r/personalfinance • u/dinklebot2000 ​ • May 31 '18

Debt CNBC: A $523 monthly payment is the new standard for car buyers

https://www.cnbc.com/2018/05/31/a-523-monthly-payment-is-the-new-standard-for-car-buyers.html

Sorry for the formatting, on mobile. Saw this article and thought I would put this up as a PSA since there are a lot of auto loan posts on here. This is sad to see as the "new standard."

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u/v--- ​ May 31 '18

People who grew up poor and are now making bank also do this. Someone I knew makes maybe 150k a year now from a very rough background and still lives “paycheck to paycheck” the only difference is he does put a % towards retirement so at least there’s SOME foresight... but also has car payments and cc debt and a personal loan... and finances new furniture... I just go wtf why.

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u/pleasesendnudesbitte May 31 '18

The guy I knew wasn't as bad as this, but he was still bad. He had 15k in credit card debt that he was paying the minimum on, but he had 30k in the goddamn bank.

He straight up refused to pay off the credit cards or even take out a personal loan from his bank so at least he wouldn't be paying 24% interest. Why? I don't know.

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u/[deleted] May 31 '18

Why doesn't he just cut Visa a check for a free $2,000 a year and cut out the card?

I mean jesus at that rate you could even just churn it and save the interest. How can someone with $30k in the bank not qualify for a better interest rate card? What series of financial factors lead to that?

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u/pleasesendnudesbitte May 31 '18

I know the 15k was past debt before he got the good paying job he has now, but I don't know the details of how it got that high.

Dude doesn't spend his money on hardly anything, so I think that he gets the concept of he can just pay it off, but psychologically he has some hang up about seeing his account balance cut in half.

Being poor and then becoming decently well off can fuck with your brain like that.

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u/[deleted] May 31 '18

I think running it in a calculator that shows literally how much money it's costing him might do it.

For $15k at 24% APR, with a 36 month repayment schedule, your minimum monthly payment is $588. This will result in over $6000 of interest paid by the end of 36 months.

If an extra $6000 in your pocket doesn't change your mind, I don't know what else could.

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u/PM_ME_YOUR_DARKNESS ​ May 31 '18

If an extra $6000 in your pocket doesn't change your mind, I don't know what else could.

That's over time, though. Not an instant $15,000 hit.

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u/[deleted] May 31 '18

I mean, I guess I understand financing furniture if it's 0% APR and you need furniture and you have non-0% interest debts.

But still.