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I make about triple what Jose makes and my new car was $5000 less. To each their own. There are new cars one can get for $15K he chose a $25K one.
I make north of 4x what Jose makes, and I paid $12k for my base model Civic 9 years ago. At the time I bought it, I was making about 3x what Jose makes, in a city with a cost of living roughly half of LA's.
Liberal insanity gone off the rails, imho. The theory apparently is, if anyone can afford it, then everyone now has a right to it. New cars are a luxury, especially no down payment, nice cars.
Jose should be looking for a used car in the $4-5k range given his current salary.
Jose should buy a car that is 1/2 his salary or less in price if he's going to make payments over 5 years.
I think that's a good general rule of thumb... houses - about 3-4x annual wage, over 30 years cars, about 1/2 over 5.
But, personally I lease because I like new and I want a new car and different car every couple of years. Even then, the price of the car I lease (if I were to buy it) is less than 1/3 my salary.
The US population is taught through the continuous propaganda of advertising that a new car not only provides reliable (yeah?) transportation but elevated social status for the owner. The latter has been going on since the auto was invented. Jose is buying status as so many of the rest of the purchasers. This, like the college loan scams, is just another way to keep us in perpetual debt.
Even when I was working full time I did not make enough money to buy a new car outright. I was not about to take out a loan to buy a depreciating asset that cost me money instead of making me money. The result has been a succession of near clunkers that cost us relatively little money. We buy cars like a 10 year old Buick sedan with 135 k miles for under $3,000 in cash and spend another $1500 in paint and repairs. That car, 5 years later, has 235 k miles and is still going strong. We will keep it until it rusts out.
So buying any car that you cannot pay for without a loan is sheer foolishness. So go ahead and buy that new Corvette for 60 grand but realize you could buy essentially the same car as a 5 year old used car for about 30 grand. Your money, your choice.
It was my second "new" car (and I've owned quite a few cars). I prefer used, generally, because they're a better value. But with owning used cars, all the repairs and inconvenience of breaking down builds up, and I reach a breaking point and say, "Screw it, I want a new car, with new car reliability and a new car warranty." It's happened twice in my adult life now, and I don't regret it, either time.
The first new car I bought was a '97 Ford Contour. I owned it for a decade and put 160k on it before selling it. I think I got my money's worth, especially considering how few problems I had with it. I had fewer problems with that car in ten years than I had in the first two years of ownership of the car I bought to replace it - a used Chevy Astro.
My second new car was/is a Mazda CX-9, and we'll probably keep that for a decade, too.
So I agree with the sentiment of your post, but for me, at least, there are some times where buying a used car is just buying a different set of problems, and buying new makes more sense. Not every decision is or should be based on finances alone.
More claptrap on how "bad" it is when the guy did something very stupid to begin - rolling negative equity into a new loan and thus inflating his payments. If he had a normal income, he could afford a Civic, even with the negative equity, yet he still wants nice things he cannot afford on a very limited income. Isn't this quite telling?
Lol
from the article -
Quote:
Jose Hernandez, 24, lives in East Los Angeles and makes $26,000 a year working the front desk at a clinic. After trading in his previous car with $6,000 in negative equity, he financed a 2013 Civic EX for $25,000 at 2.3 percent for 6 years, paying $379 in monthly payments, plus $100 per month in insurance. He finds a new car can be a stretch. "I believe most cars are slightly out of reasonable price range for the average American, especially considering most 'affordable' cars don't last very long and lose a lot of value rather quickly," he said.
Lol how would he know? he makes half of what the Average American makes and he lives in one of the most expensive states in the country.
I've never purchased a new car for personal use and I can afford to pay cash for a median priced new car.
If it weren't for someone ELSE buying (or leasing) the car FIRST, you would have no second hand inventory to purchase.
So thank them, instead of calling them stupid. Because if everyone was frugal in this country, there'd literally be no jobs and no economy to speak of, since our economy is based on people buying goods they don't need, and services they could probably do themselves.
Enjoy.
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NBC: Most Americans cannot afford new cars.
