Jet sitter

I ran into a bank loan officer today at Autozone. He saw me pull in with my 2000 Accord and asked the mileage. He told me that he recently had a gentleman come into the bank for a loan on a car that was only 6 months old The individual had purchased it at a dealership and didn't put anything down on it. He said that the dealer gave him a 7.5% loan and he was looking to finance through the bank. After checking, he found that the car had depreciated $8K in the 6 months he owned it, so he could not get a new loan.

Legal Bill

He must have bought a Mercedes!

Chuck S

Depreciation from what value? MSRP? Dealer invoice?

-- Chuck

boltonblue

No way, depreciation would have been much higher unless it was one of the really cheap ones.

But you lose 20-25% as soon as you drive off of the lot with almost anything.
so at 8K you'd be looking original list of around 32-36K.

Conedodger

Precisely why the last new car I purchased was my S2000 in 2003. I've been buying used ever since. I'm thrilled with my 30K mile Accord that I just purchased for a little more than 1/3 of the original MSRP.

Jet sitter

I never knew that you could finance 100% of a car loan. Seems to be a risky business, especially when new cars depreciate so quickly.

dlq04

That seems really excessive to me; do you have anything to back that up?

Lainey

You can, and you can get six year loans....Many lenders now require "gap insurance" with the car loans as too many folks become "upside down", total the car and can't cover the loan.

Conedodger

I remember in the 80s when my brother was upside down on a trade and the dealer rolled that into the new car loan. Financed more than 100% at 16% interest.

jukngene

Here's an analysis from Edmunds that appears to back that up.