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Nissan to Reward Dealers that Originate Car Mortgages (Quick Rant)

Images courtesy of This was basically my reaction to this news.

Cars Depreciate. Duh.

Cars depreciate. That is, they go down in what they’re worth. That is, you pay a big number of dollars for something that is no longer worth that big number of dollars. We know this. We even know, on average, by how much.

  1. Longer loan terms get rolled out

Dealership Add-ons

Let’s talk about what this supposed $50,000 new car will really cost a customer.

Dealer Rewards

Nissan will be incentivizing dealers to push these much longer-term loans.

Rolling Over Junk Debt

Most customers walking into this kind of situation walk out of the dealership immediately underwater. By that, I mean they are on the hook for payments on an expense item that is worth less in resale than what is owed. Our hypothetical customer here is driving home in a new Nissan vehicle having paid sixty thousand dollars, but could only turn that vehicle around and resell it — day one! — for maybe $45,000.

Good for the Dealerships, Dangerous for Consumers

I realize I picked a relatively high purchase price for our hypothetical car for easy numbers, but let’s not kid ourselves here.

Programmer by day and a writer by night. Somehow finding the balance in between. Look for my next article on Wednesday, May 12th.

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