Why Are So Many People Upside Down on Car Loans?

Tim Healey
by Tim Healey

Hey there! It's podcast day again!


We discuss the state of auto financing with Edmund's director of insights, Ivan Drury, and then Matthew Guy and I discuss angle grinders and the latest from the NASCAR playoffs.


You can find us wherever you get your podcasts, and you can also find us here.

We thank Ivan and Matthew, and we thank Matt Posky for editing. Most of all, we thank you for listening!

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Tim Healey
Tim Healey

Tim Healey grew up around the auto-parts business and has always had a love for cars — his parents joke his first word was “‘Vette”. Despite this, he wanted to pursue a career in sports writing but he ended up falling semi-accidentally into the automotive-journalism industry, first at Consumer Guide Automotive and later at Web2Carz.com. He also worked as an industry analyst at Mintel Group and freelanced for About.com, CarFax, Vehix.com, High Gear Media, Torque News, FutureCar.com, Cars.com, among others, and of course Vertical Scope sites such as AutoGuide.com, Off-Road.com, and HybridCars.com. He’s an urbanite and as such, doesn’t need a daily driver, but if he had one, it would be compact, sporty, and have a manual transmission.

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  • Haze3 Haze3 on Nov 04, 2024
    "Upside down" isn't the right metric on a depreciating asset, though it can be for some. Incentive loans are often such that being "upside down" is a financially reasonable move (e.g. nothing down, 2 or 3% interest for 60mths... when you have $ and treasuries are yielding 4.5%). "Upside down" on an appreciating asset (e.g. a house) is be a much better indicator of dicey financial decision-making.
  • Zerofoo Zerofoo on Nov 04, 2024
    Upside down or right side up is good or bad depending on the scenario. Yes - I'm upside down a few thousand dollars on my 3 month old car. I have the cash to buy the car outright at any time sitting in the bank, and Mazda is loaning me the money for 3 years for free. I also have gap insurance because it was cheap (<$500) and I rolled that into the interest free loan. Leaving $40k in the bank at 4% interest for the next 3 years makes more sense than paying cash for the car in this scenario.
    • Walt Walt on Nov 05, 2024
      You may have more peace of mind if it were paid off. Just in case something happens to your income.
  • Lorenzo If it's over 30 years old and over 80k miles, and not a classic, it's a parts car, worth no more than 20% of original price.
  • Dusterdude No mileage noted on a 33 year old car means likely well north of 300k + miles , along with issues noted , should equate to an ask price of less than $3k
  • Ajla IMO, something like this really should be naturally-aspirated.
  • Kjhkjlhkjhkljh kljhjkhjklhkjh Unless they are solid state batteries you BAN THEM. I like EVs... but EVs like to burn ... for days
  • Kjhkjlhkjhkljh kljhjkhjklhkjh uh .. it looks like a VW golf got the mumps
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