Author Topic: Debt downgrade, my car loses value?!  (Read 773 times)

Offline bluefoxicy

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Debt downgrade, my car loses value?!
« on: August 10, 2011, 07:39:11 AM »
The collateral value on my car was $11250 before the debt downgrade, when I got my loan approved.  I figured, ok, I'd get paid, pay it down.

Well, lo and behold, a debt downgrade happens and my collateral value is $10500.

WTF?  My car lost value because the US Govt is now AA+ instead of AAA?  At least my approval for 2.61% interest rate is good until October.  I'm paying down to the $10500 and refinancing.

Jesus this is retarded.  The car hasn't been driven!

Offline Slowbrew

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Re: Debt downgrade, my car loses value?!
« Reply #1 on: August 10, 2011, 08:14:32 AM »
No asset depreciates faster than an automobile.  You lose 20% just driving a new one off the lot.  The US credit rating probably didn't have anything to do with it.  Just wait another month, it will depreciate even more.

Paul
Where the heck are we going?  And what's with this hand basket?

Offline johnf

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Re: Debt downgrade, my car loses value?!
« Reply #2 on: August 10, 2011, 09:00:56 AM »
No asset depreciates faster than an automobile.  You lose 20% just driving a new one off the lot.  The US credit rating probably didn't have anything to do with it.  Just wait another month, it will depreciate even more.

Paul

Sandwiches depreciate pretty fast.

ccarlson

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Re: Debt downgrade, my car loses value?!
« Reply #3 on: August 10, 2011, 09:03:34 AM »
No asset depreciates faster than an automobile.  You lose 20% just driving a new one off the lot.  The US credit rating probably didn't have anything to do with it.  Just wait another month, it will depreciate even more.

Paul

Sandwiches depreciate pretty fast.

So does beer.

Offline Slowbrew

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Re: Debt downgrade, my car loses value?!
« Reply #4 on: August 10, 2011, 09:18:05 AM »
No asset depreciates faster than an automobile.  You lose 20% just driving a new one off the lot.  The US credit rating probably didn't have anything to do with it.  Just wait another month, it will depreciate even more.

Paul

Sandwiches depreciate pretty fast.

So does beer.


Neither are considered assets in most accounting systems I've worked on.  Inventory maybe, but not assets.  ;D

Paul

*** Edited to insert word my fingers didn't type.
Where the heck are we going?  And what's with this hand basket?

Offline bluefoxicy

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Re: Debt downgrade, my car loses value?!
« Reply #5 on: August 10, 2011, 09:36:43 AM »
No asset depreciates faster than an automobile.  You lose 20% just driving a new one off the lot.  The US credit rating probably didn't have anything to do with it.  Just wait another month, it will depreciate even more.

Paul

It's a 2004, there is no way it's losing $750 in value per month.  That would tally up to $64,000 in its lifetime.

Offline punatic

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Re: Debt downgrade, my car loses value?!
« Reply #6 on: August 10, 2011, 10:53:54 AM »
I bought a 1999 Toyota Tacoma 4 x 4 in 2005 for $12,000.  I have no idea what its monetary value is today.  I've taken good care of "Nellie Belle" and she's taken good care of me.  She takes me everywhere I ask her to go, and more importantly gets me back out again safely.  

80% of the island I live on is inaccessible by convention vehicles. I could not do my job without her.  I could not do many of the things I do for recreation without her.  Nellie Belle's value to me is much greater than the $12,000 I paid for her 6+ years ago.

That said, it's time for me to go take my daily 12.6 mile bicycle ride.
« Last Edit: August 10, 2011, 10:57:29 AM by punatic »
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Offline 1vertical

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Re: Debt downgrade, my car loses value?!
« Reply #7 on: August 10, 2011, 01:08:09 PM »
No asset depreciates faster than an automobile.  You lose 20% just driving a new one off the lot.  The US credit rating probably didn't have anything to do with it.  Just wait another month, it will depreciate even more.

Paul

I been waiting YEARS for this .....what this country needs is a good NEW 4 door $5k sedan. (totally made here too)
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Offline loopy

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Re: Debt downgrade, my car loses value?!
« Reply #8 on: August 10, 2011, 04:51:05 PM »
not soo much the downgrade, but the FOMC meeting a day or so later. 

from Bernankes minutes:

http://federalreserve.gov/newsevents/press/monetary/20110809a.htm

Quote
The Committee now expects a somewhat slower pace of recovery over coming quarters than it did at the time of the previous meeting and anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate.  Moreover, downside risks to the economic outlook have increased.

Quote
The Committee currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013

If the monetary heavyweights in this country are saying the economy will suck for the next two years.  That rates will continue to be zero - because there is no way to turn a positive investment in this environment.  and that unemployment will contiue to drift down as well over at least the next 2 years. 

The story is deflationary, and assets deflate in that environment. 

be it stocks, houses, your paycheck, and your car.  they all depreciate. 

Online MDixon

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Re: Debt downgrade, my car loses value?!
« Reply #9 on: August 11, 2011, 06:24:44 AM »
I'm not sure why anyone would think a 7 year old car would be worth that much in the first place.. ::)
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Offline 1vertical

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Re: Debt downgrade, my car loses value?!
« Reply #10 on: August 11, 2011, 06:52:53 AM »
I'm not sure why anyone would think a 7 year old car would be worth that much in the first place.. ::)
I am not sure why ANYcar should be worth that much. But I suspect it is because the
Insurance companies paid someone to make sure their bottom line was padded by way of mandating
that these cars be equipped in certain fashion....
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Offline gymrat

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Re: Debt downgrade, my car loses value?!
« Reply #11 on: August 11, 2011, 07:12:30 AM »
This is why I hate borrowing money for a vehicle. The vehicle depreciates and you lose money on interest. It is double jeopardy. If I can afford $300 a month for a car payment I can afford to put $300 a month in the bank instead and pay cash for a car later. Also I like to buy my vehicles 5 years old. That way they have already lost half their value and shouldn't depreciate as fast. I don't understand what happened with the 04 that belongs to the original poster.
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Online MDixon

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Re: Debt downgrade, my car loses value?!
« Reply #12 on: August 12, 2011, 04:23:54 AM »
I must admit two years ago my wife needed a vehicle and we opted to pay for 75% of the car and finance the rest at 4% for 3 years just so we would not deplete our accounts in a somewhat uncertain time. Car was paid off this month, a year early to save some interest...I still feel this move was the correct decision at the time.

Back to the OP, I just cannot see paying so much for a 7 year old vehicle. I realize it is a sellers market and cars are valued more highly than before, but bike man you are only going from point a to point b, you can get a better deal!!!
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