Wow, that's more expensive than the car I bought (and felt guilty about) as a newly employed software developer. I wonder if we should be offering financial counseling in addition to financial aid.
I'm not surprised about the new Elantra. People who grow up poor are not socialized to make good financial decisions. (People who grow up rich often make bad decisions too, but they don't suffer as much from them.)
Unfortunately, we have a system where poor college students are able to dig themselves into massive debt. Huge student loans are given to people who have no chance of repaying them, and it's possible for someone in dire financial straits to finance a new car. It's a miracle we haven't had a mass default bring down the entire student loan system yet.
Low unemployment will do that. Just wait for when U3 creeps toward 7% or so, when the prospects of employing the sociology, theater, and gender studies majors for "college graduate salaries" becomes untenable for employers.
Then you'll probably see it pop.
Or not. Markets can remain irrational surprisingly long times.
Americans are being groomed to think in monthly payments rather than the total cost which leads to silly decisions like buying a brand new car instead of a getting a used car.
It seems that he was partly inspired to write this by "the TTAC reader whose response to Bark’s article on subprime buyers was to straight-facedly suggest that a working father swap his own minivan transmission in his apartment parking lot."
I used to own beater cars when I was in college and shortly after. I never paid more than $3k for one, and I did all of my own work, including replacing all of the brakes on one of the cars myself. But I like working on things, I already owned the tools, and I had access to good public transit when my car broke down. I would not recommend beater cars to most normal people.
When I bought my Prius, I was looking at 1-3 year old used models that were only about $3-5k less than a new one, and came with a worse warranty. The two years of free maintenance that came standard with the new Prius covered a significant part of the price gap, and the new one had more life left than the used ones, which I think covers the other part of the gap.
On the other hand, it rarely makes sense to buy a new Chevrolet or Ford, or Mercedes, for example. The resale value on those is terrible.
Buying non-luxury cars is NOT expensive. Throwing away a working car is expensive.
that's not really what I was trying to argue. I'm trying to point out the mindset of someone in her position purely thinking of monthly payments.
An "extra" $100 a month doesn't sound like a lot of money and the sales people push this hard because it obfuscates the true cost of the purchase. For example my real estate agent kept trying to do this when I was buying a house, an "extra $200 a month is a small price to pay for the house you love".
If I would be theoreticaly buying latte each day, it would be either because I would love latte so much or because of some social reason (collegues I want to talk with are going there so I have to join etc).
Compared product is usually not needed socially and is no more appealing then daily latte I am not buying.
My current car cost me $2,000 a few years ago. I can't imagine paying $17k for a Hyundai, of all things. I'd have to be seduced by some kind of sexy rare classic.
I have another running car, a hideous Subaru, that I bought for $100. That's my backup.