Comment by testdelacc1
16 hours ago
> it’s expensive to be poor
https://en.wikipedia.org/wiki/Boots_theory
“The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. ... A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. ... But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while a poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.”
It's a great theory, though it doesn't seem as accurate nowadays. Now, even supposedly 'high-end' brands will be low-quality garbage hollowed out by private equity firms or other corporate acquisitions.
We're not in a world where you can necessarily choose between quality at a high price and disposable junk at a low price, we're in a world where you're often choosing between disposable junk at a low price and rebadged junk sold at a premium one.
That's just the middle class disappearing. I'm sure you can still pay experts to get you actual quality with enough money.
It really pisses me off there are used car lots that obviously prey on the poor. I asked for their cash price and they wouldn't give me one, or it was ridiculously priced. They just want for people to pay off a debt and all the interest that goes with it.
I heard the advice was to not mention the payment method until the very end when you're about to pay, because they won't cancel a sale they've invested into just because you're paying them with actual money. I don't know whether that still works or if they now will cancel the sale.
A car dealership makes most of their money off of the financing.
> I asked for their cash price and they wouldn't give me one
When I bought a car from a dealer, the dealer told me that what I wanted was impossible. So I walked out and got in my car, and started to back out. The salesman came running out and agreed to my terms.
The trick to making a good deal is a willingness to walk away.
P.S. My accounting teacher used to work at a used car lot. He explained to me that poor people tended to screw themselves by not understanding how financing works. He'd try to explain it to them, and they'd accuse him of trying to screw them, and they'd go for the more expensive option.
I tell this story to people who say that learning math in school is irrelevant.
I also remember a Frontline episode years ago on 401k plans. One company had an identical plan for all employees. The reporters discovered that the higher paid employees had better returns on the 401k plans. Why was it that the lower paid ones did poorly with them? It was they did not understand how to manage investments.
Up in my neck of the woods, it depends.
I paid cash for the last two used cars I bought. As used cars go they weren't particularly expensive and it wasn't a big deal. Both purchases came from dealerships that also sold and serviced things like brand new Hondas or Chevrolets.
For one of those cars, the paperwork was completely finished and I drove off in that new-to-me car without me even giving them a dime. (I did promise in writing that they'd have a check in a few days, and I did make good on that promise.)
There's also used car lots that work with real financing companies. They broker the financing deal and get paid for it. That works, too. (I've financed cars at these places, too; this also went smoothly.)
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But then, too: There are buy-here, pay-here used car lots. These are traps for the poor, and they love their particular financing game.
At these places: The loans are designed to be very upside down and they therefore hold all of the cards. They'll sell a used car for years of weekly payments of $120, and if/when the payments stop then they just turn the car off remotely and have someone go pick it up.
After that, it's cleaned up and sold to the next guy for $120 a week.
It's a very profitable way to conduct business and nobody of any substantial means and sane mind would ever buy anything there at all.
But they don't check credit, and they don't report credit. So as ugly and expensive as it is, for some folks that's the only way they can get the car they need to try to survive in the society that they were born into.
Even worse: they want people to fail to pay it off, so they get half the debt amount and then get the car back to do it again.
There are two kinds of lots. 'normal' lots will sell a car, and the financing comes from a finance company. could be a bank, could be a credit union, could be a business that provides money to car purchasers. the normal lot has markup on the price, and also gets a kickback from the finance company. the car buyer does not pay, the finance company has a problem.
'buy here, pay here' lots sell a car, and do the financing. They buy cars at auction, fix them if they have to, then sell them. The down payment money usually covers the auction cost of the car. Then every 2 weeks, the buyers drops by with a payment. The buyer stops paying, the car is repossessed. And then it is sold again. The dealer wins in both directions; the buyer pays a lot of money in finance charges, and if it is repossessed then you don't have to buy new inventory at the auction.
Poor people with bad credit way over pay for cars both ways. One a little worse than the other.
In the US, a lot of car dealerships make a good portion of the profits from a car sale from the loan. E.g. the lender gives the dealer a kickback on the loan and that is a good portion of the total profit. It's somewhat analogous to how US airlines make their profits from credit card deals and selling miles.
I always felt this was over stated, but I think it’s become less true over time.
First different people treat their stuff harder than others. I basically never break or wear out anything, and I usually start with the cheapest option.
Second the quality of cheap shit made in Asia has gone up a lot over the last couple decades. And it is very difficult to know how to pay more for more quality.
ive experimented with paying more for a few things and sometimes it's the cheap stuff which lasts forever.
i have a pair of cheap Chinese earbuds that way outlasted all of the expensive ones I ever bought.
I'll admit sometimes I like there is a cheap-o version as I'm not sure how much I'll end up using it.
I don't know why people keep posting that silly quote. Outside of fantasy novels, in the real world the most expensive footwear is often the least durable, and you can get decent boots at Walmart for <$50 on clearance sales.
my local-Walmart-equivalent <$50 shoes never lasted longer than a few months.
The theory might've used to be true when prices were related to costs. In current year they'll sell you the $10 slop for $50, and sell you the exact same $10 slop for $300. Someone else will sell you the $200 amazing product for $300, but they won't sell the $200 amazing product for $50. Paying a lot of money is (usually) necessary, but not sufficient, for getting a quality product.
The boots are metaphorical, obviously