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    Are you Entitled to a New Car?

    I dislike Dave Ramsey's politics but he's dead right on subject of new car loans. There's an article on NBC called "Out of Gas", stating what we already know that most Americans can't afford to buy new cars. Dave points how silly it is for a person to buy a 25K auto when they only make 26K a year! LOL!

    However, what really worries me folks are all the people getting new cars with "sub-prime" loans. I had no idea people with little money can actually buy a new car with a high interest loan that does not pay principle?? I also read these loans could very well create a bubble that can expload with the banks not having funds to create more loans. A very similar situation to the real estate collapse.

    Out of Gas: Most Americans Can't Afford New Cars - NBC News


  2. #2
    rugged individualist wphamilton's Avatar
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    Amazing to me, the writer quotes a car dealer that you must have a car, because you've got to get to work, because you've got to eat. As if that's a self evident truth. And because you must have a car it's less risky than a house loan, because the car is more important!

    My wife has started lobbying for a new car, but the last thing I want is a monthly car payment particularly when I don't have any need for the vehicle, nor would even drive a new car much at all if I had one.

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    Senior Member wahoonc's Avatar
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    In many parts of the country you have to have a car to get to and from work. However a $25,000 car on a $26,000 a year income is insane. There are less expensive alternatives out there, but they aren't as easy to come by. The elephant in the room is people have no clue about how to make personal finances work for them. The closer you are to the bottom of the economic barrel the harder you have to work at it to make ends meet. Been there done that and ended up with a divorce because she thought I was being mean...

    Aaron
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    Yep, this kind of crazy financing is what largely caused the housing market bubble and its subsequent collapse. And, to make things even crazier, a lot of people who sign on to these sub-prime loans are incapable of understanding percentage rates and/or are functionally illiterate. They often then go on to make few, if any, payments before they start looking for others to bail them out of the foolish financial mistake they willing signed on to.

    Btw, this nonsense is also being played out in many of the college loan programs that have "students" creating a life of crushing debt in a world with ever decreasing job opportunities (many of these debt ridden 18-26 year old college students have never worked an income tax paying job in their lives).

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    Quote Originally Posted by wahoonc View Post
    In many parts of the country you have to have a car to get to and from work. However a $25,000 car on a $26,000 a year income is insane. There are less expensive alternatives out there, but they aren't as easy to come by. The elephant in the room is people have no clue about how to make personal finances work for them. The closer you are to the bottom of the economic barrel the harder you have to work at it to make ends meet. Been there done that and ended up with a divorce because she thought I was being mean...

    Aaron
    I guess my two threads really struck a nerve! LOL.

    I suspect Dave Ramsey was never car free in his whole life but his debt free belief is one of principles of the carfree movement. Those of us who are carfree are often debt free. Yet, I'm pretty certain Dave would never subscribe to the carfree movement since his real agenda is that everyone should own a car. However, if society had to buy new cars with cash, half the population would be bike commuting to work!

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    Quote Originally Posted by wahoonc View Post
    In many parts of the country you have to have a car to get to and from work.
    Which parts of the country would those be? I've lived in ND, MI, MN, AZ, NJ, and CA, and never found it necessary to use a car to get to work and/or school. Sure, if you choose to live 50 miles from where you work and there's no public transit then it becomes a problem. But it's generally possible to find housing closer than that to places of employment.

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    Super Moderator no1mad's Avatar
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    Quote Originally Posted by prathmann View Post
    Which parts of the country would those be? I've lived in ND, MI, MN, AZ, NJ, and CA, and never found it necessary to use a car to get to work and/or school. Sure, if you choose to live 50 miles from where you work and there's no public transit then it becomes a problem. But it's generally possible to find housing closer than that to places of employment.
    Well...

    -The housing near the employment may not be desirable- either higher crime rate or the school system sucks or conversely, the real estate isn't affordable.
    -The employer shuts down or relocates out of the area and you weren't invited to follow (or were, but turned down for any number of reasons) and it takes a year or more to find suitable employment again. By this time, a good chunk of any funds that could be used to move closer to work have been used just to make ends meet. Been there, still doing that.

    -You work the second shift and the local transit that you've relied on for years decides that it isn't economically viable to run night time service anymore- which is what the people in Tulsa are going to have to deal with- which means some people may end up unemployed or buying a car.
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    Senior Member Dave Cutter's Avatar
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    Quote Originally Posted by Dahon.Steve View Post
    ..... I'm pretty certain Dave would never subscribe to the carfree movement since his real agenda is that everyone should own a car.
    I wasn't aware of Dave Ramsey having a "pro automobile" agenda. I thought what he promotes is personal prosperity... at least publicly.

    I think a big part of what Ramsey (and others like him) try to instill in the public is that financial opportunity is available to almost everyone. It isn't... this is your earning... now live on it. Even most of Americas poorest manage to have cable TV, cell phones, beer, tattoos, computers with internet connections... and oh yeah... debt.

    Certainly America has poor people. But even low earners can [with effort] often manage their limited resources and live fairly well.

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    winter wipeout kitty wipekitty's Avatar
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    I lived in MI, TX, CO, CA, AL, and WI, and found a car to be moderately useful in TX and very useful in AL. I did get to work and do errands without one for over a year in AL, but the combination of dangerous roads, dangerous weather, and hostile drivers made it unpleasant and scary. Conceivably, I could have lived closer to work...but my entry level professional income wasn't high enough, and I wasn't in with the right crowd to get in that neighborhood.

    At any rate, I gained a better understanding of why lower income folks who really didn't have any money and were geographically cut off from important resources like food and health care might find a car necessary in that region. It was really sad to see how some people had rigged their cars just to keep them on the road, but without other transportation options or affordable housing near anything useful, I couldn't blame them.

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    Super Moderator no1mad's Avatar
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    Quote Originally Posted by Dahon.Steve View Post
    I guess my two threads really struck a nerve! LOL.

    I suspect Dave Ramsey was never car free in his whole life but his debt free belief is one of principles of the carfree movement. Those of us who are carfree are often debt free. Yet, I'm pretty certain Dave would never subscribe to the carfree movement since his real agenda is that everyone should own a car. However, if society had to buy new cars with cash, half the population would be bike commuting to work!
    Incorrect. His "agenda" is for people to make smart decisions with their money and financing a personal auto is not the smartest decision one can make- especially if you have to pay interest.
    Quote Originally Posted by Cyril View Post
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    Been Around Awhile I-Like-To-Bike's Avatar
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    Quote Originally Posted by Dahon.Steve View Post
    ... but his debt free belief is one of principles of the carfree movement. Those of us who are carfree are often debt free.
    How did you come to either conclusion?
    Carfree movement principles? Where are they spelled out?
    How many of your car free pals buy houses for cash?

  12. #12
    Senior Member wahoonc's Avatar
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    Quote Originally Posted by no1mad View Post
    Well...

    -The housing near the employment may not be desirable- either higher crime rate or the school system sucks or conversely, the real estate isn't affordable.
    -The employer shuts down or relocates out of the area and you weren't invited to follow (or were, but turned down for any number of reasons) and it takes a year or more to find suitable employment again. By this time, a good chunk of any funds that could be used to move closer to work have been used just to make ends meet. Been there, still doing that.

    -You work the second shift and the local transit that you've relied on for years decides that it isn't economically viable to run night time service anymore- which is what the people in Tulsa are going to have to deal with- which means some people may end up unemployed or buying a car.
    What he said ^^^, the days of the cradle to grave single employer are all but gone. Variety of reasons, but job stability is rare.

    Quote Originally Posted by prathmann View Post
    Which parts of the country would those be? I've lived in ND, MI, MN, AZ, NJ, and CA, and never found it necessary to use a car to get to work and/or school. Sure, if you choose to live 50 miles from where you work and there's no public transit then it becomes a problem. But it's generally possible to find housing closer than that to places of employment.
    I have a friend that is an electrical engineer by trade. He took a job with a medium sized company in a small town just outside of a larger metro area. His wife is an elementary school teacher. They purchased a house in the town, nice older neighborhood near the school. His wife walked to work, he rode his bike. Five years later the company he works for gets bought out, the company starts consolidating. His department is eliminated. No other jobs in town, he can continue to work for the company he currently works for... IF he transfers to the office on the opposite side of the metro area, 40 mile commute. So he starts the commute using the car they owned but seldom used, 3 years later the company goes bankrupt and he is completely out of a job. He now working part time as a contract worker for a company 30 miles away in the other direction. I am sure his situation is not unique in the US.

    BTW... married? any children? Own a house? I have and do.

    I have been in the same specific industry for the past 20 years. I am on my fourth company, the others closed or went bankrupt. If I had to sell and move every time one of the companies has closed I would be on my 4th house, not particularly viable IMHO. FWIW I have been working for 40 years and have had many jobs evaporate when large corporations as well as small companies off shored jobs, eliminate entire departments, close up shop or decide to contract out the positions I was working in. I managed to live car free from around 1980-1984 and car light from 1984-1992. No longer feasible for me at this time. I am thankful that the company I have been working for the past 15 years seems stable and apparently appreciates me enough to have kept me around.

    Aaron
    Webshots is bailing out, if you find any of my posts with corrupt picture files and want to see them corrected please let me know. :(

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    Working people usually move to the suburbs because of the higher crime and costs of living found in most, if not all, of the larger cities. However, the higher commute costs and increased commuting times often make this more of a "get away from the crime" decision than anything else. This is particularly the case with working people who are raising children. My wife and I refused to raise/school our kids in the crime and thug ridden larger cities in the CA Bay Area. People who don't work and/or don't have children might not care so much about the crime and high prices found in the larger cities.

    Meanwhile owning a house has, imo, become a burden to many people due to fact that doing so can tie you down when it comes to shifting job markets. It can be difficult to move to where the jobs are if you can't sell your house for one reason or another. This is why I don't recommend house ownership to people younger than say 45 or 50.

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    Pedaled too far. Artkansas's Avatar
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    Quote Originally Posted by wphamilton View Post
    Amazing to me, the writer quotes a car dealer that you must have a car, because you've got to get to work, because you've got to eat. As if that's a self evident truth.
    If I were a car dealer it would be a self-evident truth.
    "He who serves all, best serves himself" Jack London

    Quote Originally Posted by Bjforrestal View Post
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    Senior Member FenderTL5's Avatar
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    my thoughts:
    1st concerning needing a car: Some workers in certain trades don't go to the same location for work every day either. Example, a construction worker or someone in construction trades may drive to a work site until the project is completed, then move to the next location. Whether it's feasible to always rely on a bike or public transportation could be "iffy".

    2nd entitlement: I agree with Ramsey's point on entitlement. However, I'm not a fan of Ramsey.
    Nashville, like L.A. without a tan.

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    Senior Member dynodonn's Avatar
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    For some people, buying a new car makes sense, especially if they live in a rural location. One of my co-workers decided to purchase a new car when the annual repair bills on their older vehicle exceeded the annual loan payment on a new vehicle, plus the added reliability was another factor.

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    Senior Member mrodgers's Avatar
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    Quote Originally Posted by dynodonn View Post
    For some people, buying a new car makes sense, especially if they live in a rural location. One of my co-workers decided to purchase a new car when the annual repair bills on their older vehicle exceeded the annual loan payment on a new vehicle, plus the added reliability was another factor.
    Even with rural, a brand new car doesn't make sense. Estimate $21k for a new car, $18k for a 2 year old car, and $11 on a 5 year old with equivalent say, 12k per year kind of mileage on them. My wife, and occasionally me, puts 25,000 miles on her car per year. I cut it off at 200,000 because that is the time when it seems I am underneath the car working on it more than driving it. That gives me figures for per year of $2625 for 8 years on the new car, $2571/year for 7 years on the 2 year old, and $1833/year for about 5.5 years on the 5 year old car. That doesn't include repairs because all cars would be driven through the same later mileage up to 200k. Still cheaper to buy the older used car.
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    Humvee of bikes =Worksman Nightshade's Avatar
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    Topics such as this is hard to have when the audience are idiots !!!
    My preferred bicycle brand is.......WORKSMAN CYCLES
    I dislike clipless pedals on any city bike since I feel they are unsafe.

    Originally Posted by krazygluon
    Steel: nearly a thousand years of metallurgical development
    Aluminum: barely a hundred, which one would you rather have under your butt at 30mph?

  19. #19
    Sophomoric Member Roody's Avatar
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    Quote Originally Posted by Nightshade View Post
    Topics such as this is hard to have when the audience are idiots !!!
    It should be: Topics such as this are hard to have when the audience is idiots.

    But I still don't know whose intelligence you are insulting--the audience of this forum or the audience of Ramsey's radio program.

    Besides, it would be much better to provide your opinion of the topic, rather than your opinion of people you've never even met.


    "Think Outside the Cage"

  20. #20
    Wookie Fred chewybrian's Avatar
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    Quote Originally Posted by I-Like-To-Bike View Post
    How did you come to either conclusion?
    Carfree movement principles? Where are they spelled out?
    How many of your car free pals buy houses for cash?
    I bought my condo with cash. I suspect that car-free by choice folks are more likely than average to be debt free, based on nothing but gut feeling and seeing the 'living simply' ideals often expressed here. I don't know about the car free movement or its principles, as people go without cars for many reasons.

    Quote Originally Posted by wahoonc View Post
    The elephant in the room is people have no clue about how to make personal finances work for them. The closer you are to the bottom of the economic barrel the harder you have to work at it to make ends meet.
    I'm in the middle of the barrel, and I had to make some difficult choices to get on track. I make an average income for my state, and struggled to get by when I had a car. I went without a car for 6 years (and counting), saved hard and broke out of the rent/mortgage trap.

    Quote Originally Posted by Dave Cutter View Post
    Certainly America has poor people. But even low earners can [with effort] often manage their limited resources and live fairly well.
    On the back side of my face the facts budget, I own my own condo, and have a lot more disposable income. I did what I could with slim resources, and, as a result, all my bills are less than most car payments now.
    Last edited by chewybrian; 04-16-14 at 04:36 PM.
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    The vast majority of vehicles on the market offer a sharply negative return on investment. However, they do save time while giving people the freedom to do what otherwise would be impossible; i.e. they can almost always travel various distances at their own will. People have become very much used to this type of freedom and, as such, aren't likely to "get out of their cars" in the near future (due, in part, to our inexcusably inefficient public transit systems). This, and the "status symbol" that many place on vehicles, is difficult for most people to ignore.

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    Quote Originally Posted by no1mad View Post
    Incorrect. His "agenda" is for people to make smart decisions with their money and financing a personal auto is not the smartest decision one can make- especially if you have to pay interest.
    Maybe the word "agenda" was used incorrectly but he does have a article where one could have a free car providing you're making 12% on your savings. Is anyone on this forum know of a bank giving 12% interest?? LOL!

    Drive Free. Retire Rich.

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    Quote Originally Posted by I-Like-To-Bike View Post
    How did you come to either conclusion?
    Carfree movement principles? Where are they spelled out?
    How many of your car free pals buy houses for cash?
    Here's how Wikipeida describes the carfree movement.

    "The car-free movement is a broad, informal, emergent network of individuals and organizations including social activists, urban planners and others brought together by a shared belief that cars are too dominant in most modern cities. The goal of the movement is to create places where car use is greatly reduced or eliminated, to convert road and parking space to other public uses and to rebuild compact urban environments where most destinations are within easy reach by walking, cycling or public transport"

    It may not be one of the "principles" of the carfree movement but both concepts seem to go hand in hand. Google the following, "Carfree & debt free" and you'll find scores of articles and sites on the same discussion. Most of the push for the carfree movement is coming from environmentalist, urban planners and the like. However, it wouldn't surprise me in the future to see financial planners and other social activists adopt the carfree concept as a solution to becoming debt free. The carfree movment could adopt dept free as a way not only for economic prosperity but liberation from a life time of car payments.
    Maybe this is what the movement needs.

    How Car-Free Living Can Help You Become Debt Free - Creditinfocenter Blog
    Last edited by Dahon.Steve; 04-16-14 at 10:50 PM.

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    Senior Member dynodonn's Avatar
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    Quote Originally Posted by mrodgers View Post
    Even with rural, a brand new car doesn't make sense. Estimate $21k for a new car, $18k for a 2 year old car, and $11 on a 5 year old with equivalent say, 12k per year kind of mileage on them. My wife, and occasionally me, puts 25,000 miles on her car per year. I cut it off at 200,000 because that is the time when it seems I am underneath the car working on it more than driving it. That gives me figures for per year of $2625 for 8 years on the new car, $2571/year for 7 years on the 2 year old, and $1833/year for about 5.5 years on the 5 year old car. That doesn't include repairs because all cars would be driven through the same later mileage up to 200k. Still cheaper to buy the older used car.
    With a used car, one might get a better price, but one still doesn't fully know how the previous owner treated it, with a used car, one is basically buying some other person's problem a little sooner down the line.
    I buy used vehicles, but I can maintain and repair them if there is a problem, and for the fraction of shop rates, my co-worker cannot do their own repairs and is needing a vehicle that won't need major repairs for a longer period of time than a used vehicle would.

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    Senior Member Dave Cutter's Avatar
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    The OP asked: Are you Entitled to a New Car? In a word yes. If an entitlement is a guarantee of access to something then... sure all Americans are entitled to prosperity... and all the trappings that come with it.

    Almost all possessions are also a responsibly. Often possessions, like cars and houses are also a custodial responsibly. They require time, effort, and money. It's very easy to plan, manage, or guess wrong when allocating resources. It doesn't surprise me when people bite off a little more responsibly than they effectively manage.

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