Carvana is paying big $$

[JimG_AZ]

We were doing some financial re-balancing last night. Looking to move the Range Loan to a Credit Union, so I did the KBB.org thing to get my estimated value.

HOLY SHEEAT! It's over a year old and has 18k on the odo. Worth more than I paid to drive it off the lot - even on the low end? What is happening here? Have we stumbled into this Taco/Jeep Gold Mine that actually appreciates a vehicle? All of my math skills (and they are limited) are telling me that this is wrong. That we may have a Sub-Prime Auto Loan Bubble keeping this kind of stuff afloat.

The term “financial re-balancing” sounds scary. If this is another way of saying loan consolidation, then be very careful. If I this is the case, I would strongly consider talking to Carvana. I have had a few friends who consolidated debt to make their monthly payments more manageable. Initially, it appeared to be a good idea, but turned disastrous financially.

BTW, the worst case of loan consolidation I saw was a co-worker who consolidated this car loan into a home loan with a home refi. All he was thinking was that his monthly payment was reduced, He never even considered that he was now paying his truck off with a 30-year mortgage and paying way more in interest. Oh, and that he would still be paying the truck off long after it was gone.

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[Walkman]

I honestly don't see how Carvana is buying vehicles at such high prices. Where is their margin and profit in reselling.

I did a quote, and it came back with $33,601. I only paid under $28,000.

Why could Carvana give me $5601 more than I paid for this truck???????????

MSRP on the truck was only $34,300.

You could probably go buy the SAME RANGER I have for $30,000 (rebates changed).

So, what's in it for Carvana to pay $3,600 over that one could buy one NEW?

I don't believe the online quotes. I think they are throwing that # out, and then probably offering LESS once they arrive to assess the vehicle.

So I had to do another Caravan because you guys are getting such great prices. I guess they upped their game here because my newest quote is $31,738. Now I'm not positive that last years was $23,000 but I know it was somewhere in the $20's. Still an interesting off but I'm not enough to sell right now.

Carvana gave me $18822 for my 2013 F150 XLT SC 4x4 with 91,000 miles on it. I bought it 5 yrs ago used for $20,070. Dealer offered $14,900 trade on my new Ranger. If you do it, get direct deposit. You’ll have your money in your account next day. No brainer.

 

[GTGallop]

The term “financial re-balancing” sounds scary. If this is another way of saying loan consolidation, then be very careful. If I this is the case, I would strongly consider talking to Carvana. I have had a few friends who consolidated debt to make their monthly payments more manageable. Initially, it appeared to be a good idea, but turned disastrous financially.

BTW, the worst case of loan consolidation I saw was a co-worker who consolidated this car loan into a home loan with a home refi. All he was thinking was that his monthly payment was reduced, He never even considered that he was now paying his truck off with a 30-year mortgage and paying way more in interest. Oh, and that he would still be paying the truck off long after it was gone.

Good points but 100% different than what I'm talking about. I realized I said " we may have a Sub-Prime Auto Loan Bubble keeping this kind of stuff afloat." That was the royal we - the whole US we. Not the me us we.

Just like in the housing bubble a decade ago we had people in homes they couldn't afford paying sub prime rates. But it all fell apart - Go see the movie The Big Short. Best layman's way of explaining it and making it entertaining at the same time. You won't regret is and you'll never look at a bank the same way either.

The same is true of auto purchases now. People are buying $80k trucks (looking at you raptor) and financing them for 9 years to keep the payments affordable. But that jumps the interest rate up higher and longer. Eventually it isn't sustainable.

https://www.theregreview.org/2020/01/23/alford-subprime-auto-loans-driving-next-financial-crisis/

https://defisolutions.com/defi-insight/2019/05/09/subprime-auto-bubble/

https://money.com/subprime-auto-loan-bubble/

So my fear is that the sub prime market is fueling increased demand for autos which is driving cost (and value) up up up. Can't figure out if Carvana and CarMax are fueling this market or responding to stay competitive.

 

[JimG_AZ]

Good points but 100% different than what I'm talking about. I realized I said " we may have a Sub-Prime Auto Loan Bubble keeping this kind of stuff afloat." That was the royal we - the whole US we. Not the me us we.

Just like in the housing bubble a decade ago we had people in homes they couldn't afford paying sub prime rates. But it all fell apart - Go see the movie The Big Short. Best layman's way of explaining it and making it entertaining at the same time. You won't regret is and you'll never look at a bank the same way either.

The same is true of auto purchases now. People are buying $80k trucks (looking at you raptor) and financing them for 9 years to keep the payments affordable. But that jumps the interest rate up higher and longer. Eventually it isn't sustainable.

https://www.theregreview.org/2020/01/23/alford-subprime-auto-loans-driving-next-financial-crisis/

https://defisolutions.com/defi-insight/2019/05/09/subprime-auto-bubble/

https://money.com/subprime-auto-loan-bubble/

So my fear is that the sub prime market is fueling increased demand for autos which is driving cost (and value) up up up. Can't figure out if Carvana and CarMax are fueling this market or responding to stay competitive.

Interesting point about the sub-prime loans fueling auto sales. These types of loans have been around for years. The only way to stop this madness is for people stop buy over-priced vehicles. Ever own a boat or RV? Back in the early 90’s when I got into boats, 10 year notes were common. LOL, I just checked my credit union’s web site and they will finance up to 15 years on an RV. Looks like they still max out at 10 years on a boat. I would not be at all surprised if a dealer could get 15 to 20 years on a boat.

If you watch some of the YouTube channels that focus on car buying, you will see that the ones really in trouble now are the small independent dealers – mainly used car lots. They do not have the funds to stay competitive in this over-inflated used car market. Even some of the mid-sized to larger new car dealerships are in trouble because they cannot afford or do not want to pay the auction price for used cars today. The bubble will burst, the question is when.

I appears that Carvana is paying top dollar for cars today, but I am sure that is only on select models. They need inventory to stay afloat. They do not have the service and parts department to fall back on to ride through this. As long as they are getting their minimum profit, they are probably ok. Eventually, they will be stuck with inventory that they will be forced to take a loss on. This has got to be a major concern for their senior management.

 

[WhyNot21]

This one caught my eye: LINK

It's a 2020 Lariat with almost 3k miles and they want $45,590 for it. That's crazy! I just built the exact same Ranger on Ford's website and it came to just under $46k without incentives. Does the engine cover and rear smart access door handles really add that much value? It doesn't appear to have a damper installed.

 

[GregsFX2Ranger]

AutoNation just offered me 30,094! What a joke!

Did a quote out of curiosity. They DID give a quote. Carvana and Vroom wont.

 

[DAT84]

AutoNation just offered me 30,094! What a joke!

Did a quote out of curiosity. They DID give a quote. Carvana and Vroom wont.

I'm fairly certain there's a bug out there in whatever database they use to make offers for the 2021s. Cause KBB, it's not even an option. My offer from Carvana was ridiculously low ($30,000) and they had to manually do it. Their website was "stumped" (no immediate offer). A few days later, got a random text offering $30,000. Mines a 2 month old XLT 4x4 301A with not even 3,000 miles.

 

[GregsFX2Ranger]

I'm fairly certain there's a bug out there in whatever database they use to make offers for the 2021s. Cause KBB, it's not even an option. My offer from Carvana was ridiculously low ($30,000) and they had to manually do it. Their website was "stumped" (no immediate offer). A few days later, got a random text offering $30,000. Mines a 2 month old XLT 4x4 301A with not even 3,000 miles.

Yeah, appears 2021's "stump" every online buyer. and you're right, 2021 Ranger not even in KBB.

 

[Duwop]

With $6085 over purchase price I’m waiting for g6 order bank to open i might have enough left over for a burger and fries

 

[txquailguy]

Carvana just offered me $30,511 for my 2019 Lariat FX4 with 48K miles.....wow!

 

[txquailguy]

Carvana just offered me $30,511 for my 2019 Lariat FX4 with 48K miles.....wow!

You know you really love something when you get offered a silly amount of cash and you say “I’m good” ?

 

[CollieDog]

You know you really love something when you get offered a silly amount of cash and you say “I’m good” ?

Better yet, you know you love something so much you sell it for a $4000 profit and the same weekend buy another one that is almost the same.

 

[Dr. Zaius]

Carmax is now offering a few hundred more than Carvana where before they were a couple thousand less.

I'll have to update my Carvana appraisal tomorrow.

Edit: Not much change

 

[GregsFX2Ranger]

I think Carvana and Vroom are still "STUMPED" on offers of 21's.

Vroom sent me an insulting offer of $27,000 (I got 31,500 for a 2020 from a dealer).

 

[TBR17]

Holy wow!!!!

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