Over the past 2 years, many people took out exorbitant loans on cars.
Car values were inflated (and frankly, still are to some extent).
But many people simply had no choice and bought an overpriced a car.
h/t Daniel
Over the past 2 years, many people took out exorbitant loans on cars.
Car values were inflated (and frankly, still are to some extent).
But many people simply had no choice and bought an overpriced a car.
h/t Daniel
From the link.
Surely the lender knows that consumers that take out a 2nd auto loan are MUCH riskier and have a MUCH high risk of default? Right?
RIGHT?
Yes, but the lender does it because they know that the consumer will default on the other car !!!!
Dog eat dog style.
Let me be clear:
Breezing through, I initially read the last line as “Let me get a beer…”
2008 the Auto version.
Let’s be clear: Consumers did have a choice. They could have purchased a used car they could actually afford.
My first thought as well. No one put a gun to their head to buy an overpriced product that loses value the moment it leaves the lot.
A friend of mine has been an independent used car dealer for 45 years. He has customers who have purchased as many as five cars from him. He is what one would say and honest dealer. the last two years he has being paying crazy prices at auction for the cars on his lot. Our local Hyundai dealer had a 2022, new Elantra on the lot for $19,500. My friend paid $19,000 at auction for a two year old Elantra. That of course increases the retail because without a profit he doesn’t pay his bills. Used cars have been pushed way up in cost.
People “had no choice” other than to buy an overpriced car? That would be hilarious if it weren’t so tragic.
Fortunately, I was crazy enough to believe I DID have a choice. I saved up to buy a replacement for my previous car, and when the time came, I avoided the dealers and bought a 12-year-old Honda from the previous owner for $3800 cash. I had my mechanic check it out beforehand to make sure there weren’t any hidden problems.
I’ve been driving it for five years, and it’s served me well. No car loan, so no payments and no interest. And I love how low the property tax and insurance premiums are for a car that age. Yes, it needs maintenance from time to time, like any car. I budget for that. In fact, I just spent $884.33 to replace the rear brakes — shoes, drums, and cylinders — because the whole system was worn out. But the mechanic says this is probably the last rear brake job the car will ever need, even if I drive it for another 100,000 miles. Which I probably will, because Honda drive trains last forever.
$884.33 is a little bit more that what a typical American pays EVERY month if they take out a loan to buy a new car. Which is exactly why I chose NOT to go down that path. I just checked my records, and in the time that I’ve owned this vehicle, I’ve spent a total of $7,069.51 on service and parts. (That’s EVERYTHING, including tires, oil changes, and state inspections.) That may sound like a lot, but it’s an average of $122 per month. In exchange for having NO monthly car payment, I think that’s a bargain.
I am not bragging here, because there’s nothing remarkable about this. Anyone can do what I did. All they have to do is reject the delusion that you HAVE to go into debt and buy a new car. You don’t.
Exactly right. I’m driving a 20 year-old Toyota Sequoia, and similarly spent $1,000 last year for complete restoration of the brakes on the year axle. Also similarly, I will probably never have to perform maintenance on the brakes on that axle again.
Three weeks ago, I was pushing through 12″ of snow with it, hunting elk in the mountains. I wouldn’t hesitate to drive it anywhere, and am preparing for a 3,000 mile trip for the holidays.
6 CD changer, premium sound system, heated leather seats, 4 wheel drive and no car payment.
Speaking of Hondas and their very reliable drive trains, We bought a 2004 Honda van fresh off a lease in 2008 for about $15k. It was low mileage (80 km’s) when purchased and has had no real work needed beyond brake pads,regular fluid changes and minor stuff. Its well over 200km’s now and still running strong. You’re right about not getting caught up in the new car hoopala and I couldn’t be happier about my van. Its a bit hard on fuel at today’s prices but the comfort factor (leather,heated seats, rides like a limo, etc) and NO car loan payments, more than make up for that.
I’m just waiting to see where the auto market goes this next year and will pay cash again for whatever looks enticing. But yes I’ve nothing but good to say about Honda.
AC
Dr
Bang on. In Feb of 2006, I bought a used 07 GMC 250HD Duramax: paid $38,995 CAD – Calgary
New were selling at that time for ~75k. Far out of my affordability range.
Still have it today, 575,000km’s later.
Spent maybe 35-40k since on repair/up-grades since (Head gaskets – Headers – etc, removed EGR sys…and a bunch of mods incl. EFI Live, Rims, Lift pump, Titan Tank & such)…
However regardless of type……….one must maintain ones vehicle. I do oil changes every 20-25,000 kms w/full synthetic (I have a 2ndary oil filtration system at 5mU on it). Runs better than when I bought it and pulls my RV when and wherever I need to.
Wont be selling nor changing out.
Diesel rocks – regardless of pump price (1.749 Costco Calgary)
Last car my wife had was a 2001 Corolla – had 335,000 on it when we sold it…still ran fine.
She’s now in 2017 Roll SXE….likely her last vehicle as well.
cheers
I have to admit that I sometimes feel slightly emasculated when I pull into my local Home Depot swarming with Guatemalans and every truck parked next to my aged (1999), decrepit-looking but super running Land Rover Discovery “work SUV” … faded paint cracked bumpers and all … and every truck parked next to mine is a MASSIVE shiny brand new Super Club Cab with enormous chrome grilles, huge quad tires, bitchen black rims … and I’m left wondering how the “immigrant-looking” driver can afford a $100k bling-truck? Are they taking deposits for jobs and not doing the work? Are they skipping out on Workman Comp insurance? Did they get a massive illegal-alien Federally guaranteed business loan? I don’t get it … but maybe this article explains it
Yes, yes, yes and yes. Personal finances are not taught anymore, the suckers are only fixated on the monthly payment, then if necessary, kiting payments from credit card to credit card, working under the table for cash, HELOC financing for the $100k disco queen truck, hey, whatever it takes Kenji, it’s better to look good than to be smart.
Yes, my ol 2005 F350 has a few scratches, needs some touch ups, a new seat cover, and has a very minor pan leak. But, it’s paid for, it can tow almost anything, had to sink big dollars into the drivetrain and braking system 3 years ago, but, it was still far cheaper than a new truck and without payment obligations. These guys are suckers paying up to $100k, for a truck, only to see it depreciate at 20% per year as a grocery getter or commuter. Even with tax deductible status for work, it’s still an extraordinary overhead on one’s business. Dumb, dumb, dumb.
It has been going on for years, my nephew bought a used truck and financed at some finance company that charges twenty plus interest, he crashed the truck and the replacement value wasn’t enough to buy another or pay off the loan. So what did the finance company do, let him buy a brand new one at the same interest rate and combined the loans. He’s going to end up owing more for the truck than my house is worth.
This is “kicking the can down the road” on steroids. The problem, going forward, won’t be the car buyer defaulting but the finance companies going under, which can potentially take banks with them.
My local Ford dealer finally has some F150s in stock, for the first time in 2 years. The catch? Prices are up around $14,000 over last year’s models and discounts from MSRP are a fraction of what they used to be.
9 out of how many?
I have a one ton Chev van on order, the price was lower than comparable used.
Yes Kate that is what has happened to the used car market.
“If lenders are willing to backstab each other in order to put more loans on the road, we’re in trouble.”
It was always so. The only thing lenders are in sync on is squealing to the feds about freedom-lovers.
Biden’s “hopeful economy” is beginning to blossom.
https://www.foxbusiness.com/economy/rising-car-repossessions-trend-warning-sign-economy-report-says
I have two old banger trucks ( 2002 Silverado and 2003 Frontier) and one somewhat less old bangermobile (2014 Nissan Versa Note). No car payments but have had big repair bills, especially on the Silverado. The Silverado and Versa both have 180K miles, the Frontier has 210,000 miles.
All three vehicles have body damage. I would like to get something more up to date and less banged up, but I like being out of debt and my annual liability insurance for all three vehicles is only $962 per year.
With a recession looming on the horizon and my future employment too uncertain, I’m just going to keep maintaining the bangermobiles and stay out of debt.
Jim
“Stay outa debt”. I’m all over that ..!!
Cannot imagine “financing” a vehicle so to have the latest and shiniest. Lets see, might get 10-12k for my 06 GMC D’max and then what…?? Buy a 2022 Duramax for more than what my mortgage is..? ($ 118,00 loaded..??), LMAO…as if eh.??
Nope…my 06 dmax will be my coffin: Stick a blt of Espanol Tequila in my hand, a fat lit doobie in my mouth and crank up the SANTANA as it rolls into my grave..!!
Hi Steak:
My Silverado is a 1500 HD. Six liter gasoline engine with good towing power.
Of course, a diesel engine like your Duramax would be better, but I can’t imagine myself paying for diesel fuel right now. Hopefully things will get back to normal soon.
“Old bangers”? Ha, both my trucks are from the previous century.
Newer vehicles are made for indoor use only.
The auto salesman is rewarded for selling a car
The finance person is rewarded for arranging payments
The insurance person is rewarded for arranging coverage
The gov’t loves that you’re contributing to the economy
The repo man is rewarded for bringing the auto back to the sales lot
The used auto salesman is rewarded for selling the car (again…)
It appears that none of them talk to each other.
2005 Saab 9.3 convertible Areo 6 speed manual (do I even have to lock it up parked outside Home Depot?)
Yokohama ice guard winters.. very good gas milage, zero payments, dogs love it in summer…
I’ve driven the last 3 Saabs I’ve had for +400k kilometres, I have 150k on this one. Possibly the last gas vehicle I’ll have to buy. Paid $5000 + put the actual winter tires on the original rims, “all seasons” are on nice rims too, and, I do my own brakes etc… the engine will need timing chain work next summer, rear engine seal (lift the engine out or drop the transmission) someone else will do this, and it could bring me up to $9k on the car. All in, about 20% of the cost of driving something comparable. A truck would be nice though…
Daughters drive Toyota Tacomas, son has a Nissan Murano, and ex wife has a Toyota Rav4.
Zero payments.
I am a fan boy of Honda/Acura and Toyotas.
My last two vehicles I bought, a 2011 low mileage Ford Ranger, 4L extra cab in 2015, and a Jeep Patriot 2016 in 2020 were both financed completely out of our savings account. Wrote a check for the full amount for each purchase. Interest on any loan would have be about 5 times the paltry saving interest, if not more. The Ford Ranger is a popular brand and has retained much of its value.
I purchased a 2017 Grand Caravan last June to replace the truck. Turned out to be a good buy as I started driving for Uber back in March. It makes me money. To purchase a used one now, 10 grand more.
The only way you can ‘win’ at the vehicle game is to buy used and go long.