It’s getting bad out there, guys. There are cars keep getting more expensiveaverage monthly car payments towards $800, Millennials and Zoomers skip their car paymentsand the highest number of people paying over a thousand dollars a month for their car in a decade. It seems that everyone should stop buying cars and rethink their financial situation. But people are still buying cars, and the situation could get worse: Bloomberg reported that a record number of Americans had their auto loans reversed.
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The number of people in the water concerns everyone from the drivers of cars to the dealers that sponsor these people. Bloomberg says dealers are reporting that there are more buyers than ever with $10,000 or more in negative equity looking to swap their vehicles and convert that debt into a loan. other. Get an owner Bloomberg talk to. After he realized his family needed a bigger car, they did something out of the ordinary: they traded both of their cars for a Ford Explorer. Including what was owed on the two cars, plus registration and all other agency fees, the couple ended up paying $66,000 for a $49,000 Explorer.
That family is not alone. Data from Edmunds shows that the average amount Americans owe on their auto loans is rapidly approaching pre-pandemic levels. After falling below $5,000 between April and December 2021, the average amount has begun to rise again, reaching $5,500 by the end of 2022. Rising car prices and longer loan terms are also driving Industry insiders are worried. But it depends on the buyer base.
Pete Kesterson, general manager of a group of dealers in Falls Church, Virginia is more worried about his Kia customers than his Volvo customers. Kesterson says Volvo customers often pay cash for their cars; Kia customers tend to be more financial. While they are having more sales, he is concerned about it all coming back to haunt the economy.
“It will come, and it will bite us. Now, we’re selling the cars for a lot more, and financing for a longer period of time, at a much higher interest rate. There are some challenges coming up, he said Bloomberg.
But it’s not all the buyer’s fault. Some models and brands have Terrible resale valueover which the buyer has no control. Other factors such as agent marking – which the lender usually disapproved if the extra amount is greater than the value of the car – things will get worse. If buyers continue down the path they’re on, the auto loan bubble will burst. It is no longer a matter of if it will again. Its When.