I feel horrible. Like I have been scammed or something. What can I do if anything? I still owe $130,000 on the car and can't even sell it because I would then owe around $60,000 to pay off the loan compared to what I can sell it for.
I love the car, I really do but having a hard time getting over this horrible feeling of being taken advantage of.
and the punchline:
Hol up, you bought a $155k car a year ago, and you still owe $130k on it? How small was your down payment? You are what's called "upside down" on your own loan: you owe more than the value of the thing you took out the loan on.
If you're asking what financially you can do, the answer is nothing; you took out a very large loan with a very small down payment on a depreciating asset. Take this as a lesson about why you don't do that, particularly when said asset can be crashed. All cars depreciate in value. Electric luxury sports cars from a relatively small company depreciate very, very quickly. Never trick yourself into thinking that your agreement to buy that car was ever anything but an agreement to light $155k on fire. In the future, if that's not something you can afford to do, do not buy the car.
If you're asking what you can do to make yourself feel better about your choice, my suggestion would be to try to focus on why you made the decision in the first place. You didn't buy a $155k luxury car with a zillion horsepower because it was a sound financial decision; you bought it because it was fun. Nothing has changed about the car between now and a year ago; it's still just as comfy, and it still rips your dick off when you hit the skinny pedal. The value of the car to you was never momentary, and that value hasn't changed. What can you do? The same thing you were going to do before; out make your payments, and you keep enjoying your car. Don't think about the financial value of the car; think about the value it has to you.
If you are in a situation where you can't afford the loan payments anymore, you're in a much tougher spot. I would talk to a financial planner, cuz you're gonna need to do some clever maneuvering to dig yourself out of that hole. I'm guessing your best bet would be to sell the car for whatever you can get for it, pay off as much of the loan as you can with that lump sum, and try to refinance the remaining $60k or so at a better interest rate. You'd basically be making payments on a $60k loan rather than a $155k loan, which should at least be an easier hit to take each month. If you need a car, buy a reliable used one in cash, and pay off that $60k loan as fast as you can. Swallow your pride and buy an older Prius or something for $10k.
And for the love of god, don't crash the Tesla; the max you're going to get out of your insurance is the cost to replace the vehicle (unless you have gap insurance, which I really, really hope you do). If you total the car tomorrow, the max you're going to get is $86k, and you'll still owe $60k.
The amazingly stupid part to me isn’t so much that he bought a luxury car and then the price came down, it’s that it looks like he bought it with the expectation that the value was going to go up. Rule number one of buying a new car, 30-50% of the sale value disappears the moment you drive off the lot. That he thought Elon hype magic was going to offset that is an extra level of sad.
Elon hype magic
It's weird how some people - Elon, Trump, Steve Jobs - have a reality distortion field and their acolytes refuse to listen to logic or reason.
P. T. Barnum outlined how to rope your average burgerbrain up in a fartshow and people just keep falling for obvious bullshit, over and over and over and over again.
The origin of the term "reality distortion field" is one of my faves. It was based on the Star Trek TOS season 2 episode "The Menagerie" and was coined by an apple employee named Bud Tribble, who shared his last name with the creatures from "The Trouble with Tribbles," also in season 2 of TOS.
I thought you must have been at least joking a little because "Bud Tribble" sounds like a Bobson Dugnutt name. But the story is true.
Folklore.org: Reality Distortion Field
Author: Andy Hertzfeld
Date: February 1981
Characters: Steve Jobs, Bud Tribble
Topics: Management, Personality, Reality Distortion
Summary: Bud defines Steve's unique talent
At least the Jobs one seems to be dissipating, or maybe it’s just easier for people to see the warts when it’s generic CEO running the company and not The Visionary.
The Steve Jobs Mystery Cult never established much of a priesthood, so there was no one around to deify him once he died.
It’s sort of analogous to the whole “The televised debates won JFK the election” thing. It helped JFK but him and his team didn’t fully understand it because it was too new. It would take later politicians to fully exploit it. Likewise, Jobs had the public persona for the mystery cult but he didn’t really develop it or get the potential in the Web 2.0 era, whereas Musk and Trump did and played it up for maximum effect.
The Jobs cult screwed up because 1) The brand was more known than the person and 2) Steve Jobs is also known for stubbornly rejecting the advice of doctors and then dying
i don't have a driver's license and even i know that cars are depreciating assets
He probably thought his meme Tesla was going to become a heckin collectible NFT
Some days I think that people incorrectly referring to cars as "investments" is definitely a car industry op.
30-50% 0f the sale value disappears the moment you drive it off the lot
Tbf that's not really true since covid hit. New car my parents bought in 2019 only went down a a few thousand because of how long you still wait for a new car, it's sort-of normalizing though.
Car thefts are a huge thing where I live now, because luxury cars retain a lot more of their value in the first few years now. Meanwhile before a 2 year old luxury car was worth less than a new normal brand car usually.
This is a self-correcting loop though. If residual values remain high for 2-3 years after purchase, that makes Leasing extremely attractive and almost free. More people will lease than buy because of the very low monthly payments, which will then drive up demand for new cars and lower demand for used cars. This will then cause values to again drop when driving a new vehicle off the lot
(Leasing prices are calculated by taking purchase cost - residual value (the depreciation over the term of the lease) / term in months. Therefore the more cars retain their value, the cheaper leases get and the less people will want used cars)
Comparing to financial derivatives, a lease has a built-in call option that you also pay a premium for (being able to buy the lease out at the end). You also pay for the depreciation of the car (as you say). And there's also interest you pay on each year of depreciation (so if car is expected to depreciate 8 grand in 4 years, you pay interest on that 8 grand).
Even though as you said, the gap should get bigger between used and new cars, I don't think the loop will fully self correct. Car prices rose like everything else, and I don't think the demand for used cars is really going down because if you're poor you still need a car in North America.
Covid disrupting the car supply lowered the total amount of cars available, and now the price floor for a used car is still pretty high. Old cars still broke down at almost the same rate, and the amount of new cars didn't keep up in replacing it. So now you also pay a premium on being able to buy a used car tomorrow vs waiting months for the new car to get to you eventually.
Idk if car companies actually care about having the same supply/demand balance as before and increasing production. I think they'd rather make more per car, and then invest in the stock market than invest in making stuff. The investment arm of Ford is worth more than the car-making and selling arm.
Your mechanism you talk about is more about the price gap between new and used. Which is effected by what you said (people buying new because used is not worth it), interest rates, inflation, and used car supply.
Admittedly I haven't really taken a good look at the leasing market because I was taught that it's always stupid to carry that much credit on a luxury good that depreciates (parents always told me put money into your own house, or stonks, and drive a beater until you have money to burn).
Yes there’s also a rent charge and fees, I took that as a given. Of course the lessor isn’t operating a charity and seeks to make a profit. Those are also present on retails, and much greater. You can pay all monthly payments upfront in a lump sum to reduce it to a negligible amount. It all multiplies off the base amount provided by the depreciation though, so that’s the primary consideration.
There are certain situations where leasing a new car is a very good deal, better than buying new and better than buying even somewhat new. It’s usually when conditions align just right with rebates, clearance of soon to be old model year cars & high residual values. Back when I worked in the industry I saw many leases for cheap cars like Corollas or Jettas that were for around $190/month, and some for electric vehicles that were around $100/month (this was around 2016 when there were cheap rates and big electric rebates)
(Leasing prices are calculated by taking purchase cost - residual value (the depreciation over the term of the lease) / term in months. Therefore the more cars retain their value, the cheaper leases get and the less people will want used cars)
This makes sense abstractly and yet I don't really believe there would be a major decrease in the lease cost, I just see the dealership profitting more.
Dealerships get rate binders from the financiers with set RVs. They don’t get to chose. They can mark up the rent charge and purchase cost within certain limits, but not the RV. Financiers don’t want to fund underwater loans because it’s more risk for them.
Sort of akin to girl math I believe there is an as of yet understudied field of "car math" where people do all kinds of mental acrobatics to reach some sort of calculation where new cars ever make sense as a private consumer.
I mean if you splurge on one, like that response said, you do you, but there's a lot of folks pulling all kinds of numbers out of their ass to justify why their new car is some sort of sound financial decision. Imagine being beat by the "this is a status symbol because I rule" people vis a vis personal finance
back when I used to argue with people online, I remember this one guy's argument for buying a new car was that he, as a financial planner, needed to project wealth and security to his clients.
he could not see the irony (doing something impractical to appear practical) and did not appreciate being compared to a con artist who invests in a $5000 bespoke suit or a record "producer" with a $10,000 gold chain.
I respect that, though. That's not doing mental acrobatics, that's performance and by and large cars are status symbols. It's fine if you're aware of it, whatever the reason may be. My gripe is with people that pretend their status symbol is sound financial planning because "you save on repairs" or whatever as if the 2 year old vehicle is going to start breaking down instantly all of the time (any more so than a new, shitty, vehicle would)
I mean, would you hire a defense or wealth lawyer who drove around in a beat up, two tone car?
IMO what people are paying for with new cars, outside of luxury and exotic cars, is the peace of mind that the car is virginal when you get it. No uncertainty of something that happened to it with a prior owner causing a problem down the road. That’s a personal judgement call for a car buyer, but it’s never an investment.
yeah but you can get that at much less price with like a certified used one. except for if the virginal part is really important to you, which I imagine it is, because I'm convinced people who do car math want to fuck their cars
Buys a tesla, doesn't understand the depreciation of vehicles. A brilliant mind.
was the apes thing an op? like a 3 letter agency was just pumping millions of dollars around in circles back to themselves building up hype and surely suckering in morons who didn't know what was happening?
There was a documentary that claimed Bored Apes was a Nazi inside joke that spun out of control. The main evidence he presented was the various references to Hinduism and Nazi figures who brought Indian mysticism to Germany being used in promo material.
Might be a coincidence but there was an awful lot of movement in shady finance sectors after USA got kicked out of Afghanistan and Taliban liquidated 95% of poppy fields.
I see people come into my job all the time and pay 27%+ APR on luxury sedans and Teslas every day. Like bro, you're not succeeding in life here, you're purchasing a lead anchor and proudly wearing it around your neck
Dumb guy question, but is APR the interest rate only, or is it interest rate ´+ fees + whatever other finance-expenses? Because 27% sounds like it would be debilitating.
That is the interest rate because it's technically several outside financing loans compounded to make it not illegal
But people just gotta pay $70,000 for their $30,000 2014 Mercedes with 108,000 miles on it
I've yet to see a single reason why anyone should get a car that isn't a Honda or Toyota (or maybe a subaru if you may need awd)
if you have a place to charge at home, and you're mostly just using the car as a commuter box, something like a chevy bolt or nissan leaf can work quite well and save you a ton of gas money (but make sure to not buy new)
i still hold the opinion that you should not buy an EV if you do not have a place to charge at home.
I'd be worried about battery degredation on a used electric car. Hybrids you can deal with because the battery is less costly to replace since it's smaller, and usually isn't critical to the operation of the car.
I'd rather buy an even older electric car and get the battery replaced so you're 100% sure of the lifespan than a medium-old one with a worn battery.
Yeah, the issue with old Nissan Leafs is that they always have fucked batteries that only have like 30 miles of range.
Yeah, the cheaper EV's make sense if you're stuck in the suburbs and still need a car sometimes. Get a BYD or Tesla model 3, plug it in the garage (preferably with excess solar), and you get to drive around essentially for free (excluding taxes and insurance).
In many cities it is illegal to directly connect solar power to your house. For example, in San Francisco, you must sell your solar-generated electricity to PG&E and then buy it back for twice what you sold it for.
That's so stupid wtf.
Where I live you can sell it back to the grid and only pay/get paid for the net difference. That way you don't have to buy an expensive home-battery system.
I thought California would be better than my Conservative-run Canadian province but I guess not.
It’s because San Francisco is owned and operated by a corporate cartel.
My family has had personal experience with setting up solar a few years back. It used to be only 1.25 times what you were buying for vs selling for. PG&E has been jacking up the uneven exchange rate to try and kill solar. You can’t charge anything directly from your solar panels, it has to be from the grid.
So now their solar panels are just the world’s most expensive roof ornaments.
you must sell your solar-generated electricity to PG&E and then buy it back for twice what you sold it for.
what the fuck is the point of getting solar then lol. Is this the same reasoning for criminalizing collecting rainwater on your own property?
Tesla model 3
it's actually crazy how you can find model 3s in the mid 20ks now. these things depreciate like crazy
I'm assuming those have issues? I think I'd probably get a BYD over a Tesla, although I'm not buying a new car anytime soon.
I'm assuming those have issues?
I just checked a bunch of listings on AutoTrader for Tesla Model 3 under US$30,000 and none of them mention any significant issues.
none of them mention any significant issues.
Besides the significant issue of being an off-warranty car with notoriously shitty build quality?
I know that Teslas still have suspension issues that start appearing around 100k miles so keep that in mind
The Tesla battery issues are limited to the pre-2015 Model S so that's not really an issue. For battery longevity, you should expect to replace the battery at around 200k miles, going by real-world examples of high mileage Model S.
And obviously, Teslas all have misaligned body panels, but I don't know if I'd really care about that on a mid $20k Model 3
The mid $20k Model 3s I looked at have around 50k miles
Legit. Nothing touches the reliability of the major Japanese brands. Driving sucks, but if I have to do it, my wheeled appliance better work every time.
Hyundais and Kai’s are cheaper than all of those and I haven’t had issues with reliability 🤷♂️ but I know this is hot take-y.
It depends on the model for Hyundai and Kia. Some of them can be pretty decent, some are totally shit.
I love the answers that are like 'just shitty market timing'. Because apparently, there is a right time to spend six figures on a car. $86K is still too much, this bozo has more hurt in store yet if he's obsessed with resale value.
Don't think about the financial value of the car; think about the value it has to you.
Lol I wish I could live like this
Lmao. Imagine buying EVs new when you can buy them 1 year old and save like 10 grand
Certainly better than mine "Hahaha owned, feel the invisible fist of the market" would be.
They will probably lead to the same action on the OPs part though. Seems like someone unwilling to comprehend the world
I don't have anything against the response. The dunk is a Tesla owner being fucked and that's just the comment that best explains why they're fucked and that there's no hope.
Oh I didn't read it as though you had anything against the response, I just felt like pointing it out
Remember kids: If your ass sets on it, it's not an asset. You can't make money flipping cars (except maybe repairing vintage cars, but even then)
Almost tempted to login to Reddit to post “lol” on his thread but fuck Reddit and its MAU count.
The kicker here is that Tesla offers leases on these cars, and that's how most luxury cars are intended to be used - rich people aren't going to bother with all the fuck around stuff (maintenance, repairs) when you own a car because they're always just a money pit. Even if he did lease it at a 160k value it'd be less of a financial hit.
And the maintenance with EVs includes replacing the battery entirely at some point for a cost of like $15k+. The last thing I'd ever buy is a used EV, much less one with a proprietary battery tied to an unstable company.
