Oh... given the people inside my little bubble I'm surprised to hear people don't. If the economy tightened up, presumably people would compensate by keeping the car longer though?

And service the debt with what job?

are you not underwater immediately on any car loan? sure it's worse on 84 months, but the old saying about "once you drive it off the lot" would apply to any loan would it not?

Most normal car loans are for four or five years and leave you about even three years in so If you trade it in you don’t owe anything.

This is only true in the short run for new vehicles. A well-maintained vehicle will hold a significant amount of value after 10+ years. And if you are fortunate or savvy enough to buy a car that will obtain “collector” status you may even make a nice profit. One extreme example is the 86’-91 Volkswagen Vanagon Syncro, which can be sold for up to $90k today.

A more common example is the first generation Toyota Tacoma (00’-04’) that is currently going up in price, I’ve seen closing prices at $15k in the last year. Small trucks are now extinct and this particular model is proven to be absurdly reliable, but who would have predicted that 10 years ago when these were selling for $3k-$5k?

Your examples are trendy vehicles that have hordes of fools lining up to pay multiple grand for examples that can't even move under their own power. Nobody in their right mind would say that classic VW vans or any Toyota pickup is indicative of market patterns in general. They are what the "cool kids" drive and pricing reflects that.

Diesel trucks used to be grossly overpriced too but now that most of the older stuff has aged out and the "new enough to still be kinda nice" market segment is full of emissions era diesels the crazy pricing has mostly gone away.

Wow a little harsh, don’t you think? Maybe I should have used the Toyota Corolla instead? These weren’t trendy vehicles when they were new, that’s my point. Perhaps you missed the part of my comment where I prefaced with “If your fortunate...”? Because obviously this was an off-topic side comment countering GPs generalizing that all cars necessarily lose value, not a strong claim about the market as a whole.

I can't speak to the VW but the Tacoma was absolutely trendy when new. From 2000 or so to present it has been the official pickup of "I don't 'need' a pickup but I make good money, I like nice things and I want a pickup" (I'm not saying there's anything wrong with that reasoning). They've always (even back to the 80s and 90s) been more expensive than the alternatives when new so only people who are dead set on them tend to get them.

They're comparable to the Jeep JK and the WRX STI or a performance trim Mustang/Camaro but for different demographics. Anyone could tell you that they would hold value better than average when new.

Losing less value than average is not all that remarkable. Gaining or failing to lose value is exceptional and subject to the whims of consumer culture (see my tangent about diesel pickups). Jeep Wranglers used to be like that but as the 4dr JKs hit the used market it calmed down a lot. Old full size Broncos are probably about to stop losing value if the rumors of a new fullsize are to be believed.

Also I toned down the language in the original a little.

Are you sure you're not mistaking it with the later post-2004 models? The early model MSRP'd at <$20,000 ($26k today infl. adj.) and was a small pickup, nothing like the full-size $45k beast that is offered today. It would be odd to compare it with the $35k WRX STI.

Anecdotally, I purchased a used Tacoma in 2011 for a few thousand dollars as a family workhorse vehicle. I sold it for nearly double five years later with only making regular oil changes. This really changed my impression of the used car market and have since started a side hobby buying and restoring "almost-classic" vehicles.

I'm not comparing it in terms of cost, I'm comparing it in terms of how buyers think about it. People buy a WRX STI not because they don't know what they want and it seems reasonable. People don't buy a WRX STI because they want a sedan, do a bunch of number crunching and decide it's the best fit for their needs. People buy a WRX STI because they're in the market for a sedan and they want a WRX STI. The same is true for the Tacoma and a whole host of other vehicles. People buy a Tacoma because they specifically want a Tacoma and they pay out the nose for it (especially if buying used).

These are outliers though, and in macroeconomics will have near zero impact.

Yes I’m aware, didn’t intend to imply otherwise

It's the difference between book value and economic value

Even 84 months ago around a third of those trading in a car for a new one were underwater on the trade-in.

Auto-loans are the only ones that I've ever heard of that allow you to take the balance of one note and just move it to a new note. Maybe credit card balance transfers, but those are just moving debt from one holder to another. Car loans are adding the balance of the existing note to the new loan.

Isn't the average 10 years?

The average new car loan is 5 years 9 months. The average used car loan is 5 years 5 months.