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10-27-2016, 03:47 PM #1
Used Car Values Falling: What This Means for You
Used car values declined last quarter. And this may have a big impact on your finances. Especially if the Fed goes ahead and raises interest rates.
How will falling values impact you?
First, you will get less when you trade in your car. That means you will being paying more for your next car.
Second, if you lease your car it will be more expensive. Those rock bottom lease rates were based on low interest rates and high residual values.
Third, if you need a car loan, they may be harder to get. With lower residual values, lenders will be losing money on a lot of their 5 and 7 year loans. This may cause them to pul back from the market.
Even if you can get a loan, you may be looking at a shorter term (meaning higher monthly payments) and higher rates (also meaning higher monthly payments). The good news from a shorter term, even with higher rates, is that by making your payments over less time, you should end up spending less in total interest costs.
One more thing to look out for is that lenders may ask you to make a bigger down payment on your car. Which will in turn be harder, thanks to lower values on your trade-in.
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10-28-2016, 04:11 PM #2
Yep ... all those leased cars are hitting the used car lots. And driving down prices.
I blame myself. As we have been serial leasers the last 9 years.
10-31-2016, 09:17 AM #3
I've also read that defaults are rising. Some lenders are starting to question those 7 year car loans in the subprime space.
11-01-2016, 11:14 AM #4
Look on the bright side: it will now be easier and cheaper to buy a gently used gas efficient car. Which is the right thing to do for your pocketbook and the environment.