Never underestimate the stupidity of the American consumer 
Spending $ they don't have on a depreciating asset
Spending $ they don't have on a depreciating asset
Negative equity
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Zero percent interest rates and low wage jobs made the mess. Will zero percent interest rates and jobs replaced by AI fix it
So you consider him a "loser" for simply stating what his lending institution has to offer?
Very true but the bank should have a heavy capital penalty for loaning over 80% LTV, on collateral that is of questionable liquidity. The taxpayer is on the hook when banks fail.
You have very neatly summarized why vehicles as a hobby are painful for someone who is also practical and even pragmatic with their budget. I would like an extra vehicle (again, I do this every decade or so). I’ll enjoy it for a period, then the realization of depreciating asset, effective double the insurance quotient because I’m insuring double of what I can drive on any given day, etc. then get frustrated and sell the extra. But I also enjoy the hobby and use of them. We currently do not carry a car loan.
A large pro of cash is you spend less generally vs a payment . You think more about the finite cash leaving your wallet. Payments and credit you don’t feel that.
Yep. The corallory is, make those payments to yourself for a few years and then you can go in with cash, or a big down, or a down that offers reasonable payments, or even invest in an appreciating assets instead.
Is that called saving?
No, I probably should have phrased that differently. The banker had the tone and demeanor of being in power and not wanting to help me. I had a really good old banker that was in his 70's that would actually treat me with respect. He would have written up the loan for me without any questions. Many banks are different and have their own policies. People with good credit buy used vehicles all the time but in this case with the higher mileage the vehicle probably didn't fit within the scoring model. I just don't agree with banks that push brand new vehicle loans and then people get the loan and cannot afford to pay them off. I have not borrowed money for a vehicle or house for over 25 years and don't plan to ever be a slave to the lender. I still feel like the banker was a loser because of his attitude.
Deregulation, or the failure to regulate, often comes back to hurt the public. History has repeatedly shown that banks and large financial institutions cannot be trusted to self-regulate when the incentives reward short-term gains over long-term stability. The idea that a small group of decision-makers will consistently choose what is best for the firm, the economy, or the public over what benefits them personally is not realistic.
The same problem applies to trickle-down economics too. When corporations and the ultra-wealthy receive large tax breaks, not only is there little evidence that the money will be passed on to workers or consumers, there's a ton of evidence that this doesn't happen most of the time. More often, those gains are retained, invested, used for buybacks, or directed toward executive and shareholder benefit.
The fundamental issue is incentives. When individuals can make enormous amounts of money from risky or self-serving decisions while pushing the downside onto employees, taxpayers, or the broader economy, self-regulation is not enough. Regulation is necessary because the upside for bad behavior is often too large, and the consequences are too widely shared.
I agree that cars are usually depreciating assets and should not be treated like wealth-building investments. But I think the realization of equity changes when someone buys a reliable vehicle, finances it responsibly, pays it off, and then keeps it for years.
Early in the loan, the vehicle may be a cash drain, and negative equity is a real risk. But once the loan is paid off, especially on a vehicle that holds value well, the owner does have real equity. It may not be the same kind of asset as cash, stocks, or real estate, but it is still market value that belongs to the owner.
That is where reliability, retained value, and holding onto a vehicle long-term can matter. A paid-off vehicle that still has strong resale value is not just an expense anymore. It is an asset that also continues to provide transportation without a monthly payment.
And while cars are depreciating assets, a reliable paid-off car can indirectly support wealth building. Not having a car payment frees up monthly cash flow that can go toward savings, investments, debt reduction, or other productive uses. The car itself may not be making you money, but keeping a dependable vehicle long after it is paid off can help you build wealth by reducing ongoing expenses.
My RX 350 and Tundra are good examples. They were financed at 0% and 0.9%, have been paid off for years, and are still worth around $30K and $35K. They did not make me rich, but holding on to reliable vehicles that retained value changed the equation substantially.
I agree with everything you say, but I would characterize your approach, not as equity, or asset, but thoughtfully managing overall costs.
Cars are a cost, not an asset.
But that cost is a big part of the average budget, so, keeping that cost under control, through your approach, is simply part of good financial management.
And good financial management includes future planning and investing.
For me, slightly different approach, within the “good financial management” framework, was to drive used cars, do the maintenance on them myself, and use the cash saved to invest.
Here is an example: 1970 Ford Fairlane Station Wagon. 302 2bbl. C4 auto. No AC. Crank windows. AM radio only. Bought in 1990 for $250. Sold in 1995 for $100. That’s $30/year depreciation. Not much of a loss, and 5 years without payments.
I think Covid craziness made people think vehicles don’t depreciate much and many made money selling their used cars. And if you bought before rona happened, your vehicle’s worth is highly inflated now as a result. Historically that has never happened before.
And people’s thinking is weird sometimes. I saw a Facebook marketplace add for a used motorcycle with a pretty high asking price. In the add, the seller mentioned not to low ball him and that if he wants to “loose” money he will sell it to a dealer.
So what’s likely happening is the guy wants at least the amount he still owes on this motorcycle, but the thought of selling it for less than the owed amount to a private party is unacceptable to him,for some reason, but perfectly ok if it’s a dealer.
And people’s thinking is weird sometimes. I saw a Facebook marketplace add for a used motorcycle with a pretty high asking price. In the add, the seller mentioned not to low ball him and that if he wants to “loose” money he will sell it to a dealer.
So what’s likely happening is the guy wants at least the amount he still owes on this motorcycle, but the thought of selling it for less than the owed amount to a private party is unacceptable to him,for some reason, but perfectly ok if it’s a dealer.
Just because something is common, doesn’t mean it’s not foolish.
Some people have no issues amassing debt and getting cars repossessed and homes foreclosed on then filing for bankruptcy. I have seen where after filing and being absolved of all debts they somehow land an 800 credit score a few years later.
No, they don't learn anything. I have a long time friend who is super smart, a terrific salesman and small business owner. His wife has to give him an 'allowance' every week or he will burn through all of his money like it's water.
No, they don't learn anything. I have a long time friend who is super smart, a terrific salesman and small business owner. His wife has to give him an 'allowance' every week or he will burn through all of his money like it's water.
It’s made the Big Three what they are today! Not necessarily a good thing…
Don't hate the player, hate the game. The whole system is designed around perpetual debt, so if some people can take advantage of that, more power to them.
I randomly search for larger vehicles online. Found one local and it's at a used car dealer that tends to have a lot of "expensive" cars that are a few years old (i.e. Mercedes with 30-100K miles) and looking at the new vs. used price is RIDICULOUS. You can get a pretty decked out Mercedes for less than a new Toyota Camry if you're willing to buy it with a few miles and a few years old. If someone financed new, the depreciation is ridiculous.
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My lovely bride and I took a 60 month loan on our first vehicle. We ended up not so wild about it and that was when we learned the term “underwater” on our loan. Same thing everyone else is talking about; we owed more than the truck was worth. That was 40 years ago. We never made that mistake again on any home or vehicle loan. I bought my last truck for cash in 2018. I’m the king of overkill when it concerns maintaining my truck. My wife bought her last two cars for cash…well, that not precisely true. After haggling and walking out of the door a few times the dealership ended up cutting us a check for the difference in the value of our trade in for the vehicle she wanted. Driving around in a vehicle that you own outright is a pleasing little pleasure.
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