Sunday, March 16, 2008

A Mini- Mortgage Type Crisis?

The Santa- Rosa Press- Democrat reported yesterday that more and more people are finally realizing it doesn't make much sense to buy gas guzzling cars and they're having a much harder time getting rid of the ones they already own.

When I first read the story it made me think this is kind of a mini- version of what's happened with home mortgages: The property they took the loan out for isn't worth enough to pay off the loan if they tried to sell it.

There is a difference, though: Generally, real estate appreciates over time. Automobiles lose value the minute they're driven off the sales lot and usually continue to depreciate over the life of the vehicle so the vehicle owners in the story would likely still be taking a loss. Problem is, now they're having a tough time selling their cars at all.


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