Negative Equity - wsj on long car loans

Dude it was a joke relax. Interesting how you focused on that and completely ignored the fact that I critiqued the comment belittling religious people.

I agree it is obscene. That is is why I don’t use credit cards.

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Well you know, he has to spell it out? You the “libtards/tree huggers”, having a soft spot for environment and humanity. What a losers, am I right?

You know that you can enjoy all the benefits of a credit card (consumer protections, insurances, huge travel benefits) without paying a dime of interest, right?


Yes, I am aware of that. I choose to not participate at all.

Only 40 messages in and we are already on political crap already???

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It was either that or dimitry shows up and we argue about how dated the infotainment offerings from Infiniti are.


Wow it took over 40 posts for this to get political!!.

There I fixed it :slight_smile: Everything is politicized these days. I hate it but this is the current reality.

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You can’t teach an old dog new tricks.


Every forum has to have one :slight_smile:

See, this neg equity can be a good thing if you rolled into one of the few 0% interest loans from a higher interest loan. It’s all about context.

Very bad idea. You pay the merchant fees anyway…why not get some of it back as cash back?

your reality…

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So wait, I’m 20-ish, just got out of the school, got my first job for minimum wage and you try to tell me I cannot afford that brand new, fully loaded BMW/Audi/Mercedes I always dreamed about? My teacher, my counselor and my mom always told me I’m special and have the same rights as the kids whose parents earn $200k/week. Was that a lie???

Is the world not just and honest?

Are there really privileged out there?

Can you hug me???


Yeah, kids these days am I right? We can’t bust heads like we used to, but we have our ways. One trick is to tell 'em stories that don’t go anywhere - like the time I caught the ferry over to Shelbyville. I needed a new heel for my shoe, so, I decided to go to Morganville, which is what they called Shelbyville in those days. So I tied an onion to my belt, which was the style at the time. Now, to take the ferry cost a nickel, and in those days, nickels had pictures of bumblebees on 'em. “Give me five bees for a quarter,” you’d say.

Now where were we? Oh yeah: the important thing was I had an onion on my belt, which was the style at the time. They didn’t have white onions because of the war. The only thing you could get was those big yellow ones…


Maybe we are being a bit harsh on these 20 year olds.
Think back…did you do anything financially stupid at that age?
I got my first car loan…no credit history, 15% interest, used and out of warranty Benz SLK…was paying about a third of my income on the car.

Neat thread, keep up the good work in here. Love when my auto discussions turn political.

Negative equity is something I actually do enjoy discussing, and someone said above it was overconsumption, not interest - I think it is both. Last year around this time, the stock market began a fall of almost 20%, scared that rates can get to like 3-3.5%, still historically very low.

Problem is, we’ve consumed so much that we can’t even afford those low rates, as eventually borrowers won’t be able to pay anything beyond the interest, however low it might be.

Debt to income ratios are healthy, and I hear pundits talk about debt not being an issue… These are the genius economists? What happens to that debt to income when layoffs or a recession happen and how will that spread across the economy?

I see so many negative equity comments it drives me insane, and eventually when the debt problem explodes in the next 10, 20, 30, 40 years, whenever it is, I’ll be taking my belongings and moving to a beach in an emerging economy for like $1,500 a month and cruise around on a Vespa… Rather that than be penalized for everyone else being an irresponsible moron. The same way savers have gotten slaughtered due to financial crisis, responsible individuals with low debt to income ratios will get hit in the next crisis being lumped in with everyone else.

If I find something worthwhile this month, I’ll take the final two months on my lease, pay them, and say adios to the car.

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My first car purchase was a used Saab as well…unfortunately, it was a real “Saab Story” as the saying goes…or went :slight_smile:

Well … technically the balance sheet equation all us accounting students are taught is Assets Value = Liabilities + Equity

therefore … Equity = Assets Value - Liabilities

and Asset value is book value less depreciation and amortization

I agree with your position, but can also see the argument the other way. Hopefully this is a constructive troll and not a destructive one. :man_facepalming:

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A $45,000 loan for vehicle worth $27,000. Seems crazy but it is the reality for lot of people. The question is, is it just corporate greed at lot of different levels or corporate greed supplemented with careless spending patterns. In any case an undeniable outcome is that real people suffer.

Some 33% of people who traded in cars to buy new ones in the first nine months of 2019 had negative equity, compared with 28% five years ago and 19% a decade ago, according to car-shopping site Edmunds. Those borrowers owed about $5,000 on average after they traded in their cars, before taking on new loans. Five years ago the average was about $4,000.

People are adults. If they want to make poor financial decisions, it isn’t corporate greed for the captive to sell them a new car.


To my mind, there are two prerequisites to any prudent financial decision. Education (not school or college but more related to the asset being acquired) and Diligence (aka patience). Minus these two or even anyone of the two, and the purchaser is solely riding on luck. In cases like these, both factors are often missing.

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