Get out your Repo Man giffs and stills
Unexpected!
Well... that is totally NOT unexpected... and pickup trucks are about to be just as underwater...
Americans have had a growing tendency to keep piling on negative equity. Throw in those who bought new vehicles with COVID stimulus checks - add in the parts/chip shortages that blew up retail prices... and folks got extra stupid -
So now that interest rates are high - and car loans are harder to get (and more expensive) - and as auto values fall back down... yeah...
Does this mean there will be more used cars on the market soon? Prices are nuts right now. Greater supply should reduce prices.
But it’s not all the fault of the buyer. Some models and brands have horrible resale value, which a buyer has no control over. Other factors like dealer markups — which lenders don’t usually approve if the markup is greater than the value of the car — make things worse. If buyers continue down the path they’re on, the auto loan bubble will pop. It’s no longer a matter of if it will anymore. It’s when.
Millions of people with negaive equity.
Hmmm...
Is that the kind of equity which democrats say should be shared by blacks and hispanics and women.
Go ahead, share the equity. ;)
Not me.....all my junk is paid off.
An EVs are just getting started. Choices are going to have to be made. A home mortgage, a car loan or gas and groceries. You decide. The taxpayers will take care of the kids’ college loans and their healthcare. I was reading the other day about the Student Loan Deadbeats wanting FJB to “cancel” (reneg on) their student loans so they can apply for new loans to go back to “school”. I guess they sure do miss those spring breaks.
We have no car notes. :-)
But trading in a vehicle with an underwater loan is one of the dumbest things anyone can do.
A local car dealership plays a catchy tune with their TV ads: “Move ‘em up a couple years, keep the payments the same”. Yep... nothing like those 8-year car loans.
For years my mother in law’s neighbor would get one or two new cars a year. Seemed that every time we’d visit, they had a new car. I can’t imagine how upside down they were because neither have high dollar careers.
They are nice people, friends even but they seemed to live a life of economic stupidity.
They seem to have gotten over the new car fetish in recent years. Maybe they finally took a look at how much they really owed.
This is why “serial” leasing is a pretty good deal. We just turned in a 2020 Acura for a 2023 Infiniti. Because we’ve been alternativly leasing one or the other brand for a couple of decades, it cost next to nothing to get rid of the old and into the new.
I know many think leasing is stupid because you never build equity, which is true. However, you get a new car every three years which never goes out of warranty. Basically one just rents a lease then turn it in on another rental. Since the lease is about the only obligation we currently have it works for us. What works for us may not work for others.
My advice to those who have known reliable vehicles, such as 3 generation Toyota 4Runners, do not sell them.
The used car market is strange right now. I have two teenage drivers and have been looking to get a new car for my oldest and transition my younger driver to her “first car” (its a beater).
However, this market (between 8-12k) still seems high to me and most of the vehicles in this range for sale by owner are “flippers” or the flippers (even dealers) scoop up the good deals very fast off craigslist or facebook marketplace. There are not a lot of vehicles out there at the low end, but I have noted more and more late model cars for sale by owner.
It’s been a little frustrating.
Self-denial is tough, but this is the winning auto strategy.
1. Save up a big down payment
2. Buy a used car with 20k to 30k on it. Let somebody else take the new car depreciation hit when they drive it off the dealer’s lot.
3. You save a lot on lower insurance and registration fees.
4. Buy on the last day of the month with salesmen are extra-motivated. Keep them there until 11:30 pm.
5. Get as small a loan as you can. Never take financing from the dealer. Use your local credit union. Keep the term to 3 years, 4 tops, if possible.
6. Drive around with a smug look on your face.
7. Years 5+, you own it free and clear.
8. Drive conservatively and defensively to avoid accidents.
9. Never drive after drinking. A DUI will clobber you for five to ten years.
A lot of numbskulls respond to dealer ads “we will pay off your old car loan” like this is a free lunch. The dealer just pays it off and rolls the debt into the new car loan.
Including what was owed on the two cars, plus the registration and all other dealer fees, the couple ended up paying $66,000 for a $49,000 Explorer.
No they didn’t. They paid 49000 for the explorer and rolled pay off and fees in to the loan on top of the 49k
Idiots none the less.
A low mile caravan for 3500-4k would have done just fine
A year ago I bought my third car in 30 years. It’s a nice 4 year old BMW which they stopped making in stock shift 4 years ago. I’ve never owned an automatic and don’t want one. I plan on keeping this car until the wheels fall off like I did my first two.
You can even splurge and get a more expensive car you really like. If you get a low mileage used one and just keep it and maintain it, then it ends up not being very expensive. The key is don’t get tired of your car and flip it every few years.