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Comment by chrisseaton | Hacker News Reader

> On the low end you're going to hit 300 to 500 dollars a month for the privilege of driving.

How is maintaining a car costing you so much?

Add the numbers up and it's pretty hard to get TCO on a car driven 15,000 miles/year in the US much below about $3500/year, even if you do as much work as possible yourself, buy junkyard parts, etc. If you're capable of getting that number down very much, you're probably capable of making enough money that you don't have to.

TCO on a decent and highly reliable new compact, for comparison, is about $5000-$6000/year. (Check Edmunds) At $400-$500/month in TCO you should have no car worries. But if you don't have that extra $100+/month, or can't get into a new or certified used car for whatever reason, that does you no good.

Having been raised to be frugal, and having been broke, I totally sympathize with the car trouble thing. That said, a lot of people make irrational decisions about cars, and that can include trying to be frugal.

$100 / month on gas, $200 / month for a car payment, $100 / month for insurance. That's not even accounting for maintenance.

$1200 a year insurance? Seems a huge amount! Is this one of those things where it's for some reason more expensive for poor people?

It's more expensive for people who haven't been continuously insured, who have had accidents, or who otherwise have a poor driving record. That's a larger fraction of poor people than it is of not-poor people, so yes, typically insurance is more expensive for poor people.

Say it's half that or you drive uninsured. A car is still a big expense.

You think $100/mo for car insurance is expensive? The average car insurance rate is apparently $133, but I personally know it's not very hard to hit more than $100 (even on an older model car) if you want more than liability.

https://www.nerdwallet.com/blog/insurance/car-insurance-basi...

> You think $100/mo for car insurance is expensive?

Definitely! Mine is $500/year for full coverage in the UK.

I'm nearly 40 and have been driving for decades. I recently downgraded to liability and it's still $55/mo for myself and my similarly aged significant other.

In my experience in the US, the cost of even essential coverage varies dramatically by zip code. For example, when I moved 1 mile from Cleveland Heights to Piedmont Ave in Oakland, CA, my rates went down by more than 20%.

So yea, significantly more expensive for poor people.

Liability-only insurance with minimum coverage for a good driver with a single car would be only $300-$400/year in my area. $1,200 is if you have collision and comprehensive

The cost varies dramatically from area to area though because each neighborhood has different loss risk, each state (and some locales) has different rules for underwriting, and different minimums for coverage.

Gas and insurance alone can easily hit 300 of you drive enough. Say you keep it at 200, 100$ a month to fix minor things isn't unreasonable. But that assumes you bought a car cash, from my experience people tend to finance cars just because they can't get three or four thousand dollars together at one time. Then you're paying $400 a month

Middle class perspective: if you can buy a car for cash, but you can get a good interest rate on a loan, you may be better off taking the loan. The opportunity cost of having cash sunk into the car can be greater than your financing costs.

A basic, simple loan like this also is often good for your credit record.

Unless your credit score is absolutely perfect, the APR on a used car loan is easily 8-10%

That's a pretty big chunk of change to spend to boost your credit record

https://www.bankrate.com/loans/auto-loans/rates/

Right I was thinking about new car loans which I've seen at zero, which is why it makes sense to work the money somewhere else.

Yeah, that's another way it costs to be poor. But you can read that page as "a new car loan can be as low as 4.2%, even if you only have fair-to-good credit".

It can still make sense to hang on to the cash if you don't otherwise have a cash reserve.

The problem is most people buy more car than they can afford when they finance it. If I have to save $10,000, and I have it in my mind that I don't buy things on credit, I'm only going to buy a $10,000 car. But if I have $1,000 for a down payment and the car dealership talks me into a $30,000 car with zero down, I might take that deal.

True, but a complementary problem is that your $10000 used car is probably overpriced, driven up by the demand for lower-cost-up-front cars. Edmunds' 5-year TCO on a 2015 Corolla is only about $20/month less than that of a 2021 Corolla. There have been years where their estimate was for slightly higher TCO on the five-year-old car.

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