I’m refinancing this terrible loan and the bank person grimaced when they saw this.
I took a loan out on a brand new car many years ago, a 6 year term with 17% interest (don’t do that, kids). But I was able to refinance to ~4% a year later, we knocked another year off the remaining term (5 years to 4 years), and I still ended up paying less per month than the original payment.
I miss that car sometimes. It was a 2012 Kia Soul, and I really liked it. I went on a 3-week business trip a few years ago, and my rental happened to be a 2021 Kia Soul in mustard yellow. I loved every minute of it.
I have a loan right now that is at like 3%. I can pay it off now if I wanted to, but it’s so low that I can easily make more money by putting it away and collect interest on it. It would be kinda nice to get a new car, but where this country is headed, it’s not worth it. I feel bad for the younger generations and what lies ahead for them.
Loans with interest rates above inflation are weapons. They are violence. Why should we all have to pay more than something is worth for our education, our transportation, our housing? Why are we paying directly for these things at all?
Government should be providing all this for its people. Higher education should be provided. Starter housing should be provided. Public transportation should be provided.
considering that you likely live in the US, just wait 6 months and this loan would be below monthly inflation
Lol…that’s funny and also so depressing.
You pay for the ability to access capital you do not currently have. Nobody owes you thousands of dollars with which to but a car. If you want to buy a car with money you don’t have, then you have to give the bank something in return. That something almost always is “more money than we initially lent you, over the course of the loan period” and if you shut that down, banks just won’t give loans anymore. Suddenly poor and middle class people have lost their biggest tool for accessing capital.
Lack of public transport is a separate problem. The US has dropped the ball across the board there. Only a handful of cities have any reasonable public transport and even those systems are old and often shitty.
Education being so expensive that it needs to be financed, is a separate problem. Education is too important to leave to the free market, letting our system metastacize to this extent is the result of decades of compounding failures.
16.9% interest is predatory, but “interest above inflation” is necessary if you want banks to do anything besides hoard money.
See, that whole entire thought process just doesn’t hold me prisoner anymore like it used to.
If you want the capital to survive (buying a car is survival in most places) or to try and get ahead, you must pay more capital than you have. If the banks don’t make money this way, the poor and middle class will fail.
I don’t think this is true economical theory anymore. It’s corrupted greed that’s overtaken institutionally in every facet of life including academia. It’s like saying nuclear war is the best peace keeping practice.
No no surely making the rich richer will help, it’s done so great the last 50 years!
Well I’m hoping to live in a world where banks don’t provide loans anymore. I’m demanding a better world than this nightmare that is unregulated capitalism in the US.
I’m demanding a better world than any economic system that incentivizes and rewards screwing each other over and hurting one another in a race to get ahead.
Capital investment is necessary regardless of your chosen economic system. Without banks, you’re relying solely on a central government to dole out capital investment which has historically turned out poorly
Providing loans is a major part of a bank’s job though? Like yes it’s wrong that we need loans for necessities like transportation, education, healthcare etc, but even if all those were unnecessary banks would still need to provide loans so that people can start businesses or build houses.
A car is not a right, it’s a privilege. You have a right to walk with your own two feet. If you don’t want to - then you have to pay.
It’s a good thing we have a robust public transportation system and pedestrian infrastructure then. /s
Yes, we do.
Not in the US we don’t. A car is a necessity for the vast majority of Americans because of how our cities and towns are built. The car lobby makes sure that doesn’t change because they can take advantage of that fact to put people in massive amounts of debt.
The world doesn’t end with US, surprise!
Always buy from a person not a dealer. Look for a model known to be reliable and cheap to fix and maintain. I bought a 95 Ford Ranger for $1,800 and am still driving it 5 years later. I’ve maybe put another 2k into it from oil changes, tires and brakes. People pay way too much for bells and whistles.
I did this in my younger years and the cars I got always had some hidden fucked up problem.
The most notable was cemented in spark plugs, rip that Honda Civic I drove it till it couldn’t hold on anymore lmao it ended up sitting for a long while then someone stole the catalytic converter lmao
I did this in my younger years and the cars I got always had some hidden fucked up problem.
My minivan is (well, was) like this. The person I bought it from said the roof-mounted DVD player was professionally installed. I got it home, pulled the interior apart (I was installing a new headunit, backup camera, and some other things), and found the “professionally installed” wiring crossed in front of the side curtain airbag. It wasn’t secured anywhere at all, either. Just flopping around. I fixed that up along with some other issues I found.
Lol yeah there’s always that risk. Feel like you want to find some boomer that’s selling his daughters car that just went to college or something.
Yeah right on!
Don’t buy cars. Ban them.
Yes, let’s ban the single most common form of transportation in the country because you’ve never had to live in an area with zero public transport.
Great line of thinking, there.
A lot of us wage slaves live in areas that are too spread out to bike, have no public transportation, and we can’t afford to move to a higher COL area that has those amenities. For example, my commute to work is typically 70ish miles, one way. There aren’t better job prospects within my niche industry that are available to me. I’m working towards moving closer to work, but I’ll be moving to a smaller town that is even less bike-able/walk-able. IMO, your position requires an amount of privilege I don’t have.
My commute is 117 miles one way :(, return to office has really fucked me. I won’t be moving anytime soon but am working on getting a job closer to home.
Facts. I live in Maine. I dare anyone that says to ban cars to come live here without one. The only form of public transportation here is a very shitty public bus system. If you live outside of its route, you are shit out of luck. Its why you have a lot of old people driving here that honestly should have had their license revoked a decade ago. Can’t take their license away cause they will have no way to access the resources they need to survive. But shouldn’t let them keep their license cause they are a major danger on the roads.
hey millenials: car dealers are not a good choice of bank. please tell your generation about credit unions: https://www.logixbanking.com/rates/vehicle-loans
Definitely shop around, but sometimes the dealership does have an actual competitive offer. Especially if you threaten to use external financing (and have the pre approval in hand), they might knock down their interest rate to save the deal, as the loan is where the money actually is.
And maybe buying something that isnt sold by a dealer…
That’s just typical brazilian interest rates
Check with and get pre-approval from a credit union or two near you. Go with that pre-approval for the car you want.
Rarely do the dealers find or provide a better deal. DON’T let them focus you on your monthly payment. Look at the complete picture.
As a non-American it seems wild to me that you would take out a loan for a car.
We got rid or public transit because of racism so we are totally dependent on driving to go anywhere
I have a three year loan at 1.9%. Why would I cough up an additional $20k now, when I could hang on to my cash and, at the very least, leave it in an account that earns twice that (and then some) in interest?
The so-called “wealth” you see in the American middle-class is mostly just debt. We have the shiniest toys and the biggest houses here, but it’s a giant gilded-cage. Most of us die in debt.
The process of dying involves lots of debt too because of our corrupt funeral and burial industry
how are you buying cars? Because I’m in Europe and they’re expensive here too.
You save up and get a second hand car you can afford. Why buy a new one, even a car with 30K miles or 50K KMs is a lot cheaper, while its still new enough to drive for a while without major repairs.
50k km is still “need a loan” territory for most people. The absolute newest car I’ve owned was 144k km, 3 years old, and still cost near 30k.
Plus when it’s like 2% + 6 months euribor for a lease you get to keep at the end, it starts looking hella more attractive.
Now the APR in the OP, that’s predatory af.
Thanks for clarifying this. I know the EU does a lot of things better but I was confused about how you’re paying €5k for a good vehicle lol
I mean you could buy a lightly used Dacia maybe? Or a Fiat 500 maybe.
But if you want a decently comfy car, nothing luxury, but also not a basic model, 20-30k is minimum for lightly used. German cars depreciate quickly so they’re your best bet in that price range. Toyotas and Volvos will actually be more expensive for same year, mileage, size.
Cars are expensive and necessary in areas without good public transit (read: basically everywhere except a couple of areas in specific cities). Most of us don’t have a year’s salary just sitting in the bank, especially when you’re young.
If you need a car to get to work, you’ll pay what you have to because the alternative is no job which means no home, no healthcare, and no food.
As a European it seems wild to me that my peers would pay a loan for a car. But they do. That’s crazy…
“American” here. We are obsessed with financing depreciable assets.
We are also obsessed with appearances and status.
I’m sure you can see from this thread some of us cannot comprehend driving a $5000 car. They will whine and come up with tons of excuses for why that just cannot happen.
Reliability is a problem when car trouble can mean losing your job. $5000 doesn’t buy that much car anymore
I cannot comprehend owning a $5000 car.
That’s insane that some people have up to 5k to spend.
I bought my 2008 Toyota Sienna for $4500. I talked him down from $4900.
It had:
- 230k miles (269k now)
- an engine replacement (2010 engine with 110k miles, replaced at 201k on chassis)
- severely worn out sliding door rear hinges, bad enough to be grinding the body under the 3rd row windows down to bare metal
- broken power steering rack (found that a few weeks later)
- balding tires
- rattle-can patch job (black paint on factory black paint, not a deal-breaker for me)
- blown out rear shocks
- more that I’ve forgotten (noted down in my records)
I bought that van because 1) it was a really good price, 2) engine and transmission are in really good shape, 3) rust-free, and 4) I knew what most of its issues were before I bought it and was able to fix it all in my garage.
Also, I have 5 kids, so the minivan was a necessity. $5000 is the bare minimum for a family car these days.
We don’t - hence the loan
Americans are bad with money.
We’re not given much choice.
You simply don’t exist as an American without a car and a phone and internet and an address with your name on it. Anything below that is considered fringe, poverty or societal reject. Good luck getting a job without a smartphone and your own car, don’t expect public transportation to be of any help, it doesn’t generally exist outside the larger cities and what there is of it, often sucks and takes hours out of your day. Our “public” internet is mostly coffee shops who make you buy something to sit there using their slow-ass wifi. If you fall on hard times, you have to apply for aid, which comes with stacks of provisions, like having an address and a phone, and this kind of aid is only available temporarily and if you accidentally make too much money they will cut you off.
If you’re savvy you can learn to use things like libraries and carpools and food banks and other resources for the needy. But it’s really, really hard to get out of poverty once you fall down. Most institutions and companies that provide services of any kind charge you more and more the less money you have. You need to have over a certain amount in your bank or you pay fees. You need to pay your bills on time or they charge you twice as much, you need to keep a credit history maintained even if you’re broke, because most employers include credit checks in their hiring process.
Most of the “middle class” you see here are suburban families working multiple jobs 6 days a week or more and are on average hundreds of thousands or millions of dollars in debt. Two people working often requires two cars, now your monthly transportation costs outpace your living expenses. Have kids or want to have kids? Good fucking luck figuring out childcare or daycare and paying for that too, not counting the vast sums of money the delivery and hospital stay alone cost, even if you have insurance. It’s okay, smartphones and tablets will raise your kids. Keep the machine moving.
Country is car centric. You can not live here without a car. It’s next to impossible. Especially for the handicapped. They can’t get anywhere easily without personal transportation. We suck at mass transit.
And if your handicap is the vision test you’re just stuck
Americans are also bad with money.
Not all of us. I’m sitting on 60k+ in my checking. Plus I paid off every debt I had but my school loans. Those will never be paid off ahead of time. Fuck the GOP for not helping students. But hopefully I have 20% set aside for a home in the next year or two.
not bad with money
60k+ in checking account
Womp womp
Lol I would like to offer you a loan.
You can do school loans if you start paying bigger. Not sure what your debt is or how large your financial cushion needs to be, but if extra cash is sitting in checking not earning interest, its loosing value while your student loan interest keeps ticking up.
For me after setting aside money for savings, I kept what I needed + plus a small amount for whatever and the rest got dumped into loans, had that shit payed off in a few years. Think my total interest payed was around 3k, I know some people basically end up doubling their debt over the 10 years with some crazy interest rates. (Went to state school, so loans were about 50k for everything, I know some private schools are triple that)
(Also open a saving account or something, your checking account shouldn’t have access to all your funds in the event of debit card theft, especially if you use that online)
Yes, as with most large groups presented as an object or subject there’s usually an implied “most”.
Where are you that cars are affordable to a point where this is an usual thing?
Yeah, u buy a used one for like 2,000 - 3,000€. Or you lease. But taking on a loan with 16.9% interest would not cross my mind.
If i cant afford a car, then i aint buyin one.
(This post was presented to you by “living in a livable city” Gang)
Nobody with financial sense is taking out a 16.9% loan on a car. 5% is pretty typical right now for people with a decent credit history.
Whether or not that’s reasonable, is certainly up for discussion.
You can get solid suzukis for 1.5k that last forever. If you can find porn for your weird fetishes you should be able to find a single goddamn guide on how to buy a car used. Every single bit of info on how to buy, maintain and fix vehicles is online. For free. For everyone. If you can’t live without a car at least spend 20 minutes googling it before buying a money pit.
it’s extremely rare to find such a cheap used car. my partner spent $8k on one that lasted a year. also, you might be surprised to learn that driving isn’t optional in most of the US - it’s literally impossible to live without a car. I live in a suburb. it’s several miles of dangerous roads to get to a grocery store. there is no nearby public transit. even large cities like LA were completely designed around cars. zoning and urban planning here completely screwed us.
yes, it sucks, yes I’m aware, yes I’d love to live in a walkable European city with commuter rail and cafes on the street corner, no I don’t have a choice.
I know about american circumstances, thats why i added that part in parentheses.
In the european countryside, car dependency is definitely on the same level as in America.
On the topic of prices: the first car my brother and i shared was a 2008 ford fusion. We bought in 2019 for 1.5k.
😭
American, I bought a 2005 Honda Civic in 2020 for $7,500
America: third world country, first world prices.
But for there to be used cars, there needs to be new cars… How do the people that buy new cars pay for them?
True. The entire car market from new to beater is gonna get fucked up by tariffs pretty soon
You take that 10k you were going to drop on a crap used car, use that as down payment on a new car. Get a longer loan with lower interest and keep monthly payment lower. The larger the down payment, the lower the monthly will be, and now you have 10 years to set aside money for the next new car or “out of warranty” repairs.
There are still new cars that have a sticker less than 30k, after warranties and any desired upgrades, probably closer to 35k-40k for anything not a truck, EV, or sport car.
There’s also people who lease, they pay lots of money to rent a car for around 3 year, after that they trade in for a new car and the old car gets sold as used.
Either company cars, leased cars or someone has the spare 30k for a car.
And of course people take out loans for cars too, but thats less common. And not really necessary in the cities.
Those are older/richer people that saved enough money to buy new.
I spent 55k and bought my midlife crisis sports car. Most expensive thing I have ever spent money on and I just finished paying it off after 6 years 718$ payments. Now to buy a home. One day.
What’d you buy?
Optioned out Mustang GT. 5.0 with the performance package and all the other additional features. It’s amazing how fast and nimble the car can be. The only thing I didn’t get on it was the magnetic suspension. I couldn’t find one with that added on when I purchased.
Buy the car you can afford. If you can’t buy it outright or make a significant down payment (20-30%), don’t take out a loan, look for a cheaper option. Those interest rates are insane, I’m amazed how anyone would accept them.
I ageree, but that’s his predatory loans work, there’s enough people out there who simply can’t afford not to have a car.
Sure. But if they can’t afford the loans they can’t afford the car, either. No one really needs a $40k new car, anyone could get by with a $2000 used beater.
Not really. This is another thing that falls neatly into Boots Theory.
The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. … A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. … But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that’d still be keeping his feet dry in ten years’ time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet. This was the Captain Samuel Vimes ‘Boots’ theory of socio-economic unfairness.
A new car, well taken care of, will support a driver for a decade or more. A used car, especially a cheap used car, will have problems you don’t know about and you can safely assume the previous owner did not properly care for it if not outright abused it, that will be true more often than it isn’t.
Unless that $2000 used beater has major issues (and most do at that price these days) and you don’t have the cash to fix them. Then you have a $2000 pile of crap and you still need a car. No, not everyone needs an expensive car, but sometimes there’s a good reason to buy something that requires payments.
You have the option of not buying one if you cant afford it.
And there are some used cars around the 2-5k€ pricepoint if you really need one i guess.
Edit: my main point was that it always shocks me to have such a car dependence in the US that you’d even have to go into debt. I am not saying Americans should just not buy cars…
No, you don’t. Go look at America on Google maps. Then take a good hard look at the transit schedules.
You have the option of not buying one if you cant afford it.
Not really, depending on where you are.
When I was barely above broke out of college, I had to buy a shit box just to be able to go to work, because the only job I could find in my field was >20 mi from where I lived and had no public transit options that wouldn’t add an hour of walking on top of how long the bus ride took. And that’s assuming clear weather, which we get for maaaaaybe half the year. I don’t know about you, but I’m not about walking for an hour in the blistering cold with spotty sidewalks in busy areas
So, while I could take the option of not buying a car, it would turn a <30 min commute into 2-3 hours one way on a good day. Buying a car was the only way not to lose >25 hours a week on work transportation alone.
I am explicitly talking about this in the context of me being non-american. And where I live the vast majority of people who can not afford a car (like young people) are not dependent on one. Even if you live in bumfuck nowhere you can get around by moped.
If you work full time you would usually be able to afford a (cheap) car. And if your still in uni the towns are generally big enough for you to not be car-dependant.
Every service worker is someone who needs a car but can’t afford one, it’s normal for working adults
2-5k is not something people have laying around now days.
If they do, they’re not the kind to buy them.
But I’m speaking from UK market, might be worse down here.
I was sold a car with a 14% interest rate after being told I wouldnt be charged for interest if I paid it off in the first month, so I could pay it off when my CD popped that week. The bank then told me that I had to wait to pay it off until it “appeared in their systems”. Turns out that happened right when interest ticked! Funny how that works
I seriously pray every single day that nuclear war breaks out or that a fucking astroid just hits me right on my head when I’m on the way to my car.
Interest rates above like 10% should be illegal.
Fun fact: in Brazil it is made illegal by the constitution, but the federal government itself ask for more than that in interest…
Wait until you see the payday loan usury rates!
I’ve gotten mail that have checks that you can immediately deposit if you’re in a pinch, but when you need to pay it back the APR on them is 89% 💀
Where do you live?
Wait until you hear about mortgage in Russia
26% APR. On a mortgage. No, seriously.
Jesus… Are the prices low due to the interest rate? Or is all property owned by people who can buy cash?
Prices are crazy, too. The key interest is at 20% and inflation is way over that as everyone expects rouble to crash as govt is printing bajillions to hand out to dead soldiers families.
The latter. Even without mortgage, here in my city it would take 150 months of an average salary to buy a fairly modest apartment, and we’re speaking average, which is very far from median. With mortgage…you simply wouldn’t be able to cover the interest payments, so it’s out of the question.
Also, government tries to step in to compensate a bit for the families with children. But overall, the insane interest rate reflects in everything. I currently pay out a loan at 35% APR.
Is cash for a beater car no longer an option? I don’t want to be a “less avocado toast more bootstraps” person but a loan for a used car sounds wild to me. Maybe I’m out of touch. My vehicle is old enough to drink
Cars have been expensive for a few years now, bought an 08 Subaru in 2020, it’s worth more now than what I bought it for.
I have a good '08 car that I bought with cash 10 years ago for $3000. I got it from a guy who exclusively sells and fixes this model of car. I went back last year to get my car fixed and looked at the cars he was selling. '08s were starting at $5000.
I paid 1k for my shitty pickup in 2018, it’s in worse condition than when I got it, and about 100,000 more miles on it.
It’s supposedly worth 3500 now. It needs about $300 worth in parts alone to get it into what I would consider a condition worth buying.
I don’t understand.
Shit, a working pickup? Could probably get people to bid on that and make more. New pickups are absurdly expensive
And this is gonna get wse with the new car tariffs o
That’s part of why I bought now. Life forced this on me, so I had to take the bad deal now and then refinance.
Yeah it’s gonna get rough. Let’s hope people connect the dots
Older subarus are a high value and age well. I would expect it to hold decent value but that is crazy to be worth more 5 years later
Not often. Used cars, at least where I am, are all pretty pricey, and with rent and shit being out of control, I’m not surprised younger people can’t afford to save enough to buy one outright. I’m lucky to be older and I bought my current car at 0% interest in 2012. I’m keeping it until it gives up because I know we’ll never see that kind of deal again.
0% for a used car?
Nah mine was new but I think my ex only paid 1.9% on a used one. Interest rates were amazing.
No idea if it’s still the same nowadays, but I also bought a used car in 2013 at 0% interest. It certainly was possible then.
Its still sometimes possible. Manufacturers will periodically run 0% interest loans specials for people who qualify. Tesla (don’t actually buy one) runs the deals all the time actually.
I would strongly advise against drinking your vehicle regardless of how old it is.
there are a lot of used ~2018 to 2022 cars on the market with not a lot of miles, most go for around $20k (like what I got). True beaters still go for like $10k.
Cash for clunkers removed a significant portion of the used cars from the market. It was a while ago but its effects are still very much being felt even if people don’t realize exactly what it is.
That was back in 2009 those cars would.be dead already by now
Sure thing kid.
Personally, I agree with your mindset, but I’m pretty handy with fixing/maintaining my own vehicles. For someone needing something to reliably get back and forth to work/school/daycare, I understand why people don’t go this route. Shop lead times have skyrocketed in the last few years, as have repair prices. Sometimes you just need something you don’t have to worry about.
a loan for a used car sounds wild to me.
Predatory car loans has entered the chat.
I don’t know about Carvana, but plenty of scummy dealers will give insane rates to people with no credit check, repo the car while they’re still underwater on the loan, and sell it to someone else. You can have two or three people paying off the same car.
Oh, also, they somehow encourage the most gullible people who can’t afford their loans to just let the car get reposessed instead of attempting to sell it back to the dealer.
A car that is the current model year is “used” as long as it’s had an owner. That’s what these loans are for. You can’t even get a loan for cars past seven years old with most lenders.
I mean yeah, that’s why I said beater. I just wouldn’t expect someone young or looking for a first car to be buying a current model year with low miles anyway.
I guess I was thrown when you said a loan for a used car was wild.
Buy from the owner, not a dealership. Plenty of people selling beaters on Craigslist and Facebook marketplace.
Carvana is a sister company of drivetime. Drivetime’s target customer base is sub-prime. Putting 2 and 2 together, this doesn’t surprise me at all. Their lowest interest rate might be 16% (for their target customer base) and goes upwards of 30%
Wild. I bought a car from Carvana in 2022 and the interest rate back then was 6% on a 3-year loan, which was on the high side of normal for the time period.
At drivetime, I’ve been told that my rates might be lower if I got a pre-approval from my bank instead of going through them (if I have the credit score for my bank/credit union to give me a loan)
I’d be more impressed with their car vending machines if the cars were the same price as a bag of chips.
