According to Insurify, Nevada has the second-highest auto insurance rates in the country.
Used car prices are starting to trickle down after years of soaring after the pandemic hit, and while this trend is a much-welcomed relief for buyers, it’s also hurting some consumers who bought cars at higher prices. is causing problems.
The latest Edmunds Used Car Report shows that more Americans are defaulting on their auto loans as used prices drop, and the average consumer debt is at an all-time high.
Although used car prices are down from a year ago, the average amount consumers take out on car loans is at an all-time high. (Steve Forst/Newsday RM via Getty Images/Getty Images)
According to the report, the average transaction price (ATP) of all used cars in the fourth quarter of 2023 fell to $28,371, a 4.4% decrease compared to the same period last year, when ATP remained at $29,690. did.
At the same time, the proportion of new car sales with negative equity trade-ins was 20.4%, up from 17.7% in 2022 and 14.9% in 2021.
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The average amount consumers owe on upside loans is now $6,064, the highest on record, up from $5,347 in the fourth quarter of 2023 and $4,143 in 2021, according to the data.
Used car prices soared during the pandemic, but are finally coming down. (Photographer: David Paul Morris/Bloomberg via Getty Images/Getty Images)
“Incentives and inventory are trickling back into the new car market, and it’s taking the used car market by storm,” said Ivan Drury, director of insights at Edmunds.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| bean paste | AutoNation Co., Ltd. | 158.83 | -0.38 | -0.24% |
| CVNA | Carvana Co., Ltd. | 80.79 | +1.21 | +1.52% |
| KMX | Carmax Co., Ltd. | 79.83 | -0.91 | -1.13% |
“As demand for near-new cars declines, used car values are falling as they were before the pandemic, and negative equity is rearing its ugly head,” he added.
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Edmunds analysts found that consumers who are most likely to default on their auto loans are those who bought a new car for more than the list price. That’s because trade-in values for these new cars are falling the most sharply.
Consumers who are most at risk of defaulting on their car loan are those who purchased a car for more than the manufacturer’s suggested retail price in the past few years. (Photo by Justin Sullivan/Getty Images/Getty Images)
According to the data, the ATP for a one-year-old vehicle decreased by $6,763 to $38,720 last quarter compared to the third quarter of 2022, when used vehicle values were at their peak. Two-year trade-ins fell $3,294 to $32,583.
For comparison, the ATP of a trade-in 10 years ago decreased by $1,304 to $12,477.
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“For the past few years, consumers were able to jump on new car loans and their trade-ins were protected from negative equity because they wanted used inventory and some dealers were willing to pay close to the original purchase price.” Drury said.
He added: “Consumers need to be more careful these days, especially when trading in a new car, because cars that are nearly new are the ones most affected by depreciation.” added.
