By dennismary.slave@gmail.com 
🐪 Hump Days Newsletter ➭
New Cars Are Now Only Reserved for the Rich, or Top 10% of Incomes – based on popular affordability rules of cars and the latest data.
According to the automotive group Cox, the average transaction price of a new vehicle in the U.S. last month was $47,244 dollars. And according to LendingTree, the average car payment for a new vehicle hit a RECORD HIGH $738 per month in Quarter 4 of 2023. These days, the ability to buy a new car affordably is now a privilege that seems to be reserved for those seemingly in the top 10%.
According to a popular car buying rule – the 20/4/10 rule – it suggests that you should not get a car loan exceeding 4 YEARS, thats the 4 in 20-4-10.
The 20 by the way, just means that you should always try to put 20% down on the car, and the 10 referred to the idea that your monthly transportation costs should NOT exceed 10% of your gross monthly income.
So how realistic is this rule for the average person earning the average wage? We answer that today.
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⏱️ Timestamps:
0:00 – Start Here
0:44 – How We Got Here
2:32 – Affordability Rule No. 1
5:33 – Salaries & New Car Prices
7:09 – Affordability Rule No. 2
9:29 – What Can You Do Today?
10:40 – Used Cars and Depreciation
11:18 – Luxury Maintenance
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The middle class can't afford those overpriced watchtowers on wheels aka SUV's or those too expensive $75K trucks. Let's get real. The majority of commuters don't need those cars. For a lot of people these cars a "fashion statements". Most commuters would be fine with a Civic/Corolla style car for less than half the price. Problem: These cars aren't fancy. Sidenote: The interior space of a new Civic is more than that of a 2000 Accord, which was back then one of the best selling sedans in US. I am NOT implying cars are cheap, because they aren't, but what I AM implying is that a lot of people are grossly spoiled. If all I could afford is a decent compact car, then that's what I am getting. No car loan…sorry
It’s because the middle class haven’t become poorer, they have become working class. This isn’t a bad thing but you have to recognise what happened so you can live well in the new reality.
The only car payments you should be making are into your savings account for your next cash car. You just want to buy the car, not the bank.
I think the US simply needs to ease off of their insane car laws so cheaper cars can come in and let American brand automakers actually "try" competing with imports. Outside the US, noone buys those gigantic expensive boats that Americans think are normal cars, in southeast Asia at least, the most common cars on the road are either very affordable compact sedans and hatchbacks priced at around 12k to 15k USD; or compact 7-seater family MPVs priced at around 15k – 20k USD because Southeast Asians biggest priority is family transport. People with bigger income at the most buy a mid-size SUV priced at around 34k USD for a mid-variant model, anything above 34k needs serious thinking, and noone really buys full-size SUVs or pickup trucks.
Let Chinese cars in. Americans need affordable cars.
Buy new. Finance for no greater length of time than the bumper to bumper warranty period. If 36 months result in too high of payment, consider makes w/ longer warranty period (Kia 5 year 60k mile bumper to bumper). Choose the model that you need, …. can afford, not the model you want. When car is paid off, re-evaluate your financial situation, trade-in, or keep & continue making payments into a dedicated savings account, so when you do decide to trade-in, you'll have a greater down payment to get the upscale model you want. Patience.
Let older family members in 10% earner range know that you are looking to buy a car, they may have a great used car they would sell you cheap since trading-in is a ripoff.
I made $725,000 last year and I drive a 2019 Corolla completely paid off. I wear clothes from target and have no flash whatsoever. The only hints that people would get that I have a lot of money are when they look at my checking savings account
Live in the past. It’s cheaper.
I make over $100k/yr and I cannot stomach paying $20k+ for a vehicle.
My car: 2023 Tesla
My payment: $0
Insurance: $175
Charging at home: $23 average per month over the past 12 months.
Thanks bitcoin!
What will happen to all these new cars if nobody buys them?
Car prices have gone crazy over the last few years for sure. In late 2021 we bought a new Subaru Crosstrek premium for $26,400 out the door and that same car as a 2024 model would easily top $32,000 out the door, an increase of over 20% in just three years! This is both because of a substantial increase in the base price and by something that is all too common today, making formerly optional packages standard. Even at $32k it's still one of the cheaper options out there which is just nuts when you think about it. Needless to say we are planning on driving our '21 forever and it's likely to be our first and last new Subaru as a result.
One solution to reduce your car expenses is to just keep your car up. I bought a new Mazda Miata in 1989 and have simply kept fixing it when something breaks (which is not very often) for the last 35 years. Despite the massive 322,000 miles on the clock the car looks like new inside and out and drives like it too. Admittedly the car is a bit of a Tin Woodsman as the engine was replaced a decade ago with a new crate motor (at 277k) but that was still only around $3000 out of pocket.. Plus the Miata is very cheap to insure and has now reached the point that despite the mileage it has been appreciating for the last few years and will probably continue to do so. I of course have a lot more into it than the original $15,500 purchase price but I doubt that total non-maintenance repairs have topped $10k meaning that even now I have less into it than a new Miata after all those years and miles.
EV insurance is a lot higher over ICE vehicles so wouldn’t say EV’s are cheaper overall.
They are pricing themselves out of the market. Which is going to cause their market share to crash, because the demand is not there.
Used cars are insane. 😅
Too bad the used car market is lacking in inventory due to the 8millions cars that weren’t delivered during the pandemic and chip shortage.
I only buy used Lexus, Toyota, Honda. My last 2 Lexus SUV's I bought with high miles, but mint condition, single owner with good service records. Drove both for 5 years and sold for what i paid and in the latest case $2k more than my original purchase price. Granted I drive very little and spend my free time traveling internationally. I am financially independent, and pay cash for everything. The above is how i got here. Respect your hard earned money folks.
Not only are these $1000 car payments absolutely mental, you gotta wonder how much their insurance and registration fees are 😮
if you want luxury car – go used Lexus or Acura (low cost of ownership like Toyota or Honda)
No, the middle class can't afford the luxury SUVs that they so desperately want. They can easily afford actual *cars*, like Corollas and Camrys. Or the barely $20K KIA Soul that I bought my mother last year – it's all the car anyone actually *needs*, even a family of four or five.
Getting a loan on a depreciating asset sounds so fucking stupid 😂 just get something you can afford in cash. That’s what I was taught. A car stands around most of its life anyways and really nobody with half a brain is interested in what you drive
Loan/finance for cars means you cant buy
Middle class have never been able to afford new cars. Ever. Credit misuse is now what’s actually unaffordable
These new calls cost too much and the dealership I had on and Mark ups just put the price of the car out of range
Get yourself a Mitsubishi Mirage quickly, 2024 is the last year on the market… they are so inexpensive and easy to do maintenance on… really good on gas, if you were in the market to buy a $40,000 dollar car… you might as well buy two of these… at the end of the day, no matter how much you spend you will only get 150,000 miles out of what you buy, so why pay double or triple. I promise you, they are REALLY good cars if you can get over the low HP. Its in essence built like an old school 1990's car…
I purchased a leftover’22 WRX premium under MSRP for $26K.. I know it’s not right for everyone but I consider what I got at that price tag. AWD, Big Tablet Screen, 4-door sedan, Subaru reliability dirt cheap maintenance, heated seats, typical driving tech, and a fun 267 HP turbo 4 cylinder that won’t win a ton of races but is fun as hell to drive.
Just looking at today’s mess, what can possibly justify the cost of a $50K – $100K vehicle?
I traded in a truck to get my WRX and 9/10 times if I drop the back seats I can fit just about anything.
Some days I feel it would be nice to have a truck but not for $60K+.
The craziest thing is I make incredibly above average money and realize I cannot responsibility afford even a $50K vehicle.
Who are the people buying (not buying) these fleets of brand new trucks at dealerships? Are people seriously taking out like $1000 to $1700 monthly payments on a depreciating asset?
Bc the statistics show people don’t have cash laying around to make a lump sum purchase
Middle class has gone almost into extinction , it’s terrible can’t even get a good deal on used cars
Bought a D class sedan for 5k with 100k on odo.
Made another 100k in 5 years with no issues.
I think i'll make another 300k before selling it.
The quality on new cars went down a spiral while prices are insane.
Prius costs 50k where I am from at basic trim.
SUVs are mostly 100k in a descent trims.
Everyday I wonder how people can afford to drive new cars or cars that’s few years old. I drive 2007 tundra with over 250k miles I’d love have something cheaper on gas but I can’t do payments.
I have driven used cars my whole life I have never owned a new car I frankly don't give a damn whatsoever I currently own a 1972 2 door Chevy Caprice, and an 03 H2 Hummer I love both my vehicles I love my giant tank of a truck and I am content new cars can go to hell….
Another thing that voters need to consider when they head to the polls to vote in the Nov election is how a spike in crimes causes insurance of all kinds to go up. There is a spike in auto thefts, or car tires stolen, retail thefts, home burglaries, etc. This video makes me think crimes have an effect on rising insurance rates not just accidents or natural disasters. We have tried to give people the benefit of the doubt and no longer arrest and prosecute petty crimes or nonviolent crimes. But it leads to rising insurance costs to everyone. So it is time to be tough on crimes again or even tougher.
My GTI just got totaled in the hurricane so now I go from a paid off vehicle to having to get one from Biden’s market 😭😭
Did i just hear him say buy an EV? 😂 yaaaah right hot garbage
I know I own a 17 Camry hybrid with 90000 miles and had zero problems and super mileage to boot!
@3:32 Calculate based on MSRP is hardly realistic for people who want to purchase at the limit. I would have assumed and included another $2000 stearlership mark up and then another 10% just for tax and doc fees. So it will be $55,121 OTD price to be on the realistic budget. Then 20% down will become $11024, so you will need to be making at least $150k to afford a $55k vehicle.
Have a supra GR 3.0 and Hyundai paid off 😊
I've lost hope on getting a car since even used cars around five years old are almost as expensive as brand new.
I just took motorcycle classes and bought a cheap bike. Cheap insurance, good on gas. When you are fearless life becomes worth it.
I don't own a car but I borrow my mom's 32 year old beater of a Golf from time to time. I recommend going car free if you can.
Saw a 2024 Mustang online for $75,000.00! No joke.
Probably for the best, buying new cars is what keeps poor people poor😂
Also what has to be taken into account, is that if any vehicle is bought with borrowed money, full coverage insurance is required, costing hundreds a month. And then, once out of warranty, if it breaks, look out! Auto repair costs are going stratospheric, as many mechanics are leaving the field.
Step1: Don’t even consider buying that car unless you have the full purchase price in cash in your bank. Step 2: Assuming you do have the cash in the bank, now decide if you want to spend all that cash on this car, or you should buy a cheaper car and retain some of that cash. The monthly payment trap is tricking people into buying things they cannot afford. Sad.
Ridiculous I hate new car prices
ive been playing musical cars with my family because i cant afford a new vehcile