high car prices

The price of new and used cars has gone out of sight!

You can see peo­ple com­plain­ing every­where about used and new car deal­ers who are push­ing up the prices of used and new cars and trucks…

In a recent report the aver­age for some car pay­ments, is all the way up to $1,000.00 per month…

What?

It is not an aver­age price for the major­i­ty of buy­ers but more peo­ple are end­ing up with high dol­lar auto loans.

What this could mean in the near future?

Defaults and repos­ses­sions that is what it like­ly means in the near future.

As the prices for used cars and trucks goes up more peo­ple could find them­selves in a posi­tion where they can­not do any­thing but aban­don the vehi­cle.

Of course it only makes sense that peo­ple who are accept­ing high­er than aver­age pric­ing on loans and vehi­cles may not have the abil­i­ty to deal with the prob­lem if and when a stres­sor hits them.

For exam­ple if a buy­er ends up los­ing a long term job and then can­not find a job that pays as much as they were mak­ing it is like­ly that they will end up with a deci­sion to make.

Keep the house or let the car or truck go back.

This could well start to hap­pen lat­er this year and the real prob­lem is not real­ly that the con­sumer will lose mon­ey but that mar­ket will not be able to absorb the high­er pric­ing.

Even after a buy­er defaults and returns the auto to be resold the next prob­lem is that the mar­ket will not be able to sell the used car or truck at any­where near the price of when it was new.

Of course we all know this is true but why is this a prob­lem now?

For one thing a vehi­cle los­es about 25 to 40 per­cent of its val­ue in the first year.

We also know this but when you are look­ing at a 40 per­cent drop in val­ue of a vehi­cle that should have sold for $58,000 but actu­al­ly was sold for $79,000 then you have a huge val­ue issue.

If the cus­tomer owes $75,000.00 on a vehi­cle that is not worth the price tag then or now then you have a bub­ble and that bub­ble can burst and when it does then you have a prob­lem that the mar­ket can­not solve.

One thing seems clear we are in for a rough ride and it is like­ly that repos­ses­sion lots will be fill­ing up with auto­mo­biles that no one wants because the price is just too high.