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hdkeno's 1969 Firebird

2023 March
of the Month

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A third of America's cars are underwater: Is yours?


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Nashville flood carIn the aftermath of the Great Recession, you probably heard about plenty of people whose homes were underwater. Maybe you were one of them. Now, the analysts at Edmunds say plenty of cars are underwater, too. How did this happen? When we say that something is "underwater", we mean that (a) it was purchased on credit and (b) it's now worth less...

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This article points out some interesting points. First the average new car price is now $34000! So ask youself how much (as a percentage of your annual income) this comes out to be. If it is close to 50% or more then you probably should not be considering a new vehicle anytime soon unless nescessity forces you to.

Second comes the loans going out to 60 to 72 months, just so you can simply afford the payments. My credit union is offering 1.99% APR financed on loans from 24 to 60 months. This means, to me, that there is no difference to the CU between a short and medium term loan. I would have to think long and hard before I would consider a loan for 60 months. I would rather save for a larger down payment. As well as collect the little bit of interest on that money.

Finally, it also means with all the bail outs, lay offs, bankruptcies, the automakers are not lowering their prices any, they are simply maximizing their profits. So they have not figured that constant increases in automotive MSRP prices without any serious wage increases in this country is pricing more and more people out off the new car market, effectively they are slitting their own throats long term. Obviously they nor Congress are not smart enough to figure that out.

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