I think the “average guy” has a car loan for 72 out of 79.3 months. I don’t think you want to BE “average guy” but “above average” guy.
Long live Above Average Guy! 
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There is much truth to that as well 
Don’t forget the old story about the guy who had his head in the refrigerator and his feet in the oven but on the average he was quite comfortable. “Average” can be a very misleading statistic. I actually tend to think that most consumers tend to make reasonable decisions given their particular situation. If you trade cars every four years with a four year loan, you are likely to have trade-in value and not be upside down. If you trade with a ten year old car though and a four year loan, you are likely to be upside down at some point because the trade will have little value. Which makes more sense? Depends on the situation. Just being upside down isn’t necessarily an indicator of irresponsibility. Besides there is now gap insurance that can minimize the risk.
I’ve never worried about it actually and I’m quite sure when I traded my 20 year old car with 500K on it, that I must have been upside down at some point.
I like that, and I do plan to use that parable in the future.
Somewhere I saw a good way to figure out how much car one can REASONABLY afford: take the monthly payment one can reasonably handle, multiply it by 36, then add in the available down payment plus trade in value for the existing car. That’s the out the door price (approximately) of the car one SHOULD be considering, with a 36 month payment. Sure, it misses the interest expense, but at 36 months it should be fairly close.
Keep that car for, say, 10 years, saving up the next down payment in years 4-10, and repeat.
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I know exactly how much car I can reasonably afford. And, lucky for me, it’s sitting in my driveway!
Truth is, there are far too many people, often young people, try to finagle a way to have a car they want (usually because it’s fast and/or cool looking) rather than considering what they really need and starting the search at the bottom of the target segment’s price range. I used the word “have” rather than “buy” intentionally… sadly, way too many kids lease a snazzy car when they could have easily bought a new car for less per month and owned it outright after the loan period. Every time I see a kid in a fancy Mustang, Camaro, Challenger or Charger with a big V8, scoops, and spoilers, I wonder if it’s leased… and if he’ll be in for a big shock when the lease runs out. They suddenly come face-to-face with the fact that they own NOTHING, not even equity!
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If banks were unable to hold purchasers liable for automobile finance debt beyond repossessing the vehicle there would suddenly be a new basis for determining what customers could afford.
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LOL, you’re probably right!
And you bring up an excellent point. Many kids don’t understand that if their car gets repossessed, they still owe the difference between what the lienholder can recoup from the sale of the vehicle and the balance of the loan… plus perhaps legal expenses. 
I am 75 years old and never owned the car I wanted. When I was younger, my finances dictated the car I drove. I always paid cash for cars, so in my younger years, I bought used cars. Now, my interests and utility dictate that I drive a minivan. When I was in my 20s, I wanted an Austin Healy Sprite, but that car didn’t fit my needs or budget. I also didn’t have the time to do the upkeep or maintenance. Now that I could buy the Austin Healy Sprite equivalent, the Mazda Miata, it wouldn’t work for my musical interests where I am always transporting my musician friends and their instruments. I learned at a young age not to be a slave to my possessions, but to have things that serve my needs and interests.
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Funny kind of, I do not like red because many things I ended up buying turned out to be red, 71 nova with a black vinyl roof, ranchero cause I needed to haul wood to heat the house, 73 nova, was actually maroon, but close enough, hand me down red sweater, shirts etc. I wanted to get rich enough not to have to buy something that was red because it was the best deal. Guess I made it because we have a black and a blueish car, ouch
It’s been a long long time since I financed a car or motorcycle. I usually just pay cash, if I don’t have enough, I can’t afford the car.
Let’s see, that makes at least seven motorcycles and six cars that I bought without taking out a loan so far.
It’s good to live in the black!
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Back in 1972, my first wife and I had tenure track faculty positions, owned 5 acres in a great location and wanted to have a house built. The estimated cost for building the house was $25,000. I wanted to surrender the deed to the land as a down payment to have the house built. There was no way the bank would lose if we defaulted. The first question we were asked was where had we established credit. I had bought a hide-a-bed and chair six years earlier at a local furniture store. The proprietor suggested I buy the furniture on a 90 days same as cash basis so that we could establish credit. The store.carried the note and I paid it off in 90 days. I showed the paper to the loan officer who told me that wasn’t good enough. I then showed him my AMOCO credit card and the proof that I paid it in full every month. That.wasn’t good enough. He then.asked me where I financed my car. I replied that I had paid cash for the car. He then asked me what kind of car I drove. I said that we had a 1965 Rambler. The loan officer looked at me indignantly and said “Why do professional people like you drive an old car like that?” At that point I hit the ceiling. I responded, “So I don’t have to borrow money fr people like you. If it isn’t good enough that I own the land.outright, that I always pay my bills and if I defaulted, you would have a house and land worth at least $35000, I don’t need your money. I will save until I can have a foundation put in place. I will then save until I can have the house framed and enclosed. I will then finish the house myself. I can do the wiring,plumbing, and drywall and will do one room at a time as I save the money”. We got the loan.
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I was 26 when we bought our first new car. It was a beautiful 74 Cutlass. Right at the end the banker asked us if we could afford it. Geez $100 a month but made us have second thoughts but then we found out it was the bank’s policy to ask everyone that. Guess they figured they were being good citizens.
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I have a buddy that had almost the exact same discussion 25 years ago with his bank when he built the house he has now.
Bank:You don’t HAVE any credit!
Friend: I can afford to build this house because I don’t OWE anything to anybody!
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I ran into that problem. Because I had always lived within my means, I did not have ANY credit history. I had to actually take out a loan I didn’t need and pay it back on time to establish credit so I could borrow later for a home.
PLAN AHEA
D
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This discussion reminds me of the SNL skit “Middle Aged Man.” In one episode, he tells a young couple how to establish credit by opening up a department store credit card.
What’s the difference between Middle-Age Man and Old-Age Man? Both understand how escrow works, but Middle-Age Man knows how to set the clock on his VCR.
College tuition on the coasts can easily cost twice as much as comparable colleges in the mid states. The mid states state schools are even better bargain. A kid can attend many mid west state colleges and pay out of state tuition - which is less then instate tuition here in the East. In many cases a lot less
And many colleges offer very large discounts if you maintain a 3.0 average or higher. Some as high as 50%.
Let’s not forget the millions of dollars in financial aid offered. You get accepted to Harvard and family income is less then 75k you get a free ride.
Going off track a little, your comments on bank behavior jogged my memory a little. Now back in the early 60’s, you have to remember that there were no computers or nation-wide credit agencies. It was all local. In our little area, a few employees in an upstairs office would collect reports on people from credit bureau members and put it in a file (paper file). They also would clip articles on people out of the newspaper and put it in a file (paper file). Our HS general business class took a field trip to their office just to see how it worked.
I had two department store credit cards. One local and one Daytons (now Target), mainly for clothes and concert tickets but paid every month. I also had a Standard Oil card. At any rate when you applied for a loan or credit card, you needed to list your credit references-which of course were the local bank and credit cards. They would then do a check with those folks which eventually would be the ladies pulling the paper file with your name on it to see what was in there.
So if you had a relationship with your local bank, credit should not have been a problem. If you moved to a new location, one of the first things you would do is establish a checking and savings account at a local bank. Also identity theft was unheard of because of the local connection and the paper file. Not sure what the point of my comment is but it jogged my memory.
I bought my first few cars for cash (not beaters, but close). When I graduated from college, and had a full time job, I went up to the bank to obtain a loan on a two year old '79 Riviera. The manager asked if my dad was OK with it, called the dealer and asked how much, then wrote me out a check. Gotta love small towns.
I’m sure you also knew the vintage diploma mills as “Matchbook Universities” since they were commonly advertised on or in matchbook covers. They raked in the dollars and produced very little in return. The current versions unfortunately are no significant improvement.