A Boring Dystopia

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Americans are more underwater on their car loans than ever before (qz.com)

submitted 2 days ago by [email protected] to c/[email protected]

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[–] [email protected] 8 points 1 day ago

The explanation is pretty mundane.

The last 2 years have seen really, really fast depreciation, because the car shortage of 2020-2022 drove up cars way beyond their normal prices. Some cars actually appreciated in value in 2021.

So when the shortage untangled eventually, used car prices plummeted. Here's a chart of the most robust used car price index.

At the same time, several EVs saw huge price drops as Tesla tried to preserve market share against increased competition. When the new car drops in price by $20k, then the used market for that car similarly drops suddenly.

So when the value of vehicles drops unexpectedly across multiple markets, you'll have a lot more people whose car values failed to keep up with their loan balances.