![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-71257-100x100.png\")
thats the average price of a new car though - to get a more representative average, you would have to average the price of all new and existing cars for sale... otherwise its like looking at the average price of a new home, as opposed to homes for sale.
plus, take into account the number of each kind of car for sale, because if you have 10 cars at one price, and one at another, the average should reflect that, instead of counting each model as 1.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-1177-100x100.png\")
someone who buys a $20,000 car should be making $100,000.
Ok, so what should someone who makes $40,000 a year drive? A Moped? Srsly, WTF?
Yeah, I'd really like to see a surgeon roll up in a Caliber or Mazda 3.
![\"user-pic\"](\"/css/images/default.gif\")
Taking the average as the benchmark for \"affordability\" is just a silly way of looking at it... the average may be $28,000 but that doesn't mean a family can't get a reliable new or used car under $20,000 or even $15,000.
Uhh, is this taking into account more car loans are 5+ years?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-1713-100x100.png\")
@Abusiveelusive: No. don't be silly. Didn't you know responsible people pay cash for cars? Which makes sense, because cars only last a year, right?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-53248-100x100.png\")
I wonder if electric cars will be cheaper?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-21566-100x100.png\")
I love my used cars that don't require a loan. Something tells me I'll likely NEVER buy a new car.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-72568-100x100.png\")
I think that's about right. I'm finding a $17k car, financed over 5 years, barely affordable @ 60k income(comfortably) without scarificing to afford it.
If you look at it, you lose like 30% of your income on taxes and other government fees, another 30% on your housing (rent or house payments), then you'll want to save 10-20% of your income incase you want to retire decently. That only leaves like 30% of your income left to eat, pay bills, watch movies, tavel, etc...
So on a per year basis, I think I only spend 5% on my car per year, which financed over 5 years makes sense to only spend 20% of your gross annual.
My wife and I have driven two beaters (95 escort and 98 frontier) for the past three years. We splurged on a brand new Accord last year, and thought it was a bit too expensive. According to this, we're not too crazy after all. Right at 20%. We just paid it off last week, and now we're looking at a new hyundai for me :).
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-74911-100x100.png\")
Used cars FTW!
Isn't this a \"the glass is half full, not half empty\" story? How about this, instead:
\"The number of work weeks required to purchase an average new car fell from 31 during the 1990s to only 25 in 2007.\"
Kinda puts a different light on things, no?
like _CumaeanSybil_ I am always amazed at the amount of money people pay for cars. I've seen cars rolling around town that retail for more than what we paid for our house ($50-60,000).
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-144285-100x100.png\")
I don't know that I would want to \"control the bleeding\" as this article states. I would rather let someone else take the hit, so I can pick up a great deal when they decide to cut bait. There are tons of great cars out in the market that are more than affordable.(obviously a sliding scale based on household)
Let someone else take the initial depriciation hit, we're all too educated here to waste money like that.
This post seems pretty misleading. Families don't spend \"half their income\" on new cars. Cars last more than one year. If a new car costs half of your yearly income, but lasts five years, then you are spending one tenth of your income on it, right?
Maybe its 20% with gas, insurance and maintenance, but its still much less than half of your income.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-51932-100x100.png\")
@usermanual
Used cars are a good buy, but not everyone who buys a used car saves money. Used Scions are going for more than new ones. I've also seen several ads where the dealers new loss leader was cheaper than a used one. Example: my local dealer was advertising a new 2007 PT Cruiser for 9999 auto/w ac. They usually sell used ones for 10,999 or so.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-6178-100x100.png\")
20% for a low income family would mean a beater that will cost much more in repair bills than sacrificing for a new car under warranty. I agree you shouldn't go nuts and forgo eating for a month to get a real fancy car, but if you're fixing it every week, get rid of it. This is especially true if you don't do your own maintenance/ repairs.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-81313-100x100.png\")
Yahonza is about right. First, you shouldn't be out there buying a car brand-new and paying for it in full. That's just madness. Drive it off the lot and, depending on brand, you've likely lost thousands of dollars. Regardless, cars are negative investments; they just depreciate, aside from the occasional Ferrari, etc.
Car purchases need to be financially managed. Either buy used [best], or finance it with super-low interest and regard/budget the payments as the cost of transportation in the family. And then keep moving on along, never paying the bloody thing off in full - keep it under warranty and hopefully buy a car with a great warranty for repair and low need for repair. If you pay off, you've just invested in a depreciating asset that one day you'll sell for squat to someone like me, who'll be in far better shape for buying used -- or Nused, after six months or more. No one should be plopping down the full price in cash. And, as mentioned, whenever the purchase is made, it's not a one year type thing. Hopefully it's a purchase made for the next several years and one that can be managed financially as such.
Yahonza is about right. First, you shouldn't be out there buying a car brand-new and paying for it in full. That's just madness. Drive it off the lot and, depending on brand, you've likely lost thousands of dollars. Regardless, cars are negative investments; they just depreciate, aside from the occasional Ferrari, etc.
Car purchases need to be financially managed. Either buy used [best], or finance it with super-low interest and regard/budget the payments as the cost of transportation in the family. And then keep moving on along, never paying the bloody thing off in full - keep it under warranty and hopefully buy a car with a great warranty for repair and low need for repair. If you pay off, you've just invested in a depreciating asset that one day you'll sell for squat to someone like me, who'll be in far better shape for buying used -- or Nused, after six months or more. No one should be plopping down the full price in cash. And, as mentioned, whenever the purchase is made, it's not a one year type thing. Hopefully it's a purchase made for the next several years and one that can be managed financially as such.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-6173-100x100.png\")
@CumaeanSibyl: \"unless it does the grocery shopping on its own.\"
Oh, dude, I want that car!
@DeeJayQueue: \"I'd really like to see a surgeon roll up in a Caliber or Mazda 3.\"
We (professionals both) sometimes get mocked because we roll up in Focuses (Foci?) instead of beemers. And yet oddly I don't feel bad because WE DON'T HAVE CAR PAYMENTS unlike our friends with the much nicer cars. Also when I have to go to the crap part of town for a case, I don't have to call a cab. Nobody wants to steal my car.
I'd like to know where you live that you can buy a house under $100k. In my city the median home price is around $400k - makes a $20,000 car seem a lot cheaper around here. I want to retire in your city! :-)
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-2065-100x100.png\")
@Yogambo: \"If you pay off, you've just invested in a depreciating asset that one day you'll sell for squat to someone like me, who'll be in far better shape for buying used -- or Nused, after six months or more. No one should be plopping down the full price in cash.\"
I don't think I really get what you're saying here. I mean I kind of get the theoretical jist of what you're saying, but it goes against almost every car buying advice I've heard.
I hold onto my cars until they're just about dead and unreliable. So I'm now getting ready to purchase outright a car for my wife since we've got the cash saved up for it. This would be a bad thing?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-117170-100x100.png\")
I sell cars for a living. It's not much of a living in this part of the US (a mountain town that's been discovered by idiots from other places).
Buying used is smart. Get the extended warranty that the manufacturers through in. Cars today are made to go 150,000 to 250,00 with ease. All you have to do is maintain it and stay away from ditches, trees and other cars - then again, that's why you have insurance.
@missjulied: \"I want to retire in your city!\"
I think it's called \"most of flyover country except Chicago.\" :D
@Covert7: I'm running out the door, so forgive me for cutting and pasting my thoughts from MSN Money and Fool.com here. But saving up to buy a car, in my mind, is sort of like flushing yoru money away. First, see if you really, really have to do this. And then, why not buy used by at least six months, saving some depreciation. But then think about what you could do with that money. Maybe you can invest it somewhere and use a low-interest finance program:
MSN Money: The average new car loses 12.2% of its value in the first year, according to Edmunds.com; on a $20,000 car, that's $2,440, or more than $200 a month. Some cars depreciate even faster, depending on demand, incentives offered and other factors. Why not let someone else take that hit? Not only will you be able to save money (or buy more car), but you'll pay less for insurance. Cars are better-built and last longer than ever before, which means you're less likely to get a lemon. Companies like CarFax allow you to trace a car's history. Many late-model used cars are still under warranty, and a trusted mechanic can give your potential purchase the once-over to spot any problems.
Motley Fool: How big a bite is this depreciation? On average, cars (and trucks, too) lose more than 20% of their value in the first year. Some vehicles lose as much as 40%. The second year isn't much better, as they disintegrate another 15% or so in value. (Take heart, Fool. Each year the bite is a little smaller, i.e., 13% in the third year, 12% in the fourth, etc. And don't forget we are talking averages here; your new Foolmobile may depreciate by more, or less, in any given time frame). If you paid $20,000 for a new car, then after two years of driving, it may be worth $13,000. Yes, ma'am, $7,000 vaporized in the thin air of depreciation. That's $3,500 per year. Almost $300 a month! What if the $100,000 house you moved into just two years ago was now worth $65,000? How would that make you feel?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-101080-100x100.png\")
\"Yay for used cars.\" Thank you, Meg. We're car payment-free and loving it!
This is why the average American is a dumb ass if they are buying new cars. Especially if they trade in every few years just to roll negative equity and start the whole process over again. Dumb, dumb, dumb.
@yahonza: There's nothing misleading about it. This is a common method for assessing/visualizing how much you are paying for something vs. what you make. You'll find a similar post about how long we work each year just to pay taxes. This post isn't meant to scare and mislead. Its meant to get you to stop asking how much per month, and start asking how much.
@DeeJayQueue: I'd prefer my doctors be smart with their money and buy something affordable rather than being so caught up with what other people think of them that they just have to buy a BMW. Bring on the Mazda 3. Or if they're really smart but still want to impress all the little piss-ants who think that MDs must drive Beemers, then they'll pick up a slightly used 2-4 year old BMW for the same price as that brand new Mazda 3.
I call shenanigans!
Median household income means half the people earn less and half earn more. It is one form of \"average,\" and it is well-established.
But how do you calculate the \"average\" new car price? Do you use the median -- the only meaningful means to compare with median household income, and even then the new-vs.-used issue arises -- or do you take the mean by dividing the total dollar value for all car units sold by the number of cars sold? Then a $60,000 car in a sample with nine $10,000 cars yields a $15,000 average. Worse still if you just sample all the car prices without measuring how many of which is sold.
Without indicating in a meaningful way how average car cost was calculated, this article is meaningless.
Is this different than any other time?
@mariser: I have no idea where you and CumaeanSibyl live, but it isn't California. I'm uncertain whether you could find any property within some reasonable range of civilization for that price, much less a house.
@ CumaeanSibyl: My individual income is not much more than your household income, and I have a tough time in a secondary CA market. Can i please come live where you live?
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-115837-100x100.png\")
I have a beat up (paid for) 1994 mazda protege that i take pride in driving. sure, it shakes and rattles and sounds like a helicopter when I accelerate to 75mph. Then again I consider someone financing a new(ish) car and actually paying it responsibly as an actual sign of being a grownup. It makes someone seem like they got it together. Unless of course it gets repo'd then that's just loserly.
Unless you have money to throw around buying a new car is just plain stupid. Hell I just got an '89 Acura Integra that runs and drives great for $700 bucks. Before that I had an '87 toyota 4x4 truck that I got for 4k and completely ran into the ground, and my very first car that I drove all throughout high school only cost $1500. Unless you are unfortunate enough to get a total lemon (or lack the knowledge to spot one) then you usually are better off buying used through and through. Like said above many times let someone else who can afford it take the initial hit of depreciation, and scoop up a used car after that fact.
@anatak:
I still say the headline and first paragraph are misleading.
It would be better to say that the car costs half your income the first year, but its free every year after that. Comparing an asset that will last for more than one year to one year's income is comparing apples and oranges.
And when you are talking about taxes, you ARE talking about one year.
@SactoKev: I live in Michigan, and you wouldn't be making the same money you do in California if you moved here, unfortunately.
In fact, we don't want more people moving in, because the reason our unemployment rate hasn't skyrocketed over the past few years is that people are fleeing the state in droves. If we can just maintain negative population growth for a few more years, maybe we can all find jobs!
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-10572-100x100.png\")
Who the heck is paying that much for a vehicle?! I'd not pay more than maybe $20K. $14-18K at best.
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-136605-100x100.png\")
I have always bought used cars, usually more than ten years old. This is especially effective when you buy foreign cars like Hondas and Nissans, which can withstand a lot of mileage. My husband and I both have cars that are 14 years old, and I have only had one repair this year...a new fan, which didn't cost much. I will never go back to car payments again.
1. Don't buy new.
2. Don't ever buy new.
While I appreciate those who buy very old, 10+, a car's value depreciates the most in the first two years, some 35% approximately.
So, look long and hard for a car that's been well treated with low mileage. If you live in a place like Montreal where the winters are salty and nasty, get a car from a place where they aren't and start rust-proofing.
Either way you'll save a huge amount of money (we saved about $14,000 on our 2004 Impreza Outback) and you won't have to deal with those really really ridiculous sales people.
@yahonza: Not really free after the first year since it will go down in value this year and every year there after.
Once again, its not misleading, you're just not grasping the concept. Its an assessment of affordability. While this may be a new concept to Bankrate, some people in the personal finance world have said for years that \"transportation (i.e., cars, boats, motorcycles, a Seadoo, etc.) should never total more than half your annual income because they are going down in value.\"
Its a measuring stick.
The diamond industry has insisted for years that you should spend 3 months income on a diamond engagement ring. Its the tail wagging the dog, but its their way of telling you how to assess what you can afford.
Its an illustration.
Its not assuming that you work from January to July, living on nothing, just to pay for your car. \"Cars Are FREE After The First Year!\" That would be less misleading? Quite the contrary.
@DIALING_WAND
I'd like to know how you saved $14,000 on an Impreza Outback since a loaded one is around $20,000 new.
@STRUM40
There is (or at least was) a ridiculous price discrepancy between the US and Canada.
An Impreza Outback Sport's MRSP here (before Freight and PDI and all the Canadian taxes - which will add another %14.5 percent to the price here in Quebec) is $27,995 (or at least was for the model in question.)
That means after all is said and done, even taking into account a dealer discount off the sticker price, the car would come in somwhere around $32,500 after taxes.
We paid $17,500 including all necessary fees.
But you are right, the car was actually purchased in Washington State originally for about $21,000 and change in 2004 US dollars (US$ were worth quite a bit more than they are now.)
But either way, we saved a pretty penny and the original owner paid fairly little for his 2 year car rental, and everyone was happy.
So, um, there? ;)
![\"user-pic\"](\"http://consumerist.com/assets_c/userpics/userpic-95687-100x100.png\")
Thanks to the handy dandy inflation calculator $28,200 in 2006 money is equivalent to $4834 in 1968 money. The same year my dad purchased his first car. My dad's first car was a 1964 Ford Galaxie 500XL with 390 V8. The only thing the car didn't have was the bigger 427 engine and aluminium wheels. He paid ~$3500 for it. So the price of cars hasn't changed a whole lot in 38 years. You also seem to get a little more for your money these days. However, I don't have median household income statistics for 1968. My dad made a substantial income from his chickens and from the rest of the farm.
$28K? That's just a few thousand dollars under our entire annual income. We paid exactly twice that for a HOUSE.
I don't know if it's just the area we live in, or what, but I cannot for the life of me imagine spending that much money on a car unless it does the grocery shopping on its own.