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

[B2000]

I have a theory (only a theory) ICE buyers everywhere are in for a really rude shock sometime in second half of this decade. Most of the OEMs and the forecasters are saying that BEVs will cost LESS to make than ICE around 2025. The fudge factor is how quickly new sources of raw materials come on line - right now those costs are soaring.

So my theory goes that for a large part of the car buying population, given it's 2026 or later, the idea of buying a used ICE vehicle will look incredibly stupid - given that a new BEV costs less, costs a fraction to refuel with electrons, and requires vastly less maintenance. And used ICE values will tank very quickly.

That's 100% speculation on my part. Just a pet theory. You could make fairly make an argument in exactly the other direction - the USA will never get infrastructure right, BEVs will not cost less, or the majority just won't buy them. That's a fair response and I wouldn't argue it. It's the future and it's hard to predict.

I do plan to put my money where my mouth is. My family will go 100% BEV in the next 3 years.

ICE vehicles will dominate for at least another couple decades. Do you know anyplace that is significantly adding generation and infrastructure (all the way to homes and businesses) to support millions of BEVs?

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[SLINGSHOT]

The world did not go from horses to cars overnight. And, there were steam powered and battery driven cars, as wll as gasoline, in the changeover time. Slow and gradual will allow for the best form of transportaion to win. It might be that noe of today's contendors wins.

 

[Impetus19]

ICE vehicles will dominate for at least another couple decades. Do you know anyplace that is significantly adding generation and infrastructure (all the way to homes and businesses) to support millions of BEVs?

I am starting to think that they may actually build additional electrical grid capacity faster than building my hybrid maverick.

 

[Lonnie gee]

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.

 

[Lonnie gee]

Well said that’s the way I’ve done it for decades and decades keep your vehicle for a longer period of time and save cash and when you don’t have a payment, keep paying yourself so you’ll have it for your next purchase All the more, so if you were in your earning Year’s, I need your money to go further

 

[IwannaMav]

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.

Could you please explain this to my wife. For some reason she doesn't listen to me.

 

[CrouchingDallas]

Great thread, everyone! It’s helpful conversations like this that make this forum one of the great corners of the internet.

We’re in an interesting spot on our order and financing: ordered in September as a new MY23, got scheduled unexpectedly for an XL Hybrid for 12/19 (confirmed again today) with an ETA of Jan 3. Wild!

On one hand, we’re so pumped with the early production schedule. On the other, my wife is now on half-paid maternity leave (second baby boy!), so we’ll want to put a lot down to keep those monthly payments lower for cash flow.


Like the OP, plan is to sell our Forester (2016) for an expected 10-13k (it has some minor damage but fewer than 70k miles), bump up our down payment to 15-17 with cash, and then finance the rest. We both have 700+ credit scores so hopefully that helps us score something less than 5%, but I’m not going to stress myself out about it.

In terms of wants vs needs, I’d like to add this to the convo: in CA, with our insane gas prices, and for us a new job that involves an hour+ of mostly city driving / day, the hybrid Maverick becomes a *very* affordable proposition.

Maybe my math sucks, but I figure that the Forester sale + gas savings alone (we’ll get double the gas mileage vs our Forester!) will break us “even” within 8-10 years easily.

The numbers might work out differently for y’all, but California gas prices + LA city commuting + 20mg simply doesn’t mix! Making the Hybrid XL, at least for us, a truck that satisfies both a need *and* a want.

 

[Rolandus]

The

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.

 

[Rolandus]

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.

Check and see what the interest rate was when you placed your order for the Maverick. That should be the rate when you pick up the truck at delivery. Ask the dealership to check the interest rate at the time of your order via their "Smart Vincent" system.

 

[scottp01]

Check and see what the interest rate was when you placed your order for the Maverick. That should be the rate when you pick up the truck at delivery. Ask the dealership to check the interest rate at the time of your order via their "Smart Vincent" system.

Pretty sure that is only for promo rates which the 2023 Maverick didn't have in September.

 

[Blackbelt]

Earlier in life i played the new car every 3-4 years game. When the children came and my wife being a stay at home Mom, that stopped working for us. I bought a new inexpensive "family" car, and drove beaters to work.
I wrenched my beaters and kept them running reliably and usually sold them for as much or more than i paid for them. I resisted buying large expensive vehicles that we really didn't NEED. Our family car in the late 90's was a Neon. I didn't see the need for a thirsty large SUV. Kids are smaller humans, and don't take up a lot of room. I do not subscribe to the theory of "huge vehicles are safer", as i prefer my vehicles to be a bit more nimble.
But i digress..... I currently drive a Toyota hybrid (a 2014 Prius "C"). I purchased it used in 2016 from Carvana for $13K. It had 22K miles on it. It currently has 89K on it and Carvana offered me 10.4K for it yesterday. It has been paid off for years and i have banked a car payment every month since. At this point i can write a check for the Maverick. I have no idea what my Toyota will be worth when (if) my Maverick does get built. I wish I could get mine tomorrow but that's out of my hands. I don't NEED the Maverick, my Toyota is reliable and needs nothing. Plus i get 55 MPG and that is a big help.
I honestly don't know how people can afford to spend $40K+ for a new vehicle. I make an OK living, but damn that's a lot of $$.

 

[OpieGoneBad]

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.

I totally agree with this. We have been doing this for almost 35 years now and have never had to buy a car on payments in that time. When you have no car payment you can save that money for the next one. But, it really only works if you have the discipline to not only save the money but also to buy what you NEED, not necessarily what you WANT. That not only means buying base models when possible but also driving them till the wheels fall off.

When I bought my 22 Mav, I bought an XL hybrid with a tow hitch and full size spare. The only reason I got those two options is because it was cheaper to put them in the build as an option than I would have had to pay to do it afterword. Would I like a Lariat with AWD Ecoboost power and all the nice stuff that goes in that package, sure. Do I need that, heck no. When I picked up my truck in July, I handed them a check for the full amount and drove off with no payments...... just like I have done for the last 35 years with every vehicle I have purchased whether new or used. I fully expect to have this truck for at least 10 years before I think of replacing it.

We have a second Maverick on order with a Nov 28 build week. It is another XL (different color) with a tow hitch as the only option. When I pick it up early next year I will hand them another check for the full amount. There is nothing I hate worse than car payments. (well maybe taxes but there is no getting around those!) If it means we put money away every month for a future car we won't be buying for 8-10 years from now, so be it. If that also means I get the base model instead of all the fluff on the high end models, that's just fewer items to break in the future. I'll happily keep driving it for the next 10 years.

My dad taught me that a car has one purpose in life, get me from point 'A' to point 'B' as inexpensively as possible and not break down in the process. That is one lesson that really stuck with me. And before I get all the "it's nice to be rich" comments, we are far from rich. We are just disciplined when it comes to money.

 

[jsus]

Pretty sure that is only for promo rates which the 2023 Maverick didn't have in September.

There's the rate lock program that allows you to lock in the current Ford Credit rates, if you submit the credit application now. That's just for the current going rates, no discounted rates, which there aren't for Maverick.

If there were promo/incentive rates for 2023 Maverick, then they would automatically be locked in at time of order, available to the dealer at time of delivery. That's the usual process, which doesn't require a credit application at time of order. This new program is probably going to be over 5% for 60 months these days, for instance, vs. the 1.9%-2.9% available for 2022 Mavericks.

See thread on rate lock program...

https://www.mavericktruckclub.com/forum/threads/-ford-credit-finance-rate-lock-program-for-2023-models-ordered-by-1-3-23.21961/

 

[SLINGSHOT]

Made my last house payment in 1992, and my last car payment in 1993. It's amzing how fast money accumulates without those two mill stones around your neck, dragging you down. Now, I buy what I want, when I want. If my Lariat Lux with both Co-Polit packages. Everything except the sun roof (don't wanr it, don't need it, don't use the one I have).
If Toyota starts delivering the 2023 Cross, to dealers, I may get that. Hell, if I can't make up my mind, I might get one of each.
My wife is exactly opposit. Only a suicidal fool would try to get her to part with her 2000 Civic.

 

[JohnCondren1933]

Well with Mav it looks like you hit the apex of the perfect storm bud.
Trucks always held their resale value better than anything, and then you have Maverick that is objectively cheaper to manufacture than many SUVs including ones that drop in value quick.
Noone can say anything about your Forrester value, but your 2023 Maverick can sell right now for within $500 of what you paid for it.

Maverick was my 1st new vehicle and thats after I built my 1st new house, the prices people get for used Mavericks are still absolutely ridiculous vs new, there was no way I could justify buying a 4 year old vehicle for peak depreciation it just wasnt there with Maverick - covid cutting auto production played a hand with a lot of vehicle resale but Maverick just dropped right into the "perfect storm" for probably about the highest resale, at least the hybrid prices.

At this point Id only trade in for another Maverick, if a hybrid Tremor came out, close to same good mileage & 300,000 mile powertrain but with Tremor ground clearance & skidplates over the engine & battery...yeah Im probably trading in because I can afford to & so what if Im only on County roads I wanna lifted truck

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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