THE TRUTH ABOUT YOUR FUTURE with Ric Edelman 12/11/24: The Car Loan Trap
Dec 11, 2024
Many car buyers find themselves underwater with their auto loans, owing more than their vehicles are worth. This issue is worsened by longer loan terms and high electric vehicle prices. The podcast highlights the financial risks associated with negative equity and depreciation, especially for used Teslas. It offers practical tips for selecting reliable vehicles and emphasizes the value of long-term ownership to ensure financial security.
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Widespread Auto Loan Underwater Issue
- One out of three people with an auto loan owe more than their car's worth, called being underwater.
- This leads to owing money even if the car is totaled or destroyed.
Negative Equity Rolls Over Loans
- Many roll negative equity from one loan into the next car loan, increasing total debt.
- This creates a downward spiral making cars more expensive over time.
Longer Loans, Shorter Ownerships
- Car buyers increasingly take longer loans of six to eight years due to high prices.
- Yet, many do not keep cars for the full term, causing financial stresses.