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Comment by recvonline | Hacker News Reader

Your employer is not allowed to fire you if are in jail for less than 2 years. You also can't evict someone from their home because of jail. And the government might be paying your landlord for your time in jail as well (depending on the time etc.). It's complicated, but basically, Up to 6 months, all fine on all ends.

Germans don't have car payments usually. They pay for the car in cash, if they don't have enough, they buy a smaller car :)

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47% of new cars are financed in Germany [1]

[1] https://de.statista.com/statistik/daten/studie/1065113/umfra....

That's new cars. Which is mostly what employers buy for their employees. It's 35% alltogether.

Just wanted to highlight the different mindset. I am a German living in Canada with my family. The mindset is very different. Based on feeling, 70% of Canadians I know have car debt, whereas I know one person in my German friend circle who took out a loan. It's just not very common to take on debt for cars.

My impression of Germany is people are generally very anti-debt. Credit cards were barely used when I visited back in 2019 (although that changed by the time I went back in 2022)

The primary reason credit cards were rarely used is because Germany already had an electronic payment system (Maestro, formerly eurocheque), so there was no need and credit cards often came with a fee. Online shopping and a huge push by Visa/Mastercard to replace maestro changed this to some extend.

I have noticed that in the US people have much more tolerance for debt. Even relatively poor people in the US are much more likely to buy a new car (or even multiple of them!) than in most of the Europe.

For example, the proportion of financed new cars to all new cars sold is 84% in US vs 47% in Germany.

But that does not say anything how expensive are the cars, how expensive compared to income, how long they are being used or what is the proportion of new cars sold to used cars sold.

In Europe people tend to use the cars for longer after they buy them new and then the cars tend to be used for longer after they are sold used.

Also, in Europe people tend to buy smaller cars. And, historically, we preferred cars that use less fuel which means a lot of older cars are still very viable compared to older US cars.

In the US at least it has often (although not at present) been true that the interest rate on a new car loan with good credit is less than one could return from relatively safe investments. Thus the financially smart thing to do was often to finance the car, even if you could buy it outright.

Too much debt is a bad thing, but so is being excessively debt averse.

I would also say, historically, a dollar now is worth a lot more than a dollar 50 years from now, and your quality of life is probably better, too.

I see lots of people from my parents generation who saved their whole life… and now they have money but nothing to do as their health doesn’t permit the sort of travel (or outdoor activity, or whatever) they wanted while a 20 or 30-something.

> Thus the financially smart thing to do was often to finance the car, even if you could buy it outright

I think the financially smart thing is to avoid debt as much as possible.

Also, if you absolutely need to take on debt and decided to buy a car, the financially smart thing to do would be to buy as cheap a car as possible. But that's not what really is happening, isn't it?

The reality is that taking debt changes how you think and make decisions and has far more reaching consequences than just the financial cost of the debt.

Taking on debt at 3% so you can stick the money into a index fund reliably returning 5%... is what is smart.

This sort of knee-jerk debt avoidance on principle is not smart.

First of all, buying a car so that you can drive your ass around is very different from sticking those borrowed money into an index.

Second, there exists no index fund that can reliably return 5%. Borrowing money to put it in a financial instrument is called leverage and is a quick way to get poor, not rich (and I know a bit about it because I work with financial risk for a pretty large, well known bank).

Third, for some reason (and, do explain this if you can), people are not storming banks to borrow at 3% to then go to a brokerage house to buy a supposedly reliable index. Please, show me ONE person who got rich this way... I guess not. You see, this is not how people get rich... people get rich mostly by earning a bunch of money and then not losing it. You know, not losing it is kinda important part of getting rich.

In fact, there is lots of people interested in how people actually get rich. And funny thing, nobody gets rich by repeatedly borrowing money and buying index funds. BECAUSE IT DOESN'T WORK.

Fourth, the act of taking debt changes how people think. I also know something about it because for large part of my life I had a lot of debt. Wonderful things happened to me after I paid it all. And while most of it might be in your head, the results are very real.

The avoidance of as much debt as possible is an irrational, emotional attachment to avoiding debt. Excessive amounts of debt is also financially unsound to collect, but the financially prudent thing is some debt, after which you end up with money, or equivalent, than if you not had taken on that debt.

> Germans don't have car payments usually.

They do actually :-)

https://www.mckinsey.com/industries/automotive-and-assembly/...

"In Germany, while customers purchase 50 percent of stock cars through financing, they buy 35 percent via lease-based products and additional services."

> Germans don't have car payments usually.

There's a lot of leasing.

Yes but most of the time your company pays and then they deduct from your salary.

1% of the purchase value is taxed, regardless of usage (company car could be used only for private purposes). That way the same cost for the employer leads to a bigger car (than if bought with taxed income) for the employee and less money for the government.

And a happy car industry, of course, being able to sell bigger cars.

That's corporate, mostly. But this is changing a bit, there are more private lease constructs but they are quite expensive compared to just owning the car.

> That's corporate, mostly.

Stats would be nice.

You do know that stats are the easiest way to lie, yes?

No, the easiest way to lie is “just trust me bro”

https://bdl.leasingverband.de/en/newsroom/press-releases/sin...

https://www.ibisworld.com/germany/industry/car-rental-leasin...

And many other industry publications. Private lease is a very small fraction, but it is growing. Same picture in most of Western Europe, in Eastern Europe it is very variable from one country to another.

Well that just sounds like taking a relaxing 6-month vacation from work while the law-abiding taxpayers pay your rent. Meanwhile, your employer and landlord are forced by the government to accept the employment and housing of someone with a criminal history?

I'm usually all for protecting the little guy over the corporate entity, but that sounds like n awful deal for everyone involved except the criminal.

Well you prefer punishment, Germany prefers reintegration. Destroying a persons life is a pretty good way to keep a criminal criminal.

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