Why People Choose Junk Cars Despite Cheap Prices in America and Europe
Car affordability has been a hot topic in recent years, with the cost of new cars in the United States reaching extraordinary heights. Contrary to popular belief, not everyone can afford a brand new car, and many must opt for used vehicles that might not be in the best condition - commonly referred to as 'junk cars.' This article explores why people in wealthier regions like Europe and America are still purchasing junk cars when they are apparently cheap.
Cheap Cars vs. Junk Cars: What's the Difference?
The term 'cheap cars' can be misleading. What is considered a 'cheap car' is relative to one's financial situation. While new cars in Europe and America might not be considered cheap, they are indeed expensive. Only 21% of cars sold in the US are new, meaning the majority of vehicles on the market are used. The best used cars are often found at new car dealerships but are often beyond the budget of many consumers. These individuals often opt for any junk car they can afford, no matter how old or in need of repairs.
Relative Affordability and Public Transportation
Affordability is subjective and largely depends on your income. For instance, new basic cars in Mexico may seem expensive by U.S. standards but are relatively affordable in Mexico. However, in the United States, where public transportation infrastructure is limited, owning a car is nearly essential. Without reliable and accessible public transportation, the choice of junk cars becomes more practical for many.
Financial Strain and Income Constraints
The financial strain faced by individuals in the United States is significant. According to recent reports, 78% of full-time workers are living paycheck to paycheck, an increase from 75% last year. Furthermore, 71% of all U.S. workers are in debt, up from 68% in the previous year. Consistent with these trends, 69% of Americans have less than $1000 in savings. These statistics highlight the challenging financial conditions that many face.
Digital and Financial Inclusion
Financial inclusion is another factor that affects car affordability. According to a 2016 GOBankingRates survey, 35% of all adults in the U.S. have only several hundred dollars in their savings accounts, while 34% have zero. Only 15% have over $10000 stashed away, and over 40% have less than $10000 saved for retirement. Additionally, 1.7 billion adults worldwide do not have access to a bank account, and 30 million Americans do not have a credit card. This underscores the financial constraints that many face in making significant purchases like cars.
Alternative Paths to Car Ownership
For those who struggle to afford even junk cars, alternative paths to car ownership may be limited. In scenarios where individuals have children or no real job, a 500 to 1000 dollar junk car might be the only affordable option. Despite the challenges, car ownership remains essential, especially in regions with limited public transportation options. This necessity contributes to the high demand for junk cars, even when new cars are cheaper in other regions.
Conclusion
The choice to purchase junk cars in America and Europe, despite apparently cheap prices, is a result of multiple factors including financial strain, income constraints, and limited public transportation options. Understanding these factors can shed light on why car affordability remains a critical issue for many in these regions.