Car prices

[LuvOrlando]

So those of you who bought cars at higher than MSRP, how did that go with car insurance? Did the insurer cover you for the cost you paid? Are depreciation values for what you get in case a vehicle is totaled matching up with the market or MSRP? Is the Kelly Blue Book sort of scene keeping up or are we being shortchanged?

 

[SteveH]

Talk with an insurance agent (not a Gecko or Flo) about Agreed Value Insurance, you can decide which route you want to go and how much you car to pay.

 

[LuvOrlando]

Talk with an insurance agent (not a Gecko or Flo) about Agreed Value Insurance, you can decide which route you want to go and how much you car to pay.

We got a new car last year and I was reading a news blast today when the possibility of a disconnect just clicked. Best guess is the banks make sure things meet up but I really didn't look all that closely & was wondering if people noticed issues with used cars paid for with cash? Does insurance cover upsell?

 

[tvguy]

So those of you who bought cars at higher than MSRP, how did that go with car insurance? Did the insurer cover you for the cost you paid? Are depreciation values for what you get in case a vehicle is totaled matching up with the market or MSRP? Is the Kelly Blue Book sort of scene keeping up or are we being shortchanged?

A good question for an insurance expert. But used car values have risen faster than new car values. My daughter bought a 2017 used Ford Fusion in 2018 and it is worth $2,500 more today than she paid for it according to KBB. It had 16,000 miles on it when she bought it and has 50,000 miles on it now.

 

[Kathryn Merteuil]

I do not work in car insurance, but I work in loan servicing. Of course YMMV. What we are seeing is many people are surprised (pleasantly) at what the insurance companies are paying out on their total loss vehicles. It seems we are seeing the insurance companies are paying what the car is worth "right now". Again, this is anecdotal, but it is what I have noticed. I can see a big problem on the horizon if car values drop in the future. People buying cars now at the high prices may be getting surprisingly small payouts IF things change in the future. Some of the people from the dealerships we work with are saying that they think the prices of cars will bottom out in a couple years. That is the OPINIONS we are hearing, not necessarily fact.

Unfortunately lot of the stuff we see coming in is over-financed, and the settlement does not cover what they owe on the car.

 

[tvguy]

I do not work in car insurance, but I work in loan servicing. Of course YMMV. What we are seeing is many people are surprised (pleasantly) at what the insurance companies are paying out on their total loss vehicles. It seems we are seeing the insurance companies are paying what the car is worth "right now". Again, this is anecdotal, but it is what I have noticed. I can see a big problem on the horizon if car values drop in the future. People buying cars now at the high prices may be getting surprisingly small payouts IF things change in the future. Some of the people from the dealerships we work with are saying that they think the prices of cars will bottom out in a couple years. That is the OPINIONS we are hearing, not necessarily fact.

Unfortunately lot of the stuff we see coming in is over-financed, and the settlement does not cover what they owe on the car.

I follow a couple of auto industry vloggers and they all seem to think that people who have purchased used cars in the past year, and have a car totaled, or decide to trade them in, are going to see a huge decline in values in 3 years.

 

[Kathryn Merteuil]

I follow a couple of auto industry vloggers and they all seem to think that people who have purchased used cars in the past year, and have a car totaled, or decide to trade them in, are going to see a huge decline in values in 3 years.

This worries me because people are still borrowing a lot of money for cars. I can imagine what is going to happen if/when the value tanks.

I don't know what it is about people and cars... people seem to lose all sensibility when it comes to them. We see a crazy amount of people trading in cars that are not paid off... on a daily basis we see a bucket full of "dealer payoff checks". These people just roll that negative equity into another loan and drive off with another car. I literally remember seeing somebody owe OVER $50k on like a 2018 Ford Focus. I cannot even fathom how the underwriters are approving these loans.

 

[tvguy]

This worries me because people are still borrowing a lot of money for cars. I can imagine what is going to happen if/when the value tanks.

I don't know what it is about people and cars... people seem to lose all sensibility when it comes to them. We see a crazy amount of people trading in cars that are not paid off... on a daily basis we see a bucket full of "dealer payoff checks". These people just roll that negative equity into another loan and drive off with another car. I literally remember seeing somebody owe OVER $50k on like a 2018 Ford Focus. I cannot even fathom how the underwriters are approving these loans.

I am well known here for being on the opposite end of spectrum. We traded in my wife's SUV that we had had for 20 years in July 2020 for a new Camry when car dealers still had full lots, and no customers because of the pandemic.
And in June 2018 we traded in my SUV that we had owned for 31 years on a new Ford Flex.
Barring a collision, these may be the last cars we every buy. Mechanical repairs are easy and in the scheme of things, less expensive that replacing a vehicle.

 

[spiders]

I bought a new car last August and paid $3500 over MSRP. I never even tonight about the insurance part of it. I just called my agent as usual and reported the sale.

The dealer did low ball me on my trade. They came up initially but I walked out the door. They called me a mile down the road and increased it again so I turned around.

 

[spiders]

This worries me because people are still borrowing a lot of money for cars. I can imagine what is going to happen if/when the value tanks.

I don't know what it is about people and cars... people seem to lose all sensibility when it comes to them. We see a crazy amount of people trading in cars that are not paid off... on a daily basis we see a bucket full of "dealer payoff checks". These people just roll that negative equity into another loan and drive off with another car. I literally remember seeing somebody owe OVER $50k on like a 2018 Ford Focus. I cannot even fathom how the underwriters are approving these loans.

Residual car values are only part of the problem if you ask me. The real problem is who thinks it’s a good idea to buy a car on payment amount only. I swear you can sucker some people into anything. They don’t care that it’s 6-7 year loan on a car so long as the payment is right.

 

[greeneyedchick]

I do not work in car insurance, but I work in loan servicing. Of course YMMV. What we are seeing is many people are surprised (pleasantly) at what the insurance companies are paying out on their total loss vehicles. It seems we are seeing the insurance companies are paying what the car is worth "right now". Again, this is anecdotal, but it is what I have noticed. I can see a big problem on the horizon if car values drop in the future. People buying cars now at the high prices may be getting surprisingly small payouts IF things change in the future. Some of the people from the dealerships we work with are saying that they think the prices of cars will bottom out in a couple years. That is the OPINIONS we are hearing, not necessarily fact.

Unfortunately lot of the stuff we see coming in is over-financed, and the settlement does not cover what they owe on the car.

I wish that were the case. Someone totaled my car from behind and we got $10,000 less from their insurance than what it would cost to rebuy that same year, make and model. We kept arguing that used car prices had increased a lot but the software value system they used kept devaluing it. I had heard that Kelly Blue Book was at least 6 months behind in keeping up with the rates. I should have gotten a lawyer.

 

[momz]

I do not work in car insurance, but I work in loan servicing. Of course YMMV. What we are seeing is many people are surprised (pleasantly) at what the insurance companies are paying out on their total loss vehicles. It seems we are seeing the insurance companies are paying what the car is worth "right now". Again, this is anecdotal, but it is what I have noticed. I can see a big problem on the horizon if car values drop in the future. People buying cars now at the high prices may be getting surprisingly small payouts IF things change in the future. Some of the people from the dealerships we work with are saying that they think the prices of cars will bottom out in a couple years. That is the OPINIONS we are hearing, not necessarily fact.

Unfortunately lot of the stuff we see coming in is over-financed, and the settlement does not cover what they owe on the car.

i have experienced this recently. My car was totaled on Jan. 8. It was a 2012 model that I purchased new for $21K. so, it was 10 years old. The other driver was found to be at fault, so her insurance paid. But they paid me more than I was expecting. I was given just over $11K for that car! I was surprised that a 10 year old car had lost only half of the original price.

 

[Kathryn Merteuil]

GAP insurance is important if you are over financed, however it cannot make up for cases of grossly over financed... it only goes up to a certain percentage.

 

[CaptainAmerica]

I bought a new car last August and paid $3500 over MSRP.

I can't figure out why anyone would do this in the age of the Internet. When I know what car I want, I email every single dealer of that manufacturer in a 100 mile radius and tell them to give me their best and final offer, then I go with the lowest.

 

[spiders]

I can't figure out why anyone would do this in the age of the Internet. When I know what car I want, I email every single dealer of that manufacturer in a 100 mile radius and tell them to give me their best and final offer, then I go with the lowest.

You can certainly do that. Today, though — they’re going to tell you that it’s MSRP plus whatever the current markup is. There is absolutely zero incentive for them to negotiate with you right now. If you don’t want it for the price that’s listed then they’ll sell it to someone else later today.

 

[LYSE]

You can certainly do that. Today, though — they’re going to tell you that it’s MSRP plus whatever the current markup is. There is absolutely zero incentive for them to negotiate with you right now. If you don’t want it for the price that’s listed then they’ll sell it to someone else later today.

I hear you can get some for msrp but recently I tried for a wrangler and couldn't in my area at least...so I just shelved it, I bought and sold 3 cars during the shortage and did well each time considering...currently have about 12k equity in what I'm driving today at 8 months old and 25k miles...I understand some need a vehicle right now but I don't understand those over paying that could just wait. (The car market is already showing signs of slowing down with inventory coming in and lenders predicted to pull back on over financing and quality of borrowers)

To the OP, insurance normally pays out based on value (comparable sales) and not msrp...so just be sure to get a fair deal and get gap if financed

 

[cvjw]

I can't figure out why anyone would do this in the age of the Internet. When I know what car I want, I email every single dealer of that manufacturer in a 100 mile radius and tell them to give me their best and final offer, then I go with the lowest.

Used to work. I have done it multiple times. Now, not so much. My sister just bought a giant GMC SUV. She was at the mercy of whatever dealer could get her one. No way to try and get a better price from another dealer - no other dealer had any. She considered herself lucky to JUST pay MSRP. Others were paying over. If they could find one to purchase.

 

[spiders]

I hear you can get some for msrp but recently I tried for a wrangler and couldn't in my area at least...so I just shelved it, I bought and sold 3 cars during the shortage and did well each time considering...currently have about 12k equity in what I'm driving today at 8 months old and 25k miles...I understand some need a vehicle right now but I don't understand those over paying that could just wait. (The car market is already showing signs of slowing down with inventory coming in and lenders predicted to pull back on over financing and quality of borrowers)

Well, it’s a trade off. Higher car prices also get you higher trade in values. It doesn’t entirely equal out but it helps. If you’re buying a car for the first time then you’re just pretty much screwed. They don’t even hide it. The stickers are all reprinted with ADM — Additional Dealer Markup. If you don’t like it then feel free to exit through the same door you came through.

The only thing that was up for negotiation was my trade in which I negotiated up to the high end of the range.

 

[LuvOrlando]

Well, it’s a trade off. Higher car prices also get you higher trade in values. It doesn’t entirely equal out but it helps. If you’re buying a car for the first time then you’re just pretty much screwed. They don’t even hide it. The stickers are all reprinted with ADM — Additional Dealer Markup. If you don’t like it then feel free to exit through the same door you came through.

The only thing that was up for negotiation was my trade in which I negotiated up to the high end of the range.

See this is the thing troubling me. Not sure the trade in values will match up properly so this is the concern. If someone is paying above market value and depreciation tables were set before things got all wonky, then those tables might not accurately reflect true depreciation and someone will be on the hook - if history has taught us all literally anything at all it is unlikely businesses will be the ones who take the hit :/.

Trade in might be the opposite of what you think if someone needs to make up for the difference between what the depreciation tables say and what a person paid for the vehicle... at some point this will shake out. If you should pay x and you paid x+$2,000 how does that hit the numbers, like is it a front loaded loss, an all over loss or just sort of flat sum that lands unexpectedly, would just be nice if people were blindsided when it happens. That extra 2k is going to be reflected in depreciation somewhere, I just wonder if the inter-dependencies are accounting for it properly & will line up with insurance.

 

[LYSE]

Well, it’s a trade off. Higher car prices also get you higher trade in values. It doesn’t entirely equal out but it helps. If you’re buying a car for the first time then you’re just pretty much screwed. They don’t even hide it. The stickers are all reprinted with ADM — Additional Dealer Markup. If you don’t like it then feel free to exit through the same door you came through.

The only thing that was up for negotiation was my trade in which I negotiated up to the high end of the range.

I didn't bother with trades, just sold to the highest bidder...one of the bidders for our truck was a dealer we tried negotiating with on the jeep...they were about 1k under the highest purchase bid for the truck...but they wanted a 5k markup on the jeep (and tried to hide the markup)

Anyone that can wait should wait IMHO and if you can deal with being down a car get rid of that potential trade now.