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.
My BIL who did just about everything possible wrong with his kids, particularly financially speaking, got a new pickup on a 12 month lease for one 18 year old son. It was $99 a month with 12k mile limit. Well the kid gets a job as a pizza delivery driver and 6 months into the lease dad has to turn the truck in and pay off the lease (the kid had no money). To deliver pizzas. This was quite a ways back as you can guess by the numbers.
[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.]