The affordability of a new car is always a moving target because the idea of “affordability” itself isn’t fixed. Variables like household income, car prices, incentives, and vehicle financing can tip “affordability” one way or another. Our current best measure of vehicle affordability now shows that it takes a household roughly 37 weeks of their total income to buy a new car.
That’s actually an improvement! I’m trying to look at the bright side in this Morning Dump, but the news isn’t great to start the week. GM is going to lay off nearly 1,000 people, mostly in North America, as it tries to streamline. Startup Northvolt was supposed to be Europe’s answer to China’s battery dominance and that answer seems to be “Ehhhhhhhh…”
Lemme see. Good news. Good news. Speaking of China and Europe, there’s a possibility that the EU and China’s government have come to some sort of complex technical agreement to avoid tariffs. Maybe.
New Vehicle Affordability Improves A Bit In October
The above chart from Cox Automotive/Moody’s shows the Vehicle Affordability Index, which tries to reduce the complex question of affordability into a fairly straightforward and easy-to-understand metric: How many weeks does it take a median household to afford the average new vehicle?
Generally, we look at the Average Transaction Price (ATP) to determine how expensive cars get, but this doesn’t always take into consideration how much money a family has to buy a car and the interaction of interest rates and incentives.
Affordability generally increased from 2012 to 2019 as the industry managed to sell more than 17 million cars a year for five years in a row. Then the pandemic happened and prices went way up (you can see my Trimflation piece for an explanation of why). The time it would take a family to buy a car jumped to over 42 weeks even as financing costs decreased.
Now it’s down to 37.4 weeks, which means that if you spent all of your money on your car during a given calendar year it would take until approximately September 12th to pay it off. Obviously, no one is giving out 9-month loans and most families also have to pay for shelter, food, and Toca Life World updates.
Since the beginning of the year, though, affordability has mostly increased. Why?
“Auto loan rates are beginning to decline, offering some relief to consumers,” said Cox Automotive Chief Economist Jonathan Smoke. “In October, we also observed an improvement in auto credit availability. Although new-vehicle prices remain stubbornly high, these improvements in auto credit, along with increased incentives from automakers, are driving new-vehicle sales as we approach the end of the year.”
The typical monthly payment is now down to $743 after peaking at $795 in December of 2022.
ATP still remains the toughest part of this measure to get to move as automakers have continued to make increasingly expensive cars and cut the more affordable models (and safety requirements and consumer tastes make vehicles more expensive). I suspect someone is going to come into the market with lower priced cars and trims in the coming years, but that isn’t something that happens overnight.
GM To Lay Off 1,000 People Globally, But Mostly In Michigan
Companies are required to file what’s called a Worker Adjustment and Retraining Notification (a WARN notice), and GM has filed a large one, indicating the loss of more than 600 people in Michigan, including 507 workers at the Global Technical Center in Warren, Michigan,
These cuts include more than 100 people working in various engineering departments as well as some sales staff according to The Detroit News. Here’s what GM has to say:
“In order to win in this competitive market, we need to optimize for speed and excellence,” GM spokesperson Kevin Kelly said in a statement. “This includes operating with efficiency, ensuring we have the right team structure, and focusing on our top priorities as a business. As part of this continuous effort, we’ve made a small number of team reductions. We are grateful to those who helped establish a strong foundation that positions GM to lead in the industry moving forward.”
Most of the individuals who are getting laid off will get a severance equivalent to wages and benefits through January 14th, 2025.
Northvolt Going South Fast
Northvolt is a Swedish batterymaker supported by mostly European-based carmakers like Volvo and BMW. It was supposed to be the next big thing in batteries with former Tesla exec Peter Carlsson at the helm.
Building cars is hard. Building batteries for cars is also hard.
The idea is sound, as Europe badly needs a domestic company that can support a growing demand for batteries, instead of relying on plants in Asia. So far it hasn’t worked. The company has continued to struggle and lost a $2 billion deal with BMW this summer, leaving the automaker to source batteries from Korea’s Samsun SDI.
According to Reuters, this is only getting harder:
Two unpublished documents reviewed by Reuters, marked “Production plan 2024”, show Northvolt has since early September been consistently missing weekly production goals for shippable cells, or cells deemed good enough to be delivered to clients. They include data as recent as the week ending Nov. 10.
The documents show, along with goals for each week, a target to reach 51,000 deliverable cells in one week by the end of 2024.
Contacted by Reuters, Northvolt said the targets had been set on Sept. 5 and were “long out of date”. It did not elaborate on its current production targets, which it said are based on contracted customer deliveries.
This is extremely not ideal, especially as demand isn’t increasing as fast as everyone hoped, thus making investment harder to source.
Did Europe And China Reach A Deal On Tariffs?
The European Union has moved forward with tariffs against Chinese automakers trying to sell cheap electric cars on the continent. This isn’t ideal for everyone and has already resulted in threats from Chinese companies against EU members.
Last week, one of China’s state-controlled television networks (China Central Television) posted on Weibo that there was progress being made on a deal. Specifically, there was a “technical consensus” on how tariffs could be removed.
The two sides have been exploring an agreement on so-called price undertakings — a complex mechanism to control prices and volumes of exports, used to avoid tariffs. China and the trade bloc held talks Nov. 2 to Nov. 7, after which they said that they had made “technical progress” and that they would continue negotiations this week.
How would that work? The simplest way is that a minimum price would be set for imported vehicles. Chinese automakers win because they get more money and European automakers are protected from cars that are too cheap. Consumers probably lose, but it should be comparable to the tariffs put in place.
Will this actually happen? That’s a harder question to answer, and one Weibo post isn’t enough to convince me it is.
What I’m Listening To While Writing TMD
“Work It” by Missy Elliott. A fun way to start the week.
The Big Question
Is that 37-week number bigger or smaller than you expected it to be?
37 weeks checks out, for me, but only if …
It was gross income, not net, so some kind of contract work that only pays in cash, and dodging taxes.
And.
I had absolutely no expenditures. No food or water, heat or cooling, phone bill or internet, and no gaming or streaming subscriptions. Heck, not even electricity.
Sounds perfectly sane.
As a professional consultant who bills by the hour it is easy for me to think about purchases in terms of time worked. Do I want a new car or 6 months off? Wow, that’s an easy decision.
So on Social Security checks, it will take me over two years of saving those checks. To afford a new car at about 50K. (laughing like a lunatic)
But no issues here.
Food and shelter are over rated luxuries anyhow…YMMV
37… “In a row?”
“Try not to spend any income on the way through the parking lot!”
Man of all the big automakers, no one deploys sickening corporatese quite like GM.
“The typical monthly payment is now down to $743 after peaking at $795 in December of 2022.”
I simply cannot imagine spending that much on a car payment.
Even when I was earning 3x what I am making now, I didn’t pay that much for a car payment.
I’ve always enjoyed Missy Elliott. I’m glad she’s still terrific.
I always expect it to be 41, but I’m biased.
Not a good sign when you are laying off engineers. That is future money.
The cost in 1950: 34.6 weeks 1960: 24.6 weeks
Layoffs suck, for sure. But is it better to never have created the jobs in the first place?
I worked at a company that had a “once a job is created it is never eliminated” mentality. Which was great because they never laid anyone off in 80 years.
But, at the same time it made keeping the company successful impossible because you could not flex to take advantage of growth opportunities that weren’t 100%certain to stay around FOREVER. It basically means you are just treading water as your competitors take all the excess demand and hoping that they don’t drive you out of business.
I think there is a balance somewhere. Otherwise, job creation stagnates and that’s not good for workers.
“Once a job is created it’s never eliminated” is a really scary proposition. Assuming perpetual growth is not realistic for any enterprise.
It basically means everyone is overworked and your output is chronically behind demand. For people that are willing to grind out the years with good job security but absolutely no growth opportunity it works. And even those people can waiver when their friends make more money doing similar work (but then get laid off a year later). Layoffs 100% suck but are kind of part of a well-balanced company at times.
Our union has a clause that if they make your permanent position redundant, they have to do everything reasonably within their ability to place you in another position. Sometimes at a pay cut, but it’s better than being jobless.
That’s part of the reason so many jobs are temp roles (can be active for up to 30 months). It’s hard to commit budget to a permanent role, but temps are often set up.
I gambled on a temp role that turned to a permanent full time spot. My co-worker isn’t so lucky and is getting shipped back to his substantive position. Less than ideal as it’s overnights with forced overtime (supervisor role, can’t leave unless someone relieves you). But that is the game, unfortunately.
Regarding GM, im glad to see that it continues to be the people who arent in charge getting the boot as a result of the people in charge fucking things up. The way it should be.
That graph of the Vehicle Affordability Index crossing the x-axis at 28 instead of zero makes both the rise and fall look more dramatic than it is. This is not a scientific way to present data.
““In order to win in this competitive market, we need to optimize for speed and excellence,” GM spokesperson Kevin Kelly said in a statement.”
These lay-off statements are always such bullshit. Was the current structure optimised for sloth and mediocrity?
OK, so it’s GM, but still.
It’s hard to believe any new structure will be successful when it is planned out by the same people who created the old structure and thought that was just fine until yesterday.
Beware of any graph that bottoms out at something that isn’t zero.
Where is it written in stone that the “median” family needs to be able to easily afford the average new car? Especially when the average price of new cars is rather skewed by all the luxury vehicles and wildly overpriced trucks and SUVs that are sold?
Heck, you save a LOT of money just by buying an actual “car” and not a CUV…
It would be interesting to see the median new car used in this comparison. Because that would largely eliminate the skew from the high end stuff due to their low volume.
Not really…
Corolla $22,175 vs Corolla Cross $23,860
Accord $28,295 vs CRV $30,100
Mazda3 $23,950 vs CX30 $24,995
Sentra $21,590 vs Kicks $21,830
Jetta $21,995 vs Taos $23,995
None of those seem like “a lot” of savings. Heck, the biggest savings I could find was the Chevy Malibu ($25,800) vs the Equinox ($28,600) and that’s particularly bad because the Malibu is ancient and going away any day now.
Plus, head down to a dealer and I’d wager the actual deals you can get in real life shrinks those price differentials even more.
The problem is people don’t cross shop them that way – they look at Accord vs. Pilot, not Accord vs. CRV. Civic vs. CRV is the real comparison.
You can get a much better deal on a sedan today than any of the CUVs. I shopped the bottom of the market for my mother last year. We ended up with the perfect compromise, a Soul. For $20.5K it is all the car anyone actually needs.
I’ll take “Wildly unverified claims for $2000, Alex.”
I’ll take “I am the guy everybody I know asks for car buying advice, and that is what I see for $1000, Alex”.
If that’s the basis for your argument, you might have well said:
“Heck, you save a LOT of money just by buying an
actual “car” and not a CUV…cheaper vehicle that isn’t even in the same size class of more expensive stuff…”A $30k car in 2014 is a $38-40k car today. $30k was considered affordable, but a nice version of affordable.
And wages have actually outpaced inflation for once too.
If yours have not, what are you doing about that other than whining on the Internet?
I’d put it under Pursuit of Happiness.
Happiness needs a rather higher than just median income, and has for about 50 years now. Doesn’t help that there is such a ridiculous disparity between haves and have nots today with not a whole lot in the middle.
I read recently that wealth inequality is higher now than in the Gilded Age.
I think it’s roughly equal to the level right before Bastille day.
We’re a few years behind in sharpening the guillotines.
Well, we just voted in 3-brach government control to the party that espouses “trickle-down” and puts the wealthiest man in the world in an unchecked power position. So there’s some more motivation on the way.
At least you know your enemy this time…
I think everyone gets a little stuck with absolutes when it comes to average/median person affords average/median this and that.
Do I think that the median family needs to afford a new car? Maybe not. But ideally, the gap wouldn’t be tremendous, that people of slightly higher than average means or whatever that increment may be, can afford some sort of new car. The fewer people that can afford a new car, the fewer used cars for those that can’t afford new, and the cycle gets out of control, as we’ve seen lately. Even worse, once that gap gets so prevalent that manufacturers only cater to those with higher incomes, we see close to what we’re getting now; nobody catering to the lower ends of the market.
Ideally, there would be a balance in the market that catered to as many people’s needs as possible. Right now it’s sort of bleak. The goal shouldn’t be for only the wealthy to be able to afford new cars. And now it’s looking a whole lot like some manufacturers are going to be in a world of hurt by choosing the new world of high margins on lesser volume path.
Those manufacturers would not be better off losing money on a bunch of cheap cars like they did back in the day.
The low end of the market is catered to beautifully by USED cars.
There’s a balance. The low end should naturally be used cars. But there’s a whole strata of different situations.
I also feel like I’m one of the few defenders of the concept that sometimes a cheap new car is a better choice than a used car. For someone that needs a fixed cost transportation, sometimes cheap and new makes a lot more sense than taking on risk in the form of a used car. I know it made a lot of sense when I bought my SX4 a long while back. And it served me really well. Where many of the used cars I have owned failed me (repeatedly).
There’s only so many used Corollas hanging around, and with their Toyota tax resale values, you rarely get to capitalize on their non-existent value anyway. What the hell is the point of a used RAV4 that hardly costs less than a new RAV4 anyway? The antidote to a lot of this is more new cars being sold to a greater number of people.
I’m in my mid-40’s and have never bought a new car. I figure if I have X amount of money to spend, I can get much more car on the used market. Like when I bought a Volvo that stickered for 45K in 2007 for 13K in 2012.
The thought of being the first owner is tempting, maybe I’ll do it someday, but it really doesn’t make a lot of sense except in a few specific situations.
If we were to revert to say, 2017, the math on used cars suddenly changes. Back when there were a healthy supply of people buying/leasing new sedans and hatchbacks and even small crossovers, there were tons of great, depreciated options. This was a time where an off-lease Accord cost 16k. That’s a serious value. Depreciation hit hard and early.
I worked for this supplier based company for 8 years, switched to GM to realize it wasnt the company that I was expecting to be, moved back to the same supplier company with a better salary and position. A lot of friends, even my family called me crazy for leaving GM.
My mental health is more important than anything else, the stability and knowing I still have a job that support my family is very important to me right now, all my friends at GM are always stressed waiting for that day when they decide they are no longer needed, very smart people with families too.
Just hoping all that people land a decent job soon.
Good to hear and know. Best of luck to you amigo.
Good mental health is over rated…/s
The percentage of income needed to buy a new car is pretty irrelevant, as is the concept of “this car used to cost ___ and now after ____ years of inflation would cost ____ today”. None of this takes into account that housing is 50%-100% more expensive in most markets compared to five years ago. As long as that trend continues (it will) “affordability” will continue to mean nothing.
In fact, you would almost believe that auto manufacturers would be lobbying for affordable housing policies, as in the current environment, income that would be considered for purchasing vehicles is being sucked up by housing expenses. Can’t buy a new car if your landlord is jacking up the rent 500$/month, or you’re about to take on a 2k/month mortgage.
THIS. I can deal with most of the other increases, but the fact that housing has increased so much basically kills any hope I have for the future. Yeah, I can afford a few K more for a decent car, but I’m most likely permanently priced out of the housing market.
Gas prices could go to FREE and it would not help me on the housing front.
My brother, after many, MANY months of being outbid on house after very modest house, finally broke through and is under contract. But despite he and his wife doing pretty well on the income front, that modest house at a not so modest price, and childcare costs means you can bet he’s permanently out of the new car market. Hell to make it all work, he and his wife share the car and have a pretty convoluted schedule to make it all work.
Auto manufacturers should be terrified that a couple in their 30’s with kids are resorting to being a single used-car household in order to make housing possible. Especially at their income in a place where the housing market isn’t even comparatively expensive to others. I get that other people may be doing better, but typically a couple like them should be the backbone of the new car market, not people with plans of limping along a single RAV4 to the year 2040.
Right? It used to be that modest home ownership was accompanied by a modest new car.
In the 50’s my factory worker grandfather had a new house in a nice, new neighborhood, 3 kids that my grandmother stayed at home with, and was able to buy a new car every few years.
In the 80s/90’s, both my parents worked, but mom had a string of new cars, and my dad would get the one she was replacing.
Side note: I think my grandfather was born at the perfect time. Just missed fighting in Korea, too old for Vietnam, was able to raise his family on one income, and saw all 3 of his kids go on to lead nice lives.
My parent’s both worked their asses off and now are watching their adult kids struggle.
I try my best to not compare eras as a lot of comparisons are apples to oranges, and while 2024 certainly doesn’t look like an episode of Leave it to Beaver (a very upper-middle class household, mind you) I would imagine I have it better than my grandparents. Did they somehow manage to afford 13 kids and a house on suburban Long Island on one salary? Yeah actually. But I try to believe that things are, theoretically, just different instead of objectively worse.
But there’s just zero bright spots regarding the current housing market. And there’s nothing to imply that it will improve.
See and I’m crazy cheap and can’t picture a scenario in which I would even spend 12 weeks of my salary on a car right now. And I’m not rich by any metric.
I can afford a new car. What I can’t afford is the insurance rate on a new car 🙁
I mean, I didn’t know what rates were like until I talked to my agent and asked about a few different cars I was think about getting and what the rates my be. WHOLLY COW!
“I suspect someone is going to come into the market with lower priced cars and trims in the coming years, but that isn’t something that happens overnight.”
It will happen quicker than most think. When the Government reduces corporate income tax to 15/16% vs. 28%, that is a massive incentive. Sure, your local t-shirt shop in South Padre might gain an additional thousand or two in free cash flow (which is awesome for them!), but when we talk about $1b or more in product production, the chickens will come home to roost.
It will certainly happen faster than if it was mandated that “X” number of vehicles meet “Y” standard (only possible through buying materials outsourced from enemies) and by pumping out ICE.
The market will shift quickly now.
Alternate take: More stock buy-backs that boost stock price, which benefit stockholders and executives.
And? All that noise is just that…noise. A drop in the bucket percentage-wise, and has nothing to do with production of lower margin vehicles that still maintain a profit.
In what way is it “just noise”? Historically, corporate tax cuts tend to be followed by share buybacks, which directly enrich shareholders (including company execs). I am not aware of historical evidence of significant increases in R&D, average worker compensation, or low margin product sales that are of similar magnitudes to the buybacks.
You’re missing the power of underpants gnome business analysis: you can just group everything you don’t understand or like in the ? column in the middle, so nothing interrupts your path to profit.
This right here is what is going to happen. The rich get richer, the poor get screwed.
This is pretty much what happened after the tax cuts Congress enacted during the first Trump administration. Not really any reason to expect it to be any different this time.
It really would be nice if they made the tax cuts contingent on increased employee wages, but that’s not part of the grift.
Like when he made that big deal in 2016 about “saving” Carrier jobs, when they took the taxpayer money and relocated the jobs a year later anyway.
It’s a shame that POS Reagan made tax buy backs legal.
LOL – there is NO profit in cheap cars. And no incentive to lose money on them so that you can sell more profitable expensive cars now that CAFE is footprint based. Those reduced taxes will go right into exec’s and shareholder’s pockets.
Did Jalopnik totally shut down?
looks like all the commentariat are now here.
Oh, joy. Bring on the Nazi word salad algorithm contributors. lol
Which part of what Kevin said is wrong, though?
Actually, your local t-shirt shop probably will not benefit from lowered corporate tax rates as they, for the most part, report income on Schedule C and pay at the personal rate.
Their COGS will also skyrocket due to tariffs, if we are to believe the incoming administration’s plans.
Tariff increases are such a Wile E. Coyote move the optimist in me believes the administration will stop talking about them and hope we forget they were ever mentioned.
I had some hope of that too but the cabinet appointments so far make me believe that they are going to just go for it.
Yes, then they will raise prices to maintain their margins, t-shirts will become less affordable so sales will decrease along with their profits. So, they’ll be paying less tax!!!
They could do even better by closing the shop, so they don’t pay any business taxes at all!
Well, then they are doing it wrong.
If nothing else, multiple changes will be happening at once (tariffs!) which are likely to increase costs for business.
Besides, I thought the deficit was supposed to be reduced…
I’m not sure that’s what’s going to happen, but I do love t-shirt shops in South Padre and have given them more money than I’d like to admit.
T-shirt graffiti cartoon caricatures are fantastic, especially when they come with a free can koozy that has a phone number you will never dial. I’ll give you that one all day!
Classy move GM, 2 months of severance a week before Thanksgiving and barely enough money to get someone into the new year. All while Mary Barra makes $28M a year in compensation, Mark Reuss makes $18M, and the stock price is up 60% YTD. I get that layoffs are a part of business is these massive companies, and that revaluating personnel needs is important, but this ain’t exactly great for optics as the year closes out. I suspect UAW and other groups will be all over this if C-Suite pay isn’t cut accordingly.
Ironically, a family friend got 6 months from Pfizer when they cut a gazillion jobs last year.
Hmmm.
Sounds like most of the layoffs are tech related, thus don’t affect union members. UAW generally doesn’t care about non-members, but if they do it is only because they can utilize the layoffs to advance something for themselves. Not saying UAW is heartless, but it isn’t their people.
2 Months does seem shorter than normal for GM, unless the people getting cut are relatively new hires.
Santa is not real. And nobody deserves a gift this year anyway. Right? /s
Apparently Santa drives a Ford
I’m not sure it makes the most sense to compare median income with mean transaction price.
Someone making the median income is not (and really has never been) the prime audience for the average new vehicle.
That may be true, and is fair, but I assume the argument behind using those numbers is that they’re the most indicative of what the average, not extremely wealthy consumer makes, and what a typical vehicle sells for, so it’s a fairly accurate accounting of what a typical new car buyer could afford. As with all national financial figures, they’re messy and some caveats are necessary, but general trends can still be gleaned.
If you’re going to discount the guy making $10 million a year from your income calculation, you should probably discount his Rolls Royce from the average new vehicle price and use median instead. That’s half of my point.
The other half is that the affordability of a $50K crossover to a family making $75K isn’t super applicable to reality, because that isn’t the kind of purchase that those people are generally making.
The point on the Rolls is totally fair, I guess my thinking was that people making 8 figures distort the Mean income calculation more than a 6- figure car would, but it’s still a distortion. Just thinking 2-3 orders of magnitude above for income versus a single one for ATP.
I’d agree that the affordability shouldn’t matter and that people/families with sub-6-figure combined incomes shouldn’t be shopping for 50k+ crossovers, but based on the average loan terms in the US continuing to creep above 72 months and with average payments being ~750, it unfortunately seems like there are a lot of people that are overleveraged and overextending to get into expensive vehicles they cannot actually afford.
Counterpoint (not that *I* would ever do it) – in an era when any reasonably reliable new car can be expected to last 10+ years with minimal dilemmas is a 6 or 7 year note to buy it a bad thing? This isn’t the 70s when you were lucky to get 100K/4-5yrs out of a new car before it became uneconomic to keep due to rust and mechanical dilemmas.
A bigger issue is people getting bored with that car, or it no longer meeting their needs, and them rolling ever increasing negative equity into subsequent purchases.
IIRC, the median and mean of new car pricing are not actually all that far apart. The vast bulk of the new car market really does center right around $40-60K, with $20K cars and $1M cars being outliers. But relative to the population, the annual number of new car sales is relatively small, and the buyers skew rather wealthier than the median.
I will say again what I have said many times. Cheap new cars make zero sense today when you can simply get a 2-3yo CPO much nicer used car with just as much life left in it for the same price. There are just too many compromises to get a car down to the low $20K price point vs. one that is nominally $5K more expensive new. IMHO you need to be a special sort of special to buy a Mirage over a used Corolla.
It’s not though. The “typical” new car buyer is a LOT wealthier than the average person. Which is why the average price of a new car is so skewed. It’s not like expensive vehicles are stacking up like cordwood all over the place.
In this case when I said “average consumer” I should have specified “average new car buyer” and while yes, the average new car buyer has more wealth than a median earning household family, the average car loan in the US according to Bankrate is ~$41k financed at 6.8% for 68 months, resulting in an actual cost of 50k on that loan, not counting down payment. And this is purely the average, meaning plenty of loans are further underwater than that.
I don’t intend to sound judgmental here, but higher wealth earners tend to be smarter with their finances that paying 10k in interest on a new vehicle. Default rates on new cars are at the highest rate since Covid hit as well. All this to say, median earners are continuing to purchase new vehicles that are objectively too expensive, so any trend that will show that the ATP new vehicle is become more affordable on average when compared to median income shows a trend towards generally more affordable vehicles. We can argue all day about how tenuous that connection is and the magnitude therein, but it seems to be there.
It actually is about as sane as a Muppets skit. Just because one has pre-tax income of $95k doesn’t mean they have $35k just sitting there waiting to snap up a Sequoia.
Silly.
Finance department be all:
The monthly payment is $599!
….what about the interest rate?
THE MONTHLY PAYMENT IS 599
……..what is the loan term?
THE MONTHLY PAYMENT IS 599 YOU STUPID FUCKING IDIOT SIGN HERE OR ILL KICK YOU IN THE DICK!!!!
“Oh shit I owe $50,000 on a $30,000 Rogue”
I simply refuse to even discuss monthly payments when I buy a car. “I can buy it in ONE payment or as many as it has months of warranty – the interest rate will determine which”. Makes their heads explode. But I also fully realize that most don’t have that privilege, and whether the payment fits in their budget (or at least they convince themselves they can swing it) is their biggest concern when buying a car.
I’m the same way. “Tell me what monthly payment you’re aiming for and we can get you there!” motherfucker tell me the interest rate and loan term and I’ll do the rest.
Exactly. But the average American is TERRIBLE at math, so here we are.
Terrible at math AND financially illiterate, which is one hell of a combo.