Bloomberg: Average Car Loan is Underwater by $6,054

[OliverHeldens]

https://archive.ph/aH3LO#selection-4557.0-4557.64
Paywall free Bloomberg link

It’s a tough time to be a car owner in the US.

Prices for new vehicles are high. Interest rate hikes have made loans more expensive. And many car owners now owe more on their loans than their vehicle is worth. This situation — commonly called being “underwater” or having “negative equity” — occurs when the price of a car falls faster than the owner can pay down the loan for it.

In November, people were underwater by an average of $6,054, the most since April 2020 and well above pre-pandemic averages, according to automotive information firm Edmunds.com Inc. It’s a precarious spot for many Americans, coming after a twin surge in car buying and interest rates has strained finances and fueled an uptick in automobile repossessions.

“We're in this situation where combined with the cost of the vehicles being so high and the interest rates being so historically high, you have a lot of people who are in bad car loans,” said Joseph Yoon, consumer insights analyst for Edmunds.

[BalognaNbeans]

Goofy ass people

[DeBaie]

The best car is a paid for one. Cannot imagine being indebted to a depreciating asset ever again.

[OliverHeldens]

The best car is a paid for one. Cannot imagine being indebted to a depreciating asset ever again.

I actually think the best car is one you can get a cheap lease for. Then it's still under warranty and you're not responsible for repairs. But a reliable car that's only a few years old and is paid off is also very nice.

[BespokenBrah]

-berg is a Jewish name

[Visel]

Not a bad time for car owners. A bad time for in debt idiots who can't AFFORD (pay in cash and justify cost via their income and other debts + CoL) what they drive.

[OliverHeldens]

Not a bad time for car owners. A bad time for in debt idiots who can't AFFORD (pay in cash and justify cost via their income and other debts + CoL) what they drive.

There will be a lot of tradies who bought 2021 Trucks for $80k and are stuck paying $1200/mo for a truck that is now worth $45k. That's going to push a lot of tradies into working longer hours for Mr. Noseberg.

[Visel]

There will be a lot of tradies who bought 2021 Trucks for $80k and are stuck paying $1200/mo for a truck that is now worth $45k. That's going to push a lot of tradies into working longer hours for Mr. Noseberg.

I've listened to Dave Ramsey too long to justify any car loans in my life, srs. If I ever get married, she has to agree with this too or there will be animosity off the wazoo.

Debt's fine for a mortgage, education leading to a career, or something similar that actually makes a profit. Not a $50k+ EV or any type of vehicle you'd expect to depreciate by 20% or more in 5 years time.

[JackyChin]

Wait until payment becomes mandatory again on student loans again (September 2024)

[OliverHeldens]

Wait until payment becomes mandatory again on student loans again (September 2024)

They're already accruing interest, so even if these people aren't being penalized for non-payment it's still making their balance go up. And these will still go on their record and will keep them from taking on other types of debt.

[OffwhiteBrah]

got my car mid pandemic with almost 0% financing, you mirin ?

[OliverHeldens]

got my car mid pandemic with almost 0% financing, you mirin ?

Is it underwater by $20,000?

[MidnightMadness]

sure is nice to be debt free

[TheScapeGOAT]

How about this:

You finance a car that you can already pay off, for like 10months to build credit on a more srs loan.

[tripod29]

lol @ debtcels.

[meanstringbean]

Funny how being underwater in your house is seen as a Great Recession horror story , but every day thousands of consooooomers willingly enter into agreements to immediately be underwater on their car loans, which 90% of the time are unnecessary


I know idiots who trade in their car every 5 years to get a new one. It’s the biggest self inflicted financial wound people make

[6gorillion]

Funny how being underwater in your house is seen as a Great Recession horror story , but every day thousands of consooooomers willingly enter into agreements to immediately be underwater on their car loans, which 90% of the time are unnecessary


I know idiots who trade in their car every 5 years to get a new one. It’s the biggest self inflicted financial wound people make

This. If you can't buy the car cash, you can't afford it.

[sf813]

I almost bought a new car this week. I was going to trade in my current car + pay the rest in cash though.

But decided not to and keep the money. My current car is paid off, and while it doesn't impress the sloots (Lexus SUV), it has only 50K miles on it and will last me many years. I'll upgrade maybe in a few years.

[MidnightMadness]

I almost bought a new car this week. I was going to trade in my current car + pay the rest in cash though.

But decided not to and keep the money. My current car is paid off, and while it doesn't impress the sloots (Lexus SUV), it has only 50K miles on it and will last me many years. I'll upgrade maybe in a few years.

good decision

[EDcellent]

I took a loan out on my 1979 K10 with 19% APR for 84 months. It's over for me.

[frankdtank20]

A lot of especially new truck and large SUV buyers from 2020-23 are cucked now. For awhile there dealers were adding $10K+ "market adjustment" fees. Those rape-you-in-the-ass dealership extra profits are basically gone now, so the value of those vehicles has dropped incredibly. BRB 5 years worth of depreciation after just 2 years.

The wife and I have 3 vehicles, 2 long paid off. The third we bought used last year. Feelz good mayne. I might look at getting another vehicle in about 4-5 years.

[havoc00]

lol @ riding around in some Jalopy because your scared of a lil debt. Who knows if you will be here in 10 years max all that **** out it takes them years to get you to court

[viccruise420]

Not surprised, took 2 years for my equity to match what I owed.

Alot of people will immediately trade up once their loan matches the vehicles equity. Or only keep it for 1 or 2 years after that point and trade up.

People are so stupid. Everyone says the same thing.. yea bro but as long as you can afford the payments. The thought of owning a car without payments doesn't even cross their mind so as soon as they can trade in for something newer and "better" while keeping their payments relatively similar, they do.

Most people have accepted that they will essentially just rent a car indefinitely as long as every few years they can get a new one.

[HMFIC_BROWSIN]

How about this:

You finance a car that you can already pay off, for like 10months to build credit on a more srs loan.

Hahahahah. Love this form of COPE

[multiplemiggs]

The best car is a paid for one. Cannot imagine being indebted to a depreciating asset ever again.

This. Never had a car loan and never will.

[meanstringbean]

Not surprised, took 2 years for my equity to match what I owed.

Alot of people will immediately trade up once their loan matches the vehicles equity. Or only keep it for 1 or 2 years after that point and trade up.

People are so stupid. Everyone says the same thing.. yea bro but as long as you can afford the payments. The thought of owning a car without payments doesn't even cross their mind so as soon as they can trade in for something newer and "better" while keeping their payments relatively similar, they do.

Most people have accepted that they will essentially just rent a car indefinitely as long as every few years they can get a new one.

Yea the people I know who do this view car payments like a utility, just something to expect indefinitely


It’s absurd. When you have a paid for car and not spending $600+ a month (even more now) not only can you invest that, but hell that’s like a vacation you can book every other month. Things that actually improve quality of life over the latest model car.

Oh and brand new car is more expensive to insure, so you’re double dipping in stupid.

[TheScapeGOAT]

Hahahahah. Love this form of COPE

Please explain the cope

[HMFIC_BROWSIN]

Please explain the cope

Get a secured loan, use a $500 limit CC to build credit, use a credit card on everyday expenses and pay it off every month so you pay no interest.... These things cost literally nothing (I suppose the secured loan will cost a few bucks of interest) and will get you to a 750+ credit score almost instantly.

But nah, you bought a depreciating car and blew off a chitload of money on interest in order to "build credit".... It might be the worst possible way to build credit.... Right up there with a payday loan.

Source: My credit score is 809 and I never once paid a penny of interest.... Let alone had a CAR PAYMENT.