Under Water . . . Again

Print Friendly, PDF & Email

The more expensive new cars become, the less financially rational it is to buy one. But not so much for the obvious reason.

The up-front expense of buying a new car is the one many people see – and (rightly) sweat. It has risen dramatically – by about $15,000 on average – over the past four years. This uptick is due to a combination of factors, including the increasing cost of compliance with government regulations, inflation and the standardization of what used to be considered luxury features such as “power everything” and climate controlled AC, to name a few.

The car industry tries to assuage this dread by reducing the monthly payment. Which is done by increasing the number of years people make payments. Of course, you’re not paying less in this case.

You’re just paying more longer.

But that’s just the obvious thing – though there are people who don’t see that, either. The other thing is a consequence of the first thing. The longer you pay, the less your vehicle is worth over time. This is depreciation – and it happens to every new vehicle because much of the value of a new vehicle inheres in its newness. As that transitions into used-ness, the value of the vehicle usually (historically) decreases. Most of this depreciation occurs during the first five or so years of ownership, but consistently thereafter. Eventually, it plateaus at a baseline of hardly-worth-anything; this generally happens after about 15 years or so for most vehicles. A point may come at which its value increases again on account of it being old and so scarce and perhaps interesting and desirable as a collectible.

But that usually takes 20 at least years for that to begin to happen.

It’s what happens during the time the owner is still making payment that’s the dangerous thing. If the payments are stretched out over a long enough time, by the time the owner has been making payments for say four or so years, he may be in danger of still-owing more on the car than the car is worth by then.

Because of depreciation.

A car purchased – financed – when new for $50,000 (which is now the average price paid/financed for a new car) is likely to be worth $30,000 after four or so years. Possibly less. If the owner wants to trade it in, he may discover he has little to no equity in his trade, because he still owes a large sum and because the car has lost a large sum.

This problem was temporarily salved during the past several years by the highly aberrant phenomenon of late-model used vehicles not depreciating significantly or even at all. This being due chiefly to the effects of the event marketed as a “pandemic,” which among other things interrupted the supply of new vehicles. This left dealerships without a supply of vehicle to sell and many resorted to buying used ones at near-new prices from their owners – in order to re-sell them to people who needed a vehicle, never mind that it wasn’t new.

It was a vehicle.

During the last few years, consumers could jump into new car loans and their trade-ins were shielded from negative equity because some dealers, desperate for used inventory, were willing to pay near original purchase prices,” notes Ivan Drury, an analyst for Edmunds.com

This put people who’d been making payments in a temporarily favorable position. The vehicle they were making payments on was in some cases worth more than they still owed. This enabled them to trade in – and up – without the usual loss. But – very much of a piece with the way the housing bubble of the early 2000s popped and left many people owing more on their house than it was worth – the same is now happening to cars, chiefly because depreciation norms have returned. The vehicles people bought at the height of the late aberration – many of them having bought on the assumption that the value of what they’d financed would hold – are discovering it isn’t holding. The value is depreciating.

And they still have years of payments left to make.

It’s a terrible position to be in because there’s not much you can do to avoid taking a bath. Your choices come down to continuing to make  payments on a vehicle that’s worth less and less the longer you pay for it it.

Or you can dump it – and make your payment that way.

The take-home point being you’ll pay – either way.

. . .

If you like what you’ve found here please consider supporting EPautos. 

We depend on you to keep the wheels turning! 

Our donate button is here.

 If you prefer not to use PayPal, our mailing address is:

721 Hummingbird Lane SE
Copper Hill, VA 24079

PS: Get an EPautos magnet or sticker or coaster in return for a $20 or more one-time donation or a $10 or more monthly recurring donation. (Please be sure to tell us you want a magnet or sticker or coaster – and also, provide an address, so we know where to mail the thing!)

If you like items like the Baaaaaa! baseball cap pictured below, you can find that and more at the EPautos store!




  1. Maybe cars will end up like Super Yachts….

    The billionaire control group will own their own…

    The very rich will charter them for a couple of weeks…like a Super Yacht…

    The over 200 ft. long $60 million Super Yachts are available for charter….@ $500,000 per week….

    All the slaves will walk around a 15 min city/prison….when all the slaves are immobilized the super rich controllers will be living the good life on their 300 ft yachts and private jets….drinking $6000 a bottle whisky….

    This sounds like a profitable business….start a charter business….
    The over 200 ft. long $60 million Super Yachts are available for charter….@ $500,000 per week….

  2. This is why, a couple of years ago, I’m glad I resisted the urge to trade in my 2020 Ford (con)Fusion on a new 2023 Ford Escape hybrid…when I blanched at the prices the stealership wanted (about $48K out the door), I was shown a 2021 model with, they assured me (assuming the odometer spinners haven’t figured out the electronic ones) had only 7K miles on the clock…interesting thing is that the trade-in value of the Fusion was as much as I’d paid for it…but then again, of course they were tacking it on the replacement vehicle. I figured out that even if I simply “started over” with the Escape, which I did like, I would have been “leasing” my ride for 2 years, 8 months at $480/month, which seemed absurd. I had a offer from a local credit union to refi it at 3.375% fixed for five years, not that I wanted to stretch out the payments THAT long, but it’s nice to have that option…it made the minimum payment only $338/month. So I told the anxious salesmen, “no, it just doesn’t make sense to do anything other than ‘stay the course’ “, which I have. I have quite a bit more than the minimum car payment transferred from my main bank to the CU, and every six months, I either pay off something that needs paying off, and I make at least one extra car payment, and spend a LITTLE on some “blow” (not LITERALLY, of course!). Supposedly the values of used-up cars (my Fusion has 48K miles on it now) have come down somewhat from stratospheric levels, though I certainly owe much less than what it’s worth. I wonder how many folks “bought high”, and now find themselves even further “underwater” than that irresponsible financing method already has made them?

  3. hmmmmm,,,, depends on how you define value.

    Before I start,,, Happy Easter to all,,, or is it Happy Transgender day. One wonders what would happen if they done something this utterly insulting to Ramadan, or Hanukkah or any other religions tradition. Must be that DEI thingy. Wonder why they always insult Christians?

    Personally I do not allow others to determine the value of what I own as they do in the ‘Blue Book’. I have a twenty six year old car worth $500 at best according to the gods at Kelly. The car saves me a 500- 700 dollars per month payment wise. License, insurance far less expensive. And the best part,,, it could care less what lane I’m in,,, whether I signaled, where I am at,,, where I went,,, how fast I drove,,, what I said while in the car,,, whether or not I did a burnout,,, how hard I hit the brakes,,, whether I had a beer,,, it does not have ASS and there is no remote kill function.
    I have no need to impress the neighbors,,, the state or anyone else. I am not in debt and I will not go in debt for any reason, especially a car. I only use cash locally so the best part is when we shop the author-o-ties have no clue where we went, what we done, what we purchased, or how long we were gone.
    My freedom is priceless.

    • Insulting Christians is akin to grabbing the low-hanging fruit, Ken. Christians will generally not do anything but pray for you over such a thing. The real ones, anyway. Try that crap over Ramadan. The Muslims will start blowing things up, and raping and sodomizing everyone in sight. If a Christian stands up, he or she will be racist, yada yada. If a Muslim does so, it is their right to do so, and to protest means you are the bad one. As for old vehicles, I find more value to them than the new ones. Comparing my old one to this newer one, what a difference those years make, just in how they are made on the outside. It cements my decision to never sell it, and keep it in good running condition.

      • [” Christians will generally not do anything but pray for you over such a thing. The real ones, anyway. “] the shadow….

        I think that situation needs some serious updating. JMO,,, no insults intended.

        Reminds me of the bully in the schoolyard. On and on he goes until someone explains it to him in his language. But hey,,, If the Christians don’t mind, who am I to explain it to them.

        If memory serves, Jesus spent his life fighting the Jewish pharaohs until they took him out. Even then He went like a man.

        • Not offended, Ken. What Christians seem to forget, is that even Jesus had no problems with upbraiding the Scribes and Phrases. There are plenty of “woe to you’s” directed towards that group. He took a whip, and drove out the money changers in the temple. Jesus DID spend His life butting heads with the politicians and “morally superior” (so they thought they were) religious leaders of the day. And yes, sadly, many seem to forget that it was His own that killed him.

        • Hi Ken & Shadow,
          Happy Easter to you both, and all here. I always found it interesting that although he preached peace and nonviolence, Jesus really lost his temper over the “moneychangers”, kind of equivalent to today’s Federal Reserve. Yet another lesson we should learn from Him.

          • [ Jesus really lost his temper over the “moneychangers”, kind of equivalent to today’s Federal Reserve. ]

            True dat!

            I think it was like 3 days later when they crucified Him. That is how much they hated Him. They would kill anyone today that threatens their central banks which is where they derive their power.

            Some say He was a Jew,,, I contend He was a Palestinian by birth. Palestine was here before and after. Palestinians are mostly Christian and have been completely deserted by Christians in the USA. This nonsense of Euro-peon Jews saying the were the chosen ones is blasphemy as is the nonsense that the USA has to defend them to stay on the good side of God.

            I’m not sure God will be amused with the US assisting in the genocide of His followers in His homeland.

        • The Pharaohs were a matriarchy…the Jews were a patriarchy…one historian said that is one reason Jews were targeted….

          The descents of the ancient royal bloodlines of the Pharaoh aristocracy are still in power today….one example King Charles the 3rd and all the kings and queens everywhere today….all presidents, prime ministers are connected to the control group bloodlines too…


          The Catholics were part of the OWO… old world order…king at
          the top slaves at the bottom, feudal system….

          The Protestants and their connected Islam were part of the NWO new world order….rotating presidents at the top…slaves at the bottom…a republic….a feudal system….. instead of just one king…

          Organized religion…it says it has a monopoly…you have to go through them for access to God…pay to play….maybe another way of taxing the slaves….it is another way to control/program the slaves….the same as the education system….both are for taking control of the slave’s mind….so is the MSM….

          Organized religion….Christ didn’t say anything about going to church…he said your body is God’s temple….but…the priests today say you have to go through them…the middle man…no going direct…

          …..no going direct. for slaves….that is too dangerous for the control group…then God would control the slave’s mind…not the control group, through their version of organized religion, political propaganda, the education system, MSM, big pharma drugs, etc….

          but soon they will implant microchip the slaves…then AI can control them…..more desecration of God’s creation….

          • …..no going direct. for slaves….that is too dangerous for the control group…then God would control the slave’s mind…not the control group,

            that is what happened with Jesus…then he became a threat…..

          • The control group doesn’t want the slaves to drink from the spring of enlightenment….they want them to drink from the spring of darkness….MSM, the education system, the official narrative propaganda, big pharma drugs, satanism, etc…

      • Watch King Charles the 3rd….it looks like he wants to go back to an absolute monarchy…king at the top slaves on the bottom…

        It looks like the slaves on the bottom will be Muslim….

        Maybe there is a trend of republics switching back to absolute monarchies….

        There is a conflict in the control group right now…which causes wars…

        If there is a trend back to absolute monarchies….king at the top slaves on the bottom…with the slaves on the bottom Muslim….this doesn’t look good for republics and white/christian or non Muslim slaves….they could disappear…

    • It’s Easter, and whether the holiday means “dat skwewwy wabbit” dropping those faggoty eggs all over creation, or the commemoration of our Savior rising from the tomb (“He is risen”), triumphant over Death and the grave, it sure as hell wasn’t meant to commemorate sodomy and other forms of “pre-version”.

  4. The entire nation needs a Dave Ramsey Financial Peace lesson.

    Happy Easter, yall. He is risen!

    Praise be to the God and Father of our Lord Jesus Christ! In his great mercy he has given us new birth into a living hope through the resurrection of Jesus Christ from the dead. 1 Peter 1:3

  5. Any time you get involved in any debt system, you are taking a leap of faith. The current economy cannot offer any basis for such leap. Quite the contrary, as those with car loans underwater are now discovering.

  6. Happy Easter to all!

    As I’ve said so many times before here, and as Reddy said above, the business model for EVs is not ownership, but leasing/Transportation-as-a-Service/rideshare/public transportation.

    You’ll own no wheels—and you’ll be happy with it and enjoy it!

    Until your wheels get cut off because you didn’t follow the Terms and Conditions…you know, like your social credit score isn’t high enough…or you want a ride to a Trump/RFK Jr./Sanders rally…or you insist on paying with cash…or the authorities have declared a “climate emergency” and “non-essential” travel is locked down…you get the idea.

    But the apparatchiks will have their ZILs and Chaikas and the Militsiya will have their Volgas.

    Speaking of which, could a reason The Company Formerly Known As Chrysler Corporation decided to offer gasoline powered, albeit turbocharged I-6 powered, Chargers is that they didn’t want to lose the business of selling Volgas to the Militsiya, excuse me, Chargers to the cops?

  7. ‘Which is done by increasing the number of years people make payments.’ — eric

    ‘Usury is the practice of making unethical or immoral loans that unfairly enrich the lender. The term may be used in a moral sense—condemning taking advantage of others’ misfortunes—or in a legal sense, where an interest rate is charged in excess of the maximum rate that is allowed by law.’ — Wikipedia

    Inherently, campaigns against usury have a populist element. Those who have excess capital to lend are well to do, whereas only those with no capital would borrow at punishing rates.

    Yet no politician inveighs against usury today. The hateful $700 billion bank bailout of 2008 made clear who runs America. Today, BofA CIO Michael Hartnett projects that the US fedgov could be paying a crushing $1.6 trillion of annual interest by the end of this year, if interest rates remain where they are.

    Usurers are crushing the life out of the US economy. But hardly anyone other than the Freedom Caucus utters a peep about the obvious fact that this house of cards is gonna fall.

    Asset strippers think they can extract another year’s worth of loot from the failing system before it implodes into ruin. The $100 billion Ukie/Israeli grift, which will be front and center when Clowngress comes back to town, is Exhibit A in the Looting of America. Deport these traitors.

    • One man’s usury is another man’s last choice. One reason why Jews were tolerated in Europe was because they didn’t have usury rules but the Catholics did. When you were too much of a risk for the catholic bankers you turned to the Jews.

      I have a feeling that is one of the big reasons for Israel being put up with in the Middle East too. Allah says not usury, so no loans for low credit score borrowers.

      • ‘Halal car finance is straightforward. The seller increases the purchase price of the car to cover the interest payments they would have received. No interest is actually charged by a bank or the seller.’


        Clever, but merely a subterfuge. Given the true present value of the vehicle, the APR is easily extracted.

        I’d rather just have the APR openly stated, then buy some kind of indulgence to save muh mortal soul.

  8. Leasing. Transportation as a service. Autonomous taxis. Autonomous delivery vehicles (including drones as soon as Walmart gets rid of the free fliers and birds).

    We paid for it, might as well get our money’s worth…


    The U.S. Congress authorized DARPA to offer prize money ($1 million) for the first Grand Challenge to facilitate robotic development, with the ultimate goal of making one-third of ground military forces autonomous by 2015.

    Kinda missed that target, but the money was well spent. Every big name in tech went off on a patent gold rush to stake their claim in the new frontier. How hard could it be anyway? Well, turns out quite difficult. It’s taking a little longer than expected, but that new witch’s brew of AI, enhanced GPS/GNSS and 5G connectivity promise to make it all work this time, just like Bullwinkle’s magic hat. This time for sure (and all the subscription fees for the support systems).

    In the meantime, most people aren’t begging for autonomous vehicles. Quite a number have been vandalized. The public doesn’t trust them any more than they trust their nav system in a city they know. I might ride in one under tightly controlled conditions, such as a track set aside specifically for autonomous vehicles, but no way will I trust them in the wild. Too many variables that can’t be anticipated in the lab (including said vandalism and people f***ing with them for the LULZ).

    And people who own vehicles generally like owning vehicles. People who don’t, well, they don’t know what they’re missing. Sure, being a high level public servant with access to drivers and your own transportation fleet is a pretty cool perk. And having the kind of business acumen to enjoy a company vehicle as a benefit is pretty cool too. In reality when the job ends or the other side gets in office, that all vanishes like a dream when the alarm goes off and you’re back on the Shoe Leather Express. Unless you have your old car in storage of course.

  9. This has always been a problem but it as only gotten worse when you consider that a loaded pick up now costs more than you could buy a cheap house for 30 years ago. I know that seems bizarre but it’s true.

    Perhaps it is due to people buying cars to impress people. On one job I was on, one guy had a diesel F250 4X4 for his commuter car. It goes without saying he lived in an apartment, towed nothing and never went off road….

    The better course of action is figure out what you need a car to do on a regular basis and buy that one. If you have 4 kids and they all play football or hockey a Ford Mustang is probably the wrong car for you but it would be probably OK for a couple with one or two small kids that were into martial arts. Chances are you can get by with borrowing a truck from buddies (don’t forget to gas it up afterwards) if you only need one once a year or so.

    • A friend mine, their great-uncle’s first house cost him $30,000. Thanks to inflation, news cars cost that much, and more. Never mind trucks. It is insane to see the prices of trucks up here. And that is before you fill the gas tank up. 7-10 year loans? I remember walking by one house, where between the very nice house, the boat, the 4 trucks, and the RV, they had a least several million dollars sitting there. It made me wonder if any of those “toys” were paid for at all, or if they would forever be paying on all of them, house included?

  10. I’ve heard stories about F&I rooms here in Austin pushing Turo and deliberate repossession of the previous vehicle(s) as part of the finance “package”.

    The first time someone told me about Turo, I thought that they were kidding.


Please enter your comment!
Please enter your name here