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Comment by ramesh31 | Hacker News Reader

I just can't understand who is buying these cars. As a single person with a 90th percentile income and zero debt or dependents, I literally can't even comprehend having a $1,000 car payment. How anyone else is affording this just doesn't make sense.

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8 or 10 year loan. Then you roll that remainder into the next loan when you get another car.

It's absurd, to be honest. We financed our last vehicle, because we got a price discount via financing. The FIRST payment term they brought us was 8 years. And this was for a 19k vehicle.

People aren't looking at the terms, they're just looking at the payments. They're paying more for cars than they are for houses, monthly. I don't get it.

Me sitting here with a 28% APR on my 11 year old car. My own doing bad credit but I did get the car I want through ACA.

> ACA

Affordable Care Act?

My guess is American Credit Acceptance... a subprime auto loan originator.

> It's absurd, to be honest. We financed our last vehicle, because we got a price discount via financing. The FIRST payment term they brought us was 8 years. And this was for a 19k vehicle.

I’m gonna go out on a limb and guess it was a Nissan dealership. Nissan can’t sell enough cars without subprime lending, that’s my guess as to why you were offered a 96-month term lol.

With a prime credit score, Toyota offered a 3 year term loan to me which I changed to 5 years (2.5%, it’s free money)

Ford. The town is medium to low income. So I'm guessing that's their motivation?

> 8 or 10 year loan. Then you roll that remainder into the next loan when you get another car.

What does this mean? Surely lenders are not lending more than the price of the new car with just the new car as the collateral.

That is exactly what they are doing. It's common to have negative equity in car, just roll to the next auto loan.

Suppose you are buying a new car for $30k, and you owe $10k on a car that would sell for $5k.

A dealership would take the car worth $5k and lend you $35k?

Exactly! And with high interest rate, like 15% for 8y. 3 years later you can roll over debt into the next new car.

I'm also in the 90th percentile of income and I'm quite comfortably affording a $1000 car payment.

It would be very interesting to compare finances and see what it is that both of us are doing that gives us such wildly different perspectives.

I could afford it, but I’d much rather put that money into my mortgage, pension, or an investment account. But then I don’t get much pleasure out of cars. If I loved nice cars then I might think it’s worth spending disposable income on one.

Completely agree here. I came from a family that loved its fancy cars, but the practical difference between an average car and a high-end luxury model is pretty minimal. Until you need to fix the latter.

> ... but the practical difference between an average car and a high-end luxury model is pretty minimal. Until you need to fix the latter.

You're right: broken gearbox on mine was a solid 15 K EUR at least. But... I paid zero.

My solution is simple: I buy a high-end luxury car used (four to five years old) but I then religiously pay every year for the official extended manufacturer warranty.

I pay 1400 EUR per year for that warranty but then any yellow or red light on the dashboard, any issue (sunroof not opening, sound system speaker broken, NAV issue, anything really), I bring it to any official dealership, in any country in the world and they fix it (it's already been at least to dealerships in Belgium (various little issues), France (gearbox but they didn't fix it: they didn't believe me it was broken), Germany (gearbox replaced), Spain (wipers broke down after a 1700 km road trip under heavy rain: like... it was just too much for the motor 15 hours non-stop), Andorra (yellow light, forgot what it was) and Poland (headlight was getting old and cranky, this summer)).

Car is now 12 y/o and 115 000 miles / 190 000 km and I just renewed the warranty for another two years, unlimited mileage.

For that's the thing with high-end luxury cars too: you have fancy stuff like a warranty valid until 15 years old and 350 000 miles / 400 000 km if you want (if I were to bring it in two years in Sep 2027 with 400 000 km and a broken engine, they'd be forced to replace it just like they were forced to replace the gearbox).

And that warranty is valid in any country in the world. And they give you a spare vehicle. And you've got assistance taking care of everything should you be stuck. For 120 EUR / month on a used car to me it's a no-brainer.

And in two years I'll just sell the car for 15 K EUR or something and buy another high-end luxury car, used (four or five years old), again.

I think for people who enjoy high-end cars but don't want to deal with the stress of having an engine or a gearbox breaking, a used high-end luxury car with an extended warranty is a good solution.

Practically I give to you that it's still just metal on four wheels.

The business model of most higher-end makes has evolved: the first customer leases the car for 3-4 years and then returns it to the dealer, who turns around and sells it to a customer with a full warranty for another 3-4 years.

So modern lux cars are actually pretty well-made and pretty reliable these days. The only catch is that they’re designed with the assumption that all maintenance will be done at the dealer and that the driver never sees a bill.

Once you exit that - do maintenance elsewhere or not under warranty, the costs become ridiculous and people start skipping necessary items. So the car breaks down and the repairs are even more ridiculous. So off to the junkyard it goes.

Stay inside the dealer+warranty bubble and you have a pretty good time, although many people will question your sanity buying an expensive extended warranty for a 12-year old car ;)

I think OP is suggesting that if it's a ridiculous idea to have a car payment that high, why aren't poorer people agreeing with said idea?

Not to mention that insurance is crazy with such high vehicle values. Easily another $200-300 a month, and that's if you're a good driver over 30 with no accidents.

Can depend on where you live too... if you're living in a location where your mortgage is $1500/mo vs $3000/mo that's the difference of a new car.

Especially electric cars, which can depreciate up to 50% in the first year [1]. I can't comprehend being that impatient.

[1] https://www.wired.com/story/evs-are-losing-up-to-50-percent-...

I had a > $1000 car payment, but the interest rate was only 2.5%, not to mention I overpaid, so it was paid off early. I'll keep the car for at least 10-15 years.

25% of people in my state have a car payment above $1,000/mo.

It's clearly a massive priority for a lot of people but not one I understand either.

Rolling old car into new one means your loan is only the difference. Which is the same as a large down payment

Trade in value is usually negligible unless you're buying a new car every few years

Just looking at the "blue book" site suggests that a 5-year-old Accord with 50k miles can be traded for $20k and a 10-year-old Accord with 100k miles can be traded for half that, but a 2005 model with 200k miles is virtually worthless. So there's a cliff somewhere, but neither the 5 nor 10 year old example are negligible.

One point of annecdata to backup your figures: I traded my 2018 Accord (7.5 years old, 97k miles) this past weekend, was offered $11k and negotiated them up to $15k. So, trade ins are definitely worth more than nothing.

That’s how a decent number of people do it - buy new, trade in at some “sweet” spot whatever they deem it to be.

Past a certain point, it’s better to run it into the ground.

It's about keeping up with the Joneses.

They've been snookered by American culture into believing that the bicycle is useless, and/or they've become trapped in an American exurb where the bicycle is in fact useless. I have a car but it mainly just sits there and like you I refuse to buy anything that costs more than about $30k. I drive a Honda Insight which at the time was the cheapest car Honda was selling in this country. The new Civic Hybrid annoyingly has 18-inch wheels so if I was looking at cars today I would probably favor the Corolla Hybrid. It blows my mind that people will by a Rivian.

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