Will Vehicle Prices Ever Decrease?

[Poindexter]

Isn't leasing a car a bad idea? You pay extra if you drive over a certain amount and get dinged if you don't return the car in certain shape? I thought leasing for an individual was the most expensive way to have a car and most do this to lower their monthly payments and the pay more overall?
Thanks Bill

It isn't for the people who truly drive their cars until the wheels fall off, but I think it is a very good way to go right now.

The average selling price of a new car broke $46,000 last month

Prior to COVID, the average new car selling price was $34,000. $12,000 in two years! That's NUTS.

This market will stabilize in the next two years. Prior to this market the average deal on a loan had a 66 month term at a ~5% APR. The average downpayment was around $2,400 and the average dealer profit was $600. That means people were receiving a couple thousand dollar discount + rebates.

The interest rates have remained roughly the same, but the term has gone farther in 2021. The average downpayment has climbed to $3,600, but dealer profit has broken $5,000. Manufacturers are not offering the same rebates.

For example: if one were buying a $50,000 pickup truck from a domestic, they were probably buying that truck for a few hundred dollars over the invoice and receiving around $4,000 in rebates. This equates to a discount of $6,000. And the average downpayment was $2,400 with around $1,500 in taxes and fees. So, a $44,000 selling price - $2,400 down payment + $1,500 taxes/fees = $43,100 financed.

Today the selling price is $55,000 for the same truck. Maybe you get a subvened interest rate under 5% as an incentive from the manufacturer. $55,000 selling price - $3,600 down payment + $1,700 (higher taxes) taxes/fees = $53,100 financed.

That's a $10,000 difference in your loan. You may need to finance for 84 months to afford that difference.

If you (like 90% of us) get the new car itch within 3 years, you now have an extra $10,000 + an extra two years of financing and interest that you wouldn't have had in a stable market.

Enter the lease.

When the 3 year new car itch hits, you're turning the truck in and getting a shot at a stable market where you can make the decision to lease again or get a loan.

Mileage overages are $0.25 per mile. There may also be a lease termination fee at the end. Excessive wear and tear is a thing, but I've never had an issue. I live in the countryside of Vermont with three young children - there is no worse place in the US for a car than the Northeast where roads are salted. Just wash the car before you turn it in. <---- good advice for any time you take your car to a dealership.


P.S. I stayed at a Holiday Inn Express last night.

 

[ewade07]

If you have to make a payment, you can’t afford the vehicle, period.

Sound advice. I bought my 2002 Tundra 5 years ago with 140k (197k now) for $7000 cash. Just recently bought a 1995 Subaru Legacy wagon with 120k on it for $1500. Im pretty well set for a while

 

[aftriathlete]

It isn't for the people who truly drive their cars until the wheels fall off, but I think it is a very good way to go right now.

The average selling price of a new car broke $46,000 last month

Prior to COVID, the average new car selling price was $34,000. $12,000 in two years! That's NUTS.

This market will stabilize in the next two years. Prior to this market the average deal on a loan had a 66 month term at a ~5% APR. The average downpayment was around $2,400 and the average dealer profit was $600. That means people were receiving a couple thousand dollar discount + rebates.

The interest rates have remained roughly the same, but the term has gone farther in 2021. The average downpayment has climbed to $3,600, but dealer profit has broken $5,000. Manufacturers are not offering the same rebates.

For example: if one were buying a $50,000 pickup truck from a domestic, they were probably buying that truck for a few hundred dollars over the invoice and receiving around $4,000 in rebates. This equates to a discount of $6,000. And the average downpayment was $2,400 with around $1,500 in taxes and fees. So, a $44,000 selling price - $2,400 down payment + $1,500 taxes/fees = $43,100 financed.

Today the selling price is $55,000 for the same truck. Maybe you get a subvened interest rate under 5% as an incentive from the manufacturer. $55,000 selling price - $3,600 down payment + $1,700 (higher taxes) taxes/fees = $53,100 financed.

That's a $10,000 difference in your loan. You may need to finance for 84 months to afford that difference.

If you (like 90% of us) get the new car itch within 3 years, you now have an extra $10,000 + an extra two years of financing and interest that you wouldn't have had in a stable market.

Enter the lease.

When the 3 year new car itch hits, you're turning the truck in and getting a shot at a stable market where you can make the decision to lease again or get a loan.

Mileage overages are $0.25 per mile. There may also be a lease termination fee at the end. Excessive wear and tear is a thing, but I've never had an issue. I live in the countryside of Vermont with three young children - there is no worse place in the US for a car than the Northeast where roads are salted. Just wash the car before you turn it in. <---- good advice for any time you take your car to a dealership.


P.S. I stayed at a Holiday Inn Express last night.

Your comment about the climate/environment is part of my consideration that favors leasing too. I’m moving to HI, so I’m gonna have this truck in what’s basically the harshest climate it can exist in in America for 3 years. I’ve looked at Tacomas for sale there in Oahu, and I’ve seen 2016 and 2017 Tacomas that already have body rust because the environment there is so hard on vehicles.

 

[5MilesBack]

I remember hearing a line years ago about "guys would never give up their trucks". But the last time diesel was over $5/gal, people were having trouble selling diesel trucks. I bought my one-owner 2001 SRW F-350 XLT CC LB 4x4 with manual transmission and 122k miles on it for $10k. I could sell it today for more than that. But who knows what we'll see down the road here if inflation hits 10%+ and gas and diesel are both over $5/gal. Might be some deals. And I'll be buying.

 

[Cajun Hunter]

The market is nuts right now. There are no "deals" anymore

 

[Like2hunt]

I’ve had a new excavator ordered for 6 months. I may see it in 9. Before JBA (Joe Biden’s America) it was maybe 30 days, 2 weeks of that being the shipping process. I can sell the 2015 model it’s replacing for what I paid for it.

It’s not just cars and trucks.

This is true. My grandpa had to order his new 2022 John Deere swather around August of last year to be able to have it here in time for this years hay season. Wanna talk about expensive? Go look at how much one of them things cost. I wouldn’t be surprised at all if his 3 year old Massey sells for a ridiculous amount too

 

[CamoPirate]

I saw a MSRP $43k 4door Rubicon with a sale pending for 90k...who legalized smoking crack?

 

[JJJ]

No, they won’t come down.
It’s just been discovered through. fOIA request that the 2008 bailout wasn’t the 3 trillion we were told, but 30 trillion.
Also we’ve been giving a trillion dollars a week to the major US banks and global banks for two years now.
All in around 95 trillion hidden from the American people, not including the Covid spending.

This is intentional and to tank the dollar worldwide.
What comes after this? Digital currency world wide. In the very least here.
I guess then you can calculate how many fed coins an electric truck costs.

But only if your environmental, social and governance scores are where they’re required to be.

So again, no. This is never coming back down and yes we are in the midst of dystopian future.

This is the great reset and we are all on the road to serfdom. Live it up now and enjoy your life and your money.

 

[dirtshooter]

No, they won’t come down.
It’s just been discovered through. fOIA request that the 2008 bailout wasn’t the 3 trillion we were told, but 30 trillion.
Also we’ve been giving a trillion dollars a week to the major US banks and global banks for two years now.
All in around 95 trillion hidden from the American people, not including the Covid spending.

This is intentional and to tank the dollar worldwide.
What comes after this? Digital currency world wide. In the very least here.
I guess then you can calculate how many fed coins an electric truck costs.

But only if your environmental, social and governance scores are where they’re required to be.

So again, no. This is never coming back down and yes we are in the midst of dystopian future.

This is the great reset and we are all on the road to serfdom. Live it up now and enjoy your life and your money.

Don't forget tax on every private transaction.

 

[Trial153]

Thankfully I got a deal on RFID blocking tonneau cover

 

[JJJ]

Thankfully I got a deal on RFID blocking tonneau cover

Ignorance right here

 

[MattB]

No, they won’t come down.
It’s just been discovered through. fOIA request that the 2008 bailout wasn’t the 3 trillion we were told, but 30 trillion.
Also we’ve been giving a trillion dollars a week to the major US banks and global banks for two years now.
All in around 95 trillion hidden from the American people, not including the Covid spending.

This is intentional and to tank the dollar worldwide.
What comes after this? Digital currency world wide. In the very least here.
I guess then you can calculate how many fed coins an electric truck costs.

But only if your environmental, social and governance scores are where they’re required to be.

So again, no. This is never coming back down and yes we are in the midst of dystopian future.

This is the great reset and we are all on the road to serfdom. Live it up now and enjoy your life and your money.

Do you have any sources for those claims? The last barn burner posted on Rokslide that allegedly came from a FOIA request looked like someone created it on their laptop at home.

 

[MuleyFever]

 

[tony]

I waited, looked in many states and actually found a good deal on a 2021 Ford Ranger Tremor here in WV. Price was under MSRP and I got $1500 off that. Traded my old F150 in for near what I wanted, put a few bucks down and used Ford finance which was less than even my credit union.

Deals are out there, you just have to look and maybe make the drive to get them.

 

[Billinsd]

I remember my mechanical engineering buddies in college said that a car is the worst investment possible. If you ran a car 24/7 it could run a couple weeks, I think it was. A car isn't an investment, it is a necessity for work and to live, and any amount over a basic subcompact car is a luxury to me. I got a commuter civic that I need and my 20 year old Tacoma that's a luxury that I could do without. Cheers Bill

 

[BigDog00]

I remember my mechanical engineering buddies in college said that a car is the worst investment possible. If you ran a car 24/7 it could run a couple weeks, I think it was. A car isn't an investment, it is a necessity for work and to live, and any amount over a basic subcompact car is a luxury to me. I got a commuter civic that I need and my 20 year old Tacoma that's a luxury that I could do without. Cheers Bill

Your friends are right. A car isn’t an investment. It’s a depreciating asset.

My wife really wants a new car but I’m trying to convince her to wait it out. At least until supplies catch back up. I’m not sure prices will come back down, at least short term.


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[dtrkyman]

We bought the wife a new vehicle last summer, first one since 08 so I didn't have much ground to stand on, even though my 13 has more miles! There was a 1500$ manufacture's rebate at the time and that dealer group did not inflate prices for "market value" so no gouging, bought it through her business outright so no financing.

A jeep dealer I stopped by had 5k added to all their vehicles for "market value"

Crazy times in the housing and car markets!

 

[hflier]

Supply > than Demand = prices down


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[aftriathlete]

I'm prepping my 2016 Ram 2500 for sale. I really don't want to sell it, but it can't be shipped to HI, so I'm not paying to store it for 3 years, especially when there has never been a better time to sell a vehicle than right now. But it will still be a couple weeks at least before it's sold and I can make a decision on a used Tacoma or a lease. But I'm already watching the classifieds. The first good deal I have seen within 250 miles of here in about the last month that I've been watching popped up last night on Marketplace and is already gone today -- clean title 2014 4x4 crew cab TRD Sport w 65000 miles, $17900. It was up for less than 24 hours. So maybe, just maybe, I'll find a reasonable deal on a used one. That was fully $6K+ under KBB for private party, so it was either a unicorn or it had skeletons in the closet.

 

[Huntin_GI]

I don’t see why it would come back down. Worsening inflation and people are already buying at these prices. Higher interest rates can help. But, supply costs drive a higher price to end consumer and those likely won’t come down for a long time.

those likely won’t come down EVER. There, I fixed it for ya.