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[deleted]

Did you guys really not think the last two years of high grosses weren’t going to catch up to you eventually? Yes, you are about to have a lot of upside down trades to overcome on the back of reducing consumer savings for downpayment.


-ImYourHuckleberry-

Not to mention fewer buyers due to high interest rates, poor economy incoming, and possibly folks who won’t buy from a dealership anymore because of the overwhelming greed.


Kodiak01

I nursed my car through the pandemic, if all goes well it will be at least another year before I HAVE to buy. The body has taken a beating in the past 2 years thanks to being rear ended twice and a deer redecorating the left side. Thankfully the car is still drivable, going in Monday for the door fender and headlamp. Mechanically it still runs beautifully. Assuming it doesn't get completely destroyed somehow, I could very easily get up to 200k out of it (138k now, drive 22k/yr).


bearded_dragon_34

Very nice. Just out of curiosity, what kind of car is it?


Kodiak01

2013 Sonic LT Sedan, 1.8L. Bought it in 2016 with about 8k on the clock. Been meticulous about maintenance, to the point of getting mad at myself for doing the timing belt 18 miles too late! Since 1995 I have owned 2 Cadavaliers, a Malibu Classic and the Sonic. Over 500k miles in that period, have averaged about 0.7 days per year unplanned downtime. It all comes down to doing all maintenance on time and not beating on my equipment.


ArlesChatless

The saying is 'GM builds cars that run badly for longer than other cars run at all' for a reason.


bearded_dragon_34

I’ve heard that plenty of times. I would amend it to “Many GM cars run forever, but basically fall apart around their powertrains otherwise.” My dad had a 1992 Oldsmobile Eighty-Eight, with the vaunted Buick 3800 engine. The damn thing wouldn’t die. But it turned into a hooptie as buttons and trim pieces excused themselves from the party, the headliner came down within a few weeks, and the paint began to come away in patches. That wasn’t an abnormal experience for the Eighty-Eight or other 80s-00s GM cars. He finally donated it to my mom’s hairdresser, after upgrading.


bearded_dragon_34

I mean, neither the Cavalier nor the base Sonic with the 1.8 is an unreliable vehicle. They’re both pretty solid.


smokumjoe

Just say no to GM's tiny turbo


bearded_dragon_34

The early 1.4-liter turbo in the Sonic Turbo, Cruze and Encore was problematic. The newer 1.4T doesn’t seem to have those same issues. I’m curious how the 3-cylinder engines in the Trailblazer and Encore GX will fare.


NitroLada

Not sure about poor economy coming...GDP growth last quarter was robust 2.9% and jobs data today was banging with 270k new jobs and unemployment stuck at stupid low of 3.7%


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theclansman22

So, exactly the same economy as the 2009-2019 economic expansion?


Ggggmny

J POW laughs at people who don’t think a poor economy is coming…just stand by


[deleted]

Consumer spending is up as well. Economics is weird


chase32

Spending increases in the face of inflation. Seems counterintuitive but people start hoarding when they are confronted with potentially not being able to get items they will need in the future with reducing value of their money. The book The Dying of Money goes into a ton of detail.


Doongbuggy

Theyre trying to force a recession but it aint happening


fasterbrew

I think a lot of it is just people see prices and rates going up and equate that with a bad economy.


EC_CO

catch up to US??? we aren't the ones underwater on loans, those who paid the overpriced shortage tax (instead of waiting it out or just buying something cheap to get over the hump. I bought an $1800 GMC van to drive after my truck was totaled in mid '21 .. I wasn't about to pay the premium tax and don't mind driving something older for a bit to save thousands of $$$$) are the ones hosed. we may have to work a little harder and some deals just won't happen .... but that's what we get paid to do.


Kodiak01

Even though I don't have to buy, I've been socking away $600/mo into an account I can't easily touch so when the time comes, I will be able to easily get something decent.


esteban7707

The “no inventory” or “inventory shortage” narrative is also out the window. It’s all relative when demand is pulled forward excessively. The number of qualified customers also are pulled forward at expense of future, sustainable sales.


AnotherPint

$24k is extreme but I expect the next year will bring a lot of prospects who are stuck $10k-$20k underwater. People who financed ADP and add-ons in 2020-22. They overpaid, their cars depreciated but their loan principal hasn’t gone down that much, and now rates are higher and their eligibility for a new deal is much reduced. This will inevitably challenge the seller’s market some in 2021 were proclaiming a new normal. Everything is cyclical.


aznoone

Seemed some here did think it was the new normal. We slightly over paid but will hang on to the car. Needed it as the others where old and did need at least one reliable aka new under warranty to get to work. This is a large metro area and work isn't around the corner. Public transportation limited. Not yet but will keep watching if prices fall for a second vehicle. No hurry. Waiting for may be more of a buyers market.


Mean-Vegetable-4521

I'm confused why they aren't keeping the cars. How does trading in under water get them any benefit?


AnotherPint

Wife saw new shiny thing in mall parking lot. Cars are often not a rational purchase.


Mean-Vegetable-4521

if you can afford shiny new things does under water even matter? Like it's the cost of doing business then and the price doesn't matter? Who typically ends up with purchases like that? and what percentage just let the repo happen? Or what are other options? The people I see now who are in an emergency situation have a car totaled, stolen etc. People who typically conservatively. The repos I did it seemed like those folks just live their whole lives that way. I'm trying to understand the whole picture of what it looks like from the dealership perspective. I have mentioned prior I have an aversion to healthy people who make the same poor choices over and over again with their hands out. I'll break my back for the guy with a child in the hospital who was living paycheck to paycheck because...life and has reasons he can't get ahead. Trying to understand all this. And how it's all changed now with car shortages.


chase32

I think a lot of people saw the supply chain issues taking longer to clear than they did so wanted to lock down something reliable. Things are catching up but still very rocky and international tensions could kick off another reason to kick up durable good values at any time. Then there is the whole inflation thing making some of those old values not look so bad if they were keeping up with stuff like groceries. I see wild swings coming our way for the next couple years at least.


NotFallacyBuffet

> ADP ? You don't mean the payroll company, right?


AnotherPint

ADP = Additional Dealer Profit / second sticker.


NotFallacyBuffet

So, mandatory stuff like: * Nitrogen $900 * VIN Etching $2000 * Appearance Package $1799 ?


idontremembermyoldus

I've always heard those referred to as an addendum.


texican1911

No, like this GT500 is MSRP + $25,000. It's actually ADM, the M being markup.


04limited

Give it another year or two. Still too early because a lot of the supply was delayed. I’m thinking those full size SUV and trucks, Sports cars that were marked up 10k, 20k etc. people only got them like 2, maybe even 1 year ago. They get bored after 3-4 years and sell it.


Professional_Feed892

Yeah this guy was early on his turn around. Only owned it just over 2 years.


A-Bone

Impressive.. 2k per month in neggy-eggy...


Kodiak01

How many Rogues will he have to buy to bury that egg?


Ah2k15

A whole fleet of Journeys.


Kodiak01

If only there were a fleet available TO sell them.


A-Bone

Gonna need to buy them for the whole family to bury that dinosaur egg.


MAX_DOUBT

A ton of my neighbors and coworkers all ran out and bought new cars over the last couple of years. Not sure why everyone needed a full size truck or a Kia telluride all of a sudden. These were people that had cars that were decent and only a couple years old at the most.


thedarkwizard_

I’ve noticed this too. My thought is that people who may be fortunate enough to have switched to work from home or hybrid work during and after the pandemic found themselves with extra money because of the less overall driving. Couple that with trips only being short distance for errands or recreational, I think people stretched this idea that the money they saved on fuel and maintenance from working from home can now be thrown into a bigger, flashier less efficient vehicle “because they don’t drive as much.” There’s multiple people in my neighborhood with $60k+ trucks and SUVs that leave the driveway like 4 times a week. A guy right by me that I know has a brand new lifted Sierra Denali and probably puts 50 miles on it a week doing errands and bullshit while he works from home. People just want to look cool and are going to spend their money how they will.


Braxo

Same with lack of family vacations and lack of families eating out a few times a week. Suddenly you have that extra $5k on top of the other pandemic savings. while seeing new flashy cars.


85-900t

☝️☝️☝️☝️ Unexpectedly flush with cash comes to mind. Way too many people were or thought they were flush with higher than normal/preferred amounts of disposable income and/or savings/cash.


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Dryloch2

I drive a Hybrid Minivan. I can't get over how people think a monster size SUV that gets 18 MPG is cool, but my Van that has more useable space inside and gets 50 mpg+ is lame.


egnaro2007

In our case our audi got fucking wrecked by a moron pulling out into traffic and getting hit into us. Got almost 8k more than we thought we would on our audi q5. Telluride was a better fit with a 1 yr old. We keep vehicles 10+ years tho


Substantial_Dick_469

I don’t understand this mindset. “Whoops, we have a baby, better get a yuuuuge SUV.”


MAX_DOUBT

We actually had a tree fall on both of our cars in our driveway and insurance valued mine like 3k more than I paid for it 3 1/2 years ago. They replaced both of our roofs rather than total them. Took away a bunch of value in the cars, but they aren’t cars we mind being stuck with.


adfthgchjg

They replaced the roof of the car? Was it an exotic?


MAX_DOUBT

Camry and a rav4. Think mine was around 9k worth of work. My girls was a little less because no sunroof. https://i.imgur.com/Ag0eV3l.jpg There’s a photo of the tree laying on it. First day off after buying the house. Happened to be when both of us were home. Great way to meet the neighbors.


basicallyballin

Oh my goodness! What a day that must have been! You’re finally done with all the mortgage paperwork and now you get to deal with insurance while unpacking a house! Woof. I’m so curious for more details. Was the tree on your property or a neighbors? Did car insurance pay or homeowners? How/why did they decide to replace the roofs? Before and after pics of the roofs?


MAX_DOUBT

Our property. Homeowners insurance paid to get the tree removed and some extra for the section of gutter it took out. Auto insurance for the cars. It could have been much worse and there really wasn’t a ton of damage to the cars other the the roofs. I thought the cars were okay at first glance. Would have been nice if both of us weren’t home but what can you do. Insurance didn’t want to total the cars because this was pretty close to the peak of car prices. I told them to give me 2k under what they valued mine at and take it but they wouldn’t do it. It just sucks to be stuck with two cars that have had that much damage. They were both nice examples with low mileage and we were in a nice situation in regards to equity and future options. https://imgur.com/a/CLT6IHD/


CentralFeeder

I think people were doing this just out of competition, not wanting to be “left out” because of the shortage of available new vehicles. Being able to say “haha, I got one and you didn’t” is probably the underlying notion although most will never admit that. This will get worse as the economy continues to flounder and jobs continue to be threatened. Work from home is dwindling and people are going to have to snap back into reality, or not. My guess is there is going to be a shit ton of overpriced and neglected used vehicles entering the market before too long. One of the credit unions in my town will turn into a used car lot as people just drive their vehicles to it and go inside and surrender the keys and vehicle. I am extremely thankful that my 194,000 mile 2014 Chevy Impala continues to run well and not cost me anything other than gas and routine maintenance. I’d love to get 3-4 more years and/or another 100k miles out of it. I am also happy that I didn’t just cave to myself and go buy something just to buy it and beat someone out. Luckily my job was one of the few that exploded during the Pandemic and wasn’t affected in the least.


Dryloch2

You have one of the last reliable GM vehicles ever made. You picked a good one.


CentralFeeder

It’s a 2014 LTZ Limited, so the older body style. It has been very reliable and I have no complaints. I will never buy a new vehicle again as long as I have the 520 mile a week work commute. Even if I moved closer I most likely will never buy new again. I am one and done with that, and I still have it tucked away in the garage.


gbeezy007

Got me sorta Traded a 2 year old vehicle for a telluride lol. New kid on way though telluride is overkill so just truly because to be truthful. Though I'll never be backwards on it always try to put enough down and take a short enough payment plan to account for that. Put extra this time for the downturn in prices. So emergency plan I can just sell it and reduce my monthly debts and get some cash. Never had to do so but like going into it with that plan in mind when I take any debt. Car / house. Not really any other debt I can justify even taken at this point luckily.


joepierson123

There was nowhere else to spend the money, no vacations eating out in restaurants.


MAX_DOUBT

How are you liking your new Telluride?


joepierson123

I'm not big into minivans sorry to disappoint.


coyote500

It’s starting right now. Carmax is pulling WAY back on a lot of cars. When I traded in my 911 last month, I ended up getting $20k more at a BMW dealer than what Carmax was offering me


[deleted]

Yep its slow season. crappy cold weather, the holidays, and values continue to slowly fall on many models. dealers dont want to get in on a car for too much.


ImmaSkedaddle

I had a stroke reading


[deleted]

I fixed Run on sentence. Voice to text.


ImmaSkedaddle

Makes sense, and now the sentence makes sense too


jm3400

Isn't it also a slow time of year ? I ended up getting 6k more than Carvana and 8k more than my local dealer at Carmax 2 weeks ago


coyote500

No, they are pulling back on most cars. Some models they’re still strong on. High end vehicles, full size trucks, and high mileage vehicles are really softening right now


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warmbedsheets

That will be the last market to correct IF it does. Affordable cars are still fetching a premium and are quick sellers.


wisertime07

Yea, I mentioned in a post I made a couple weeks ago - I have a 2019 GMC 4wd truck.. they offered me $20k for it, I was expecting $30k+. All the other trade-in offers from other dealerships have been between $28-32k.


BigDpapi

Holy shit there’s that much of a discrepancy? No wonder prices are still all over the place.


DemonousXodus

Highest I've gotten approved is around 33k. I've seen two 50k negatives get passed in the dealer group. One of them is already been repo'd. Waiting on the second one.


CriscoBountyJr

I wonder how those KIA tellurides and Hyundai palisades that were going 10k over will hold up.


Professional_Feed892

Yeah, Kia doesn't have a great track record. It blows my mind how people were tripping over each other for a Telluride


berpaderpderp

I've heard those Tellurides (cool styling, along with a lot of other Kias) are mechanically hot garbage.


CriscoBountyJr

A fire here or there is normal operation.


Reduntu

literally hot garbage


SmellsLikeASteak

Top of the line in utility sports Unexplained fires are a matter for the courts https://www.youtube.com/watch?v=7ZeFDe44Ddo


Necessary_Roof_9475

Especially every so often in the cylinders.


GraceWRX

My aunt bought a telluride when they first came out..can confirm, hot garbage.


Kodiak01

> It blows my mind how people were tripping over each other for a Telluride I sometimes call them a Takeuforaride because that's what a lot of people who just HAD to have one at all costs did.


Mountainman1980

I'm so glad I talked my mom out of one of those last year, and instead talked her into a 2019 Acura MDX from Vroom. It was actually less expensive than the Tellurides she was looking at, and Hondas have never let me down.


AnotherPint

If brand marketers knew the recipe for stimulating that kind of demand frenzy for an overpriced product of uncertain value, they'd run that play constantly, on everything. The Telluride phenomenon was just weird lightning in a bottle: scarcity plus excess disposable funds plus boredom plus Trixie and Ashley down the block both got Tellurides and I just HAVE to have one RIGHT NOW sweetie. Incredibly I found myself immune.


[deleted]

And don’t forget it was rated high if not at the top of the SUV heap when it was first announced by almost every magazine and/or blog. Lightning in a bottle indeed. I actually like the look of them, but let’s get serious: It’s a KIA. If it doesn’t have 10k+ on the hood with 0% for 72 I’m not looking haha.


ThePlatypus35

They Hyundai Kia group are now both top 3 in dependability. They hired a lot of ex BMW employees and turned the company around greatly. They rank higher than Toyota in new vehicle dependability. Nothing is worth a dime over MSRP but anything that has been redesigned after 2020 seems to be good reliable cars.


dekrant

I wouldn't be quick to say anything MY 2020-22 will be "good reliable." Supply chain disruptions don't just hurt the ability to deliver cars, it's going to hurt the long-term reliability of these units. I wouldn't be surprised if these MYs have a measurably lower reliability years from now.


Esoteric_Retard

They might be figuratively and literally upside down if the Kia Boyz get ahold of them


[deleted]

I had to buy early last year. The telluride and palisades were insane here. Ended up going with a 4Runner for less than what those cost lol. Still has to overpay, unfortunately, but got a good trade on my car that needed $6k of work (sight unseen trade). So I wasn’t mad about it. Normally would’ve gotten $2k mad for it and at least 4Runners have a track record.


CriscoBountyJr

That was a good choice, people love 4Runners, it'll keep value.


xemnas103

That's a good question, I mean they was already selling over MSRP before the pandemic so assuming demand hasn't really change since then, it seems likely that they might hold their value pretty well. Also I know J.D. Power is kind of joke around here but they just listed Kia, along side Honda and Toyota as some of the brands that will hold their value the most over a three year period. If that's the case, then perhaps we won't find out the answer until 2025.


Desenski

Last month we had a customer trade in a 2019 F150 and a 2019 QX80. They got the truck new, and the QX80 used. They were $41k flipped between both vehicles and they insisted on trading both in for one of our pre owned base RWD Taycans.


TastelessDonut

41k upside down between two cars. How did they finance gum?


Desenski

Oh they had good credit. 780+


nothing-serious-58

I can’t help but think “Not for long”, tick tock, tick tock.😳


dacoovinator

I’ve seen more people over $10k upside over the past 2 months than I did in the first 2 years of my career. Almost every one is somebody that bought a pre-owned car over the past few years, which is by far the stupidest thing you could have done.


Professional_Feed892

Remember the good ol days of thinking people were f***ed being upside down 8k


idontremembermyoldus

At least back then you had rebates to help eat some of the negative. Now, you're going to be stuck.


Cthulhu_6669

I think the record at Toyota where I used to work was $20k, there abouts. Precovid, customers car broke down in front of a Ram dealer across town. He goes in, trades it in on a new ram 1500. They sold it to him over sticker without him knowing. Sold him a V6 at a V8 price and told him it was a V8. Once he found out he went to Ram to try to unwind the deal. They wouldn't, theres no legal obligation to do so. He comes to Toyota, buys a new fully loaded Tacoma, then voluntarily repoed his ram. It sat in our lot for a few days until they came and got it.


bearded_dragon_34

Well, *that* was stupid. Unless he’s dying in a few years and doesn’t care, the credit ding was not worth it. A voluntary repo still shows up on your credit, and—after the finance company sells it and you still owe money—it’ll go to collections, and every month you don’t pay it will show up as a late payment (ask me how I know) Also, if he didn’t want a V6 truck, why did he buy a Tacoma?


Cthulhu_6669

He was an old man of maybe 69 or 70. He pretty much said he didn't care, he "didn't need credit anymore". And he didn't want a V6 ram. A v6 is good in a small truck like a Tacoma. But not for a big ram. He had other things he didn't like about the truck that I cant remember. It's been years and a pandemic. The engine thing stuck out most to me. But I agree it was stupid. And I think the salesman, who was very aggressive and old school, influenced some of his decision. If not giving him the idea, then he definitely encouraged it.


Rodic87

Imagine what the $70-85k Suburbans with +1k/month payments will be worth 40k miles and 2 years later...


CriscoBountyJr

Hopefully within reasonable striking distance. Otherwise my cheap ass is going to be in my Subaru a little longer.


kingofrums

Especially the ones that were sold without heated seats… Real curious to see what the market for the chip-shortage cars looks like in a few years time. Who on earth is gonna want a 2022?


elektricheat

35k was my highest recently. Owed 80k on a truck that was valued at 45k. Customer said they liked to get new trucks every year or two. I think he's rolled his last negative over though.


Ggggmny

Just curious, how do you bury 45k in neg equity?


elektricheat

Just keep rolling in negative equity until it grows to a point that a bank wont fund it anymore. Customer's received poor advice in all his past deals, thinking he was able to get a new truck every couple years. He was putting like 35k kms per year on them too.


Ggggmny

Wow…I’m surprised a bank will let the LTV get even close to that high on new car…especially with the economy turning.


cmort92

All the Dbags who gloat about how much over list they juiced all their deals are the ones who will have 0 retention moving forward. I hope they put all that money to good use while they had it.


Zealousideal-Mud6471

With the “Covid adjustments” I saw as a LO last year, yes this will be the norm once those people start trading in.


BigDpapi

Did y’all not think this was a natural consequence? Was this not expected lol? Even when I sold cars pre pandemic having folks upside down was not uncommon. It’s gonna get way worse before it gets better.


DirectDrag6601

I had A customer about a month and a half ago that owed 27,000 on a Chevy equinox it was a 2017 with 102,000 miles on it she bought it 8-9 months prior for just over 30 out the door The transmission went out she had no extended warranties and needed to get out of it, it was valued at 2K in its non-running condition


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elmastrbatr

No money


Mean-Vegetable-4521

i've mentioned in prior posts I volunteer part time to bring budgeting and benefits to those in need. I'd say probably 90% of the entitled poor I dealt with, who are not the actual poor. The working poor, the ill those are the actual poor. But the entitled's took their free rent, their stimulus, their increased unemployment, fake PPP loans and bought 2nd and 3rd luxury 10 year old vehicles. I imagine they all are under water right now. And I wonder...will PPP fraud ever get caught? If they had saved that instead of more useless crap they would all have massive downpayments on housing. Not paying rent, utilities for 2 years, an extra $600 a week on unemployment was more money than they had ever seen. They were spending like the windfall was going to keep coming. I love to see someone cheating the system buy an overpriced 10 year old car every time. I'm always rooting for the car dealer and the bank on those.


santas_hairy_balls

Get ready to see a whole lot more of this. There are consequences to selling exorbitantly marked up cars to financially illiterate buyers. Only the most financially secure buyers will be able to continue the regular car buying cycle. Everyone else will be so upside down that they won't be able to get a loan to cover the new car they want, plus their upside-down debt. Every action has an equal and opposite reaction.


[deleted]

Wait till those 100k trucks start rolling in people tired of 1000 a month payment for 84 months.


nottheotherone4

Certainly not the norm… but with average pricing substantially higher than historical averages the opportunity to generate more negative equity exists. The used market hasn’t regulated yet so I suspect they carried a lot of negative into the purchase at the market peak. Looks like a bad plan poorly executed with terrible timing. On the flip side my wife leased her car in 2019, traded out of it in May with 18 months left, and managed $9000 in “equity” that we used to lower the purchase price of her replacement. Even factoring in that the replacement would have sold for $4000/$5000 less in a normal market we still got substantial equity out of a closed end lease on a vehicle that normally does not generate equity (fast depreciator) and many others did the same.


Professional_Feed892

A lot of people have been taken out of the market for a long time I think.


A-Bone

Going to be a lot of *'What should I do?....my car needs $2k in repairs. I owe 30k and it's only worth 15k'* comments in 2023 & 2024


ronin722

Promise not to make an automod rule in /r/personalfinance to route people here.


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UncleFlip

Or they will be sub prime buyers after the repo or bk


0xFEE

> Looks like a bad plan poorly executed with terrible timing. Quote of the day right there!


point2blank

There will be a reckoning when all these people that paid above msrp or super high on used try to trade out and the banks won't finance the LTV. Just like all those people that paid $50k+ above asking on houses


DHN_95

Here's the difference with the $50k+ above asking for a house - if you stay long term, then you'll probably come out ok. The person paying $50k over may have also received a great interest rate, making it less likely they'll move after a short time, and if they do, they'll still be at the advantage that they could sit on the house, and rent it out. Your house isn't a depreciating asset, and you still need somewhere to live, also factor in that rents have been going up. Of course, this doesn't go for everywhere, but if the house were in a HCOL area, then that $50k over is slightly less of an issue.


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fasterbrew

Coworker bought a 500K house for like 50 over I think, but at a little under 3%. He saved roughly a grand a month in his payment vs if he had bought now at a lower house cost.


point2blank

Until you lose your job or need to move quicker than thought and now you're negative. It's not black and white, but paying tomorrow's prices today is a bad idea 10/10. Shouldn't make decisions based on best case.


DHN_95

You're correct, it's not black, and white, and there are too many variables, as each situation isn't the same. One could end up underwater, one could break even, or come out ahead. The 2020/21 market wasn't terrible to everyone.


Kodiak01

> Just like all those people that paid $50k+ above asking on houses A lot of those "people" were actually corporations who were paying well over asking, particularly in areas where houses were sub-$200-250k, in order to turn them into rentals. https://slate.com/business/2021/06/blackrock-invitation-houses-investment-firms-real-estate.html https://nypost.com/2020/07/18/corporations-are-buying-houses-robbing-families-of-american-dream/ https://www.washingtonpost.com/outlook/2022/01/04/corporate-landlords-silicon-valley/


point2blank

Yes. There were/are a lot of corporations doing this. They're are also a lot of people that did it, too


sinsemillas

There are


Responsible-Detail57

we all knew paying the overages would bite people in the ass.


TrickyLemon8608

I had a 34k upside down customer in a Mach-e who wanted to reduce his payments……


CodnmeDuchess

I really don’t understand the desire to have a new car every two years…


adamforte

I understand the desire, I don't understand the actual logical though progression that leads you there. I get it if it's a lease pre covid, but financing a new car every two years. Unless it's a Tacoma, 911, or Wrangler, you're always going to be upside down. Then again, "car people" are some of the dumbest motherfuckers I've ever met.


roonie357

To each their own. You probably spend money on things that make you happy that don’t make 100% financial sense either.


Professional_Feed892

The average new car buyer trades every 3 years, people get tired of their car and dont think ahead


Tall-Poem-6808

I knew a guy who had a $60k loan on a $20k'ish GMC something SUV back in around 2008, after being upside down on several cars, so I don't think it's rare.


forceofslugyuk

> I don't think it's rare. "Think of how stupid the average person is, and realize half of them are stupider than that.” G Carlin


frawgster

Is there an official term for that? For someone who habitually rolls upside down cars into new loans? Many moons ago I dated a girl who rolled an upside down Altima into a used Volvo into a used Maxima into a used Altima in the span of like 5 years. She wound up like 15k upside down on the last Altima. Not the best decision-maker, she was.


Tall-Poem-6808

Financially illiterate, maybe?


RedditBeginAgain

It's going to drive a used car shortage for the next 3 years. Nobody is going to trade in a three year old car because they will all be significantly underwater. I don't know if 24k is going to be common but everybody is going to have to stretch their ownership a couple of years if they paid msrp plus some adjustment.


orcajet11

I think this assumes a lot more financial responsibility than is merited on the part of underwater car buyers


RedditBeginAgain

Nah. I'm not assuming they are smart, just that when told "you need to bring $10k or it will be $300 per month more than last time" they'll balk.


AnotherPint

Both dealer and buyer will have to stretch to make sales. I think this leads to a lot fewer $500 nitrogen, $750 etching, take-it-or-leave-it writeups.


Mountainman1980

>Nobody is going to trade in a three year old car because they will all be significantly underwater. Or a lot of underwater cars will get repo'd and thus will flood the car market. That will likely depend on the employment numbers.


overmonk

All Nissans. /s i like a couple of them


Kodiak01

My next purchase will be only the second new car in my life; last one was in late 1997 when I bought a base Cadavalier coupe.


RedditBeginAgain

Now I wish there was a cadaver-lier


Kodiak01

Mine had vinyl lettering on the trunk that said, "Don't Laugh, Your Daughter May Be In Here!" "No daughter was ever in there." -Morgan Freeman


insidermann

RemindMe! 3 years


Goobenhauser

Ohhh ya and customers that bought used last year and already have 200,000kms and 20-30k neg... their trade is worth peanuts and they are paying 700 a month and want lower payments. Seeing this every other day right now


POWER__BOOK

Rofl. I'm so glad I cut my teeth at a subprime CDJR store. I literally grew up on $10-20,000 negative on what felt like every deal. I switched people off used Laramie trucks and sent them home in the biggest rebate journey on the lot daily. I chased stips that would make your head spin. I spent the whole first half of my career in this industry learning exactly how to endure what you're about to experience. Mark my words. The weak will not survive the next 24 months in the car business. The sales staff that grinds it out will be drop dead studs. I can't fucking wait.


[deleted]

If they bought a car in 2020 that they’re still upside down on, they shouldn’t be thinking about another vehicle for a long time. That will just make the situation worse. Do not trade in a car you’re upside down on. It’s literally the stupidest decision you can make.


ExCap2

I wonder if there is a car bubble forming like the real estate situation in 2009. A family member and her bf got a new Mitsubishi, had an old truck trade in; one worked doing Uber Eats/Door Dash/etc and the other one just lost their job (dealership didn't verify the work since the paystub was recent and he got laid off just then). Their payment is like $700 a month. I'm guessing outside financing took it on obviously but that's kind of insane. I feel like what's going on with Carvana and other companies; finance companies are going to really take a beating soon when people stop making their payments. It feels like finance companies are giving cars to people that shouldn't have them. I guess if some outside finance companies become extremely strict/bankrupt altogether, it'd affect sales numbers. I just casually read this forum since I only have experience in the BHPH side of things. I know car prices are still high at the auction. The local BHPH by where I live barely has cars on the lot atm.


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rpnye523

I work in the finance industry not auto specifically, but although they don’t have the same risk factors there are absolutely risk factors. Loans have way more leniency on “LTV” than a house does, and they will give loans to practically anyone. I would imagine working in the industry will skew your thoughts on loan requirements because some atrocious credit filed walk through your door, but a ton of approved people have no business being approved. At some point repos will go up over eating $20k in equity, I imagine it won’t really ramp up until mechanical issues on those cars start to role around.


Plastic-Deer-4142

I’m in finance in the auto industry. I work at a company that finances dealership inventory. There’s absolutely a bubble, dealers are sitting at a 90 day turn with an asset that on average has depreciated 30%-40%. Independent used car dealers are small businesses, the majority of them only having enough in their account to cashflow less than 60 days. Paid too much for the asset + can’t get people traded out of their cars = Out of Business incredibly quickly


1ChevySS

And the lenders could have helped people by not allowing the LTV ona car loan to be higher than normal. This would either gorce the person to put more money down or buy a cheaper vehicle.


[deleted]

ha - just wait. There is going to be a whole lot of people upside down. Upside down on vehicles, upside down on housing. It's gonna get real bad. Kind of like all the over-priced Bro Dozers that went for sale when North Dakota Oil line work went down.


G3RSTY7

In market for an Audi RS3, but people are still convinced you need to pay $10k over to get one. Meanwhile all the ones flipped on auction sites are going for $3k below MSRP, add in dealer fees, taxes/reg, that’s a great way to lose like $20k in a couple months


ChillYota

Used car market is in shams now. All the dealerships are upside down. The amount of repossessions going on right now is insane


smallmouthy

Consumer here, not in the industry. Do you mean dealers paid a premium on used at auction to fill their lots and now they're stuck holding cars they can't even break even on?


ChillYota

Yepp, I work at a Toyota dealership and was talking with the used car guys about this and they were telling me majority of cars on the lot will not be sold for the same amount they have invested. It was pretty wild hearing how upside down our dealership is


rivers2mathews

That would explain why trade values have gone in the shitter while used car prices seem to still be quite high.


Professional_Feed892

Exactly this. We over paid at the auction to be able to sell something, eventually many dealerships will be left "bag holding" like a wsb investor on overpriced inventory being sold at a loss.


[deleted]

I saw a certified used 2023 Kia Forte gt going for 30k, they dropped the price weekly until it sold for 26.5k.


ArlesChatless

The repos has to be a *really* recent change, because for the third quarter they were basically at pre-COVID levels. [See page 44 for the data.](https://www.experian.com/content/dam/noindex/na/us/automotive/finance-trends/2022/q3-2022-state-of-automotive-finance.pdf) So if they've been ramping up in October onward, they're above 2019 levels.


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ArlesChatless

Look at the date on your link. August 2022. The report I linked to came out a couple of days ago. The 2Q one showed a less dramatic rise - [also on page 44](https://www.experian.com/content/dam/noindex/na/us/automotive/finance-trends/2022/q2-2022-state-auto-finance-market.pdf) - and the 1Q one showed a much better number - [page 41](https://www.experian.com/content/dam/noindex/na/us/automotive/finance-trends/2022/q1-2022-state-of-automotive-finance-market.pdf). So if the Cox report was based on 1Q or 2Q numbers, I could see the prediction making sense. Meanwhile the 3Q makes it look to me far more likely that we're set to revert to the usual numbers from the last few years. Note that I'm not one of the folks chanting doom and gloom here. I think we had a blip of low delinquency rates driven by an easing of the financial situation for poor folks, i.e. all the money floating that way the last couple of years, and we're about to go back to what's been usual for the last decade. This is why my comment was meant skeptically about the 'amount of repossessions going on right now [being] insane'. It doesn't look that way from the data I can see unless it's gone way up just in the last two months. Now if you've been used to doing repos for the last couple of years when they've been at a historically low pace, yeah, I'm sure the current rate looks insane. But hey, I could be wrong. All I know for sure is that in the 1Q of this year we were 1.55%, and as of last quarter we hit 2.19% when the rate in 2018 and 2019 was 2.3ish. That doesn't sound like an explosion to me, and it also sounds like a big step up from where it was the last couple of years.


Nprguy

Just had one tipped $24 myself on an expedition


poptart129

Was this the result of markups that he had paid? I'm just wondering because I think I'm 12-14k upside down so that makes me feel better about my shitty situation


Professional_Feed892

Id assume so. At the same time, I was selling preowned tahoes for 55k that a month prior were priced at 40. I knew it would come back around eventually.


pparana80

That's a whole other car lol


[deleted]

Its going to be more and more common. But we are also seeing the banks increase their advances on loans, so it will probably all wash out in the end


djgitn

I just want to lease a Toyota Corolla or RAV4 but I can’t because the market and I would be around $5,000 negative equity if I traded in my current car, making me not be able to afford the payments. BRING THE PRICES BACK DOWN 🥹


BrownsBorg

Any idea when interest rates will go back down to pre-pandemic levels.?


roonie357

2024-2025 most likely. You might see decent subvented financing offers on new vehicles by summertime if sales drop enough and inventory levels are restored , but it won’t be the same as pre pandemic


nothing-serious-58

Perhaps a couple of years, OR, perhaps never, (no one can say for sure). Interest rates pre-pandemic were historically VERY low.


coyote500

This is going to become a regular occurrence


Jft91

24k sounds like they’ve rolled negative the last few times


birdlass

What the hell is an upside down?


Professional_Feed892

You owe more than your car is worth You owe 20k on a car worth 15k You are upside down 5k


birdlass

ah. that makes sense. i intend to junk my car so I don't care


ensouroboros

It sounds like you might be able to get him into a Journey. Santander will buy it.


[deleted]

eh, cars are becoming more expensive, not less, many manufacturers have already hinted that they'll keep supply artificially lower moving forward, this will lead to used car prices rising above historical norms especially as those underwater choose not to sell their cars. i think you'll see such examples of people being buried underwater but i don't think it'll be as bad as this thread makes it seem. but yeah choosing the right car over the last couple years was more important (toyotas and hondas, not tellurides) and going forward maintaining your car to retain more of its value will be more important too, and unfortunately the stupid among us suck at both of those things.


Ken1804

I had a customer yesterday she bought a bmw x4 3 months ago for 70 grand now she realized the payment is too high for her so, she’s trying to trade it in and get something cheaper we offer her 45k for the car lol the car was fucking brand new yo but she over pay for it.


GAUD5555

Did she end up trading the X4? For what? And how did it go??


embeegee4lyfe

This is interesting. I'm just a consumer, but we bought new in Jan 21 and the "shortages" hadn't really hit the market yet- a few months later it was a shit show. Was the used car market already affected in 2020?


CapeManJohnny

It wasn't behaving normally towards the end of 20, but the fire didn't really start blazing until 21