Now is one of the worst times ever to buy a car. Wait six months or a year and things will be different.
Worst Time to Buy in 30 Years
- There has never been a worst time in the last 30 years to buy a vehicle. Within the span of 2 years, cars went from being the largest depreciating asset one owned, to doing better than most of our stock portfolios, and I’ll explain exactly why.
- To get a better understanding of the insanity which is the car market, lets start with a number that we’re all familiar with: 9.1% (CPI for June). New & used cars are a large portion of that. New vehicles rose 11% yoy and used cars 7.3%.
- But percentages don’t do a good job at painting the whole picture so here are the raw numbers: 2 years ago: Average new car: 38k, Average used car: 20k. So what about 2022? Average new car: 50k (+24%)Average used car: 31k (+35%)[Used Car Image from Sully Below]
- Not lookin so hot is it? We went from walking into a dealership, buying a brand new car with $5000 in incentives, to dealerships asking for 10k “market” adjustments on seemingly boring cars (Lookin at you RAV4 hybrid). The culprit?
- Short supply combined with literally 0% rates caused many people to start buying any car that could “fit into their budget”. Why responsibly buy a 30k car, when you can finance a sick 100k truck at 84 months with 0% rate? I mean it’s free money after all. (this is a 7 year loan btw).
- Dealerships saw this, and started to push higher and higher loan terms. Telling customers its “only 900$ a month”. The average loan term right now? 72 months — an increase of about 33% since 2010 (48 months).
- But the era of 0% loans was last year, when the fed thought inflation was errrrr transitory (lol), so what’s going on now? Same thing… which makes it even worse. Car loan interest has gone up quite significantly, which means people are financing their car at insane APR.
- Imagine paying 7-8% interest on a 7 year loan for a car, and that is the scary part. People are literally paying hundreds of dollars a month just in interest for their car.
- And this is the ugly bit, when the car market starts to adjust. Normally most cars follow an inverse exponential curve, with the vast majority if the car losing its value in the first 1-3 years. That hasn’t been the case since 2020, and it seems like we’ve seemingly forgotten. [Depreciation Chart From Sully Below]
- Eventually cars will once again, begin to depreciate like they always did. And guess what happens? Those who bought a USED vehicle at a 40% premium? They’re now significantly underwater on a car they financed for 7 YEARS.
- Top it off with some good ol day-to-day inflation, layoffs, and potential recession and you get a recipe for disaster within the car market.
- My bet is we’ll see a significant amount of repos and subsequent nuke of the car market. So pls unless you ABSOLUTELY need a car, try to avoid it for the next little while.
- If you’ve made it this far, appreciate you reading this thread! Feel free to leave drop any questions you have. Also if you absolutely need to buy a car dm me! I’ll try to find something that’s reasonable in this market.
Lots of stories on Safford around town.
They quoted someone $400+ for an oil change, vs Pohanka for $200+ (same exact service)
Fighting with people over warranty work.
I saw a fb post with pictures of a recent collision repair that were just horrendous.
There is even more than what she posted on fb.
The pictures alone are enough proof of incompetence, but any attempt on Safford’s part to defend that situation would only further cement the thought that you should avoid that place.
I can change oil in my own vehicles for less than $50 each. Car dealer service depts have been ripping unsuspecting customers off for years.
I happen to know a “repo man” and he was telling us a few weeks ago the repo business was picking up steam with no sign of stopping. The good thing is he said it’s all people in democrat strongholds. That is good news. democrats don’t deserve to be able to afford cars. Same with home foreclosures. Almost all in democrat strongholds. Voting stupidly has consequences. democrats all deserve to live without any comforts in life and to live in crime infested filthy neighborhoods. And they have no right to complain either. When they start voting Republic like civilized human beings do then and only then will they be allowed to complain. Same with drugs. democrat parents because of open border policies allow drugs in. When their children die from drugs they need to suck it up because they have no one to blame but themselves.
You really should get some help.
That’s like lumping all republicans as white supremacists
I bet most of the repos are BMWs, Mercedes and Lexus’. It was fun and impressive while it lasted.
Nah man, it’s F-150s and Honda Civics