Anyone concerned about rising auto interest rates and decreased used car values?

[Ponchsox]

I have a 2023 Hybrid Maverick on order but I’m concerned it might not be worth it come 2023 to make the purchase. Interest rates are hovering around 5% and the used car values are rapidly decreasing. I have a 2019 Forester that I plan on selling before I buy the Maverick but if I can’t get any equity for it, my payments will not be affordable. I wonder if more people walk because of these two factors? I am locked into a great rate on my Forester and I don’t owe much on it. I would love to own a Maverick but not sure I want one THAT much now, especially if this trend continues.

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[Last Truck Ever]

Both concern me, though not a heckuva lot I can do about either. I'm taking the offensive in saving as much $$ as I can while I wait for the Mav, to pay as much upfront as possible. My ride is a 2008 Ranger, it's gotta go one way or the other. I do think, to your question, some will walk for the reasons you cited. I am also hearing an inordinate number walking unwillingly, because their credit prevented approval.

 

[Mikew555]

When I ordered my maverick last year ford credit was 3.9% for 72 months. When I got my maverick 2 weeks ago the interest rate that was offered at time of sale was what they used. Ask your dealership what ford was offering when you placed d your order. That might help you with your decision. Hopefully that helps. Good luck!

 

[gte105u]

Just got 3.5% on a 36 month for a used Rogue. Go in informed and see what they can do.

 

[B2000]

We most likely have a recession in 2023 which will reduce consumers ability to buy everything. With energy, food, and housing costs way up people will have less money for autos and everything else. Given the demand for Mavericks now it won't disappear but I imagine you will see some ecoboosts on lots at MSRP or less.

If you aren't picky about what you get there might be some deals but if you want exactly what you ordered and have the bucks it makes sense to stay with the plan.

 

[BuddyS]

The best way to mitigate issues like this is to buy a vehicle and keep it for 10 years or so. Getting a new vehicle every couple of years is a horrible financial pattern -- you just keep paying on payments and eating depreciation. Your actual cost becomes $1000 or more a month on a 40K car that loses half its value in 4 years. Buy smart -- something that will fit your life for a decade -- and enjoy a few years of no payment and little depreciation. Then you'll be in a much better position to get the next vehicle when the time comes.

 

[matmondro]

The best way to mitigate issues like this is to buy a vehicle and keep it for 10 years or so. Getting a new vehicle every couple of years is a horrible financial pattern -- you just keep paying on payments and eating depreciation. Your actual cost becomes $1000 or more a month on a 40K car that loses half its value in 4 years. Buy smart -- something that will fit your life for a decade -- and enjoy a few years of no payment and little depreciation. Then you'll be in a much better position to get the next vehicle when the time comes.

Absolutely agree on this, I plan on keeping my Maverick for years and years to come.

In response to the OP, that's an understandable situation, especially as it seems more and more signs point towards a recession soon. The Mav is tempting, but if you have a great rate on your current car, it might be worth keeping it for now, then in a year or two when used ones pop up, pick one up at less than MSRP with lower mileage. I only say less than MSRP because I believe the used car bubble is popping as we speak, so used car values shouldn't be so high next year.

 

[Clock Doc]

The best way to mitigate issues like this is to buy a vehicle and keep it for 10 years or so. Getting a new vehicle every couple of years is a horrible financial pattern -- you just keep paying on payments and eating depreciation. Your actual cost becomes $1000 or more a month on a 40K car that loses half its value in 4 years. Buy smart -- something that will fit your life for a decade -- and enjoy a few years of no payment and little depreciation. Then you'll be in a much better position to get the next vehicle when the time comes.

BuddyS is right.
You're talking want over need here. There is never equity in anything that loses value the minute you bought it. Your Forester is running and almost payed off why look for another vehicle? It's a fools bet to flip it just to make more payments that will hurt your budget. All my vehicles are kept 15 to 20 yrs. After your loan is gone and your insurance cost are down you'll have more for spending on needs and wants.

 

[colinl]

The best way to mitigate issues like this is to buy a vehicle and keep it for 10 years or so. Getting a new vehicle every couple of years is a horrible financial pattern -- you just keep paying on payments and eating depreciation. Your actual cost becomes $1000 or more a month on a 40K car that loses half its value in 4 years. Buy smart -- something that will fit your life for a decade -- and enjoy a few years of no payment and little depreciation. Then you'll be in a much better position to get the next vehicle when the time comes.

this is sound advice in general... but this doesn't match the current market at large, and might not match the current situation for an individual. interest rates will continue to rise. they'll be high a while, I don't see the Fed reducing until well after pricing has moved down. we have a lot of inflation to overcome. but the Maverick, I think, will have enduring appeal especially the hybrid and for every person priced out of a Maverick there is a person who was priced out of something more expensive than a Maverick who now is very interested in a Maverick.

regarding trades-
if you bought a vehicle before prices started to rapidly rise at the end of 2020, and you sell or trade that vehicle now while paying msrp on a Maverick you will be enjoying the maximum benefit of the elevated prices due primarily to low inventory of all vehicles. that said it's still a new purchase even if it's an advantaged one, so if you have a paid-off reliable vehicle and you don't want/need a new Maverick, it is hard to honestly say that a Maverick will save you money. it probably won't, not even a hybrid, unless you are a driving a lot of miles on a vehicle with very poor mpg.

conversely, if you bought after prices spiked and especially if you paid ADM on anything you bought, you will be severely damaged if you sell or trade in a falling market. and I completely agree the market is going to fall, in fact it's already started. it will just be a slower fall than usual due to low inventory.

 

[Ponchsox]

The best way to mitigate issues like this is to buy a vehicle and keep it for 10 years or so. Getting a new vehicle every couple of years is a horrible financial pattern -- you just keep paying on payments and eating depreciation. Your actual cost becomes $1000 or more a month on a 40K car that loses half its value in 4 years. Buy smart -- something that will fit your life for a decade -- and enjoy a few years of no payment and little depreciation. Then you'll be in a much better position to get the next vehicle when the time comes.

Generally, I agree with this sentiment. When I bought my Forester, I wanted a truck with great gas mileage. They didn’t exist until the hybrid Maverick became available. I wish I would have ordered one last year to take advantage of the lower rates and to get a great price on my car. I could have used the equity towards a down payment on a Maverick. I’m not upside down on my loan and still might have some equity even with falling prices. Next year, I’m certainly going to have a higher payment than I wanted on the Maverick. Whether it’s worth it remains to be seen.

 

[huunvubu]

Anyone concerned about rising auto interest rates and decreased used car values?

No concern for me.

Resale value on my MY2022 Maverick XLT Hybrid is currently $31,197.00 which the proceeds of will fully pay for my MY2023 Maverick XLT Hybrid out-the-door cost of $28,590.60 leaving a profit of $2,606.40.

I currently have an outstanding balance of $12,500 on my MY2022 Maverick with Ford Credit on a 0% loan. I will be paying off the remaining balance when my MY2023 Maverick gets a scheduled for build date from savings on hand.

Then I will share driving my wife's 2009 Honda CR-V Ex until delivery of the MY2023 Maverick exactly like I did in 2021 when I sold my 2015 Honda Fit Ex in late October until I got my MY2022 Maverick in mid December.

 

[voldemartian]

Interest rates right now are normal. They were super low during covid to increase spending. It wasn’t that long ago that 4.9% was prime.
As for used car prices well that was also a massively inflated market due to supply chain nonsense. By the time you are ready to trade out or up we will be in a more normal market.
None of this you can change and it will apply to any car you buy so it’s all rather irrelevant unless you are trying to buy and flip it for a quick profit.

 

[huunvubu]

The best way to mitigate issues like this is to buy a vehicle and keep it for 10 years or so. Getting a new vehicle every couple of years is a horrible financial pattern.

This is exactly what we do. I call it "cradle to grave" as I buy brand new and keep until near end-of-life.

My 1998 Ford Ranger XLT SuperCab that I bought new and kept for 16 years + 4 months.

The wife's 2009 Honda CR-V Ex also bought new will be 14 years old next month.

 

[gte105u]

The best way to mitigate issues like this is to buy a vehicle and keep it for 10 years or so. Getting a new vehicle every couple of years is a horrible financial pattern -- you just keep paying on payments and eating depreciation. Your actual cost becomes $1000 or more a month on a 40K car that loses half its value in 4 years. Buy smart -- something that will fit your life for a decade -- and enjoy a few years of no payment and little depreciation. Then you'll be in a much better position to get the next vehicle when the time comes.

Had planned to do that with our current rides. But things changed on our end. I traded my paid off 140k Edge for a 40k Rogue. My wife will drive this, she does less than 5k miles a year so it'll last a long time.

My son turns 16 next year, so he'll get her paid off Altima for with 29k miles. Should have a decade left in it plus. My edge wasn't going to last that long, and needed some service and repairs. I am guessing it had 2-3 years left. Felt some rough shifts and shudders, worried there are big repairs in its future. Traded it when it still had 8k value vs. scrap.

Holding makes sense but there are situations where it doesn't. When my Maverick comes in we will be set for vehicles for a decade assuming no outside influences. Rogue will be paid off 3 years (or sooner.

 

[MvrkECWI]

Decreased trade in value is a concern; APR not so much.

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