How 0% financing deals are hurting your car resale value
According to this Wall Street Journal story (subscription required) the flipside of the great 0% deals available on the mostly domestic cars:
The financing deals are accelerating the rate at which cars lose their value as they age. It works like this: Buying a $20,000 car with a $2,000 rebate lowers your out-of-pocket cost to $18,000. But the rebate instantly shrinks the new car's value by the same amount. It also lowers the trade-in price of the previous year's model. The effect then cascades through older versions of the vehicle. As a result, a growing number of people trading in used cars owe more on their existing loan than the vehicle is worth.
Resale values also are being hurt by classic supply and demand: Some people who would have bought a used car in the past are now able to afford new vehicles because of the incentives. Also, many people are returning cars as leases expire, worsening the used-auto surplus. As a result, wholesale prices on used cars fell 6.3% in August compared with a year earlier, says Tom Kontos, vice president at car-auctioneer Adesa Corp.
...Many buyers don't realize how much value their old vehicles have lost until they make a deal on a new car. Jamey Adams, a 32-year-old information-systems consultant who lives in Frederick, Md., last month traded in his two-year-old Ford Explorer toward a new Chrysler Town and Country minivan. He found out that his SUV, with an original sticker price of $28,300, was now worth only $12,000 -- not enough to cover the $15,000 left on his five-year loan. He wound up rolling the leftover $3,000 into his new loan on the minivan.