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Forum » Car Debt Is Piling Up as More Americans Owe Thousands More Than Vehicles Are Worth
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Thread: Car Debt Is Piling Up as More Americans Owe Thousands More Than Vehicles Are Worth

post 1678296463 03-03-2023, 07:30 PM
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#1
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Car Debt Is Piling Up as More Americans Owe Thousands More Than Vehicles Are Worth

Chris Martin knew he needed a bigger car as the birth of his fourth child approached, but he and his wife were already $14,000 underwater on their two vehicles.

So the couple proposed an unusual two-for-one deal with an Atlanta-area auto dealer in 2020: trading in both of their vehicles so they could afford a three-row Ford Explorer. Their total loan after factoring in negative equity, a service contract, fees and other costs ballooned to $66,000 on the $49,000 Explorer.

Despite a lot of progress on the debt, he feels uneasy. “I don’t want to be paying interest on cars that I don’t even have anymore,” said Martin, a 36-year-old data engineer.

The build-up in negative equity — or the amount that debt exceeds a vehicle’s value — is rattling consumers and raising alarms within the industry. Though it’s not unusual for drivers to carry negative equity, some dealers say more people are arriving at their lots up to $10,000 underwater, or “upside down,” on their trade-ins. They’re buying at still-sky-high prices and rolling debt from one car to another and even onto a third. Loans are commonly stretching to seven years.

“As trade-in values begin to cool, each month more and more consumers will find themselves falling from positive to negative equity,” said Ivan Drury, director of insights at auto-market researcher Edmunds. “Unless American car shoppers break their habit of buying again too soon, we’ll see the negative equity tide continue to rise.”

Even if the US economy avoids a recession this year, consumers will likely struggle to make payments on their auto loans, especially with the Federal Reserve planning to keep raising interest rates. The average new-car interest rate rose to 6.9% in January from 4.3% a year earlier, according to Edmunds. With car prices still elevated, demand high and inventory levels relatively low, Ford Motor Co., General Motors Co. and other automakers continue to rake in sizable profits.

$1,000 Payments

For the typical American, a new car is increasingly out of reach. Today, about two out of 13 people are making monthly car payments of $1,000 or more. For many, there’s no choice: They have few or no public transportation options and need a car to get to work, bring children to school and buy groceries.
https://finance.yahoo.com/news/car-d...10000331.html?
post 1678296783 03-03-2023, 07:36 PM
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Yes people are quite foolish
post 1678297443 03-03-2023, 07:47 PM
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LOL at the keeping up the jones mentality by having to have the newest car, newest phone, newest clothes for no one to care. I'll be here relaxing, saving/investing money while being debt free wearing Hanes shirts. (Super Ded fkn Srs)
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post 1678297613 03-03-2023, 07:52 PM
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Used 90s Japanese cars is always the answer but those elite ****s want to take them away
post 1678297643 03-03-2023, 07:52 PM
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Originally Posted By SamIAm1892⏩
Chris Martin knew he needed a bigger car as the birth of hisfourth childapproached, but he and his wife werealready $14,000 underwateron theirtwo vehicles.

So the couple proposed an unusualtwo-for-one dealwith an Atlanta-area auto dealer in 2020: trading in both of their vehicles so they could afford a three-row Ford Explorer. Their total loan after factoring in negative equity, a service contract, fees and other costs ballooned to$66,000 on the $49,000 Explorer.
Where do you even start? jflmao

Some people learn from their mistakes, these people just doubled down on it.

Now they have four kids and one car between them that they can't afford. It's people like this that need Dave Ramsey.

post 1678298033 03-03-2023, 08:02 PM
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people are dumb. they should be punished for the bad behavior, but just as likely they will get bailed out by the politicians, further encouraging irresponsible behavior.
My ALT is elevated. 75.
post 1678298243 03-03-2023, 08:08 PM
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Originally Posted By ToxMasculinity⏩
LOL at the keeping up the jones mentality by having to have the newest car, newest phone, newest clothes for no one to care. I'll be here relaxing, saving/investing money while being debt free wearing Hanes shirts. (Super Ded fkn Srs)
its not keeping up with jones for me. its having proper tech, quality items. you buy a ****ty car, youre probably dead in a head on collision but you saved 10 grand, okay.
post 1678298503 03-03-2023, 08:13 PM
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Of course they're all going to be brand new cars too, huh? Instead of, you know,getting something you can fukcing afford.
post 1678298773 03-03-2023, 08:24 PM
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I want a new 4Runner too but not gonna live paycheck to paycheck just to afford that

Cmon now
post 1678299023 03-03-2023, 08:30 PM
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This will end well. The jones mentality will kill you


I’ve had the same old Jeep since high school. Runs fine paid off 10 years ago. I only drive 3000 miles a year so I could probably make it another 10 before needing a car.
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post 1678299063 03-03-2023, 08:31 PM
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only thing sadder than a carcel is a watchcel.

truly absurd purchases. esp vehicles like trucks that will get used and depreciate. at least buying an Enzo has sign resale value among $$ carcels.
post 1678299563 03-03-2023, 08:44 PM
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I got mine off of Carvana. The interest is high but I have a car I want and it’s dependable. I can easily pay it off when the payments get low. I think it’s better than having no transportation
post 1678300193 03-03-2023, 09:03 PM
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  1. ErnieMccracken
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The entire car market is insanely bloatmaxxed and overdue for a correction.
post 1678300933 03-03-2023, 09:18 PM
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A fool and their money are soon parted.


I knew someone who sold a truck, for 15k less than he owed, just to "get out of the payments"

Everything I buy or anyone else buys he asks "whats the payments like?" He gets mad when I just tell him the full price.


Dont borrow if you cant afford, life lesson 101
post 1678301453 03-03-2023, 09:36 PM
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Originally Posted By TugOfPeace⏩
I've wanted a sports car for so long, but I could never justify the cost. An Audi S5 is my dream car and I could afford to pay for it in cash, but with how bad drivers are these days and the fact that I WFH, it doesn't make sense to pay $70k for such a vehicle when I can get a 2010 Lexus with 30k miles for under $20k.. with the exact same horsepower and far better reliability.

These people that buy brand new cars and take on huge monthly payments because they finance for 72 months.. fukking LOL. Then there's the posers who buy base model bmw/audi/mercedes, typically used, just for the badge.

People are just too concerned with image.
What’s wrong with used ? I Agree if it’s used and the very base model but some models you can’t buy anymore because MB changes their lineup every so often

You can’t tell me a CLK 63 AMG is the same as a C230 just because they’re both used
post 1678301473 03-03-2023, 09:37 PM
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“For many, there’s no choice: They have few or no public transportation options and need a car to get to work, bring children to school and buy groceries.”

Fkn lol, yeah no choice but to overpay and get underwater on a Tahoe or Explorer or something way too expensive, certainly couldn’t buy a 2008 Camry that’ll do the job just fine until you’re in a better financial position
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post 1678301553 03-03-2023, 09:39 PM
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Originally Posted By andrepmeet⏩
only thing sadder than a carcel is a watchcel.

truly absurd purchases. esp vehicles like trucks that will get used and depreciate. at least buying an Enzo has sign resale value among $$ carcels.
Gotta be trolling. Full Size pickups usually retain 3-4x the value cars do on the used market SRS
post 1678301613 03-03-2023, 09:41 PM
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somewhat related.

a guy in the towns FB group said he has a car for sale - a 2015 nissan sentra w/81k miles.

dude wants $11k for it. just fukking crazy.
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post 1678301633 03-03-2023, 09:42 PM
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Originally Posted By ThatGuy950⏩
“For many, there’s no choice: They have few or no public transportation options and need a car to get to work, bring children to school and buy groceries.”

Fkn lol, yeah no choice but to overpay and get underwater on a Tahoe or Explorer or something way too expensive, certainly couldn’t buy a 2008 Camry that’ll do the job just fine until you’re in a better financial position
but it could eventually cost HUNDREDS of dollars in repair!!!
post 1678301873 03-03-2023, 09:49 PM
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Originally Posted By ThatGuy950⏩
“For many, there’s no choice: They have few or no public transportation options and need a car to get to work, bring children to school and buy groceries.”

Fkn lol, yeah no choice but to overpay and get underwater on a Tahoe or Explorer or something way too expensive, certainly couldn’t buy a 2008 Camry that’ll do the job just fine until you’re in a better financial position
Lol this.

I love that I grew up “kind of poor” and know what it’s like to scrape and save. I set my life up to be ok even if I didn’t have a job. Which happened during covid. I got laid off, but my expenses were so low on purpose that it didn’t really affect me at all.
post 1678302443 03-03-2023, 10:04 PM
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I bought a new camry in 2020 in cash and I'm gonna drive it into the ground

People are dumb with their money
:)
post 1678320383 03-04-2023, 09:25 AM
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Originally Posted By DolphinPilot⏩
Of course they're all going to be brand new cars too, huh? Instead of, you know,getting something you can fukcing afford.
This. These people are idiots. I'd love a brand spanking new car too, but I'm not getting into debt for it.
~ In a world where you can be anything, be kind ~
post 1678320833 03-04-2023, 09:36 AM
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A lot of car dealers are sociopaths, but in cases like these where sheeple bend over for them, I don't really blame them. The Pleebs in the story likely have an 84 month loan.
post 1678321123 03-04-2023, 09:42 AM
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comments on that article are good, too
post 1678321183 03-04-2023, 09:44 AM
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this is why you get a honda and let that thing go for 15+ years.
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post 1678321743 03-04-2023, 09:54 AM
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Originally Posted By DolphinPilot⏩
Of course they're all going to be brand new cars too, huh? Instead of, you know,getting something you can fukcing afford.
TBF the car market circa 2020-2022 was whack. Used vehicles were selling for near as much as new ones + higher interest rates on used car loans than new car loans.

Someone could absolutely buy a new vehicle for a lower payment than a used vehicle.
Originally Posted By Mountaineer92⏩
this is why you get a honda and let that thing go for 15+ years.
2007 Honda owner. I think my total miles is around 110K.


ETA: I mentioned the negative situation with cars on twitter and another poster said that banks are really holding off on repos because used car prices have stalled out/should be cratering and if they take possession and then sell the car they have to write down the loss.
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post 1678322193 03-04-2023, 10:02 AM
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Imagine being BROKE AF and buying a $50k Ford Explorer instead of a 10 year old AWD Toyota Sienna in great condition for $13,500 from a private party after getting a pre purchase inspection.





post 1678323073 03-04-2023, 10:14 AM
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Originally Posted By Sal29⏩
Imagine being BROKE AF and buying a $50k Ford Explorer instead of a 10 year old AWD Toyota Sienna in great condition for $13,500 from a private party after getting a pre purchase inspection.





Ngl that interior looks comfy and functional as fuk

Guarantee that old Toyota will Still be running after that $50k explorer pops a timing chain too
Coincel
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post 1678323883 03-04-2023, 10:29 AM
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Everything is cyclical and pendulums that swing hard in one direction tend to swing back about as hard, we’re in the process of that right now.

It wasn’t long ago that there were basically zero used cars available anywhere. Pandemic supply chain issues throttling new car output + price increases had everyone friending over used cars, and now that is also in the process of reversing.
post 1678324003 03-04-2023, 10:31 AM
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I'm waiting to see all the 1-2 year old vehicles for sale after being reposessed.
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