Part 9/11:
This decline places many borrowers underwater, unable to comfortably service their loans and facing repossession. Many lenders are now waving auto stipulations that previously protected them, allowing consumers to take new loans even while existing loans remain underwater. This practice fuels a cycle of higher risks, more defaults, and eventually, a glut of repossessed vehicles flooding the market.
Impact on Car Prices
The impending wave of repossessions will flood the used car market with cheaper options, forcing prices down further. Even new cars could see prices fall as demand diminishes and inventory increases. Consumers will prefer buying affordable used cars over expensive new models, a trend that could depress auto sales industry-wide.