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

[Maverickman74]

I can almost guarantee that my wife and myself earn less than most on this forum. We are buying a XLTremor for $3000 under msrp. We are paying the minimum downpayment because we also have to ship it to Hawaii($1200-1800) drive it cross country on a fun roadtrip and stay on the mainland for 2 or 3 week. All included we will be spending about $12000 on this trip including the down payment, shipping, and a topper purchase. We have a little over half of that and will put the rest on a 0% card and pay it off before the interest lock expires. Our financing will likely be $26000 at 72 months for between 3.9 and 5%. This will cost about $4000 in interest. Over 6 years. Thats $55 a month. Thats about how much we pay for premuim channels on out satellite tv. We are gonna drop that. So the financing is a wash for us, however we will lose Starz and Cinemax and others of the that ilk. We have never purchased a new vehicle and will probably keep this for as long as it runs and maybe sometime after(I fix things), the fuel savings over what we currently drive will be about 35% of the monthly payment. Honestly at this level of vehicle we arent sweating it too much. It will be well worth it to us. It will be worth it for the AC.

People worrying about finance rates and depreciation kinda crack me up. When you are poor and live almost paycheck to paycheck you just do what you have to do to have what you can manage. To afford this truck we will have to drop cinemax and work 15 hours a month. Not bad to me. We may even pay it off a lil early if we can. But I am not gonna sweat about the borrowing cost fluctuating between $3500 and $4500. Its just not worth the worry.

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[Tiger Dude]

I am definitely not concerned about prices coming down. I'm very happy about it.

 

[Clock Doc]

I wonder what part of a dealer's profit on a sale is financing.

In a normal market you never want to tell your salesman it's a cash deal. They don't want your money up front. The market for pre order is slightly different because your priced at order. Better to let them think your going to finance get the out the door price in writting then tell them cash. If they say that price only through financing then finance it then wait 10 days till the note posts get your pay off amount and pay it off.
A dealership makes 24% on average in car sales that means 76% comes from everything else. When financing through a dealer when they quote you say 4% the dealer is keeping a vig around 2% maybe more they also get a kick back for every loan they make. That's why interest rates are easy to negotiate. If it goes through Ford Credit it may differ in dealer money back. The rest of all the other add ons extended warranty service, window etching, tint etc. Is where they make their money not so much in the actual vehicle sales. All of which can be negotiated if the dealer is a good dealer looking to keep you as a customer in their service dept.

 

[OrangeBlue]

Yeah, no.

The only buy rate of 2% a dealer will ever see would be through Ford. Ford will not allow them to mark up a factory incentivized rate. Dealer would likely get $125 or so on a Maverick deal like that. It's called "a flat".

When financing through a dealer when they quote you say 4% the dealer is keeping a vig around 2% maybe more they also get a kick back for every loan they make. That's why interest rates are easy to negotiate.

 

[Clock Doc]

Yeah, no.

The only buy rate of 2% a dealer will ever see would be through Ford. Ford will not allow them to mark up a factory incentivized rate. Dealer would likely get $125 or so on a Maverick deal like that. It's called "a flat".

I figured Ford wouldn't work the same as the alternate finance company's. Thanks for filling in the missing numbers.

 

[The64]

This has been an anomaly. It is not normal for used cars to maintain their value. It's not normal for interest rates to be 0. It's not normal for consumers to have excess savings burning a hole in their pocket. This is going back to normal and when it does, the impact on Maverick sales will probably be the least noticable.

 

[OrangeBlue]

No worries. Have a good one.

I figured Ford wouldn't work the same as the alternate finance company's. Thanks for filling in the missing numbers.

 

[Beckybee]

I just got 1.9% financing with Ford on my 2022 Maverick last week. Not as good as the 0% on my F350 in 2020, but not going to complain!

 

[Scott Asheville]

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.

 

[atomguy245]

Auto sales are starting to slow. Lots are starting to fill up, and I am now seeing low interest rate and rebate offers advertised on tv, so who knows what your rate might be 6 months from now. Your scenario is exactly what home sellers face now. If they sell, they enter a softening market with high interest rates. Why would anyone give up their 3% mortgage and move to a new house for over 6%? They wouldn't unless they were forced to.

 

[Crance]

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.

Bingo. One of many great pieces of advice my dad gave me was right before I paid off my current car. “Take whatever your monthly payment was and continue putting it aside. When your car breaks, you have money for repairs. When it’s time for a new vehicle, you have a down payment ready to rock.”

 

[dcs12345]

as my kids are getting older, I don’t mind used prices having a big hit. With the current prices, I would hate to have to pay the going rate for old vehicles.

 

[Maverick Grabber]

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.

nope bought mine outright and plan on keeping it , hope you get what you want

 

[vezpa]

I had a ZERO percent interest on a 2022 truck I paid less than MSRP for. Let my cash in that bank account do other things in the meantime. Woman hit me and totaled it out Oct 1st. Can't get another one like it because I can't get a sunroof in an XL and my XL was dolled up with everything including the nice black interior .

Two weeks before the accident I put an order in for a Tremor for $hits and giggles. So glad I did, but now I've got to spend more on this truck with features I really don't need and lose my 0% financing and 4k tow. I will have to pay cash because I'm not giving away interest money. Who knows when I will see this truck built. I don't even care at this point. I'm driving my cool little old Mazda 3 which was my summer car through this winter and I'm not looking forward to it. I'm so over this whole accident and Maverick price/markup/ availability/economy BS. I am half tempted to go buy a Tacoma. I think interest rates will plunge next year. None of us have a crystal ball.



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[cavemold]

Not at my 0.9 rate ! but yes expect rates to go up and used cars market will go down I think ..

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