Consumers underwater with car loans

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>In two years, the 40-year-old electrician signed up for four auto loans, each time trading in the previous car and rolling the unpaid balance into the next loan. 4 different financed cars in 2 years! That’s a guy who earned his financial hardship. I have no issues with people suffering from their own stupid choices.


What pisses me off about this is it started 3 years ago and Used cars prices are as high as ever. Ive never seen a period when used cars sell for as close to new cars as Ive seen recently. These extended term loans are really warping the market and valuations, soon we’ll have 10 year car loans and a new car will start at $60,000.


The banks are lending money on a depreciating asset. With the housing bubble, the expectation was that homes would continue to go up in value. But never once have we assumed that cars (other than the occasional classic) are going *up* in value over a lifetime of use. The average, somewhat un-educated consumer may not know any better, but lenders absolutely carry the responsibility for aggressively lending on depreciating assets. Someday, if/when this “bubble” pops, those financial institutions who issued shitty loans are gonna be left holding the cards.


I bought my car new. For the last couple years my dealer has been sending me emails stating “if you turn in your current car you can get the newest version of it for $20 more a month.” Small wonder some people fall for this.


It’s been a few years since our last car purchase and we bought a used car this year thinking we were gonna have some bargaining power by paying cash. The dealers couldn’t care less, only way we’d have any leverage is if we had taken finance. Then after settling we go through to the back office and are given the hard sell on 3 different products, again all on finance. It was so confusing realizing that they were primarily a financial business and car sales were an ancillary side of the operation, I must be getting old.