It was last March. Nowhere close to the popping bubble thing. The “lose 50% as soon as you drive off the lot” or whatever folklore is generally ignorance. Of course it’s closer to the truth with the Tesla that I bought to replace the Honda.
I don’t think there was a bubble, either, I was just trying to see it like OP. Hondas hold their value better than most and goofs with my overly broad generalization but there won’t be a collapse in price.
Another aspect is that the ceiling isn’t very high, either. A bidding war for a Civic tops out.
And I did go out of my way to avoid the ‘50% drop on signing’ folklore, as you say.
It was never a third unless you’re a car salesperson’s dream customer. It was traditionally considered 15-20%, and that still applies. No matter what you put down on a car, or even buy it outright, you can’t recover what you paid by selling the car. All of your fees, taxes, and any interest you pay on financing any portion of it will never be recovered either. There are rare exceptions, and inflation is a factor that can benefit you a little by keeping your car’s value high, but it’s still unlikely for you to come out ahead on the entire deal.
I assume the 3-year number comes from the traditional 3-year lease timeframe. The “Keeping up with the Jonese” types would lease a car, typically for 3 years. After 3 years, the resale value matches the amount you would have paid off, give or take, return the car, lease a new model. Manufacturers used to have 3 year warranties (now much longer) and some offered free service (which makes sense for a car they will probably take back soon).
There were some not bad deals for 3-year-old cars that had returned from lease.
During Covid, leased cars were worth way more than their payoff amount. In 2021 or 22, my wife’s Honda CRV was at the end of it’s 3 year lease. Instead of returning it, we went to a Honda dealer and asked them if they wanted to buy it. They offered $3k, and it was pretty easy to talk them up to $4k.
Well, that is how they calculated depreciation, and many people bought a new car every three years.
Right.
Yeah, I remember as a kid an article in my local paper about a guy whose car had hit 200000 miles!!! it had a 6 digit one, but 5 didgit was very common.
Yep or a lie they dealer tells you when you bring it in as a trade in.
IRL, yes. But again, there was urban legends and the lies dealers told.
Well, yeah, except in rare instances. But my point is- generally cars today are NOT “underwater” the minute you drive them off the lot- in reality that is.
Hence the celebration when the odometer rolled over.
Yep, and also "IF it ever got there.
Usually, you would expect a crash to follow delinquent payments. Currently, the delinquency rates are fairly normal, across the board:
As is often the case in finance, your prediction (whatever it is) will prove right … eventually.
The problem is being positioned awkwardly so as to benefit for your predicted crash then waiting 2 or 3 economic cycles before being proven right.
IOW:
The market can remain irrational longer than you can remain solvent.