Americans are struggling to pay off their auto loans
nypost.com
nypost.com
My truck is going on 10 years old (bought used) and has low mileage < 100k. Paid a fraction of the cost of a new one (roughly 35% of the sticker price when it was 5 years old).
A 2017 Honda Accord goes for $20k new. A 2014 of the same model with 45k miles goes for $16k (KBB). A 2011 of the same model with 90k miles goes for $10k (KBB).
Basically, the first 3 years and 45k miles it depreciates $4000. The second 3 years and 45k it loses $6000 more in value.
Arguably it's cheaper to buy new and sell after 3 years than to buy 3 years old and sell after 3 years.
The years 7-9 are when the car stops losing value so quickly. Worth $6700 in year 9 and 135k miles. The last 3 years and 45k miles only depreciate $3300.
Basically, luxury goods depreciate a lot. Luxury cars depreciate a lot.
At this point it's maybe not so much that they need one, but that they want one. I for sure don't want to keep cars forever.
Maybe I misread your comment, but keeping a car for 10 years may not be for everyone.
Losing a bunch of money as depreciation for a marginally more efficient car doesn't really make accounting sense.
>android auto /carplay
These are accessories that car manufactures generally do a worse job of producing than 3rd parties.
Same deal for my 14 Ram 1500. Fortunately, UConnect is pretty decent as it is.
It could at least make environmental sense, but I doubt that most buyers compare the emissions savings from the new more efficient car with the emissions that were produced during its manufacturing.
Those changes, generation to generation (2-3 years) will be marginal if even present anyway, except on rare cases.
And even them are more like "want" than need, as you say.
>Maybe I misread your comment, but keeping a car for 10 years may not be for everyone.
Might not be to the mindset of everyone, but that's what the parent addresses.
Ultimate point being, I drive cars that would have been $35k new, for less than $100/month over the life of my ownership, versus the $500 referenced in the article.
As a very frugal owner of a 17 year old Honda who doesn't know much about leasing, can you expand on that? How is this possible?
It doesn't mean you need a new one straight from the dealer of course. Buying something slightly used will save you lots of money.
Sure you can drive without them. But however capable you think you are - you're safer with them. I'm not sure why this always have to turn into "I can drive without them successfully" dick-measuring contest. Yes, we all can. But nobody has x-ray vision that will allow them a kid behind their car in a driveway.
(also owner of a 13 yo Alfa Romeo which I got used 8 years ago and it's still kicking asses, paid 25% of original value because, Alfas)
In fact, once you start to service your car, that's where the problems start. We are not paying enough for mechanics to pay attention or care. The cars are not always designed for serviceability, some things can simply never be put back together the way they were done in the factory. There are no shops, official or not, that will use the recommended by vendor procedures or swap out all the required parts when doing some work.
Modern Japanese cars seem to last quite fine with zero service (again beside oil changes, brakes, fluids and such) for 200K+ miles/15+ years, after which they are worth so little and work costs so much that donating to NPR is the only practical option.
I do change things that aren't difficult such as replacing a turn signal switch in the steering column. But I think the premium for a Toyota or Honda is definitely worth it- paying to reduce probability of having someone wrench on your vehicle, leaving it with a new problem for each one it resolved. Then just hope no one runs into you resulting in the same issue- wishful thinking in an era where everyone is looking down at a phone (which should result in reckless driving charges and jail time).
I suppose it's like expecting even halfway decent QA on software that you purchase. At every place I've worked there is not even a dedicated SQL DBA let alone a legitimate QA effort or team.
This is one of the things I loved about maintaining my diesel Mercedes. It was clear that thought and great care was put into fastener choice. (Most) Anything that needed to be removed for service was a permanent fastener. No push-through "Christmas tree" fasteners on parts that needed removing for service; it was a threaded insert and a screw. Where the parts needed a plastic fitting, it was a permanent/reusable expanding plastic fastener, not a push-in fitting.
Contrast that with the Honda that needed less service, but so many jobs involved doing the job and then also replacing the broken one-time or few-time use plastic fasteners (after trying to find and buy it). Similar with my older Jeeps and VWs.
MB seemed to design their car to be serviced for 500K km. Others seem to design it to be cheap and fast to assemble and pass the "initial quality survey" and maybe the length of the warranty period without too many defects.
Have you done any work on the interior of your MB? Were they similarly thoughtful in the way things were laid out?
Since we're already going off topic, I may as well add that one of my dreams is to someday acquire an old MB, maybe a W116/W126, or even an older W108, and convert it to an EV.
Many of the interior fasteners, even if push-to-assemble were curved bits of metal spring that snapped into an FRP "box" to hold things securely and rattle-free.
As an engineer, I couldn't help but marvel at the care that went into some of the design and service thinking.
That's not to say it was all peachy. Mercedes faces the same realities and tradeoffs that other companies face, and they need to assemble cars to hit a price point that people will pay, and people don't want to see fasteners in the interior, so they use some plastic-on-plastic or plastic-into-metal in some areas.
The worst engineering I saw was that that car was eventually killed by rust, caused in large part by poor factory prep and/or a poor understanding of the durability of the (then) new water-based, low environmental impact primer and paint system that plagued the whole W210 line in snow belts. Perfectly good car sent to the junkyard after only 216K miles and 18 years. What's the environmental impact of that? Could have easily gone another 150K+ miles. Pity.
On old MBs, dad has a 1959 220S cabriolet that he's restored (to nice driver condition, not a show car) after we found it in a barn in PA, a W123 he bought new, a diesel W210 that isn't all rusty (as it's a southern car), an R170, and an electric Smart. With all those cars, the electric Smart gets the most usage...
After that I vowed not to take my car to the dealer so I took it to a well reviewed independent shop. On the way home after a fluid change and radiator flush my engine temp shot up and I discovered they hadn't installed a radiator cap.
Since then I've found a really good local mechanic, but being that he's in demand, his prices are high and getting an appointment on my day off can be a problem. I still take my car to him at least once a year for service and to have him look things over but other than that I do my own basic service. I usually schedule a day with a few friends and we work on our cars together. It makes things more social and less of a chore.
I literally cannot imagine paying $500 a month for a car payment, even as a young single person making $100k. People are insane.
I think a long economic cycle is probably beneficial to businesses and politicians since time can insulate them from the consequences of poor decision making, but I wonder if a shorted cycle with less severe but more frequent downturns would be better for society. People seem to have really short memories when it comes to this stuff.
You can argue whether all of those items are needed, whether items not listed might be beneficial (I don't believe in "lifetime fill" automatic transmission fluid, for instance), but the glovebox is the first place I'd look.
I have an older car, model year 2000, which probably makes things a bit easier but my friend has a newer 2010 Lexus and doing the oil change on that car wasn't much more difficult. The oil/oil filter was a bit more expensive and the oil filter was a bit harder to reach, but not bad overall.
Doing your own oil change can be pretty darn easy. The oil filter costs me $6 and the actual oil comes to around $10-$15. Warming up my car, putting it on jacks, putting down some cardboard, draining the oil, installing a new oil filter, refilling the oil, and then cleaning up takes me about 20 minutes by myself.
It also forces you to know a bit more about your car than most people which can come in handy even if your aren't particularly into cars.
Depending on your down payment and loan length your monthly price may be higher or lower but it seems to me that if you are buying a new car in 2017 then $500 per month is going to be a pretty good baseline.
The reason why I took out a loan at 2% instead of paying cash is because I'm making greater returns than that investing it.
I literally cannot imagine paying $500 a month for a car payment
That's frightening.
And if anyone is wondering about the duration,
"Average term for an auto loan: 68 months — this is the longest average term ever seen by Experian."
http://www.cnbc.com/2016/06/02/us-borrowers-are-paying-more-...
No wonder people are driving their cars for 12 years+ now. They can't afford not to.
Some people have more vehicles than they need.
My father has three old cars: a 2001 truck (to haul gravel/etc), a ... 1997 Nissan Pathfinder (4wd needed for 4 months/year), and the 1998 civic my passenger gave me in trade [1] (so he doesn't have to put miles on his truck, and to save at the gas pump).
[1] http://www.taxiwars.org/2016/09/the-perpetual-quest-for-dece...
He could easily buy a new car, but doesn't see the point of dropping all that money on a depreciating asset. Maybe when he retires...
Is there going to be a car loan bubble crash?