That is correct. It’s also what happens when a loan repayment period so long that it is impossible for the car value to ever be equal to the loan.
It also happens a lot when buyers are distressed so they buy another car and roll over the loan into the financing of the new car. Common practice for people that are always in over their heads. Lenders still share the blame.
Car loans “should” require sufficient down payment that the value of the loan will not exceed the value of the depreciating car.
That is correct. It’s also what happens when a loan repayment period so long that it is impossible for the car value to ever be equal to the loan.
or worse. the loan is so long the car will never make it to the end. I had someone trying to trade a car with a 7 year loan on it. it was 3 years old with 295,000 miles on it. “I have to uber to pay bills!” ya, well, GLWT cuz your 3 year old car is used up and I can’t help you. the car failed ubers rather easy inspection. basically everything was shot.
I never suggest letting the bank have it, but I did mention he better bank some cash because when it dies and is unrepairable cash is the only way he’s buying the next one.