> So you have to take a 5 years loan to buy a new car? 10 years if you have a low salary?
Most people with good to high salaries just lease their cars anyway, at least that's been my experience in Germany. People on low salary don't buy new cars or don't own cars at all, dense country with a decent public transit system, no need for everybody to own one.
Peer-to-peer carsharing also has been rather successful with Drivy, which is an option low-income people make use of if they should ever actually need a car for something.
> He bought the car in 2015 so he’s lucky to get 8 years
Well now I understand why manufacturers say transmission has lifetime oil in there... because some people think that 8 years old car is... an old car that could as well be done?
I could afford buying new car and paying xxx/€ per month, but I choose to buy ~10 year old car and if I'm lucky it has <200k km on odometer. But then I'm debt free.
If I'd be paying xxx/€ per month and having a broken vehicle after 8 years, I'd be very disappointed to say the least.
> The UK is heading this way too, and I hate it.
> If you show up with cash to buy a car, you're looked at like you're crazy. They
> push, and push to get you to take out a loan.
With used car dealers in Germany it's a common thing to pay in cash. At least the down payment is usually in cash. However, having payed for my used car in cash, it still makes me nervous thinking of me taking a bus to the dealership with €11k in my backpack. And prior I had to tell my Bank in advance to order enough cash for me on that day. Even if I had used my debit card, I would have needed to tell my Bank to increase the withdrawing limit.
And I think with latest EU regulations cash transactions are limited to 10k nowadays. So all in all I think it is becoming more and more inconvenient paying in cash these days even in a cash driven country like Germany. Unless either customer to dealership bank transactions become a thing, or checks return in digital form or Bitcoin's taking off I would not even know how to pay for my next car in the future. Perhaps I should get myself a Tesla and a pile of debt after all. ;)
> but the auto finance industry is pretty slimy on this too, in different ways
This is true that the auto industry (some anyways) will extend the life of your loan to make the car look cheaper. You can only afford $100 a month? Have a ten year loan! However, I was with a friend when she bought her car and on the finance agreement there was a (possibly legal requirement) box where it said clearly "this is the total amount of interest you will pay over the life of the loan." You had to sign that you got that number and that it was pointed out to you. Regulations in the US make lenders less scummy.
Because new cars are nice, and people are bad at time value of money? Also I think it's partially a cultural thing, very few of my friends and family buy brand new cars but I know some people would never even consider a second-hand vehicle.
> It's almost as bad as cheating on your wife (and far, far worse than cheating on a gf).
What a curious point for comparison! Although I get your point if you just mean purely financially.
> A car costs about $6000 per year, so about $30 per workday.
And I thought owning cars in America was comparatively cheap.
Meanwhile in Finland, 500-600 eur is enough to cover my tax & insurance. I'm coming close to 2000 eur on repairs and maintenance but I've got somewhat expensive and unusual stuff in this year's bill (like a new bumper & paint job). The rest is all gasoline. About 100 eur per refill, and that's usually enough for a month. Add up, 3800 eur. It's been by and far my most expensive year yet!
A ceiling on the price? Now granted this is a BMW, so I wouldn’t dare own it outside of the warranty period, but I usually keep a car 10-15 years. So the longer I keep the car, the more this feature with a low, fixed cost, costs? Screw that.
> you are smart enough to know that you don't borrow to purchase a depreciating asset. If you don't have the cash to buy a new car, buy used.
This is nonsense. If you can borrow money for less than you can earn, you should borrow. I know people who, buying a new car, had saved cash to do so. But they got 0% financing. So even sticking that money in a CD made them more cash.
What you mean to say is "if you do not realize that you are paying a lot of money for the use of a new car, not for an asset"
>I’ve never actually gone to a bank first before buying a car.
I don’t think you’re paying much attention to what you sign when buying a car, you don’t go to a bank, there’s a person at the dealership who sets the loan for you from different banks. There are buy-here pay-here which is financed by the dealership but that is usually for conditions that banks won’t accept like rebuilt title vehicles, heavily modified or too old.
Cheap financing close to 0%, and long term contracts. In fact, financing on new vehicles is far far better than financing a used vehicle. Why would anyone vinance a used vehicle? Because even used they cost more money then most have in their bank.
Used cars require repairs, meaning they require a place to do these repairs or extra income to cover a mechanic. Also how does one recover from vehicle related downtime in a car centric society? These things should be priced in.
So, how much money does one need to get into a used vehicle and how much safety net do they require? Mind you, during covid car market flipped on its head, new cars were (and still are) 3-6-12-24 months wait, and used car market saw a massive increase in prices.
> Anyone concerned about the overall cost would never choose 72 months, but the majority of people only care about that the number for each month.
There's no golden rule about ideal finance term lengths. It could make a lot of sense for an individual to elect to maximize near term cash flow in exchange for a higher total cost.
After all, in car dependent societies the chief value of a car is to get you to your place for work so you can earn money to support yourself.
Car prices also don't scale down infinitely, so it's not like you can always find a practical car for yourself that you can pay off in 48 months.
Similarly, if overall costs were the only thing that mattered, I'd have no mortgage on my house, but then I just wouldn't have a house, so I instead have a 30 year mortgage.
> I think people buying new cars every 3 or 4 years is already the status quo, regardless of cost. That's the average lease/finance period (though financing duration is increasing).
Not where I come from. Most of the folks I know are sitting on 8+ year old cars.
Leasing is useless in the US at this point because you are on the hook for the full price of the car if you get in an accident and total it.
> I do remember buying a car years ago and my wife commenting, “At home [europe] they wouldn’t even let you in the door”. In the Vally they just want to do business.
Doesn't match my experience. I assure you they'll happily sell you a car regardless of your attire over here.
>that depreciates by 30% the very second you drive off the dealership
Nobody would underwrite loans for new cars with low down payment and low interest if this had been true. Also we would see the year old cars with low mileage selling with >30% discount, which is also not the case.
The reason I buy new cars is customization: I get exactly the car I want with colors/materials/options I selected.
I can't speak for all of Europe but in my country we don't take loans for cars.
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