Also wanted to add, A lot of it may be explained by the way expensive cars attract your attention in a poor neighborhood while in a nicer neighborhood you never notice them. I felt like expensive cars are fairly common in the housing project I linked to above but it took me a couple of minutes on google street view to find an example.
Some people in these areas might be more likely to intentional buy a car that looks more expensive than it actually is as status symbol.
Yeah, what is it with rich people buying Corollas? I once went in to a rich neighborhood and saw Corollas and I don’t get it. Should everyone in a rich area have a Beemer in the driveway?
+1. Luxury cars depreciate like it’s their job. A 7-series BMW cost something like $85k new. 12 years later with 130k miles it’s a $6500 car. The great thing about it is that it still looks like a BMW, and it’s big, so it does exactly what the buyer wants it to do: project an image of wealth.
It’s not at all interesting that people in low-income areas can afford $6500 cars. What is interesting is that they’re completely willing to ignore all the reasons that the $85k car is now only worth 7.5% of it’s sale price from 12 years ago; namely, it’s going to break soon, break often, and break expensively. It’d make a lot more sense to spend that $6500 on a gently used Saturn Ion or something, but if everyone made sound financial decisions all the time the world would be boring. And if I had to choose between a 12 year old Bimmer and a Saturn Ion, I’d take the Bimmer in a heartbeat.
It’s not just a city thing. I live in a rural, or at least semi-rural, area where there was essentially no zoning until about 10 years ago. Because there was no zoning, some land got broken up into acre or even smaller tracts, often with 1970s single-wide mobile homes. Many of these people have very newish Ram 2500 4x4 extended cab diesel pickups parked out front. No, they are not farmers. Most don’t have jobs at all. I drive a 1990s Nissan Sentra with 190k to work every day.
Wow. That was eye opening. I just did a quick search on edmunds for used cars under $15,000. It is amazing how many 7-8 year old luxury cars you can buy for that price. Since most manufactures update models every 5 years or so an 8 year old model can look nearly identical to one that is two or three years old.
Why buy a new Honda fit when you can get a 2008 jaguar for the same price?
Well, cost of ownership for one thing. According to edmunds the approximate five year cost of ownership for a 2008 jaguar is $52,000. The Honda fit is much less at $33,000. Even nicer new cars like the Mazda 3 and Honda accord are much cheaper to own at around $36000 five year cost. It looks like edmunds only does five year cost to own back to 2008 models but I am sure the older luxury cars are just as bad.
Still, most people I know who are decent with money have a hard time getting past the initial price when comparing cars.
I wonder how much less the cost of ownership is if you are willing to drive around in a car with a window that doesn’t work, shocks that should be replaced, dash lights out, no a/c, etc.(or simply can’t afford to repair these items) Also how much of this is a case of people being stuck in a bad neighborhood because the car that looked like such a great deal initially is costing so much to keep on the road.
I wonder how well maintained a car is if its owner bought it with the intention of dumping it for a quarter of its value in four years. I wouldn’t be surprised if a lot of these vehicles have had no basic maintenance and went on the market the first time they had a significant break-down.
Lots of factors at work:
Rich people live in places with HOAs that require that all the cars, nice or otherwise, be kept in garages, with the door closed except within 30 seconds of the car actively entering or leaving said garage. Low rent neighborhoods often lack garages, much less HOAs, so if anyone has a nice ride, you see it parked on the street or in the driveway.
It is pretty easy to repo a car vs. a house, so it is a lot easier to get a car loan than a mortgage.
In some cases people have lots of friends, or feel comfortable with their own ethnic or religious group, so when their economic circumstances improve, may stay in the ghetto rather than move on up to a deluxe apartment in the sky. If you greatly improve the exterior of your abode beyond the surroundings, guess which one will be robbed? This is one reason for the “shitty outside, nice inside” effect mentioned earlier in the thread. Nice furnishings you can take with you when you move, but exterior improvements don’t help property value much if you are in a bad neighborhood.
Used “luxury” cars can be great deals. Mechanics don’t make a lot of money, so it is likely that poor people have a friend or cousin that can fix the thing cheap, so the poor folk don’t spend $$$ at the dealership to keep the thing running. Daddy Warbucks only knows the first name sewn onto the shirt of the service manager at the dealership, and wouldn’t know an actual mechanic if he tripped over one’s foot sticking out from under the car.
Likewise, Jr. gets an employee discount at the carwash, Or cousin Joe does detailing and window tinting, so you can keep it looking sweet without spending too much. If the gas mileage is poor, that is an issue, but you can charge/barter with your neighbors for rides, and that helps a lot.
Not everyone in a “bad area” consider themselves stuck. A lot of people would like to build up their neighborhood and bring positive change, rather than fleeing the moment they get a few dollars in their pockets.
Some of this was explored in these other recent threads as well:
Why are large aftermarket wheel rims so popular in low income areas?
Cite?
All cars have things that can break and the car will still be functional as a car (basically everything but the power train). But if the engine or transmission goes, you no longer have a functional car. I’ve never seen any data that indicates that luxury cars power train lasts longer than midrange or budget cars.
In fact, the most reliable cars in the long run are generally midmarket Toyotas, Hondas, and (lately) Fords.
Ram diesels are considered a maximum virility vehicle in most truck-drivin’ circles. Those things are $%^ expensive, > 60K for a fully loaded one.
I can attest to the plausibility of this. The two houses I’ve ever been in that looked like that on the outside both seemed very nice on the inside.
Not necessarily that they had expensive things, but rather, they took very good care of the things they had.
One of the people living in one of the houses, after I remarked on this (I was a kid…) said they did it so no one would target them for theft.
As a friend of mine is fond of observing: “Fords run like crap, but they run like crap forever.”
A quick search on Cars.com (NADA prices are a lot different, however)
2002 Escalade with about 125,000 miles = around $11,000
2002 Camry LE V6 with about 125,000 miles = Around $10,000
So if you have $10,000 you want to spend on a car, which one would you get: Luxury yacht or dependable & dull? Point is, used cars have a wide price range depending on condition. If you know a guy who can squirt paint reasonably well you can get a dog for pretty cheap and make it look really nice (from 20 feet) for just a few hundred bucks.
Also, these cars are not that complex that a home mechanic can’t work on them. It’s cheap and easy to get engines and transmissions from junkyards and install them your self.
It’s alot easier to keep them running than most people think.
Drug dealers and pimps want/need nice cars. Real property has too much paperwork, impossible to buy with cash.
This would only account for a part of the picture, of course.
What percent of the urban poor do you imagine are pimps?
I strongly urge anyone who doesn’t understand some behavior poor people exhibit to read that article. Although clearly meant to be funny, it also happens to be one-hundred-percent accurate, down to the comment about how sudden cash windfalls cause a “panic” reaction.
Well, I personally buy dependable and dull. I realize that not everyone makes that decision, but I think the’yre being foolish. If you only have $10k for a car and you have to buy a ten year old car with 100K+ miles on it, can you really afford a car that gets a combined 12 mpg? That seems like a pretty wasteful decision.
WIC