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Started By
Message
The Great Car Bubble
Posted on 8/5/23 at 12:26 pm
Posted on 8/5/23 at 12:26 pm
Saw this alarming map today.
Assuming it's true, let's do some simple math.
Reasonable estimates say you should spend anywhere from 10-20% of take home pay on a car note. Personally, I think 20% is way too high, but let's split the difference and use 15%.
For a $1000 note, you should be making at least $80k a year AFTER TAX. Let's just use 30% tax for ease. That's a salary of about $114,000.
Based on a quick income calculator, roughly 14% of Americans make $114k or more. Looking at the map, over 2/3's of states have more than 15% of people paying $1k or more for a car note.
Now this is quick napkin math and not nearly an exact science. You should adjust by state income and whatnot but I think the picture is pretty clear regardless. People are living way beyond their means. This is not sustainable and something has to break eventually.
How are you baws affording those brand new F250's?
Assuming it's true, let's do some simple math.
Reasonable estimates say you should spend anywhere from 10-20% of take home pay on a car note. Personally, I think 20% is way too high, but let's split the difference and use 15%.
For a $1000 note, you should be making at least $80k a year AFTER TAX. Let's just use 30% tax for ease. That's a salary of about $114,000.
Based on a quick income calculator, roughly 14% of Americans make $114k or more. Looking at the map, over 2/3's of states have more than 15% of people paying $1k or more for a car note.
Now this is quick napkin math and not nearly an exact science. You should adjust by state income and whatnot but I think the picture is pretty clear regardless. People are living way beyond their means. This is not sustainable and something has to break eventually.
How are you baws affording those brand new F250's?
43
Posted on 8/5/23 at 12:29 pm to rintintin
Everyone’s been saying this for the last 10 years but I don’t see GIANT waves happening ever. People make do.
Posted on 8/5/23 at 12:31 pm to rintintin
Between that map and your numbers, I’m thinking a lot of way too general assumptions and incorrect data is being thrown around here.
And yeah, there are indeed a very small percentage of people who are very stupid with how much their car notes are vs income.
And yeah, there are indeed a very small percentage of people who are very stupid with how much their car notes are vs income.
Posted on 8/5/23 at 12:32 pm to rintintin
It will lead to another dark Era of vehicles like we had with the fuel embargo
This post was edited on 8/5/23 at 1:15 pm
Posted on 8/5/23 at 12:32 pm to GeauxTigersGo
quote:
Everyone’s been saying this for the last 10 years but I don’t see GIANT waves happening ever. People make do.
Sure, but never has there been a time where more people are paying over $1k for car notes. And wages are not increasing that fast.
Posted on 8/5/23 at 12:35 pm to notiger1997
quote:
Between that map and your numbers, I’m thinking a lot of way too general assumptions and incorrect data is being thrown around here.
I'm open to someone refuting the math and data. Like I said, it was quick and dirty. Honestly, I don't want to believe there are this many morons out there, but I'm not optimistic.
quote:
And yeah, there are indeed a very small percentage of people who are very stupid with how much their car notes are vs income.
I think you underestimate how terrible most people are with money.
This post was edited on 8/5/23 at 12:37 pm
Posted on 8/5/23 at 12:42 pm to rintintin
I just don’t get how someone can stomach a note even over $600 for 5 or 6 years that’s making average income.
Mine was $325 and the wife’s was $425 and both have now been paid off in the past three months.
Mine was $325 and the wife’s was $425 and both have now been paid off in the past three months.
Posted on 8/5/23 at 12:42 pm to rintintin
quote:
let's do some simple math.
NSFW
Not Safe For Women
Posted on 8/5/23 at 12:43 pm to notiger1997
quote:
Mine was $325 a
Wtf do you drive?
Posted on 8/5/23 at 12:46 pm to rintintin
People are idiots.
WTF would someone gladly pay over $1000 for a vehicle note?
This is why prices are not dropping. People are still wanting to pay them
WTF would someone gladly pay over $1000 for a vehicle note?
This is why prices are not dropping. People are still wanting to pay them
Posted on 8/5/23 at 12:48 pm to rintintin
quote:
Reasonable estimates say you should spend anywhere from 10-20% of take home pay on a car note. Personally,
Do the math with 20% and use the actual tax bracket instead of an easy one. That’s clearing $60k a year.
Posted on 8/5/23 at 12:49 pm to rintintin
Sounds like I need some more expensive cars or Texas is gonna kick me out
Posted on 8/5/23 at 12:50 pm to notiger1997
Wtf kind of car is $325 a month?
You financing a golf cart?
You financing a golf cart?
Posted on 8/5/23 at 12:50 pm to rintintin
quote:Please explain why I'm supposed to be alarmed by that map.
Saw this alarming map today.
Posted on 8/5/23 at 12:51 pm to Fat and Happy
quote:
WTF would someone gladly pay over $1000 for a vehicle note?
Car allowance from work.
They have money.
They like cars.
And no one is “gladly” paying it. It’s just what nice shite costs.
Posted on 8/5/23 at 12:52 pm to LSURussian
Posted on 8/5/23 at 12:53 pm to LSURussian
quote:
Please explain why I'm supposed to be alarmed by that map.
Right. I’m seeing trade-ins sell for more than their own MSRP when they were new a few years earlier.
Posted on 8/5/23 at 12:54 pm to rintintin
quote:
Assuming it's true
There is no doubt it's true. Look at prices and consumer consumption. It's ridiculous what the prices are and equally ridiculous that people are buying at those prices.
Posted on 8/5/23 at 12:57 pm to kciDAtaE
quote:
Do the math with 20% and use the actual tax bracket instead of an easy one. That’s clearing $60k a year.
I don't think people spending 20% of their income on a car note is sustainable.
And my math also doesn't take into account notes more thank $1k, which skews it slightly more favorable.
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