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Comment by imagist | Hacker News Reader

I can't speak for most American millenials, but my options are:

1. Buy a $5000 car up-front, which is an expensive up-front cost for me (and more than most people my age have in savings). If I've been careful in investigating the car, it will work most of the time and only cost me $500/year in repairs.

2. Buy a $20K car for $2000 up-front, taking on $18K on top of my student loans, which, frankly, I"m just not going to do. I've been shit on by banks enough for one lifetime.

3. Keep my savings, use public transit, and have enough financial stability that I could lose my job for a few months and not be homeless.

And for the record, I'm a software dev; I make almost twice as much salary as most of my peers.

My Macbook Air cost me $1200. My $2000 Macbook Pro was paid for by my job. Most of my peers buy <$1000 PCs. And laptops are cheaper to repair and don't require gas, insurance, or a license.

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>1. Buy a $5000 car up-front, which is an expensive up-front cost for me (and more than most people my age have in savings). If I've been careful in investigating the car, it will work most of the time and only cost me $500/year in repairs.

Is this accurate for the US? I live in an expensive European country and a used car around that price would cost next to nothing in annual repairs, unless you really drove it a lot. Do you need to pay $5k up front? It's common here to take loans for used cars.

> Is this accurate for the US?

I looked up my own stats on this for you. Note: I have a used car that cost me around $8k.

I spend about $500/yr for maintenance.

I don't drive very often (I bike to work and walk for groceries/to bars -- the car is left-over sunk cost from a previous life, and now only used for inclement weather and weekend get-aways). So oil changes and tire rotations are only a small fraction of that (maybe 100-200).

So repairs probably cost around 300-400/yr for me. And that's only driving very rarely.

It's worth noting that I'm probably upper tier on the used car repair spectrum. I live in a cold climate -- much harsher than everything in Europe except the Nordic countries. I also live in a poor city that can't afford to take care of its roads. This combo is pretty devastating from a maintenance/repair perspective. E.g., I need good winter tires and they take a true beating. Also, salt.

The last car we bought was a used vehicle that cost about $8k a bit more than a year ago. Since then, including repairs, we have probably spent about $700 on maintenance. But that also includes a new set of tires, which should last longer than a year. That car is driven every weekday, with a minimum distance of 20 miles.

The US ran an incentive program a while ago called Cash for Clunkers that basically took a lot of used car inventory permanently out of circulation, as a political favor to the auto manufacturing industry. That drove the prices of the surviving used cars way up. And since many of the destroyed cars were more owner-serviceable than newer cars, that also increased the average cost of maintenance.

The cheapest new car in the US market, the Nissan Versa, retails above $14k. That's 27% of the median household income in the US. The average US household spends $3k per year for vehicle purchases, $2400 for vehicle fuel and other consumables, and up to $3k on insurance, maintenance, licensing, and other transportation-related costs. That means that the overwhelming majority of the US could not purchase a new car without a loan, even if they wanted to.

This is likely a good portion of the reason why younger folks don't own cars at the same rate as older generations. Cars got more expensive, even as education costs skyrocketed. When the economy says you can't have anything nice without taking a big dose of debt with it, it is easier to say, "Okay, well, F U then; I'll educate myself using the Internet, sleep in a cupboard under the stairs, and skate to whatever work I can find that isn't already done by robots."

> Do you need to pay $5k up front? It's common here to take loans for used cars.

No, you don't have to pay $5K up front; you could take out a loan, but typically if you're taking out a loan you're buying from a dealership, and you aren't going to find a good $5K car at a reputable dealership. What you're looking for when you shop for a $5K car is a 10-year-old for-sale-by-owner car that the person left in their garage and didn't drive much.

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