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An Auto Loan Debt Crisis Looks Imminent
(www.automoblog.net)
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this post was submitted on 08 Nov 2023
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Where are we on the whole used car market thing? This could get wiggly if tons of people can't pay their car note, but for at least the first few they might actually be able to sell and turn around some money. Not a ton, mind, but until recently it was a given that your car is worth less than you owe on it.
We were in the market for a new car about 6 months ago. I wanted to buy used, but a used version of the exact same car (except a year or two older, obviously with mileage) was roughly the same price as the new car on the lot. Needless to say we bought the new car
This is because the Banks, and dealers are floating the losses.
COVID pumped prices up so a 2015 car had a loan taken out at 35k and now it's been repo'd. If a bank/dealer takes less than 35k then they have to write that loss on their books. So it will remain on the lot until the lots are beyond capacity.
People were buying a 2015 car for 35k. Driving it home, calling their lender and saying because COVID they need forbearance. They drive that shit around for 6 months and then right up until it's repossessed 90 days later. Having driven a car around for free for 9 months. Leaving the bank with a 2015 Chevy Cavalier and a loan of 35k. Ain't nobody realistically going to pay 35k for a 2015 Chevy Cavalier.
Even if they wanted to pay it off. Financially they couldn't. They made $17/hr but nobody checks that. They take your word at the dealership.
We're going to see the 2008 of car prices for the exact same reason.
Used cars are still more expensive than their new counterparts, at least in San Diego. It's almost cheaper to buy a classic car than a used car in many cases.