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The Next Great Recession Isn't Housing... Its FAR Dumber.
The Next Great Recession Isn't Housing... Its FAR Dumber.
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0:00
The 2008 housing crisis was supposed to be a one-time event.
0:04
But the exact same financial toxic waste that wrecked the economy back then has
0:08
been repackaged. This time, it’s in the chrome grill of a Ford F-150.
0:13
By the end of 2024, reports showed that more Americans were underwater on their
0:17
truck loans than at any point in history. The average owner
0:20
owed $6,500 more than their vehicle was actually worth.
0:25
A phantom debt bubble is ballooning up and ready to burst. And when it does,
0:29
it’s going to lock an entire generation out of the housing market.
0:33
There’s been a surge in luxury trucks everywhere. But many of them aren't being used the way trucks
0:38
traditionally were. Instead of hauling equipment, working job sites, or tackling rough terrain,
0:42
they're spending most of their time in suburbs, office parking lots, and city streets.
0:47
At the same time, the price of these trucks has skyrocketed. Models that sell
0:50
for well over $100,000 are being used to drive to the office and back. But,
0:56
despite that hefty price tag, demand keeps growing. In fact,
0:59
the data suggests that many buyers are stretching their finances just to own one.
1:04
In 2024, sources from Edmunds reported that over 40% of large trucks now come with monthly payments
1:10
exceeding $1,000. And surprisingly, many buyers don't seem to view that as a problem. In fact,
1:15
videos regularly go viral featuring owners discussing their staggering monthly payments.
1:21
Sometimes even bragging about them. One driver got thousands of comments
1:24
after she mentioned that the monthly payment for her husband’s GMC Sierra 1500 AT4 pickup
1:30
truck was $1,600. That’s just $500 short of the median monthly mortgage payment in the U.S.
1:37
People literally can’t afford it.
1:39
Documents reveal that an alarming number of truck owners now have negative equity. They
1:43
owe basically more on their cars than their cars are actually worth.
1:47
Car industry insiders assert that a new car can lose up to 20% of its value in the first year.
1:52
It’s even more for luxury cars. For buyers who don’t put enough money down and end up
1:56
financing over long periods, even with monthly four-figure payments,
2:00
they end up in the red, or “underwater”, on their loans.
2:03
As of late 2024, the negative equity crisis reached epidemic new proportions, to the tune of
2:09
$6,000 per average person. That’s enough to buy a reliable, used Honda Civic outright.
2:15
Sources show that 1 in 5 vehicle trade-ins with negative equity are down by $10,000 or more.
2:21
The number of people trading in cars with negative equity has also exploded,
2:25
from 15.5% in 2022 to 24.2% in 2024.
2:31
Their shiny new trucks are a ticking time bomb.
2:34
For many drivers, that bomb has already gone off. Repossession lots filling up with
2:39
$90,000 King Ranches. Data from Cox Automotive shows that repos increased by 43% between 2022
2:46
and 2024. Across the U.S. around 3 million vehicles were repossessed in 2025. It’s a sign
2:52
that for some Americans, the cost of keeping up appearances is becoming unsustainable.
2:57
But how did this problem get so bad? Did a whole
3:00
lot of people just start making financially irrational decisions?
3:03
The reason is more complex, and sinister. Not
3:06
the result of individual stupidity. But a purposeful systemic failure…
3:11
Compounded by greed.
3:13
The decade from 2012 to 2020 was a time of cheap money and zero-percent interest rates.
3:18
The Fed held interest rates low to spur an economic rebound. This translated to
3:23
low rates on car loans. For many people, this basically made loans “free money”,
3:27
with rates for most of the 2010s hovering around 4 to 4.5%.
3:32
Until around 2022.
3:34
That’s when they rocketed up to just under 8% for new cars.
3:38
Reporting from Experian shows that in late 2025, the average interest rate for new car loans had
3:43
reached 6.37%. While the average interest rate for used car loans reached 11.26%.
3:50
We found consumers had even more horrifying experiences than that when it came to trucks
3:55
and SUVs. One consumer, Melissa Dickerson, told how she ended up with a $1,100 monthly
4:00
payment after her son got into an accident. Up until that point, she had been paying
4:05
$400 a month for a similar car. The new loan carried an interest rate of roughly 15%.
4:10
She replaced her car and got a financial burden. During the low rate era, people stopped factoring
4:16
interest rates into their purchases at all. So instead of looking at a car’s total sticker price,
4:20
they just checked the monthly payment. Dealerships knew this was happening.
4:24
So they weaponized it.
4:25
One tactic involves the “four-square worksheet”. It’s a piece of paper divided into 4 sections:
4:30
purchase price, trade-in value, down payment, and monthly payments.
4:35
While it seems informative at first glance, according to former car dealers,
4:39
the dealership used it to steer potential customers towards the number that will get
4:43
them the sale: the monthly payment. If the customer still hesitates,
4:47
the dealership can negotiate to bring it down. In exchange for a much longer loan term.
4:53
The customers pay significantly more overall.
4:56
When dealerships focus on the monthly payment, they can also fold in extra fees and hide higher
5:01
interest rates than you might qualify for. And loan terms are pretty long already. In mid-2023,
5:07
64.5% of buyers with payments over $1,000 had loans between 67 and 84 months long.
5:15
That’s longer than getting a Bachelor’s and Master’s degree, combined.
5:20
One of the worst tricks? Taking advantage of negative equity to push you further into debt.
5:25
If you trade in a car with negative equity, dealerships can offer to pay it off if you
5:30
buy a car from them. But sometimes, they’ll just fold it into the customer’s new loan,
5:35
or take it from the downpayment, without making it clear in the contract. Customers
5:40
end up pay interest rates on an even higher principal without fully realizing it.
5:44
Once the industry learned it could sell increasingly expensive vehicles through
5:47
financing, something changed. Affordable cars began to vanish.
5:51
If buyers shop by monthly payment, why keep making cheaper vehicles?
5:56
The Big Three - Ford Motor Company,
5:58
General Motors, and Stellantis - mostly stopped building the kind of $25,000 work trucks that once
6:04
formed the backbone of the American auto industry. The simple, affordable pickups that people had
6:08
relied on for decades were disappearing. In their places came trucks like the F-150,
6:14
a rolling luxury suite made to jack up profit margin during chip shortages.
6:18
Data from Cox Automotive shows that the average price of a full-size truck as of
6:22
July 2025 was almost $64,800. And prices are often deceptively even higher than that. For example,
6:30
a Ford F-150 starts at $38,800, which seems reasonable. But in 2025,
6:37
5 of the 8 available trims cost over $65,000 after mandatory fees are included.
6:44
Part of the huge price hike in trucks is a reflection of general automotive price
6:48
hikes. Between 1999 and 2019, car prices rose by an aggregate of 2.3%. But in just
6:55
the 6 years after that, between 2019 and 2025, prices rose 23%. 10 times higher.
7:03
The luxury truck market is even worse.
7:05
Prices went through the roof. And automakers knew they could
7:08
increase them because of insanely high demand. Especially in the U.S.
7:12
The U.S. pickup truck market makes up 37% of worldwide demand. In 2024 alone, consumers
7:19
in the U.S. bought 4.1 million pickup trucks, a 12% increase over the previous year. That’s
7:25
the equivalent of every single resident in Los Angeles buying a pickup truck in the same year.
7:30
For most people, these fully decked out - and overpriced - trucks are completely unnecessary.
7:35
Stats show that 35% of Ford F-150 owners use their trucks for hauling once a year or less.
7:40
Three quarters of these owners tow something with their truck once
7:43
a year or less. And only 30% will go off-road more than once a year.
7:48
That’s like buying a $1,200 deep-sea diving suit and wearing it for your daily showers.
7:53
Most luxury truck owners don’t actually need a truck. Any sedan or crossover would work just
7:58
fine for 99.9% of their needs, if not all of them. And be available at a much lower
8:03
price. These owners’ refusal to get their vehicles dirty gave these cars a nickname:
8:08
Pavement princesses.
8:09
But automakers are pumping out the highest-end trims for these trucks faster than ever,
8:14
while cutting their supply of the base model trucks. In the beginning of 2026,
8:18
Ford increased their inventory of the highest trim F-150s, including the Platinum and Platinum Plus,
8:24
while slashing their base model production of the XL by 19%.
8:28
This has happened every time supply gets tight. After the pandemic, Ford prioritized luxury trims
8:33
over entry-level work trucks. A shortage forces choices. And a truck that generates an extra
8:39
$35,000 in revenue is an easy choice to make. While Ford doesn’t release their exact profit
8:44
margins for vehicles, we found that the Platinum trim is a huge upsell, costing $87,000 compared
8:50
to the XL’s base trim sticker price of $38,800. In an increasingly uncertain economy, how are so
8:57
many people affording these prices? The simple answer: they can’t.
9:01
But dealerships and banks are tricking them into thinking these luxury trucks
9:05
are within their budget.
9:06
When buyers focus on monthly payments instead of total price, affordability becomes flexible. By
9:12
extending loan terms to 7 years, dealerships can make even expensive vehicles appear manageable.
9:18
Banks are encouraging them by making 84-month-terms a new norm. In the second
9:23
quarter of 2025, 22.4% of new vehicle financing was made up of 84-month loans. That’s up from
9:30
17.6% the year before. Though these loan terms emerged around the mid-80s, they were rarely
9:36
used for decades. They were heavily criticized as borderline unethical by the auto industry.
9:42
As recently as 2015, sources quote John Mendel, Honda’s U.S. sales chief,
9:47
as saying 84-month-loans are “stupid not just for us, but for the industry”.
9:53
Which is why, even in 2018, only 10.5% of new car loans had terms that long. In 2026, they’re
10:00
used to finance well over a fifth of new cars. Even Honda caved in 2022 and started offering
10:06
7-year loans to their customers. Automakers changed their tune because they realized it
10:11
was the only way they could pitch increasingly unaffordable cars to
10:14
consumers. Finding a way to sell affordable cars was apparently out of the question. The
10:19
problem with the 84-month-loan term is that it makes negative equity a virtual certainty.
10:24
Especially for luxury trucks. Initially, this loan term worked because of a
10:28
prevalent myth in the US: that “trucks hold their value better than any other vehicle”. While this
10:34
may have once been true of the sturdy, utilitarian trucks that helped people build and expand their
10:39
businesses, it’s far from today’s reality. In fact, the Ford F-150 Platinum and GMC
10:45
Denali experience a shocking 25-30% of year-over-year depreciation.
10:51
Long-term car loans are becoming the U.S.’ silent wealth killer.
10:55
A Ford Platinum, averaging about $87,000 at retail, can lose around half its value
11:00
within five years. In fact, most of that depreciation hits within the first three.
11:04
And that leads directly to negative equity. A customer puts some money down and only takes
11:09
out a loan for $80,000 of the Platinum’s value. They have pretty good credit, so they get a 7%
11:14
interest rate. That means they’re going to pay nearly $21,400 in interest over the next 7 years.
11:21
For just a couple of thousand more, they could have bought a practical 2026 Toyota Corolla
11:26
with just the interest for their Ford Platinum. Even after the initial downpayment of $7,000,
11:32
the customer will have $101,400 left to pay on their luxury truck.
11:38
Unfortunately 3 years later, their truck is worth $43,500. While,
11:43
if you’ve made all your full payments on time, you still have $50,400 left to pay off. Leading
11:50
to almost $7,000 in negative equity. The F-150 is no exception, either.
11:55
From 2021 to 2026, the Chevrolet Silverado 1500 and GMC Sierra also depreciated by 42%.
12:03
And if you try to sell these trucks? The secondary market has imploded. Because consumers are finally
12:08
moving away from trucks, partly due to higher cost of living and gas prices. Reports from
12:13
early 2026 that show a 3% drop in people who think their next car will be an SUV or truck.
12:20
All this has created a situation in which consumers are trapped in increasing cycles
12:25
of debt, with negative value assets, and no clear way out.
12:28
The fallout has already started. We found sources from Moody’s that 30%
12:33
or more of subprime auto loans are defaulting. That’s just about the rate of subprime mortgage
12:39
default that caused the Great Recession. So what are banks doing with these defaults?
12:43
Aren’t they unhappy with the money they’re losing? Not really.
12:46
Because they’re not losing money at all. They created these loans to protect
12:51
themselves while consumers go bankrupt.
12:53
In 2025, Bloomberg reported that car loans made to consumers with
12:57
bad credit backed more than $37 billion in bonds.
13:01
But Wall Street found a way to profit off them.
13:04
They started charging absurdly high interest rates to customers with
13:07
risky credit and spread the risk out. It’s a process known as securitization.
13:12
The practice was heavily regulated with mortgages after the Great Recession,
13:16
thanks to new laws and the formation of the Consumer Financial Protection Bureau, or CFPB.
13:21
Companies were supposed to investigate customers’ financial situation to make
13:25
sure they had a good chance of paying their loans off.
13:28
But car dealerships fought hard - and won - exemptions from supervision by the CFPB,
13:35
arguing that cars were an absolutely necessary good for Americans. Plus,
13:39
banks aren’t taking on much risk at all. Because most auto loans are not “systemically” held by the
13:45
same banks. They are spread out across credit unions and captive finance arm,
13:49
like Ford Credit. So the consumer defaults and loses everything, but the bank still wins.
13:55
One example is the Drive 2019-3 trust. Though its face value was $1.21 billion,
14:02
an extra $344 million in auto loans was bundled in, to cushion against losses. It
14:08
was handled by Santander Consumer USA, one of the country’s largest subprime
14:12
lenders. Santander’s plan was simple and designed to produce mass amounts of profit…
14:18
For them.
14:19
They offer car loans to generally risky borrowers with an average interest rate of 19%. Some loans
14:25
had interest rates as high as 29.99%. But the bonds paid interest rates of 2.5-3.2%.
14:33
The interest rates were so high, Santander predicted that even if
14:36
42% of customers defaulted on payments, the bank would still come out ahead.
14:41
Since the average default rate in 2025 reached 30%, that was a pretty good bet.
14:46
To further cushion against defaults, Santander got creative when it came
14:50
to Drive 2019-3’s structure. Even if every single borrower defaulted,
14:56
investors in the top three tranches, the first to be repaid, would see no losses.
15:00
The company itself only had to have a 5% interest in their securitization,
15:05
in this case, $71 million of its own money. If there was a massive amount of excess defaults,
15:11
it would be the last to get repaid. But, if defaults came in at the pretty high
15:16
percentages expected, or under, it would get a huge share of any leftover money.
15:21
In fact, reports from S&P Global Ratings showed that even if up to 60% of borrowers defaulted,
15:27
every senior bondholder would get repaid. One source from a private investment bank said,
15:32
“you could think of it as structured like a bomb shelter against a nuclear blast”
15:36
Not to mention, GPS technology and license-plate tracking has made finding,
15:41
repossessing, and reselling cars whose owners have defaulted on payments easier
15:45
than ever. The money from those sales goes straight into bondholders’ accounts.
15:49
Statements from the National Automotive Finance Association say that these subprime loans are
15:54
intended to help consumers; otherwise people without good credit wouldn’t
15:57
be able to get transportation in a heavily car-dependent country like the United States.
16:02
Industry experts disagree.
16:04
One law professor and former member of the CFPB said,
16:07
“this market is structured to make money even though it may be preying on borrowers.”
16:12
Which is exactly what happened with Drive 2019-3. When it wound down, 25% of the loan
16:18
money hadn’t been paid back. Since Santander was expecting a default rate of 42%...this
16:24
led to a windfall of profits for the group. We investigated SEC filings and found that
16:29
in addition to roughly $121 million Santander received in servicing fees, it also collected
16:35
at least $155 million in bonus payments. But that came alongside a far harsher reality.
16:43
More than a quarter of its customers saw their vehicles repossessed,
16:46
with many trapped in cycles of escalating debt. In some cases, they were pushed toward bankruptcy.
16:52
The worst part? When these repos happen, it’s not just family cars being towed away…
16:57
They’re taking most peoples’ American Dream right with them.
17:00
Truck payments themselves are eating into Americans’
17:03
wealth much more than they think. It’s not just the money they’re
17:06
putting towards the truck. It’s what they could be doing with it instead.
17:09
People who manage to swing a monthly 4 figure truck payment could instead
17:13
be making millions for their retirement. A $1,300
17:16
truck payment invested monthly into the S&P 500 for 30 years would yield $2.97 million.
17:24
That’s not only enough for a very cushy retirement,
17:27
but also three luxury homes or an entire private island to enjoy in your older years.
17:32
That’s how these payments become an invisible wealth transfer. They’re
17:36
destroying household income and weakening people’s ability to save for a home.
17:40
Someone making $75,000 a year, while making a $1,200 monthly payment - factoring in these
17:45
long term loans and rapidly depreciating vehicles - is eroding their buying power by
17:50
$165,000. Considering the average home price in mid-2026 sits at around $368,198,
17:58
that’s 45% of the average home’s total sales price.
18:02
It’s the difference between eventually owning a 4-bedroom house, or living in a studio apartment.
18:08
And unlike homes, luxury trucks are only going
18:10
to plummet in value. Consumers are left financially underwater, deeper in debt,
18:15
with their future prospects being stolen out from under them by banks and dealerships.
18:19
Even with all these insane financial moves happening, some people think that one man’s
18:24
car debt issue is his problem. But the $100,000 truck isn’t just a bad purchase;
18:29
it’s a systemic “canary in the coal mine” for a looming credit collapse.
18:34
Just like the mortgage crisis that caused the Great Recession,
18:36
the auto loan bubble is starting to burst.
18:39
The results…will be devastating.
18:41
New car sales are slowing down. Inventories are increasing, and luxury tracks are sitting for
18:46
longer in dealership parking lots, with no one able to buy them anymore. Data from Cox shows
18:51
that after May 2025, inventory volume has been increasing at a steady pace.
18:56
Dealers are now sitting on endless days of supply as “give-backs” begin,
19:01
from people realizing they can’t afford what they were led to believe they could buy.
19:05
While the average days’ supply in the U.S. across all brands was 84,
19:09
for the big luxury truck automakers, almost all of them have a backup of 100+ days. Chrysler
19:15
was up to a backup of 111 days’ supply, while Ford clock in at a shocking 113.
19:22
This led to 2.87 million new vehicles sitting, available and unused,
19:26
on dealer lots in October 2025. That’s an increase of almost 5% from the month
19:32
before. That’s more than all of the registered cars in New York City.
19:36
For people with existing cars and loans, delinquency rates for 60+ month-long loans
19:41
increased by 5 basis points from the beginning of 2024 to the beginning of
19:45
2025. That makes the 2025 delinquency rate higher than the peak rate in early 2009;
19:52
the start of one of the worst global recessions in recent memory.
19:55
As of October 2025, 6.65% of subprime borrowers were at least 2 months past due
20:02
on their auto loans. Inflation, the return of student bills, and a somewhat stagnant
20:07
job market keep putting pressure on drivers who simply can’t afford to keep up anymore.
20:11
Most worryingly, because of this crunch, the percentage of borrowers who are classified as
20:16
subprime has grown to its highest percentage since 2019: almost 15% of customers. So this
20:23
vicious cycle of dodgy lending practices and defaults is only set to get worse.
20:28
And as with most crises, the subprime market is the first to go.
20:31
Texas subprime car lender Tricolor Holdings suddenly collapsed in September 2025.
20:37
Even with all the protections these financial institutions put in place,
20:40
the luxury truck market has gotten bad enough that it just wasn’t enough to save them.
20:45
Though Tricolor wasn’t one of the biggest companies,
20:47
its bankruptcy and liquidation has sent shock waves throughout Wall Street. Even
20:51
financial giants like JPMorgan Chase and BlackRock were shaken.
20:55
Some see it as a sign of things to come.
20:57
One source from Axonic Capital said, “ABS market participants are creating incredible demand for
21:03
subprime auto loans, and this is resulting in loose, and sometimes even reckless, underwriting”.
21:09
For consumers who have lost everything due to these practices, “reckless” is an understatement.
21:14
There’s an even more sinister reason for this.
21:16
The bankruptcy has triggered a huge federal investigation, precisely into the practices
21:21
that have been preying on auto consumers for years. Federal prosecutors are now
21:25
poring through Tricolor’s documents and practices to look for evidence of fraud.
21:30
Unfortunately, this investigation might be too little, too late.
21:33
Dealerships and banks found a way to make increasingly expensive vehicles,
21:37
unnecessary for most buyers, feel affordable on paper. Longer loans and lower monthly payments
21:42
pulled consumers into debt they didn’t fully see, while profits climbed on the other side.
21:47
What was once a reliable, affordable work vehicle
21:50
for the middle class has become something else entirely.. It’s less a tool for labor,
21:54
and more a tool for financial extraction. Maybe that’s what it really represents:
21:59
an era where the appearance of success is easy to buy, but financial freedom is not.
22:04
In the end, it wasn’t the trucks that changed who we are… it was the debt we took on to own them.
22:10
The rise in expensive trucks and increased monthly payments isn’t happening in isolation. It’s part
22:15
of a wider system that’s putting pressure on the automakers. behind these vehicles. And for Ford,
22:20
the situation is starting to look a lot more unstable. Watch the “REAL Reason
22:24
Why FORD Is Failing” to find out why Detroit is panicking. Or click on this.
