To help start building a credit history so that if/when you do want to borrow more for some reason you've already established a history of successfully repaying debt.
Plus don't forget that the discounting of future cost v money now doesn't just have to be financial. A reliable car and debt repayment now versus saving up whilst running a clunker (with its associated running costs) can have all sorts of related negatives.
"Building a credit history" also seems to be a US phenomenon. If you want to buy a house where I live, you save up about 25%-50% of the price, and apply for a loan for the remainder. To get the loan you prove that you have a stable income, provide some collateral (e.g. your car) and prove that you never defaulted on debt (which doesn't mean that you need a history of loans).
Is that really necessary with a 25-50% down payment?
A 50% down payment in many places in the United States, would mean foregoing home ownership until one was in their 30s. Depending on the market the person is in, (and, of course, the current interest rate, which right now is at historic lows) - the person would then end up spending more money on rent than they would have by purchasing a house and instead paying mortgage+upkeep+insurance+taxes.
It's a little difficult to say exactly where housing prices would be without government incentivized 30 year mortgages.
(there are several incentives, tax deductions, cheap loan insurance, etc)
In a decent housing market, one of the things people consider when choosing a house/making an offer is how large of a payment they can make each month. Feed that payment into a 15 year loan on 60% of the purchase and you end up with a much different level of buying power than if you feed that payment into a 30 year loan on 95% of the purchase (and thus one way of thinking says that you can expect higher prices in general when 30 year loans on most of the principle are easy to get).
> Is that really necessary with a 25-50% down payment?
It's not necessary at all. First of all, a car is not going to be adequate collateral for half (or three quarters, or more) of a house. If it is, you are spending way too much on your car.
And yes, 50% down payment is untenable for the majority of people in the US, even those with upper middle class incomes. Hell, when my wife and I bought our first house we used the FHA and only had to make a 3.5% down payment. In our low cost of living area that meant our down payment was less than what I paid for my first car (which was a decade old when I bought it). No collateral was necessary for that, either.
To help start building a credit history so that if/when you do want to borrow more for some reason you've already established a history of successfully repaying debt.
Plus don't forget that the discounting of future cost v money now doesn't just have to be financial. A reliable car and debt repayment now versus saving up whilst running a clunker (with its associated running costs) can have all sorts of related negatives.