BANKS Caused The WORST CAR CRISIS In History | Negative Equity SKYROCKETS

[@straight_to_finish]

I got in just before the pandemic-a 2020 Tundra in November 2019; financed by Toyota Motor Credit @ 1.9% for 60 mo. The title arrived last month! It was tempting to sell the vehicle a couple years ago when it was worth the same value as what I paid for it, but I’m glad I didn’t! For the first time in 17 years, I’m hanging on to this one.

[@NVRAMboi]

You did GOOD! Hang onto that V8 and service her and you'll be able to pass it down to your kids. :o) I lucked out as well, buying a used Frontier in April of 2019, and walking out of the dealership with no payments. My last truck I think.

[@smith-e4h]

The fact that nobody talks about the forbidden book called The Gilded Nexus of Prosperity speaks volumes about how people are stuck in a trance

[@JA-zh5xi]

Banks should NEVER be allowed to resell and package the loans they write. They should be forced to hold them on their books for the entire duration of that loan.

[@waltblackadar4690]

Anyone who upvotes that comment is economically illiterate.

[@moorefacts6605]

I drove my 2009 Tacoma for 11 years, putting 110k miles on it, for a total of 123k miles. I caught up on the maintenance on the truck, then parked it and bought a 2024 RAV4 PHEV. I saved for the new car and paid cash. Now I have 2 good cars, paid for. Stay out of debt folks because the future is uncertain and the cost of living will never come down no matter what the politicians lie about.

[@hokie9910]

I have been saying for a couple years our next 2008 is going to be negative car equity. When people go to trade in the cars they bought in 2021-2023 and they owe double their trade in value this is going to get bad quickly. I mean someone buys a Dodge Hemi 1500 for 80k on a 7 year loan and still owes 50k when it’s worth 25k….not going to be pretty.

[@rmo9808]

On the brightside a base model civic will still be worth something.

[@NVRAMboi]

@@rmo9808 I'm kind of surprised most buyers haven't already realized this. Civics, Corollas, Imprezas and Mazda3's can all be had at or under 25k and will always have steady value - even used.

[@rmo9808]

@@NVRAMboi In part its the I should treat myself mentality.

[@jerrylundegaard2592]

No bank forced anyone to take an auto loan.

[@renzo2131]

It is in part the bank's fault. They willingly financed air. The customer was too dumb to buy a $5 cookie for $9

[@richardgiacomotti404]

TRUE~BUT WHAT'S ALSO TRUE THE BANKS COMMITED WORD FRAUD VIOLATING THE 4TH AND 10TH AMENDMENTS TO THE CONSTITUTION THUS GIVING WE THE PEOPLE THE BENIFIT IN THE END! DEBT FORGIVENESS IS ON THE WAY FOR EVERYONE~MORGAGE~PERSONAL~CREDIT CARDS~CAR LOAN ARE ALL GOING TO BE FORGIVEN CAUSE OF THIS VIOLATION! LOOK AND SEE FOR YORSELF CAUSE WE ARE NOW JUST ABOUT TO REEP THE BENIFITS OF THIS RIGHT NOW!

[@pnichols8583]

This is why I kept my van and my mustang

[@chrisbailey5055]

We need financial literacy classes in high school.

[@deepthinker999]

ABSOLUTELY !!! Health classes too that focus on healthy diet & processed food. Americans are getting more obese every year and don't know why.

[@Soundsaboutright42]

Called common sense and an understanding of basic math

[@axxxingforanswers4648]

Can't. Stupid religion is what gov wants in school.

[@thystaff742]

School teaches you to learn. Not critically think.

[@gamingwitharlen2267]

And no one is going to learn anything. You really think teenagers are going to give a crap about personal finance.

[@Fezzent]

Love this new format. Straight to point. Provides definitions when needed. Great job guys

[@throwuout87]

Banks also had no business allowing negative equity to be rolled over.

[@JohnJackson-e9z]

I am happy my car is paid off.

[@lyndahammel9502]

In 2017 I bought a used 2017 car with 25,000 miles for $20,000. I still have it in 2024 and plan on keeping it for as long as it makes sense.

[@hippiebits2071]

Not one tear shed for these lenders who are now having to repo cars that will eventually have to be unloaded for pennies on the dollar.

[@juliuscaver]

Wait wait but it was a chip shortage 🙂

[@steveosgood9182]

the dynamic duo..always a pleasure to watch you guys work....

[@Pamela0707]

I hope these car companies now pay the price for their greed🙄

[@trekhardfilms]

Guys, THANK YOU. I started watching a few weeks ago and we saved big! I gathered the courage to negotiate which simply turned out to work like this: I researched prices. Found out brokers could get 10% off, then I asked for 7% off. THey said yes. No haggling. Then I also got a stackable military discount and saved $7k!!!!!! Then I followed your finance lady and made it obvious we were not trying to low ball the dealer, had his interest in mind, would finance and keep the loan so they got paid: he immediately offered $1500 off our extended warranty, so we saved $8500!!!! This allowed us to get our dream car!!! Much success to you both!!!!! I have always paid full price and never negotiated. Thank you!!!!!!

[@hushpuppy3]

I always pay back my auto loans bi-weekly. I take the monthly payment, divide it by 2, and pay that bi-weekly. This allows me to make 13 monthly payments in a year. Also, since the principal balance decreases at a faster rate, I also end up saving myself a lot in interest over the life of the loan. I am currently 50 months into a 66 month term on a new vehicle. My current due date is 5 months into the future. It will be paid off at the 60 month mark. I am currently just over $13K positive equity. If you get paid weekly and can make 1/4 of the monthly payment every week, you can pay it off even faster.

[@JA-zh5xi]

An even better way is to not take out a loan at all.

[@Joeblo-i9c]

And everyone would pay cash if they could.Its called having kids,a mortgage,child care,food,health care,etc,etc.

[@JA-zh5xi]

@@Joeblo-i9c I have those things too minus the mortgage because - ya, I don’t like having debt so that got paid off way early too. Live within your means.

[@lyndahammel9502]

That's why I buy used and keep a car for 7 to 10 years. Then I am able to pay cash for the next used car.

[@coreylucas5997]

Very true, my bank shutters when I ask the rates versus the dealership rates, struggle is REAL 😮

[@kdubs3]

Right on the mark with your message. Folks need to take some responsibility for their own ignorance too however. If you have to get a 7 or 8 year car loan to be able to afford to make the payments, guess what? you can't afford the vehicle. And don't think that when someone says congratulations, we got you approved, that they are congratulating you at all. They want to get your money in their pocket, plain and simple.

[@Pamela0707]

Not fair😢 these banks gave loans knowing the cars were not worth their value inflated and now this country in horrible shape!

[@thystaff742]

The main issue is that the banks gave loans to people with bad credit. People went out and bought 70k challengers with paying 20% or more interest rate for 72+ months.

[@Joeblo-i9c]

No,they bought $70k Challengers that were worth $50k,the banks knew it,and gave them the loan anyway.

[@edg8535]

Being upside down is not a recent event. Back in the 80's I would attempt to purchase a used vehicle from a private party. Most of the time they owed more on the vehicle than it was even close to being worth. Most had traded in a vehicle that still had a loan on it and this amount was just added to the new loan.

[@rmo9808]

There's a dealership advertising that as a good thing in my area.

[@fiily1]

Being a former car sales person, the whole auto industry is built around the dealership's profit, which in turn puts all buyers in a negative equity situation if they don't have anything working between the ears. From the purchase of the car, to the outrageous "document fee's" that are 100% profit to the dealership, to the finance and insurance office making points off the loan, trying to sell you extended warranties, nitrogen, scotch guard treatment, gap insurance, 1-2-3-4 year car maintenance plans, and everything else they can to suck every penny out of your pockets for years to come. My advice, buy used from a private party, and avoid dealerships pure greed.

[@SimplyOffRoad]

I've seen a handful of people that are 12-18k upside down. I wouldn't even talk about 36 month loans. A $20k car at 5% on 36 month loan is near $600/month

[@NVRAMboi]

Thanks Guys. I maintain that the "crisis" of "inflated value" continues on many or even most NEW vehicle purchases TODAY. I'm basing that purely on the MSRPs skyrocketing from 2019 to present. (It does vary by vehicle to a degree.) So the banks/OEMs are STILL financing (as an example) 2024/2025 Toyota Tacoma TRD PRO's at around $65,000.00. (PLUS interest). I think this problem has NOT stopped and is largely ongoing.

[@bigmurff]

Many people out there live in a life where they need to keep up with the Jones next door. They see someone go out and buy a nice looking Audi E-Tron, or that nice lifted F-250 diesel. I bought a certified pre-owned 2013 Mazda cx5 back in 2017. The car has been paid off and i've since then put over 200,000 miles and it keeps on going. Sure it ain't nowhere as fast as a Tesla Plaid, but at least I can enjoy life doing other things than working to pay off a car note

[@somethingbig3797]

I bought my car new back in 2019, and I paid it off last year. I love not having a car payment, and I love not having to pay these outrageous prices for vehicles.

[@Fred1294]

That's people's own stupidity, I would never pay over sticker price, I would never even pay sticker price, they can keep their overpriced Turbo, Cvt transmission,Gdi injection garbage cars. That's why I stopped buying new cars.

[@TimothyPerron-l1b]

I agree, people were not forced to purchase overpriced vehicles...They did it to themselves.

[@joer8399]

Some sports car owners (picking on corvette owners here) are prone to overvalue their ride, even in a normal economy. I hear corvette fans talking about how their 'vette is one of only 5 made in 19xx/20xx with the xxxx paint color, x speed manual or auto transmission, xxxx interior upgrade, and xx inch alloy wheels from the factory.

[@BandDirector]

‘24 C8 owner here and I agree. Paid MSRP in Sept of ‘23, Put $40K+ down, I currently owe $20K, so far from upside down. However, I didn’t buy it to collect, I bought it to drive with no illusions it would be worth more one day. It’s now 14 months old with over 12K miles. Amazing car that’s loads of fun to drive! Get out there and drive those Vettes!

[@joer8399]

@BandDirector Sounds like a cool ride. I like the C8 body style. I'm not a fan of letting a fun vehicle collect dust for 40 years in hope that your grandkids will sell it at Barrett Jackson to pay off their first home and college loans.

[@shekharmoona544]

Reminds me of NINJA loans in the mortgage industry. Except people actually had jobs.

[@jccc8373]

No income , No Job, assets NINJA loans

[@patricki7422]

Pretty much you are underwater as soon as you drive off the lot. The big question these days is how far underwater are you? If you bought over MSRP + "Market Adjustment" + "Dealer Options", you will be wayyyyyy underwater because the market value doesn't account for those "add-ons".

[@lyndahammel9502]

Mach Es have really dropped in price. People who bought early really took a hit.

[@kingbonezai4925]

Not just the banks, all the dealer mark ups are pure equity loss the moment one drove them off the lot!

[@tacomafan5186]

I don’t blame the banks. Nobody made these people finance at these crazy LTV’s. I’ve always put down a decent down payment and then paid the vehicle off as soon as possible. My last new vehicle was a 2019 Tacoma. Put down $10K, financed for 72 months, paid off in just over 48 months.

[@NVRAMboi]

Ultimately it's on the buyer. But the banks knew *exactly* what they were doing.

[@Joeblo-i9c]

The average buyer doesnt have $10k to put down on a car,or a house for that matter.

[@jeffreybischoff6772]

The more I look at the car market, the more I'm comfortable keeping my 2012 Honda CRV, with AWD, and 84,000+ miles, and the title.

[@Pamela0707]

I bought right before the rates when up, you are correct!! People are upside down! Now I am helping my son to pay for his car😮

[@connclissmann6514]

What you may wish to cover in an upcoming episode is negative equity in forms holding PCP promises on returned vehicles after 3 or more years. We all can think of various used models you would have a hard time to shift, but companies like Nissan in financial trouble will face the credit wall soonest.

[@trikytrak2583]

Why are you blaming the bank instead of the person who made the decision to take the loan?

[@johnkonde1975]

why not blame both?

[@fiily1]

The only reason why cars are selling for over sticker was because the banks floated LTV to 125%-175% to make a killing off interest from idiots who decided buying a vehicle for over MSRP. If the banks said no more than110% LTV, you can get out of that negative equity paying down the car/ money down. Instead they screwed the consumer for the next 4-7years paying off that loan, or just walking away from the car and make the bank lose their shirt...which many are doing now.

[@justindressler5992]

Its called predatory lending, never assume the bank or the dealer has your best interest at heart.

[@DollarBill01984]

The banks should’ve never approved these loans’

[@marciamenage931]

Dealers are totally responsible for overpricing MRSP = GREED.

[@alvar350z]

Imo it is not only the banks fault. Dealerships went crazy and marked up the price of cars, new and used. They took advantage of the people who actually needed a car and these people had to get into debt. Cars with over 100k miles are still being sold at inflated prices at over 10k$ both bank and customer are taking a risk for these vehicles. Ultimately, the fault is to whoever is setting the price and taking advantage of customers.

[@brianjosey8113]

Dealers also LOVE this situation as they get to over price there cars, I have been after a Dealer on a 2016 X5 that they have over $5K by KBB value and they will not work at all, I even offered $4K over KBB and they still would not come down and meet me, the car has been on there lot for over 200 days and they will not budge at all, THE WORLD has gone totally INSANE???

[@fiily1]

Friends don't let friend's buy a Euro car, endless money pits.

[@ph1438]

I saw the writing on the wall in January 2021, bought a leftover 2020 Honda Ridgeline for a bit under MSRP. Such a great decision...

[@edwardkrochmal8268]

If possible look at gap insurance. We are facing a possible Vehicle Manufacturers are going to lower prices to increase volume. GAP Insurance covers the loan amount and not just 80% of the vehicle value.

[@andrewshenton6541]

One other thing,remember you make your money or loose less money at the start when you buy not at the end

[@norby007]

Gap insurance doesn’t cover a bunch of stuff, make sure you know what they won’t cover. I still owed $6k after gap paid when a car ran a red light and destroyed my 8 month old car.

[@rustycook3318]

Gap almost always has a limit on the payout. It's not an automatic lifesaver.

[@tomglpn]

Buy used, pay cash, if you can't, you don't need it....PERIOD!!!!!

[@tinatepe2078]

That's what the banks get for enabling the car industry to price gouge. If they hadn't done that, then the dealers would have had to sell at reasonable prices instead of gouging everyone

[@pnichols8583]

I have a breakdown from a dealership with a 3500 markup. These scumbags think I’m going to travel across the country to get ripped off n

[@dera6347]

Is this Car Bubble the housing bubble from 2008? A recession over bad car loans? Hmmm, I guess we are about to find out. At some point in the future I see this being a huge win for all those holding off buying due to over prices.

[@rolandrahn8343]

8:14 But the longer loan will still have a higher interest rate. So, taking a 96-months-loan and paying it down in 36 months will still be more expensive than a 36 month loan in the first place.

[@roguedogx]

The thing that really makes me confused about this is why people went so nuts buying cars in this time period? Like I get it if you had a situation where your car was totaled and you HAD to buy a new one. But the low production and high costs should have had people going "i think I'll hold on to my perfectly fine 5 year old car for a year or two more" not "I'll pay $20k over sticker for a bronco!"

[@roguedogx]

3:06 curious to know how many of those are Tesla's thanks to their shenanigans with pricing which resulted in resale values that would be comical if it weren't so sad. Given Tesla's share of the market, it's gotta be a primary driver.

[@roguedogx]

7:36 or, just because you got a loan that long, doesn't mean you have to pay it off on that time. If you overpaying each month is a great way to reduce what you owe quicker. Plus if you need some breathing room for a bit, it allows you to lower your monthly payment. Sometimes (if you time it right) you can even skip a month if you need it.

[@mikepiper6077]

Have 2005 Chrysler Sebring Convertible . Runs great. 141000 miles. Bought in 2006. Had 24 000 miles on it at the time. Came with remaining factory warranty. Sticker price was 30,000 and bought it for 1/2 that. Dealer said All loans any extra went to principal . He lied. Found out it went to interest so paid off car with credit union loan. Paid extra and went to principal. Huge priority so paid off quickly. Price of new cars, crooked salesmen , f dealers, would like to buy but hate the buying experience. Could donate car since trade in value so low. Did this once. So what is easy efficient way to buy slightly used car? New huge depreciation so couple years old lets say and A SUV . Need Higher ground clearance.

[@nikkiparis5399]

Consumers never bear any responsibility for their terrible decisions. If you paid double the value for a car with money you don't have, thats on you. There's always been plenty of great, affordable used vehicles out there. I bought a very normal priced used car in the middle of the pandemic.

[@andrewshenton6541]

The biggest problem guys isn’t being upside down,that’s expected until your loan is done,so this is a little misleading,its the difference between where you should be and where you are and there are many variables

[@steveschilling5966]

I took a 84-month loan o% interest i always keep my vehicles in top condition and keep them for decades it works for me

[@ozzierabbit587]

For new or used?

[@BandDirector]

Nice! ALWAYS take the free money! Not a fan of 84 months, but if it’s 0%, I’d do it too!

[@johnhinant970]

The auto industry is starting to reap what they sowed!

[@sethalbert386]

I would never go past 60 months on a loan. If you need more than 60 months to lower the payment, that means you can't afford it. In reality, you shouldn't even go past 48 months on a loan so you don't end up in this situation. And people should also consider residual values when buying a car. Something like a Jeep that drops like a rock in value is not something that I would buy. But a Toyota holds its value a lot better so that would make more sense. Otherwise, just lease the car and you won't be in this position. You'll always be at zero equity - never negative!

[@throwuout87]

Banks had no business allowing them to finance the market adjustment, if you wanted the car, you gotta cough up that bs charge then many less cars sell and then we dont have this problem

[@toddwatkins891]

Isnt all auto loans upside-down do to auto

[@jamesalias595]

I just saw a news article last night, not sure if it is true, they said people are snapping up cars and big ticket items now in advance of Trump's tariffs so dealers are not willing to deal with lower prices. Is there any truth to that?

[@trekhardfilms]

I don't think so except maybe Lexus. I have been car shopping for a few weeks and researching via reddit how much people are getting dealers to come off. Mazda came down 7%, Lexus people are saying about $1k but there isn't much inventory if you are picky. We got a bmw off about 7%. Dealers have been very busy and I think they are prepared that people are expecting deals in dec and they are giving them.

[@pn504]

Hi Ray, Merry Christmas to you and your family. Is 200 miles on a brand new car acceptable?

[@squigglessquiggles8126]

So if I am looking for a car you are telling me to wait 1 more year and a bunch of used cars will hit the market?

[@rwgallup]

Why would a lender loan more than the car is worth? Am I missing something?

[@NVRAMboi]

Short term greed (ie: sales commissions/internal incentives to loan money).

[@rwgallup]

@@NVRAMboi Are they not exposing themselves?

[@lisad6106]

I thought as soon as you drove a car off the lot you were upside down. There's actually a way to not do this in America?

[@NSO1505]

For sure, this kids on speed.

[@knotslip8862]

Its not all on the banks...The manufacturers and dealers were selling these vehicles for way more than they were worth (not to mention all the idiots that paid way more than they could afford for these overpriced vehicles). They are all to blame and deserve whatever consequences they encounter. Sad!

[@Avengedsevenfoldrocks]

You know Wise Guy some of us needed vehicles to do our jobs and we're under the gun and yes of course we realize now we made a mistake but we're not f'ng idiots

[@rmo9808]

Looking at base model cars/compact SUVs. They are still $25k . Used still around $18-20k until you hit 100,00 miles.

[@knotslip8862]

@@Avengedsevenfoldrocks Yes, of course I know that. My best friend totaled his Subaru and had to purchase during these times - he had no choice, as many others didn't. Quit being so defensive and realize that this didn't apply to you. And, I love A7F. 🙂

[@Avengedsevenfoldrocks]

@@knotslip8862 I just thought the idiot remark was rather offensive. No worries

[@md-crab7379]

Sounds like 2008 mortgage defaults

[@mrmaxin53]

So 30% people are delinquent on their loans bc…I guess life happens? Laid off or fired from work? Other bills to pay?

[@Pamela0707]

You have to have gap insurance!! Your right dad!? 👍

[@orrinkelso9295]

And jerk dealers are partially to blame by selling cars at inflated prices during the pandemic! Now people can't afford to get a new car because they owe more than the current value so dealers have fewer buyers in the market.

[@jazenka99]

Cars are a depreciating commodity. The second you drive it off the lot you are upside down on your loan. 😂

[@NVRAMboi]

Or as a "good ole boy" salesman once put it, "He's walking on his ears."

[@rotart12arx3]

No you are not. If you have a nice trade or put some money down you are in great shape, a low APR helps also.

[@robertk1049]

No one forced those buyers to take out those loans. Let them pay for their stupidity.

[@orrinkelso9295]

And stop buying cars based on payment! Buy on the best price!

[@bondobilly9369]

Im glad my credit union will go to 100% plus taxes/fees, depending on age. It has kept them ane buyers in check

[@HDR20]

The banks didn't force these consumers to pay huge markups or even buy that shiny new car. We live in a "look at me" and got to have the latest and greatest" society

[@rmo9808]

Just in time manufacturing doesn't respond well to massive changes. A significant lack of production across the board gave everyone that could make a buck off it incentive to charge more.

[@Remingtonrestoration]

Summer 2021, I told everyone I knew, for the live of god, stop buying cars at these prices, your only making it worse, & committing financial suicide…… & 3 yrs later, here we are

[@eyeheartsushi2212]

I was able to get 4.79% at 72 months but this is the last car I’ll buy (haven’t actually bought it, yet).

[@b4804514]

Corporations will take advantage of dumb consumers any way they can. Just go to the grocery store to be taken advantage of in the worst way possible.

[@UmmYeahOk]

The EV percentage makes no sense. You can buy a 10yo EV or plug in hybrid for around $15k. Most of the depreciation has already happened, so you won’t get underwater if you pay on time.

[@_jaber1]

Tell me boys… wait for it… “prices are about to crash”.

[@AnthonyC-vk5ig]

Time to pay the Piper for that greedy 2.5 year window of overcharging customers.

[@bankingonmoney8224]

All vehicles are negative equity. Its just a matter of how much you want to lose.

[@drozzmojenkins9605]

Why? You have to be an adult to buy a car so wtf were these people thinking?

[@nervotica7991]

Wow, imagine sitting with all that debt AND a permanent vax injury. Just shows you the mentality of these people.

[@DavidQuear]

Didn't this samr thing happened in the late 70s early 80s with negative equity?

[@bobsobie678]

Kids need to be taught the time value of money.

[@Pamela0707]

Go dad!! 😊

[@scdi12]

I often hear friends say, "I can't afford a Tesla. They're too expensive." I tell them to look at used Tesla's. You can get one for less than half the price of new and it's likely to last as long as a new gas car. I'm older and fortunate enough to be able to buy any car I want, but at my age I want a new car at least every other year. Whoever buys my used car gets it MUCH cheaper than new, with low miles, on warranty and in perfect condition. And remember how times change---- I bought a used 2015 Nisson Leaf (electric) for my son in 2017 for $9000. When he finally got a good paying job a few years ago when used car prices happened to be high he sold it for $9000 and paid me back.

[@ES-gy1ti]

Keep it up

[@somehandle215]

@8:42 you’re still interpreting the negative equity stat incorrectly. They are not 10k & 15k underwater, they just owe 10k+ and 15k+ on their loans and are also underwater by some amount.

[@malibuStroker]

Or option number three... you tell him to come get the pile of junk and file bankruptcy😂😂😂

[@quacker998]

96% of Cars are just debt, not assets

[@NerdyOutdoorVeteran]

If you can’t afford terms of 4 years or less, you can’t afford the car and should stay away.

[@lyndahammel9502]

Only buy a car that you can afford on a 36 month loan.

[@ozzierabbit587]

I've paid cash for some vehicles, and once got a 60 month car loan. I just paid off a vehicle I acquired as a 3 year lease, which I then purchased with a four year loan. That's effectively a 7 year, or 84 month loan. If I did it again I would have simply purchased it with a five or six year loan.

[@dlh302]

Total BS - banks don't take that level of risk

[@bobbyvette]

Way are you shocked at this?? I knew this 3 years ago it was going to happen

[@Tokyo_Titus]

No. Manufacturers, dealers, banks, and ignorant, possibly stupid, greedy consumers led to the negative equity.