Repossessions On Cars Are Exploding

[Legally_Speaking2512]

I could not have said words any more true than what you said about people financing cars that exceeds their annual income. I truly don't understand how people are comfortable doing that sort of thing.

[sarge12]

I am a bit confused by this. With the chip shortage, I thought car values had increased. Last year, I bought a new 2022 Camry LE with some nice options at MSRP, and paid nothing down. It is, and has been worth more than I owe, but that might be because my interest rate is 1.99%. The only thing I can figure, is people do not research which cars best maintain their value, or buy at too high interest rates. I could easily sell my car, and pay off the loan to prevent repo.....if I was struggeling. I am not, and could have paid cash for the car if I had been willing to take the hit that withdrawing that much from my 401k would have on taxes. I drove a very cheap, used crap car for years when I knew my finances were not very healthy. Why did I choose a Camry? It maintains a decent resell value if properly maintained. It is known for reliability. Finally, at just under 30k with the options mine had, it was a reasonable price, and would not break the bank. Now it does not have 6000 dollar rims, but they are still round. It also has a very high safety rating, and low insurance rates. The options include blind spot monitoring, keyless push button start, sunroof, paint protection package, and even remote start. At the time of purchase, a two year old Camry with similar options was only about 2500 dollars less. Used car prices were insane last year.

[Horseshoez]

@sarge12, while your Camry may well be above water today and will likely to continue to be so for the next year or so, the chip shortage will ease and my guess is, with the glut of repossessed cars which will be hitting the market as well as the easing of new car supplies, it is conceivable used car prices could tank.  That said, you, me (I just bought a new Tacoma), and everyone else who did a little research before buying, will probably be okay.  The flip side is early 20-something son of my neighbor, who just bought a $70,000 pickup truck, may well have a rude awakening in the next year or so.

[RSX]

to me it is simple math

buy a car that is less than 50% of your Annual Income - as you make more money, (200k+) this % should keep dropping lower

a car/truck that is equal to or more than your Annual Income will hurt you every day -regardless if you ultimately make all the payments and own it at the end

[Horseshoez]

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@RSX wrote:

to me it is simple math

buy a car that is less than 50% of your Annual Income - as you make more money, (200k+) this % should keep dropping lower

a car/truck that is equal to or more than your Annual Income will hurt you every day -regardless if you ultimately make all the payments and own it at the end

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While I tend to agree, there are folks who feel the need to advertise their wealth, hence folks up in the $200,000+ category buying some seriously expensive hardware. 

[CreditCuriosity]

My payment > 1k a month, not by much but is.. With that said it certainly isn't near my income alot less than 50% of annual income.  Cars/Trucks are not cheap these days at all.  Avg. car is what 40k I believe?  Some below and obviously some higher to average out around that $ amt.. Crazy times we live in.  Not happy with 1k+ payment, but little impact to me personally.  Just sad it is that much in todays market

[Legally_Speaking2512]

I just bought a car last week - your post reminded me about my pre-qualification with Chrysler Capital LOL. It came back and said I was pre-qualified for up to $140,000. Apparently Chrysler Capital received a memo that must have mistakenly identified me as a full-fledged license attorney - which would be great were that true. While it is true that I plan on practicing law, the problem is that I have yet to start law school and am nowhere close to being at a salary or I can afford a car loan like that lol.

[Legally_Speaking2512]

I just bought my car last week and I have to say that I'm with you - I got a great deal and not only did I buy my car but I cosigned on my wife's car the very next day at the same dealership. I bought a fully loaded 2020 Chevy Trax redline edition and my wife got a 2022 Chevy Trax that only had 6 miles on it and we got a great deal on that as well. Nothing down on both cars and more than reasonable payments. My car only had 15,000 miles on it as well.

I agree with you completely on Toyota Camrys holding their resale value. They are extremely dependable and relatively cheap to fix should something go wrong down the road. Much like you, we drove our cars, which were both almost 10 years old, until they started having major engine problems. Both of ours had upwards of 150,000 miles on them. I was actually really nervous about buying a car because of the current state of the economy in terms of the Auto World but was pleasantly surprised in the end. 

[iced]

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@Horseshoez wrote:

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@RSX wrote:

to me it is simple math

buy a car that is less than 50% of your Annual Income - as you make more money, (200k+) this % should keep dropping lower

a car/truck that is equal to or more than your Annual Income will hurt you every day -regardless if you ultimately make all the payments and own it at the end

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While I tend to agree, there are folks who feel the need to advertise their wealth, hence folks up in the $200,000+ category buying some seriously expensive hardware. 

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All the 8-9 figure net worth people I know drive <$100k cars (and several are less than $50k); it's the salespeople and realtor type personalities who think they have to show success to succeed who drop the insane money on more expensive offerings.

I'm well above the $200k income threshold and my car would trade-in for ... *checks KBB* ... $4,800. In this market.

[Horseshoez]

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@iced wrote:

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I'm well above the $200k income threshold and my car would trade-in for ... *checks KBB* ... $4,800. In this market.

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Agreed, I'm somewhere north of $200K as well; I just bought my first nice new vehicle in 20 years, and even still the MSRP was under $50,000.