Part 6/11:
In recent years, the approach to buying cars has morphed into an intricate financing puzzle. Over 80% of new vehicle purchases are now financed, a trend that dealerships have capitalized on. Traditional savings strategies have been replaced by rolling existing equity into down payments for new vehicles, with dealerships creatively redesigning how vehicles are financed.
This financing treadmill has created a precarious situation as rising interest rates and new car costs collide with diminishing purchasing power. Car prices have spiked since the pandemic, but with the market stabilizing, used car values have begun to decline. Consequently, many consumers find themselves underwater on their loans, unable to sell their vehicles without incurring significant losses.