New Car “Buyers” . . .

Print Friendly, PDF & Email

debt leadWho can afford to spend $30,000 – the average purchase price paid as of 2013 – on a new car?

The answer is … very few.

Most new car “buyers” are in fact debtors. They sign loan documents and make monthly payments. Typically, for five years, the length of the average new car loan. Some extend this to six years – and seven years is not unheard of.

Some of you may remember when the typical new car loan was three years.

What’s happened?

Several things.

First – and most obviously – cars have become more expensive in real/inflation-adjusted terms. In 1970, a full-size family car – something like a Chevrolet Impala sedan – had a base price just over $3,000 (see here). Using the government’s own inflation calculator, this works out to just over $18,000 in 2014 dollars (see here). In contrast, a 2014 Chevy Impala has a base price just under $27,000 ($26,910).

Now, it’s true the ’14 Impala is a much better-equipped car than its 1970 counterpart. The ’14 comes standard with air conditioning and power everything, while the ’70 came standard with power nothing – and AC was optional. But the fact remains that the buy-in price of the ’14 Impala is about $10k higher than the ’70 Impala. And it is not possible to order a “de-contented” or “stripped” Impala without AC and other cost-adders. If you want the new car, you must come up with the costs 1

The problem, of course, is that most people haven’t got it. Wages (real take-home pay) haven’t increased appreciably since 1970 for most people. And the cost of nearly everything – excepting consumer electronics – continues to go up. Especially important things like food and fuel. It doesn’t leave much left for car buying.

So, most people borrow.

At interest.

For a long time.

Payment schedules are now close to twice as long as they were circa 1970 because otherwise, very few people could even afford to assume the debt load. That 2014 Impala, for instance, would cost you about $450/month for 60 months (five years) assuming no interest. On the 1970 “three year plan,” the monthly payment would be $750.

Which is why the five (and six) year plans are now the graph

I expect this to trend to continue for the simple reason that cars are not going to get cheaper – at least, not unless the government stops piling on the mandates. If anything, these compliance costs are going to go up rather than down. Because there appears to be a complete disconnect between awareness of economic (and engineering) realities and the cost-no-object demands of politicians and regulators in Washington.

An excellent example/case in point is the federal Corporate Average Fuel Economy (CAFE) mandate, which will presently require that every new vehicle (cars and trucks) achieve an average of 35.5 MPG. This is set to nearly double to 50-plus MPG by 2020 (only about five calendar years away and far less than that for the car industry’s product planning purposes). Already, the effects are being felt. Take a look at the sticker prices of 2014 vs. 2013 model year vehicles, especially the “carryovers” that are basically the same but – as in the case of the 2015 VW Tiguan I wrote about recently (see here) are no longer available with a manual transmission, it having been retired in favor of a more fuel-efficient (though just slightly) but much more expensive and now mandatory standard equipment automatic. Manual transmissions are getting harder to find because automatics are usually more efficient nowadays. All else being equal, a typical new vehicle will return about 1-3 more MPG with a modern automatic than it would with a manual transmission.

But, these modern automatics – some of which have as many as nine forward gears, or “dual clutch” technology – are quite costly. And in more and more instances, you’re not given the choice. As in the 2015 Tiguan, it’s the automatic – take it, or leave it.

Another way the car companies are trying to make lemonade out of lemons is by turbocharging very small engines for on-demand power with higher overall fuel-economy. But turbos – the means by which decent power/performance levels are maintained – aren’t free. Yes, you pay less for costs 4

But, you pay more for the car.

For example, the “Ecoboosted” three-cylinder turbocharged version of the new Ford Fiesta costs about $1,600 more than the base (non-turbo) Fiesta.

Here’s another cost-adder: Auto-stop/start. More and more new cars feature this system – not as an option, but included as standard equipment. The car’s computer automatically cuts the engine whenever the vehicle comes to a stop – and then automatically re-starts it (using a special high-speed/high-torque starter) when the driver takes his foot off the brake and depresses the accelerator. This may save a fractional amount of fuel. But it doesn’t come free, either. At minimum, that special high-speed/high-torque starter is needed. And it is very possible that down-the-road wear and tear on the engine will be higher due to the constant start-stop cycling. Keep in mind that when the engine is not running, there is no oil flowing. And it requires a stronger electrical system to maintain the battery’s charge (as well as a stouter battery) to deal with the constant start-stopping.

It all costs money.

Six air bags are now the de facto standard. Many new cars have eight or more air bags. At least one has eleven (the “Smart” car). These add cost – regardless of your feelings about “lives saved.”

None of the foregoing would be problematic – from an economic point of view – if people’s discretionary income had been rising in parallel with the cost of cars. But of course, the opposite – the inverse – is true. As cars have become more expensive, most people’s discretionary income has decreased.

This cannot continue forever – not because government will regain its senses (assuming it ever had any) much less its morals (utterly bereft) but rather because a critical nexus approaches. New cars will soon cost so much to buy – that is, to finance – that their “owners” will be under water before they make that last payment. Remember: A car is not a house. It is an appliance. It depreciates in cost last

At the end of a six-year car loan, the typical new car is worth about 50-60 percent of its original retail purchase price. You can see where this is headed. A point – not far off now – will be reached when most people will never own anything but debt. Perhaps the lease model will become the new normal. You’ll just swap out vehicles every so often. But the payments will never end.

Which, I suspect, is precisely what’s wanted. After all, what could be better – from a lender’s point-of-view (and from the government’s point-of-view) than perpetual payments? Endless debt?

Is it not the (new) America Way?

The new EPautos stickers are almost here! They’re free to those who sign up for a $5 monthly recurring donation to support EPautos, or for a one-time donation of $10 or more. (Please be sure to tell us you want a sticker – and also, provide an address for us to mail the thing to!)

Our donate button is here.epautos_logo

If you prefer to avoid PayPal, our mailing address is:

721 Hummingbird Lane SE
Copper Hill, VA 24079

Share Button


    • Hi Seth,

      I vehemently object to mandatory insurance in principle. However, I must concede that it’s not unreasonable for a lender to require that a borrow maintain insurance on a piece of property not yet paid-off as a condition of the loan.

      But this is not mandatory insurance, since you’re free (in principle) to not take out a loan, to buy a car outright rather than finance it. And once the car is paid off, you ought to be free to cancel insurance if you wish – just as I have done on our paid-for house. Because once you’ve paid off the loan, it’s yours – and no other person can legitimately claim he is harmed by the mere fact that you’ve elected not to “cover” your property against the possibility of loss.

  1. In 2007 I drove a 5 speed turbo diesel Volkswagen Golf 4 dr hatchback from Hamburg, Germany to Flensburg (approx 100 miles), used the car in town about 5 of 10 days, and drove back to Hamburg. My average speed on the highway (autobahn) was 100 mph. (the car would not go any faster and I was passed by almost everything except tractor trailers)
    Total distance was about 300 miles with fuel mileage of 72 MPG!!!!
    Price of fuel at the time was about 1.70 Euro per litre (2.47Cdn$ per litre or 9.20 US$ per US gallon – 2006 price and exchange rate)

    The US and Canadian governments will not allow any person or dealer to import this vehicle, or even the engine and transmission, into their respective country. (I inquired on return home to Canada)
    WHY?!! Because they are told not to by business (auto makers and oil companies)
    European cars typically get better mileage than ours, I think.

    Just another way we are taken from behind by our leaders and not even kissed first.

  2. I agree on all points… But I do love my Outback. Second one I’ve driven and continue to be very happy with Subaru. I often have to drive in inclement weather (often in Northern Va which, as we all know, is a cesspool of idiots), and this vehicle delivers confidence in the worst road conditions.

  3. Forgive the personal rambling, but I just decided to become a monthly supporter of this site after a few years as a free rider. Eric and his readers provide me with more value, in the form of information and entertainment, than the odd cup of overpriced coffee or fast food burger.

    On topic- thank God for my Dad, who made it quite clear to me that you don’t borrow money to buy a depreciating asset. He bought new cars, but back then there were virtually no quality used cars good for over 100K miles.

    So we had Dodge Darts, a shitty Plymouth Volare Wagon, etc. The first car he ever paid over $10K for was an ’88 Chevy Celebrity sedan- plum colored. 4-cylinder junk to put it mildly.

    I notice that college kids and twenty-somethings never buy old cars, they buy new Honda Accords and just make the payment every month. My last job at a Big 4 accounting firm saw many of the millennials driving nicer cars than the 40- and 50-something partners. I just bought (yet another) Acura Legend for $3K in great condition that will be a solid commuter for 2-5 years.

    Do kids get even a shred of basic personal finance in school? I certainly didn’t.

    • Hello Jeff. I live in a town that has one of the Big 10 universities. There are about 42,000 students here, and of the ones that have cars, many of them drive much nicer and more expensive cars than I own, or ever have. There is even a development in town where some of the students from certain foreign countries live, and most of them drive late model or new cars from Maserati, Lamborghini, or Ferrari!

    • “Do kids get even a shred of basic personal finance in school?”
      Of course not, because the Gunvermin Indoctrination Centers (GICs) are not educating them, they are training them to be cogs in the gearbox. Producing ‘something’ but consuming more, and falling into the debt trap.
      It’s not quite so bad for those who don’t take the Gunvermin Guaranteed college loan bait. Get a job while still living at home. (Don’t worry, Mom and Dad would rather have you stay around a bit now than come back AFTER college.) Save enough money to buy a beater that will get you back and forth while you save enough more to buy something half decent.
      But the kids who fall for “You have to get a degree to get a decent job” and especially those who go away to do so, NEED (or think they do) decent wheels now. Unless Mom and Dad spring for it, they have to finance. And it is much easier to borrow to buy new than used, even more so when you have no credit record and have to rely on dealer financing. So now you have a ‘car mortgage’ on top of your ‘school mortgage.’ You are good and stuck. If you’re lucky you will find something better to do than flipping burgers, and your ‘new’ car will last until it is paid off.

  4. Hi Eric: I agree with your position as far as it goes, but it is important also to understand the larger frame of reference. In practice people do not “borrow” the $30,000 needed to purchase a new car, but rather they obtain “credit”. The promissory note issued by the debtor instantly creates $30,000 of new money (credit) in the economy. The creditor obtains its credit-issuing-capacity directly from the debtor’s promissory note and does not otherwise contribute anything of substance to the financial transaction.

    On the form and substance of promissory notes

    Consider the nominal promissory note that lies at the heart of the U.S. (and global) financial/banking system. Promissory notes are most often issued by nominal borrowers and debtors in favour of bankers. The purpose of a mortgage (or securitized-automobile-advance) is to secure performance on the corresponding promissory note.

    A typical/example promissory note states: “For value received, I promise to pay the Principal Sum of $100,000 on [Date] and to pay interest monthly before as after maturity at the rate of 12% per annum.”

    We are conditioned to perceive such a financial instrument as having a face value of $100,000, when in theory and in fact/practice it is $200,000 plus the monthly interest.
    There are three separate and distinct legal/financial undertakings defined by and under the nominal promissory note, and which are acted upon as such:

    1. An immediate undertaking of indebtedness to the bank in the amount of $100,000;

    2. An undertaking of liability to the bank for the stipulated interest charges on the amount of indebtedness so assumed; and

    3. An undertaking to pay the bank $100,000 in lawful money on the named maturity date.

    In practice, as and when the bank receives the promissory note, does it receive and record the issuer’s undertaking of indebtedness, per se, as a commensurate increase in the banks’ cash equivalent/money assets? Yes it does.

    As and when the periodic interest payments are made, does the bank receive and record same as a commensurate increase in the banks’ cash equivalent/money assets? Yes it does.

    As and when the note is nominally paid on the maturity date, does the bank receive and record the payment as an increase in the banks’ cash equivalent/money assets? Yes it does.

    That’s it. They’re done. That’s the whole deal. If those three things are true, then the unearned gain is crystallized and everything else reduces to distribution of proceeds.

    That accounts for roughly half the financial value of all broadly-defined labour on Earth. The financial deprivation to the note issuer (borrower or debtor) is real and quantifiable, and the unearned/unjust enrichment of the perpetrator (bank) is real and quantifiable.

    In the present case, the nominal creditor does not bring the $30,000 of money/credit to the transaction but merely underwrites the risk of default by the nominal debtor (car buyer/debt-underwriter). The nominal default provisions under the nominal car loan are in fact a provision of re-insurance where the nominal debtor agrees to compensate the nominal creditor for its constructive losses from losing its bet/wager on the nominal debtor. Is that clear?

    Here is my take on the psycho-linguistic or cogno-linguistic basis of the deception (from an Introduction to the subject that I wrote elsewhere).

    Lender versus creditor; loan versus advance

    Lenders make loans, which they pay for by:

    pre-existing money already earned and possessed by the lender,
    assumption of risk, and
    administrative overhead.

    Creditors advance credit, which they pay for by:

    assumption of risk, and
    administrative overhead.

    It costs at least a billion dollars to loan a billion dollars, and the lender walks away from the transaction a billion dollars poorer in terms of immediate purchasing power, because now the borrower has it, and the lender does not.

    It costs at least nothing to advance a billion dollars of credit, and the creditor walks away from the transaction a billion dollars richer than the instant before, because now they own the debtor’s security, plus the debtor owes them a billion dollars that the creditor did not even possess the instant before.

    A billion dollar loan instantly costs a lender a billion dollars.

    A billion dollar advance instantly advances or gains a creditor a billion dollars.

    Yet not one man or woman in 10,000 even appreciates that there is a difference; that a loan is vastly more expensive to one of the parties, than an advance of credit, because of the added cost of the money itself. Yet legal documents, securities, mortgages, credit-card contracts, newspapers, tv and radio media, court judgements, all of it – all use the word-pairs “lender and creditor”; “loan and advance”, interchangeably for what is arguably the single greatest distinction to be made on Earth. I had done so myself for years without realising it (and on occasion still do – it takes persistent mental discipline to avoid it).

    “Mr. Banker, that $1 billion transaction that you just completed – did it cost you $1 billion? Or did it gain you $1 billion?”

    Banker: “Cost, gain; what’s the difference? You just need to get back to work and leave the complicated philosophical questions to us. As George F. Baer, president of the Anthracite Coal Trust/Monopoly, so aptly put it in 1902:

    The rights and interests of the laboring man will be protected by the Christian men of property [read: inherited wealth] to whom God in His infinite wisdom has given the property interests of the country.”

    Among the foundational elements of broadly-defined English law, which still dominates most of the planet (including the U.S.), is the concept of what the civil/money courts call ones “station in life”. If you were born poor, then it is because God wants you poor, and it is deemed a morally wrongful act for the law to actively assist you to escape God’s will. The English language – including and especially legalese and the language of finance – has concurrently developed so as to mould our perception of reality consistent with that principle.

    A closely-related and concurrent principle or doctrine is the “avoidance of unjust enrichment” whereby the law holds it as a wrongful and harmful act, of itself, for a living human “to get something for nothing (except via inheritance/God’s will)”. This was also the ground for the original prohibition against lotteries. They were literally portrayed as an attempt by the poor to escape God’s will that they be poor.

    A foundational exception/precedent was created, however, and ratified by the House of Lords in 1830 (The Amicable Society for a Perpetual Life Assurance Office v. Bolland et al. [1830] 4 Bligh N. S. 194) under which it was argued by solicitors for the financial institution, and accepted by the Court, that a corporation owes a duty to its shareholders, wherever possible, to seek and obtain unearned/unjust enrichment, even if it has to commit a tort (an otherwise actionable wrongful act) and/or breach its contract(s) to do it. The “Lords” agreed.

    After establishing this schism in our aggregate and/or collective minds, the commercial law system has slowly massaged and shaped our perceptions of reality to accept the unearned enrichment of a human as a wickedly wrongful act (unless they are already wealthy), while simultaneously accepting the same unearned enrichment of a corporation (and therefore its management and shareholders) as the epitome of virtue.

    Humans are psycho-linguistic or cogno-linguistic. We perceive reality very largely as a function of the language we use to describe it. Most everyone inherently believes that you have to be able to think something before you can say it. The greater reality is that, above a certain base level of perception and communication, you have to be able to say something before you can think it.

    So to triangulate reality it is important to train your mind to recognize only two potentials, where every nominal loan/credit-transaction is made by either a “legal-debt-creditor” or an “equity-lender”. If that distinction is not made and maintained throughout, then there can be no real appreciation of the reality of it.

    So, again, great column for identifying the fact of it, but I believe the broader situation is at least an order of magnitude more serious and dis-equitable.

  5. I sold new and used cars for many years, as well as spending some time as a Finance Manager of a new car dealership. How consumers managed their vehicle purchases, and the amount of debt they continually buried themselves in, never ceased to amaze me. But don’t blame me, I was just the facilitator of their wishes. Personally I bought myself a brand new car most recently in 2007, a base Toyota Yaris hatchback, but only because my former car, a POS Chevy Cavalier, was taken out and totaled by a family member – and I needed a replacement vehicle fast. The Yaris is still our only car and a daily driver, but it was paid for in full years ago, and since it’s only driven about 9,000 miles a year, I hope that it will last for many years to come. For fun I recently stopped by a Mitsubishi dealer, test drove a brand new Mirage stick shift, and had them work me up a deal trading the Yaris. They offered me $4,000 for the Yaris, and the financed amount came out to about $10,000. Of course I wasn’t interested in their offer, other than in considering buying a used Mirage many years from now when the Yaris wears out. I do have a maxi-scooter which I don’t ride very much, only because being retired I generally don’t go anywhere, and owning my house free and clear, my life is quite inexpensive if I just stay home (and I’m happy to do so). However a second car for my wife and I would be nice to have to travel in, and for when I need to go anywhere during the day while she is at work in her corporate job at her office. To that end, I reserved a 2015 ELIO for myself, and I really do hope that they make them, or at least make me mine. If or when I get it, and it will be paid for in cash when purchased, my maxi-scooter will be sold, and my wife and I will have a very interesting and economical vehicle to take road trips in, and for running around town during the day. — My personal bottom line FOR ME is that I consider debt to be a trap, engineered by the globalists, central bankers, and all of the other enemies of liberty and freedom; and I avoid it at all costs like the plague I consider it to be.

    • I would make 1 small amendment to your final statement. CONSUMER debt is a trap – always. Business debt, where you pay someone interest in order to use their money to make more money for yourself, may be justified. But it too can be a trap if your are not careful.

    • Spot-on clarification Phillip, and my sentiments exactly. As a founder (and later seller) of a number of small businesses in the last 40 years, I have used business debt judiciously a number of times. I was referring only to consumer debt in my comments, and I apologize for my oversight in lacking clarification. So thanks again for pointing that out Phillip.

  6. This is a great analysis however I take issue with you using the government inflation figures to declare that new cars are more expensive when in real terms they are less expensive

    In 1964 a $3,000 new car would could be bought with 12,000 1964 quarters 3000 X 4
    Today those very same quarters would enable you to buy a car costing $37,560.

    1964 quarter is now worth 3.13 inflated FRN’s 3.13 x 12,000 = $37,560.00

    Cars have not gotten more expensive they have gotten less expensive relative to actual money. Those colorful slips of Fed paper we call money are in fact worthless.

    • Even as silver goes up and down it seems that 90% silver US coin shows no real change in prices over the long term or the deflation of prices due to natural productivity increases.

      However if silver is crashed down to $6, then it will disconnect again.

      • It might crash again but unlikely to stay crashed for long. prices of any non monetary commodity can be volatile in the short run but over the longer run the numbers are very stable

    • Hi Kaiser,

      Modern automatics often deliver better mileage than a manual in the same vehicle; check the specifications and see for yourself. Here how (or why):

      * Efficiency losses through the torque converter have been reduced significantly; several modern automatics don’t have torque converters at all.

      * Their programming enables them to shift (change gears) more efficiently – and consistently – than a human operator.

      • I still don’t see any gearbox being more efficient than a manual. It is a box of gears, and that will have some losses. However, these losses can’t be made smaller by changing automatically, because the gear change is hardly consuming any energy in itself, and you will have to be an incompetent driver to flunk such a change.
        The only possible explanation can be if a 8 gear box can keep the engine in a more efficient range, than a 5 speed manual, as an example, but that I find hard to believe unless you have a very special engine, and that should be visible in the specific consumption, e.g a graph with a very defined optimum in a very narrow rev band.

        I have heard similar types of statements from people advocating Dual mass flywheels, and that also makes very little sense.

        • Well, what either of us see is immaterial! The facts are what they are. Check the stats; you’ll see. There are numerous new cars that deliver higher city/highway numbers with the automatic than with the manual. It’s not my opinion. It’s right there in black and white.

        • kaiser, dual mass flywheels, used exclusively on ’80’s, and ’90’s big 3 diesel pickups were a mixed bag but the proof was in the pudding. Not only did they take the jerk out of an engine with a great deal of torque but they also had more surface area than a flywheel/clutch combo that would fit in the same area. There became a time when getting a new dual mass for these trucks was nearly impossible but after a few years of conventional clutches not holding up, everyone went back to those original styles. I’ve sat and compared them, measuring the inside diameter to the outside and they are superior in surface area. I’m not familiar with gasoline engines requiring this same type of flywheel although I recall some cars in the 90’s having this same style.

          Now, diesel pickups produce so much power they no longer even offer manual trannies for them. I can understand this since it would require a huge clutch and driveline shock would also be a big thing for warranty since some people can ruin a cannonball with a rubber mallet.

  7. and if they did sell those again I’d be first in line to buy one! Had a 1970 bug way back when; wasn’t fancy but in retrospect the most reliable car I ever owned. If I could buy one now it would probably outlast me 🙂

  8. ERIC: Two questions and two comments: I am looking for two different cars/trucks. I would be MUCH OBLIGED, Eric, as there are good used cars out there and not so good. For instance, I have read the ’06 and earlier VW TDI’s are GREAT engines, but other mechanical problems cause these cars expensive to own.
    For sons: Good commuter truck or car for college aged/grads. Kindly Do “not” recommend the Frontier, as they are SKY, SKY high, even old paint-bald beaters….your reviews have gone viral! We are looking for something with around 75k miles that is built well and shouldn’t require expensive repairs for a long time, with good maintan.
    For mom: Good late-ish model roomy commuter sedan, again that is so well built that I won’t need to worry to much about expensive repairs. Not some cheap thin plastic CAFE-mobile. Looking at Accords, Camrys “dowager-mobiles”. Unsure, though.

    Eric, It seems that newer cars are more rickety and plastic-y now due to CAFE fuel standards. For instance, my sisters 04 Nissan Murano was super solid for over 140k when she sold it, while a late model car I bought of that same mfg was plastic-y and needed a $3k radiator/engine repair after I drove it a year with good maintenance (30,000 miles. repair not covered under warranty as it had been a theft recovery vehicle). OUCH! Sold it, quick.

    Eric, an interesting point: studied I plan to take a $95 flight to Florida, rent a car, and buy there and drive it back to TX. Seems some autos can be rather substantially cheaper there.

    • John Martin, how much cheaper are cars there? What about pickups? Since I’m on the road hundreds of miles every day, I see what’s out there used wise and new too. The only “old” pickups still running in any real numbers are GM’s. Most of the older cars that are still running are GM’s and Honda’s and Honda’s are getting more scarce by the day. I just notice what’s on the road.

      • THX for the advice. I noted used autos (late model) are very roughly 2,200 or so cheaper in Florida, for the cheapest ones, in a lower mileage range, that have clean title (I am looking at 2010 or so Acccords or Camrys….I figure they will be good low cost to operate vehicles for a lot of years for a family). New York , New Jersey are also best prices. Here in Texas prices seem high

        • Cars from NY and NJ will not last as long, even after being taken out of that environment, due to all the salt used on the winter roads. In FL, the salt is in the air, 24/7/365. Texas, except along the Gulf, is a much safer environment for rust susceptible cars. AZ, NM, etc., should be similar. I don’t know how prices compare.

  9. One thing being overlooked……the interest rate has a lot to do with how dumb it is (or isn’t) to take on a car loan. We got 1.74% APR for 5 years to finance a 2014 Tundra. There should be plenty of service life left long after the loan is paid off. That’s pretty cheap money. At that rate, one can argue it would be dumber to pay cash.

    OAC, of course. Without good credit, rates get a lot more nasty. That’s when the debtor slave thing comes into play.

    • Hi Mike,

      I suspect interest rates are as low as they are because TPTB know that, otherwise, the music will stop. It is an unavoidably temporary Band Aid, which one may take advantage of (if one is in a position to do so) for a short while longer….

    • Isn’t 1.74% great? That’s also the rate I got for my 2012 Prius C (used), except it’s for just 3 years. The dealer beat my CU’s best offer by .5%.

      What would be “dumber to pay cash” is buying new just for an interest-free loan. I could have gotten the same model new and paid 0% for 3 years, but the price difference would have been a lot more than the ~$380 in interest I’ll be paying.

      You are also right about bad credit and high rates. And thanks to modern technology, lenders can now remotely disable a car if the borrower is delinquent. No need for the repo guys.


    South Jersey Short Sale Attorneys

    Will a Short Sale Solve Your Financial Problems?
    When facing a looming home foreclosure, [or when its in your best interest to make it appear so] many people consider a short sale, believing they will be capable of satisfying liens and evading serious debt and credit problems.

    However, not only do short sales require a significant amount of time and expense, they are frequently unsuccessful. Even when a short sale is successful, it frequently only serves as a band-aid — addressing only one component of the overall financial burdens faced by the debtor.

    When you find that you cannot maintain regular payments on your home, [or that its foolish to make the pmts] vehicle or other financial obligations, talk with an experienced lawyer who can evaluate your full financial situation, explain the options available and provide you with the knowledgeable advice necessary to enable you to make an informed decision regarding your financial future.

    Schedule an initial consultation by contacting us online or calling 856-872-4152 to arrange a consultation. We have convenient offices in Northfield.

    Negotiating a short sale is an extremely difficult process that usually involves multiple lien holders. While many homeowners will spend endless hours in an attempt to contact and negotiate approval of a short sale with the primary lender, many times, the secondary lien holders are forgotten. Unfortunately, unless all listed lien holders agree, the short sale cannot move forward.

    Advanced title work is vital in order to ensure all liens, encumbrances against the property and judgments against the property are known. And in many cases, due to the extremely limited time frame in which short sales must be conducted, title insurance companies will require escrow of multiple times the amount of judgment liens against the property in order to ensure the escrow covers the amount of the judgment, as well as accrued penalties.

    The vast majority of short sale negotiations are unsuccessful due to the number of lien holders that are typically involved.

    Unless the property is your primary residence, debt that is eliminated or forgiven through a successful short sale is considered a TAXABLE EVENT that will need to be reported in your next tax filing. However, an equivalent discharge through a bankruptcy filing is not considered a taxable event, and cannot haunt you in the next tax year.

    Additional Pitfalls of Short Sales:
    Timing for occupants to move out: When a short sale is completed, occupants must vacate the property. However, occupants may still be allowed to remain on the premises during foreclosure proceedings, which can last up to a year and even longer.

    For many people, this provides a place to stay while they file for bankruptcy to delay or stop foreclosure and get financial matters sorted out.

    Other financial problems: Most people who start falling behind on mortgage payments typically have financial problems that entail much more than just the mortgage. While short sales may address the mortgage issue — if successful — they cannot address many of the other financial problems faced by debtors, such as overwhelming credit card debt, medical bills, judgment liens or other personal obligations.

    Additionally, a short sale may cause you to incur new financial obligations, such as home repairs, that you cannot afford. Bankruptcy, however, can help you deal with all of your financial concerns and obtain a fresh start.
    Serving All of South Jersey, Our Foreclosure Attorneys Help You Deal With the Whole Financial House, Not Just One of its Rooms.

    In a short sale, everyone benefits — except the debtor. Our bankruptcy lawyers look at the whole picture and help you devise a strategy tailored to obtain debt relief and regain control over your finances.

    We offer flexible meeting schedules and affordable payment plans. Call 856-872-4152 or contact us online to schedule your free initial consultation.

    Mort Loan Mod

    Purposes of a mortgage loan modification are three-fold:
    A new, more desirable interest rate
    A term extension that you can accommodate
    A reduction of principal balance, for long-term relief
    Don’t risk the alternatives to these measures — “short sale” of the home you worked so hard to afford, or foreclosure. Don’t be just another sad statistic in this historic recession. Protect your rights and your investment.

    Hamilton Township Bankruptcy Attorney Rankings — 25 found

  11. I recall mentioning this in an article some time ago Eric:

    “At minimum, that special high-speed/high-torque starter is needed. And it is very possible that down-the-road wear and tear on the engine will be higher due to the constant start-stop cycling.”

    Well, I did mention the extra wear on the starter itself at least.

    One thing I have noticed here in Oz, is that Taxi engines at the end of their (mandated?) service life are often in far better condition than regular cars.

    This could be due to a number of variables, such as regular service intervals which are required rather than left to the ability to pay such as lower class families regularly suffer.

    Or, that some are generally lower compression (perfect for turbo buildups), they exclusively use LPG, AND the fact that they don’t switch off the engine as often, maintaining a more constant engine temp and oiling of parts.

    I’ve seen Taxi engines having done the same 200,000 k’s being nowhere near as tired and leaky as most privately owned cars that are pretty much clapped out at the same distance.

    One thing’s for sure as you mentioned – the constant stop-start at lights isn’t only expensive at the dealer, it’s likely a higher expense further down the road if not only in engine/starter wear, but when the system breaks.

  12. Hi Eric. I found your site from your Tom Woods interview, and I absolutely love it. This article is especially timely for me personally. I’ve been wanting to swap out my 03 subaru wrx for a smaller to mid-sized truck, and find myself completely flustered in the process. I’m highly frustrated with the limited choices, and even with a decent trade-in the most reasonably priced models with the options I’m looking for are hitting near $25k. I’m technically inclined, but never really got into car maintenance. Once my cars hit a certain age I feel like I have the choice of being dependent on mechanics, or slave under the weight of a new car payment. I keep wanting to pull the trigger on a new or gently used Frontier, but can’t bring myself to take on the new debt. Even with the ultra-low interest right now, it’s still pretty crippling to the paycheck. I’ve thought of looking for one that has 75-100k miles on it, but then I think I’m just reduced the payment a bit, and still at the whim of some mechanical failure.

    Anyway, just adding to the rant a bit. 🙂 What would be awesome on the site would be some articles on your opinion of the best years for certain used vehicle models. Or on the flipside, certain years to avoid. Maybe that doesn’t reflect reality since I guess every car has its quirks, but it would still be cool to see your take on slightly older vehicles.

    • Hi Sackeri,

      Thanks for the kind words – and good to have you with us!

      On your dilemma: I would not be reluctant to shop a lightly used (5-7 year old) Frontier (or Toyota Tacoma) with say 50,000-70,000 miles on the clock. These are excellent trucks and provided the one you’re looking at was not abused and maintained regularly, it ought to be free of problems for another 100k, easily. And the buy-in cost will be in the range of 30-40 percent (or more) less than new. That’s a big savings. And, don’t forget to factor in the cost of peripherals such as the taxes and insurance you’d be forced to pay on a new vs. used vehicle….

      The key to finding a good used vehicle is due diligence. Do not buy it before either having thoroughly checked it out yourself (or have had it checked out by someone whom you trust). Ask to see service records. Be guided by your gut. Does the vehicle feel right? Does the seller seem to be a decent person? All the foregoing are not guarantees, but – taken together – will usually cull major risk from the equation.

  13. The conspiracy loving side of me thinks the increased cost of car ownership is simply another way for the government to get us out of our cars and into their lousy (almost universally speaking) “public” transit systems.

    At least out here in Utah, unless you are going to a specific place where “public” transit goes, you’ll use a lot more of your valuable time to get where you are going using that than you would using your own car.

    My own example: driving my car to work takes about an hour each way. Not ideal, but doable. Taking public transit to get to work: 2 1/2 hours each way…minimum.

    • Agreed, Michael – that’s how it was in the DC area when I lived there. I don’t doubt for a moment the conscious anti-car animus behind a lot of this stuff. They’re often very open about it, actually.

      • But don’t you know that mass transit is much more fuel efficient and can help us combat “Global Warming”?
        Hold on a sec while I pull my tongue back out of my cheek.
        Control = Power, that is their (silent) mantra.
        Reading a post a while back on another site about ‘locovores’ and how you can improve your diet without blowing your food budget. I responded that here in the “Free State” of Maryland, being a locovore is more about reducing your carbon footprint.

        • btw, how fuel efficient can it be when you see a bus driving around with no more passengers than a good sized van could carry?
          And don’t get me started about the ADA requirements leading to ‘kneeling buses.’ It would be cheaper to call these folks a taxi.

          • The Utah Transit Authority (UTA), which is the local “public transit” mafia, loves to trumpet the so-called “success” of its train/bus/TRAX system, especially in downtown Salt Lake CIty.

            However, the entire system is heavily subsizided by taxpayers. A person might pay $5.50 to ride the Front Runner train from Ogden to Salt Lake, but the real cost to ride it is something north of $10. The same is true for the buses and TRAX (light rail) system. Outside of downtown Salt Lake City, most of the buses run empty or nearly so.

            Just a rudimentary look at UTA’s financials shows that they do not even come close to generating enough revenue to make a profit. The shortfalls are cleverly made up with grants and other tax revenues. The leadership then pats itself on the back with huge salaries and bonuses. The whole system is a disgusting mess of lies and deception. I’d love to see it disappear, but we all know that won’t happen anytime soon.

            • I should clarify that I did not mean to insult the mafia by equating the UTA and the mafia in the same breath.

              While the mafia does use coersion to get protection money out of you, they will deliver what they promise – protection.

              UTA (and other transit systems)? Not so much.

    • Michael, in my mind the Grabbermint doesn’t really WANT us to give up our cars. They NEED us to continue driving, getting fined for anything in their wet dreams and increasing driving costs through the roof because they owe the World Bank squillions. They SAY that fines go into “improving road safety programs”, which is code for “buying more speed cams and lasers for cops”. Their addiction to these stolen billions is obvious.

      Although they SAY that road infrastructure costs are crippling, this is crap and a weak excuse as can be seen above. Roads are already paid for by fuel excise and just about every other tax imaginable. They just don’t allocate the money for roads as they should, because they’d like to keep more of it for their perks, pensions and election lobbying.

      Here in Oz, we have the same situation where full-sized buses rumble about all day barely 30% full and it’s no wonder, because they take ages to get anywhere useful and often require much walking to get to your ultimate destination. Then try that with a few full grocery bags. Taxi’s are too expensive, especially for pensioners that tend to live off dog food.

      When people were actively encouraged to take rail transport, the system couldn’t cope, which was conveniently sold off by Grabbemint to a private company previously. More conveniently, any time that rail company fails a target, it gets fined millions.

      Makes ya think?

  14. A big problem is the market for decontented new cars is rather small. It’s very difficult to put a new car out on the market without all the goodies, when there is gently used low miles used one with all the goodies a few feet away at the dealership for the same or less money.

    That’s what drives up what remains of voluntary content and one of the reasons why involuntary content has been trickled in.

    • That’s certainly a factor.

      But I’d argue the big “driver” is the normalization of debt in amounts that previous generations would have blanched at.

      $30,0000…. for a car.

      And that’s a fairly average price for a current car. It is absolutely common to see $50,000 and up cars.

      This is more than most American families earn in a year.

      It’s the Hamilton Ideal made manifest: Spend beyond your means; enjoy artificially inflated “prosperity” rather than live within your means, eschewing debt except when absolutely necessary.

      • Debt is the american system of slavery and with cheap credit abounding it drags even those who act to avoid it into it unless they are willing to live poorly. So many people using leverage pushes prices so high that not using it becomes impossible without accepting severe trade offs.

        But with cars, used cars and competition largely keep that in check. We’re largely looking at cost of doing business and what the market demands. Of course market demands would be lower if the masses couldn’t borrow so much.

        Maybe I’m the fool for not borrowing.

          • I keep trying to explain that to people. But the government is helping and how cruel I am to suggest cutting off the loans. Same thing with Obamacare. most people are just too lazy to think it through. the government ‘help’ preserves and increases the prices, round after round.

            • Historically there has been a limit to how much the US gunvermin can tax us slaves – somewhere in the range of 20% of GDP. That’s why they have to keep borrowing more and more. At some point China, Japan, et al, will stop buying Treasury debt. Then we either get hyperinflation as the Fed tries to keep things afloat, or it ALL hits the fan.

              • Except that 20% comes from an ever shrinking percentage of the population.

                In the last crash it was ‘help for the hapless’ how everyone who was prudent had to be punished to help the risk takers that crapped out. The government takes from us to pay their debts.

        • RE: “Maybe I’m the fool for not borrowing.”

          Those were my thoughts exactly as I read the following. How’s it not apply to automobiles as well? Hell, everything?

          “I am generally not a big fan of home ownership from an investment perspective, but for those considering a housing purchase, this winter may be an ideal time to buy. We have had a significant slow down in money supply growth, fewer people are considering buying houses than before the financial crisis of 2008, interest rates are extremely low and given a long-term perspective price inflation will return and make any housing purchase a bargain at current prices.”

          >Ahref=””>given a long-term perspective price inflation will return

          • Houses are different than cars, because they at least have the potential to hold their value, maybe even increase some – not guaranteed, but possible. Especially given the gunvermins penchant for devaluing the dollar.
            Cars ARE going to depreciate. A new one does so quite a bit as you drive off the lot. Its a little better now as far as life expectancy. Back in the days of the 3-yr. loan, you often had to be careful that the car was still driveable when it was paid off.

            • RE: “Houses are different than cars, because they at least have the potential to hold their value”

              That’s quite contrary to the facts presented by a lot the guys at

              Some owners of antique cars might disagree, too.

              A house is a depreciating liability, same as a car.

              “the gunvermins penchant for devaluing the dollar” is The question, imho.

              • When I said cars I was referring primarily to new ones. Besides, good luck getting a bank loan to buy a collectible. Not to mention that most guys I have talked to with restored cars, even if they did the work themselves, have much more invested than it would ever sell for, unless you put NO value on your time.
                Also, I said the house MIGHT at least hold its value, but that’s assuming it was not overpriced to begin with, which a lot of them still are even after the ‘meltdown.;
                How much would the payments be, and how much could it be rented for? And don’t forget “opportunity cost” – what other investments would you have to pass on in order to buy the house.
                Also, though I forgot to say this before, rental housing can be a good investment, but not owner-occupied property. It may or may not be better to rent your dwelling, do the math. Also, if you are married, how much more might you be willing to spend on housing just to keep the wife happy? You will never get that back, but if you have the wherewithal, it might make YOUR life better.

              • Hi Helot,

                You make a valid point. But, cars (excepting classics) are pretty much guaranteed to lose almost all their value over time. A house may lose some of its value due to cyclical fluctuations, but – unless it’s the hood/Detroit – most homes will at least retain significant portion of their value and it’s a decent bet that the house you bought will at least be worth about what you paid for it after several years, and there’s a decent chance it will be worth more.

                That’s a lot tougher with a car – excepting classics/exotics.

                • Hamilton, New Jersey.
                  Bought: 2007:
                  5 bedroom expanded Cape Cod
                  ~2500 sq ft IIRC, 0.3 acres
                  Paid: ~$300K
                  Good school district, high school on the next corner
                  fully residential area, family-based neighborhood

                  Current value:
                  ~ $180K

                  Zero equity, even after keeping up with the payments.

                    • Worse yet, the woman is co-owner. My $$$ was the downpayment; my credit history made for the terms; my income paid the mortgage and bills; and when we defaulted, it was again MY job that kept us afloat.

                      She gets to decide whether or not to work….
                      I get to pay for her decision.

                      Anyone know of a good source of cyanide…? I think I have a right to feel a bit used and exploited…

                • Seems like in small towns almost every new house I see is made off-site. It’s common to see $60-70,000 vehicles parked at them. Common to see fifthwheel RV trailers there too close to the same price. I’d guess most of the houses are the same price. Changing values for a great many and I can see the logic for many people in doing this. No job is secure these days so dragging out the old Chevy pickup from the 90’s that still runs good and keeping the house is a good trade-off when jobs dry up.

          • Yeah I saw that from Wenzel and it struck me as bit odd to be there, but then again he’s big on seeing inflation everywhere. I’ve already been burned by that line of thought and really at this point price inflation doesn’t hurt me because what I have will go up with what I would buy while a bust it would go down with it. But in a bust I borrow less, maybe not at all.

            Maybe I am a fool for not going deeply in debt, but the problem is, what happens if work dries up? The monthly payment mentality means being tied to the system in a way I don’t want to be tied to it.

      • Eric,

        To put this all in perspective. In 1974 i built a house for my parents on 2 acres of land for less than 20k. That’s land and all. The evil debasement of the currency is what is to blame for all this. Nothing more nothing less.

        With great evil comes no responsibility. This is on display daily now as agents of the state make sure everyone knows who’s in charge.

        David Ward

  15. Because China’s prices are so much lower, their demand curve hits their supply curve at a far higher point. Their society produces and consumes more goods and services than us. At this very moment the Chinese share a larger pie, but of course there are 1.4 million of them and only 318 million of us.

    Cost of Living in China
    Restaurants Avg.
    Meal, Inexpensive Restaurant 3.75
    Meal for 2, Mid-range Restaurant, Three-course 24.48
    Combo Meal at McDonalds or Similar 4.24
    Domestic Beer (0.5 liter draught) 1.31
    Imported Beer (0.33 liter bottle) 3.50
    Cappuccino (regular) 4.42
    Coke/Pepsi (0.33 liter bottle) 0.56
    Water (0.33 liter bottle) 0.34
    Markets Avg.
    Milk (regular), (1 liter) 2.15
    Loaf of Fresh White Bread (500g) 1.70
    Rice (white), (1kg) 1.05
    Eggs (12) 1.89
    Local Cheese (1kg) 14.33
    Chicken Breasts (Boneless, Skinless), (1kg) 4.20
    Apples (1kg) 1.84
    Oranges (1kg) 1.78
    Tomato (1kg) 1.27
    Potato (1kg) 0.93
    Lettuce (1 head) 0.67
    Water (1.5 liter bottle) 0.63
    Bottle of Wine (Mid-Range) 13.06
    Domestic Beer (0.5 liter bottle) 0.73
    Imported Beer (0.33 liter bottle) 2.24
    Pack of Cigarettes (Marlboro) 2.45
    Transportation Avg.
    One-way Ticket (Local Transport) 0.33
    Monthly Pass (Regular Price) 17.55
    Taxi Start (Normal Tariff) 1.71
    Taxi 1km (Normal Tariff) 0.39
    Taxi 1hour Waiting (Normal Tariff) 5.71
    Gasoline (1 liter) 1.29
    Volkswagen Golf 1.4 90 KW Trendline (Or Equivalent New Car) 24,481.80
    Utilities (Monthly) Avg.
    Basic (Electricity, Heating, Water, Garbage) for 85m2 Apartment 55.61
    1 min. of Prepaid Mobile Tariff Local (No Discounts or Plans) 0.05
    Internet (6 Mbps, Unlimited Data, Cable/ADSL) 18.61
    Sports And Leisure Avg.
    Fitness Club, Monthly Fee for 1 Adult 38.96
    Tennis Court Rent (1 Hour on Weekend) 13.66
    Cinema, International Release, 1 Seat 11.42
    Clothing And Shoes Avg.
    1 Pair of Jeans (Levis 501 Or Similar) 100.25
    1 Summer Dress in a Chain Store (Zara, H&M, …) 50.47
    1 Pair of Nike Shoes 106.80
    1 Pair of Men Leather Shoes 99.49
    Rent Per Month Avg.
    Apartment (1 bedroom) in City Centre 628.15
    Apartment (1 bedroom) Outside of Centre 346.99
    Apartment (3 bedrooms) in City Centre 1,366.61
    Apartment (3 bedrooms) Outside of Centre 739.86
    Buy Apartment Price Avg.
    Price per Square Meter to Buy Apartment in City Centre 5,532.22
    Price per Square Meter to Buy Apartment Outside of Centre 2,754.15
    Salaries And Financing Avg.
    Average Monthly Disposable Salary (After Tax) 739.47
    Mortgage Interest Rate in Percentages (%), Yearly 6.18

    Cost of Living in United States

    Meal, Inexpensive Restaurant 10.00
    Meal for 2, Mid-range Restaurant, Three-course 45.00
    Combo Meal at McDonalds or Similar 6.50
    Domestic Beer (0.5 liter draught) 3.50
    Imported Beer (0.33 liter bottle) 5.00
    Cappuccino (regular) 3.68
    Coke/Pepsi (0.33 liter bottle) 1.62
    Water (0.33 liter bottle) 1.29
    Markets Avg.
    Milk (regular), (1 liter) 1.01
    Loaf of Fresh White Bread (500g) 2.43
    Rice (white), (1kg) 3.05
    Eggs (12) 2.32
    Local Cheese (1kg) 9.53
    Chicken Breasts (Boneless, Skinless), (1kg) 7.81
    Apples (1kg) 3.83
    Oranges (1kg) 3.76
    Tomato (1kg) 3.85
    Potato (1kg) 2.41
    Lettuce (1 head) 1.58
    Water (1.5 liter bottle) 1.77
    Bottle of Wine (Mid-Range) 12.00
    Domestic Beer (0.5 liter bottle) 2.31
    Imported Beer (0.33 liter bottle) 3.31
    Pack of Cigarettes (Marlboro) 6.00
    Transportation Avg.
    One-way Ticket (Local Transport) 2.00
    Monthly Pass (Regular Price) 69.00
    Taxi Start (Normal Tariff) 3.00
    Taxi 1km (Normal Tariff) 1.55
    Taxi 1hour Waiting (Normal Tariff) 30.00
    Gasoline (1 liter) 0.96
    Volkswagen Golf 1.4 90 KW Trendline (Or Equivalent New Car) 21,000.00
    Utilities (Monthly) Avg.
    Basic (Electricity, Heating, Water, Garbage) for 85m2 Apartment 160.37
    1 min. of Prepaid Mobile Tariff Local (No Discounts or Plans) 0.16
    Internet (6 Mbps, Unlimited Data, Cable/ADSL) 47.06
    Sports And Leisure Avg.
    Fitness Club, Monthly Fee for 1 Adult 39.48
    Tennis Court Rent (1 Hour on Weekend) 18.01
    Cinema, International Release, 1 Seat 10.00
    Clothing And Shoes Avg.
    1 Pair of Jeans (Levis 501 Or Similar) 41.18
    1 Summer Dress in a Chain Store (Zara, H&M, …) 35.99
    1 Pair of Nike Shoes 77.23
    1 Pair of Men Leather Shoes 84.57
    Rent Per Month Avg.
    Apartment (1 bedroom) in City Centre 1,028.03
    Apartment (1 bedroom) Outside of Centre 772.33
    Apartment (3 bedrooms) in City Centre 1,735.31
    Apartment (3 bedrooms) Outside of Centre 1,305.59
    Buy Apartment Price Avg.
    Price per Square Meter to Buy Apartment in City Centre 1,897.93
    Price per Square Meter to Buy Apartment Outside of Centre 1,255.03
    Salaries And Financing Avg.
    Average Monthly Disposable Salary (After Tax) 3,299.54
    Mortgage Interest Rate in Percentages (%), Yearly 4.21

  16. If the gunvermin is enslaved to perpetual debt, why should we serfs expect any better. Same with perpetual war – coming soon, if not already there, to a PD near you.

  17. Auto finance is a joke. You don’t borrow money to buy a depreciating asset… What percentage of Americans can comfortably stroke a check for $30K?

    • Virtually none!

      IIRC, the average American family’s gross income is something like $55k. It doesn’t leave a lot of discretionary money for other-than-essentials.

      I rant at every opportunity about the government-imposed dearth of low-cost new cars. In “unfree” countries (e.g., China) one can buy a brand-new car for around $8,000 or even less. The least expensive new car available in the U.S. starts around $12k.

      Why aren’t “free” Americans allowed to freely choose the cars that best meet their needs and budgets?

  18. Brand new 1971 VW beetle with AM/FM radio & cocoa mats $1999.00 +tax. Down payment $300.00 cash (I think), 36 payments of $71.00/ mo.

    Can’t wait for socialism to die a horrible self imposed death.

    • Yup.

      If anything, a basic car such as the ’71 Beetle could be built and sold today for great deal less than it sold for back in ’71.

      I just mentioned to Jeff (see post below) that one can buy a new car in China – a new GM car, with a water-cooled, “modern” engine and power amenities – for under $10k.

      I have no doubt that if VW were allowed to re-open the old Beetle factory and produce a “new” Super Beetle, it could be sold – at a profit – for about $7,500.

      • eric, this summer I noticed a Buick, about 12-14 years old, really nice, kept perfect with original paint and everything. There was a phone number on it as it was parked in a parking lot on a major highway. I’ll call that I said as I passed by, the next time I got by and can get the number. I went down that road at least once, and probably many times most days. I saw it later that day and said a dammit cause I didn’t remember it was there so stopping and going back in a loaded big rig is a pain. So the next day I remember and am prepared to get the number. I never saw that car again. This is fairly common these days.

        BTW, yesterday while playing “pass me, then I’ll pass you cause you’re too stupid to drive” with fly catchers in their Camry’s I saw a really nicely kept Buick sedan of about ’99 or 2000 model, one of the better looking body styles. The old man played that same game(I have no idea what the hell these people are doing)so I got to see the same set of whitewall tires several times. They went well with the fake chrome spoke wheel covers. They stuck out like a diamond in a goat’s ass. I realized you NEVER see whitewall tires any longer.


Please enter your comment!
Please enter your name here