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Nearly all car loans for all of time have been underwater. It's a depreciating asset that drops a huge amount of value the moment of acquisition. Eventually the
by cosmotic 4y ago
Nearly all car loans for all of time have been underwater. It's a depreciating asset that drops a huge amount of value the moment of acquisition. Eventually the principal drops below the trade in value, but all car loans start out under water.
- pc86 4y agoIt's possible to buy used cars. Used cars don't drop huge amounts when you buy them, because they've already started to depreciate. Losing that "single owner" badge on a website or carfax might be worth $200, if that. If you've purchased used cars and put anything more than a pittance, you've likely never been underwater on the loan. In 2019 I purchased a 2016 car for $25k with 10% down. I've made minimum payments on a 5 year loan and it's never been under water. While by their definition I think it qualifies as "very good," the "good" KBB trade-in value is currently $23k (honestly higher than I thought).
- cosmotic 4y agoIn the case of a used car, you'd lose the difference between the marked up price and the trade in value.