Americans continue to take out auto loans higher than the vehicle is worth

[AdamK47]

What is this collective group think that's enabling people to do this? Is it that they see their neighbors doing it and thinking it must be okay? All of this is snowballing into dealerships continuing to add markups. Something has to give

Bloomberg - Are you a robot?

 

[IronWing]

I've been fortunate that I have never needed a car loan.

 

[Captante]

What is this collective group think that's enabling people to do this? Is it that they see their neighbors doing it and thinking it must be okay? All of this is snowballing into dealerships continuing to add markups. Something has to give

Bloomberg - Are you a robot?

I like to refer to it as "stupidity" ... a common condition sadly without a cure.

 

[Red Squirrel]

Cars in general are so ridiculously expensive now. Even used.

I've always bought used myself and paid cash, just can't justify buying new, it's almost like buying a house! And they just don't last. If it was guaranteed to last my life time I could maybe justify it, but after 5-10 years they're already starting to rust and start to have issues.

 

[Captante]

I've been fortunate that I have never needed a car loan.

I have a few times including one from a "buy here pay here" place lol. (which amazingly was a better overall deal then some of the "legit" dealers I've gone through!)

These days however I take a different attitude... my strategy now is drive my little Honda till the wheels fall off! (hopefully it will be awhile!)

And they just don't last.

Time to start buying Japanese. *(Ford = found on road dead!)

(Amazingly there's a part III as well but no link)

 

[nakedfrog]

Surely some of this is on the underwriters, are they now under pressure to issue loans they're not confident can be fulfilled, or proceeding with the assumption they'll come out ahead after a repo?

 

[GodisanAtheist]

Cause you need an f'ing car to exist and car companies/dealers figured out that they have been undercharging people for a necessity this whole time.

What are you gonna do, boycot buying a car and take 5 hours getting to and from work using public transit every morning?

 

[crashtech]

People want more car than they can afford, and a newer car than they can afford, so they trade in their car too soon and refinance what's left of their previous loan with ever larger loans and longer terms. Somehow there's no realization that it can't go on forever. Maybe they'll come out with a 10 year car loan to keep the consumption insanity going.

 

[Captante]

Somehow I think this pricing/finance "strategy" by the auto-makers may pay off with higher profits in the VERY short term... long term however all its going to do is speed the auto industry as currently constituted down the road to extinction.

Do keep in mind how dumb and short-sighted the "big-3" American car companies in particular are ... these morons have a long history of shooting themselves in the foot and nothing has changed.

I predict our "electric future" will consist 90% of cheapo EV's FROM CHINA in another 15 years at most. American EV's will be priced out of the market almost completely and will become high-end niche products if we're not careful.

America's MASSIVE technology lead will evaporate just like it did in the space-race. (while Musk is occupied playing childish games on Twitter)

 

[nakedfrog]

People want more car than they can afford, and a newer car than they can afford, so they trade in their car too soon and refinance what's left of their previous loan with ever larger loans and longer terms. Somehow there's no realization that it can't go on forever. Maybe they'll come out with a 10 year car loan to keep the consumption insanity going.

I think they're already ahead of you...

Vehicle Rates - Americo FCU

Rates as of March 10th, 2025 Autos & Motorcycles (2021 & Newer) Autos & Motorcycles (2021 & Newer) APR* as low as Term 2 Payment example 5.49% ** 36 months $301.90 5.99% ** 60 months $193.28 6.00% ** 72 months $165.77 6.15% ** 84 months $146.85 8.99% ** 120 months*** $126.63 Autos & Motorcycles...

www.americofcu.com

Autos & Motorcycles (2019 & Newer)

APR* as low as	Term	2 Payment example
6.49% **	36 months	$306.41
6.99% **	60 months	$197.95
7.99% **	72 months	$175.27
8.99% **	84 months	$160.83
10.49% **	120 months***	$134.88

 

[Greenman]

Lets face it, you pretty much have to have a 500HP engine, heated leather seats, power windows, door locks, seats, hatch, and mirrors. Mood lighting is always nice as well, along with a 19" screen to stare at while you drive. You're in for $50k if it's a small car. A real baller will get all that equipment in a pickup and then you're staring $90k.

 

[Captante]

And that pickup will very likely dwarf Bigfoot too!

 

[rh71]

Lets face it, you pretty much have to have a 500HP engine, heated leather seats, power windows, door locks, seats, hatch, and mirrors. Mood lighting is always nice as well, along with a 19" screen to stare at while you drive. You're in for $50k if it's a small car. A real baller will get all that equipment in a pickup and then you're staring $90k.

My mom bought an Odyssey back in 2018 and it was almost $50k. Middle trim, not lowest or highest. Good car with good tech, but crazy that minivans are going for that much. I just looked up used and they're still $30k.

 

[HomerJS]

What is this collective group think that's enabling people to do this? Is it that they see their neighbors doing it and thinking it must be okay? All of this is snowballing into dealerships continuing to add markups. Something has to give

Bloomberg - Are you a robot?

What happened to the lender evaluating the application and turning it down?

 

[Captante]

What happened to the lender evaluating the application and turning it down?

That's just crazy talk!

 

[dullard]

What are you gonna do, boycot buying a car and take 5 hours getting to and from work using public transit every morning?

I have a mind-blowing new idea. What about living near work? We could maybe even invent something to help this out, like, maybe having residential space above the office/commercial space. Surprised no one has ever thought of that solution though in the history of the world.

 

[Red Squirrel]

I have a mind-blowing new idea. What about living near work? We could maybe even invent something to help this out, like, maybe having residential space above the office/commercial space. Surprised no one has ever thought of that solution though in the history of the world.

Or we can just make WFH a standard thing, so that people can still live in nice places without having to commute anywhere.

 

[AdamK47]

What happened to the lender evaluating the application and turning it down?

The large short term gains are too irresistible.

The auto loan industry isn't as tightly regulated as tye mortgage industry... yet.

I suspect some good vehicle prices coming in the future by way of repo auctions.

 

[Red Squirrel]

Lets face it, you pretty much have to have a 500HP engine, heated leather seats, power windows, door locks, seats, hatch, and mirrors. Mood lighting is always nice as well, along with a 19" screen to stare at while you drive. You're in for $50k if it's a small car. A real baller will get all that equipment in a pickup and then you're staring $90k.

That's part of the issue too all the vehicles now days seem to be all fancy which drives up the price. They need to make more plain choices too with lower cost. Especially with EVs, they need to cut back on the infotainment and tech stuff and just go to basics. What I'd love is a plain jane single cab electric truck with 8 foot box and nothing fancy. Price it at like 40k tax/fees included, and make it all stainless steel with easily serviceable battery, so it lasts. Have a hybrid version where it has an onboard diesel generator to charge battery back up as needed. Something like that would actually sell a lot. I don't know WTF they are doing to trucks now, those tiny boxes are a joke. A minivan is literally better at hauling stuff at that point. I would actually consider a minivan as my next vehicle if I couldn't find another used 8 foot box truck. Although a car or small SUV and utility trailer would work too.. That might be the route I'll eventually take.

 

[rh71]

^ They package things to sell at higher prices. Just like cable tv packages where they include channels you won't watch.

 

[Meghan54]

Or we can just make WFH a standard thing, so that people can still live in nice places without having to commute anywhere.

Sure. As long as we don’t make anything, that’ll work for some.

Can’t WFH in manufacturing or farming or thousands of other necessary jobs.

 

[RPD]

I see it all the time, the exception are people driving cars within their means. Or people just repeatedly lease, which I still don't understand nor care to ever dive into.

 

[Red Squirrel]

^ They package things to sell at higher prices. Just like cable tv packages where they include channels you won't watch.

That really seems to be what they're doing. Even when you look at trims, if you want one option you end up having to take a bunch of others you don't want.

 

[Red Squirrel]

Sure. As long as we don’t make anything, that’ll work for some.

Can’t WFH in manufacturing or farming or thousands of other necessary jobs.

Of course it would not work for everyone, but for a lot it would. Lot of those jobs tend to be in nicer areas away from big cities anyway so you can still live close to work and have property. Lot of those jobs also require to travel no matter what too, ex: construction, sites are at different locations. So at that point it's just part of the job and ideally they should pay you for that time once you're on the clock.

Jobs like linemen or jobs of similar nature could also be dispatched from home. No sense going into an office just to have to go to a call. Could just check tickets right from home. I think some places do actually work that way though. Overall, need to minimize the amount of people all driving into downtown of big cities at the same time. A lot of those jobs are office jobs that could easily be done from home. Of course, not all, such as retail.

 

[nerp]

Sure. As long as we don’t make anything, that’ll work for some.

Can’t WFH in manufacturing or farming or thousands of other necessary jobs.

Live on the farm.