[seminatl]

This is a weird summary because everyone who buys a car on credit is always “underwater”. The cars are never worth the balance of the loan. People buy cars on credit not because the car has intrinsic value or is an investment, but because it gives them access to other things of value, like their job.

I’m concerned, of course, that Americans have built a society with so few buses that everyone has to buy a car on credit. But being “underwater” is not the main problem here.

[shantly]

> I’m concerned, of course, that Americans have built a society with so few buses that everyone has to buy a car on credit. But being “underwater” is not the main problem here.

More specifically, we've built cities that are pretty awful for bus (or rail) transportation, if you thrown any sane amount of money at the public transit system. Most of our cities have been relying on inefficient (i.e. very spread-out, low-density) growth patterns to cover costs, while the long-term expenses demanded by that growth (maintenance, for example) outpace the revenue it brings in. It's musical chairs, and when the music (growth) stops most of the cities in the US are going to be Detroit, with way too much city for their tax base to support.

Huge, low-density cities lead to shitty, expensive services (bus service being but one example) and crippling, indefinitely-ongoing maintenance expenses.

[ttraub]

Buses are a relatively decent solution for a city lacking in public transportation infrastructure. For example, Phoenix (where I live) has a network of north-south and east-west buses that can get you, eventually, to anywhere in the valley (Uber/Lyft can fill in the gaps). I normally drive, like 4 million others, but several times I've taken the light rail from Sky Harbor to midtown, then a couple of buses to my destination many miles north of the airport, and I was impressed by how easy it is--and how underutilized.

Perhaps we can mitigate many of our urban problems--pollution & greenhouse gases, road congestion & traffic accidents, and consumer debt--by investing in electric or NG buses.

[erik_seaberg]

“Eventually” is the problem. I have a 35-minute commute if I wait out rush hour, but it's two hours by bus. Each way. If I get lucky with both transfers. Average speed: 11 MPH.

[hackeraccount]

I've never checked but I don't think I've ever been underwater on a car loan - I finance but not 100% of the price - it's more like 50% - whatever the value of the trade plus at least a little bit of cash that I bring to the table.

That said I tend to agree that "underwater" isn't really the right concept for a car loan. Unless of course you total a car right after you get it. Sucks to be putting $ towards a car note with nothing behind it.

[derision]

Yeah, you're definitely the exception. The vast majority of people are not putting 50% down on a car..

[seminatl]

That’s just time-shifting. You paid in opportunity cost to move those payments backwards in time. This may have been rational for you, since it lowers the risk of the loan I.e. you can always walk away from such a loan when it is backed by a sufficiently valuable asset. But this doesn’t change the fundamental equation.

[astura]

>everyone who buys a car on credit is always “underwater”. The cars are never worth the balance of the loan

In my early years I once took out a loan for a car. I've never once been underwater on my loan. You're only underwater at some point if you put down a small/no down payment and pay the minimum amount due every month.

The topic of this article is people rolling the balance of their previous car loan into their new car loan. So they are underwater before they drive it off the lot, sometimes by a LOT. That's scary! Its basically running on a treadmill that always accelerates.