Why Can’t The Average Family Afford A Car?

Posted by at 5 May 2017, at 10 : 31 AM

Why Can’t The Average Family Afford A Car?

The auto industry is booming, even if it has experienced a few peaks and troughs in the past year or two. In fact, more and more people are buying cars at a higher rate. This might seem as if the average person can afford a new motor, but the truth is they can’t. An individual on minimum wage will have to scrape and save every month just to get by, and that isn’t affordable. So, what makes owning a car expensive in 2017 as opposed to the past? Here are just a few of the variables to watch out for the next time you go to the dealership.

Higher Starting Prices

Do you remember when a car could cost you $500? It was so cheap that you could pay them in cash. Nowadays, Marketwatch.com points out you’ll be lucky to find a new motor that is lower than $5,000. The retail prices are on the surge, and there is a very good reason. Demand is outstripping supply at the moment, and the car industry is only too happy to oblige. Why? It’s because they can charge more without anyone asking any awkward questions. There is another reason, and it has to do with used cars. Today, the used car market is huge, which means there are no bargains anymore. A seller that has a used car can get a competitive price from a dealership which will then spruce it up and sell it on for a profit.

Strict Lending Rules

Unless you have good or great credit, you aren’t getting a loan from a reputable lender. Yep, the banks will just laugh you out the door because you don’t fit the criteria. But for resources like https://www.approvenow.com/bad-credit-auto-loan, massive amounts of people wouldn’t have the cash to buy a car in the first place. The problem is that far too many wannabe car owners don’t know about companies that will lend to people with bad credit. As a result, they go out of their way to secure deals with establishments that have dodgy terms and conditions. Some even go to loan sharks, which is a terrible idea.

Longer Loans

Five and ten years loans are a relatively new phenomenon in the auto trade. Even as late as the mid-2000s, it was possible to get a year long loan or even a six month one. A contract of this length meant the owner could pay it off as quickly as possible without incurring any additional costs. With longer loans, that isn’t possible. To begin with, the initial price of the loan is higher because of the rise in car prices. More importantly, longer loans have longer and higher interest rates. That means the add-ons inflate the amount you have to pay by the end. By the time the loan finishes, you might have to fork out an extra couple of thousand dollars, money most people don’t have under their beds.

Does any of the above sound familiar? If it does, ask yourself one question: ‘do I need a new car?’

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