"About 30% of borrowers in the first quarter who traded in a car to buy a new one had negative equity, whereby they owe more on their loan than their car is worth, according to car-shopping website Edmunds. Those borrowers owed about $7,200 on average before getting a new loan, a 42% jump compared with the same period five years prior.
“The higher it goes, the chances are that people are never going to get themselves out of the situation,” said Jessica Caldwell, head of insights at Edmunds.
About a third of Americans trading in an older car have negative equity, which has been typical in the industry for years. But the average amount Americans are underwater has skyrocketed, Edmunds said, as buyers try to unload cars bought during the pandemic at high prices.
The increased level of negative equity represents another strain on an auto market already under pressure from pricey vehicles and elevated interest rates."
“More borrowers have been defaulting on their loan payments, which typically results in a repossession. Default rates on car loans in March rose to the highest levels seen since 2010, according to Cox Automotive, an industry-research firm.”
Adjusted for msrp changes this prob isn’t even significant. Msrp prob up 30% or more from 2015 so it’s no surprise people are underwater for nominally higher amounts, if anything people might be effectively less underwater now than they were back then.
Civic started at 18290 in 2015 meanwhile is 24695 starting today. A 35% increase
This Mikey guy is trying to convince someone to bury neggy eggy in a S580 financed over 24.
Logic he uses is if you get a “deal” on a S580 and finance it on a short term contract, then the paid interest of the $200k car + neggy is low.
The logic fails since a 24 month old previous model year S580 value will be like 50% soon and it’ll need 3 new transmissions. @djrabbi knows. Dude in the video is about to light $100k on fire.
Of course people will be underwater…you take out a 84 month loan vs a 36/48 month which was the norm, add in higher MSRPs, and buy a depreciating asset. It’s not rocket science.
you could totally do that, but that kind of content doesn’t have the shock factor compared to all the monkeys financing their gt3rs/aventador/g80 for 144 months at 23% APR just to show off.
Can you really blame them? Between the multiple different crises we’ve had, and the TERRIBLE economic numbers you see any time you even glance at the figures, the only real take away is that this is a house of cards.
