That's crazy. We bought a gently used car this weekend and the sticker price was nothing near that. It's nothing fancy but nice enough for a teenage driver.

What the hell are people buying here? Don't Civics run in the Mid 20s usually?

If you chart the change in median terms for said car loans it's going to look similar. That's how.

It's not…..

I'm not sure, either. But I've noticed the same. My friend just bought a used truck over the weekend for the same price that it costed new 2 years ago. The new car price has inflated so much that even used cars aren't a deal, anymore. And the same truck sold new today is $10k more.

Have two financed vehicles at 1.75% each. Would have been dumb to pay cash for them at the time. I still put half down down on each to keep decent equity. With rates where they are today I'd pay cash for the entire purchase.

It is incentivized this way. I financed two in the last 5 years over this amount because one was 0% and the other was 1.9%. Figured I could out perform in the market, which has been the case (albeit much given back in the last year).

BCG Disciple said:

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It is incentivized this way. I financed two in the last 5 years over this amount because one was 0% and the other was 1.9%. Figured I could out perform in the market, which has been the case (albeit much given back in the last year).

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Willing to bet you're not the average customer. Most people don't float cash into investments as they have no cash to do so with.

I wonder if this has the potential to become a bubble because of people buying expensive depreciating assets they ultimately can't sustain.

Jeeper79 said:

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I wonder if this has the potential to become a bubble because of people buying expensive depreciating assets they ultimately can't sustain.

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For sure.

My rule is I try to keep sticker within $10k of age. Get to live a little but keep things pretty reasonable

Burdizzo said:

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Funky Winkerbean said:

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Allowing 7 year terms spurred the price expansion.

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A seven-year-old car today would be a 2016 model with roughly 100k miles on it depending on a lot of factors. In 1980, a 1973 model with 100k miles had one two wheels headed for the scrapyard. I think seven year financing is ridiculous too, but cars are built a lot better these days than they used to be.

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I don't disagree, but it begs the question of who still drives a car that's paid off?

Funky Winkerbean said:

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Burdizzo said:

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Funky Winkerbean said:

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Allowing 7 year terms spurred the price expansion.

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A seven-year-old car today would be a 2016 model with roughly 100k miles on it depending on a lot of factors. In 1980, a 1973 model with 100k miles had one two wheels headed for the scrapyard. I think seven year financing is ridiculous too, but cars are built a lot better these days than they used to be.

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I don't disagree, but it begs the question of who still drives a car that's paid off?

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One of ours is paid off.

I try to keep vehicles for 6 years, but the prices are going up faster than my ability to afford one. What used to be a 3 year loan or no loan for me is now a 5 year loan.

I recently replaced an engine for because to replace that vehicle with something similar would have cost 4 or 5 times as much. Thankfully that one is paid off for a while now. I hope we can get 8 years out of it this time.

I only buy used cars and always will.
2011 Honda Pilot and 2013 Honda CRV here.

My daughter who just transferred from LSU to U of Mary in North Dakota just drove her 2003 Honda Accord from Baton Rouge to Dallas to Bismarck. No issues!

Absolutely, but it's a bit more complicated.

1) Less used car supply is in the market:

Dealers are holding leaner inventories due to higher holding costs.

Day’s supply - In other words, the average # of days it takes to sell a used car - has significantly dropped over the past month.

Less supply = Higher prices.

— CarDealershipGuy (@GuyDealership) January 30, 2023

Dealer carrying costs are high too, which means lower inventories. When sales are up (tax refunds etc), that means higher prices.

Also, a huge amount of the public can't make their payments now…way higher than ever. Which will lead to…insurance fraud 'accidents' etc. and that leads to even more auction types.

1.84% of auto loans are now severely delinquent.

The highest rate since February 2009.

— CarDealershipGuy (@GuyDealership) January 25, 2023

It's always been ludicrous to borrow an amount of money on a car that you can't pay off in a year or two, but to do it at 40K with huge interest rates on a 60-84 month loan (yes, really), is utter insanity, even for someone with an IQ around Vints Young or POTUS Poopy Pants.

Funky Winkerbean said:

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Burdizzo said:

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Funky Winkerbean said:

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Allowing 7 year terms spurred the price expansion.

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A seven-year-old car today would be a 2016 model with roughly 100k miles on it depending on a lot of factors. In 1980, a 1973 model with 100k miles had one two wheels headed for the scrapyard. I think seven year financing is ridiculous too, but cars are built a lot better these days than they used to be.

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I don't disagree, but it begs the question of who still drives a car that's paid off?

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me and my wife, my parents as well

LMCane said:

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how is this possibly sustainable in an economy where the median household income is around $60,000?!

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Lenders think that falling asset loans are a good money maker?
No one puts a gun to their head and tells them to make loans.