[gateorade]

The numbers suggest this is false, for the US at least. The oft-repeated study comes into mind that 47% of Americans can't cover a surprise 500 dollar expense without it being a major worry. See also the fact that the average new car purchased in the US today is 50 grand. I know I'm comparing apples and oranges here but if both those stats are true then it's clear there's likely a large overlap between people who are broke and people who are driving expensive cars.

Aside from that, there's the fact that if you can actually afford it, then it's likely better to finance than to pay cash because you can invest the full purchase price of the car for a higher return than the interest you would pay.

[Retric]

On average a new car buyers keeps their car 8.4 years, while cars are lasting 25 years. Thus new car buyers are literally quite different than the average American.

Anyway, that’s an unexpected 500$ expense. My point was people financing a 50+k new car could fairly easily buy a 17,600 car out of pocket by waiting a little longer before purchase. Large scale changes in purchasing habits would have significant knock on effects for the used car market, but that’s another story.

[beowulfey]

Did you mean buying a new used car vs a new car? That would financially be a better choice for most americans, yes. But of course you then run into the uncertainty of how long the used car you buy might go before it needs major service. A riskier option that loosely reflects the Pratchett/Vimes “new boots” theory.

[Retric]

No, I meant the cheapest new car vs the new car they can reasonably finance. The cheapest new car is generally cheaper than a nice used car and it’s got a vastly lower cost of ownership.

Holding off on a X$/month car payment on a 50k car can very quickly turn into a new 18k car. Continuing to put away that same car payment and you’re able to buy a 50k car out of pocket quite soon. Essentially financing doesn’t make expensive cars more affordable it simply allows people to buy them sooner.

[gateorade]

I guess I misunderstood your point. I was thinking you were saying that you thought most people walking into a dealership and getting loans a on 30k+ new car could afford to pay cash instead. For the same car.