What worries me is that I make a pretty good living and in my opinion I would not buy a $50k car even with my good salary (I haven't had a car payment in 10 years). That means that there are A LOT of people paying $50k without the income to support it so they are either leasing to taking out 7 year loans to keep the costs down but never getting off the monthly payment death-spiral... they roll to the next car in 4-5 years and roll the negative equity into the next loan. Yikes
We bought two $50k cars about 8 months apart (one planned, one unplanned) and both were negotiated to 10-15% off and both then had $10k down, and we financed somewhere in the mid-upper $30ks for both at 2%. Both of them are sub-5 year terms and the payments are still north of $700 for each. It's affordable for us, and we both like our cars, but two weeks after I bought mine I finally got told I could WFH permanently and now almost two years later I have 8500 miles on mine, and it's like do I really need a $700+ payment to drive to Target once a week? We have the income to support it but it's pretty insane to think about buying a $50k car, getting a big discount, putting $10k down, and still having $700+ payments, granted they are sub 5 year terms but still.
Inflation. It's all about inflation.
$48,763 2023 dollars are the equivalent of $29,824 2003 dollars.
Average car price in 2003 was $24,773, which is $40,503 2023 dollars. So cars have gotten a little more expensive for sure but we often talk about how you get a whole lot more in your average car today vs 20 years ago.
2021 US median household income: $70,784 (I don't believe there's enough data to pull 2022 or 2023 numbers but assuming it's similar)
2003 US median household income: $43,318
2023: Average car price is about 69% (nice) of total household income
2003: Average car price is about 57% of total household income
And this is the problem. Yeah, cars have gotten better to help justify the fact cars are selling for $48k instead of the $40k they should be selling for (though I'd also argue technology should get cheaper so even though cars get better, they should probably still just more or less track inflation as I think they typically had in prior decades), but incomes have stagnated or even effectively been cut. Inflation last year was 9%, my raise was 2%. Company excuse was "we benchmark other companies, not inflation." But other companies were well documented doing 3-5% raises, which was better than mine but still **** compared to inflation. I also went to Applebee's with a buddy and for an appetizer, two entrees (not steaks), and a pop and a beer it was like $65 + tip. For
Applebee's...the middle class doesn't stand a chance.
