inflation waterline from now to 2052. I bonds purchased in the current six-month period offer a chance to grow at 0.4% beyond inflation, whatever inflation may do, from now to 2053.

 

Do remember that stock market investments don't go monotonically up. They sometimes stay remarkably flat for extended periods, and occasionally make sharp downturns. And unfortunately, those downward moves are often accompanied by job losses or cutbacks.

During these downturns and mass layoffs, some of us sleep a lot better being low debt or mortgage-free, and not having to liquidate primary long term investments while they are underwater in order meet debt service. BTDT several times. While 20/20 hindsight always finds different paths that would have worked out better for any given recession, it takes a clear crystal forecasting ball to pick the right ones beforehand. My crystal ball is very cloudy, nearly opaque.

 

The IRS allows a $25k tax break for new trucks or SUVs over 6,000lbs if you can vaguely claim it's for business.

That has a little something to do with it.

Now, for the guys who have their identity wrapped up in the truck? that's actually not too bad. It's easier to maintain a truck than a family, or an old house or a day-to-day business....

 

the $200 (example) purchasing power of 2015 is significantly greater than 2023's $200 .... so if fiat $$ value has (example) been made ⅓ less valuable - then you must continue to either purchase less & less or alternatively pay more & more. No mystery.
.

 

Yeah, but $200 in 2015 is about $250 in 2023 according to this calculator.
Now, for a $250/mo car payment, what new car can you afford to purchase? Nowhere close to the average new car price of $48K.

 

I'd guess most new car purchases involve a trade in or other form of down payment.

 

Good point. I should say, I hope I don't have to pay that kind of money any time soon. I've gone from cars that cost less than $1,000 cash to a $9,000 loan then a $10,000 loan. Of course over those years I've made more money. I guess what I'm saying is I don't want a car payment to be a substantial percentage of my income, enough to make it hard to buy things like food or pay my rent.

 

We had a whole thread on auto affordability a while back.

Things haven't gotten better since.

 

Maybe or maybe not. In any case, with or without a downpayment, the cost of the car one can afford does not change much. I have always set my upper limit of a car purchase cost to be ~$20K. Only very recently I have upped that upper limit to $25K for my last 21 PP Ltd purchase, and to ~$30K for the last Escape PHEV purchase. I never look at the monthly payment as a guide for the affordability of a car.