The Next Great Recession Isn't Housing... Its FAR Dumber.

Kind: captions Language: en The 2008 housing crisis was supposed to be a one-time event, but the exact same financial toxic waste that wrecked the economy back then has been repackaged. This time it's in the [music] chrome grill of a Ford F-150. By the end of 2024, reports showed that more Americans were underwater on their truck loans than at any point in history. The average owner owed $6,500 more than their vehicle was actually worth. A phantom debt bubble is ballooning up and ready to burst, and when it does, it's going to lock an entire generation out of the housing market. There's been a surge in luxury trucks everywhere, but many of them aren't being used the way trucks traditionally work. Instead of hauling equipment, working job sites, or tackling rough terrain, they're spending most of their time in the suburbs, office parking lots, or city streets. At the same time, the price of those trucks has skyrocketed. Models that sell for well over $100,000 are being used to drive to the office and back. But despite that hefty price tag, demand keeps growing. In fact, the data suggests that many buyers are stretching their finances just to own one. In 2024, sources [music] from Edmunds reported that over 40% of large trucks now come with monthly payments exceeding a thousand dollars. And surprisingly, many buyers don't seem to view that as a problem. In fact, videos regularly go viral featuring owners discussing their staggering monthly payments, sometimes even bragging about them. One driver got thousands of comments after she mentioned that the [music] monthly payment for her husband's GMC Sierra 1500 AT4 pickup truck was 1,600 bucks. That is just 500 short of the median monthly mortgage payment in the US. People literally can't afford it. Documents reveal that an alarming number of truck owners now have negative equity. They owe basically more on their cars than their cars are actually worth. Car industry insiders assert that a new car can lose up to 20% of its value in the first year. It's even more for luxury cars. For buyers who don't put enough money down and end up financing over long periods. Even with monthly four-figure payments, they end up in the red or underwater on their loans. As of late 2024, the negative equity crisis reached epidemic new proportions to the tune of $6,000 per average person. [music] That's enough to buy a reliable used Honda Civic outright. Sources show that one in five vehicle trade-ins [music] with negative equity are down by $10,000 or more. The number of people trading in cars with negative equity has also exploded. From 15 and 1/2% in 2022 [music] to 24.2% in 2024. Their shiny new trucks [music] are a ticking time bomb. For many drivers, that bomb has already gone off. Repossession lots filling up with $90,000 King Ranches. Data from [music] Cox Automotive shows that repos increased by 43% between 2022 and 2024. Across the US, around 3 million vehicles [music] were repossessed in 2025. It's a sign that for some Americans, the cost of keeping up appearances [music] is becoming unsustainable. But, how did this problem get so bad? Did a whole lot of people just start making financially irrational decisions? The reason is more complex [music] and sinister. Not the result of individual stupidity, but a purposeful systemic failure compounded by greed. The decade from 2012 to 2020 [music] was a time of cheap money and 0% interest rates. The Fed held interest rates low to spur an economic rebound. This translated to low rates on car loans. For many people, this basically made loans free money with rates for most [music] of the 2010s hovering around four or four and a half percent until around 2022. That's when they rocketed up to just under 8% for new cars. Reporting from Experian shows that in late 2025, the average interest rate for new car loans had reached 6.37% while the average interest rate for used car loans reached 11.26%. We found consumers had even more horrifying experiences than that when it came to trucks and SUVs. One consumer, Melissa Dickerson, told how she ended up with an $1,100 monthly payment after her son got into an accident. Up to that point, she'd been paying roughly $400 a month for a similar car. The new loan carried an interest rate of roughly 15%. She replaced her car and got a financial burden. During the low rate era, people stopped factoring interest rates into their purchases at all. So, instead of looking at a car's total sticker price, they just checked the monthly payment. Dealerships knew it was happening, so they weaponized it. One tactic involved the four-square worksheet. It's a piece of paper divided into four sections: purchase [music] price, trade-in value, down payment, and monthly payments. While it seems informative at first glance, according to former car dealers, the dealership used it to steer potential customers toward the number that will get them the sale, the monthly payment. If the customer still hesitates, the dealership [music] can negotiate to bring it down in exchange for a much longer-term loan. The customers pay [music] significantly more overall. When dealerships focus on the monthly payment, they can also fold in extra fees to hide higher interest rates than you might qualify for. And loan terms are pretty long already. In mid-2023, 64.5% of buyers with payments over $1,000 had loans between 67 and 84 months long. That is longer than getting a bachelor's and a master's degree combined. One of the worst tricks: taking advantage of negative [music] equity to push you further into debt. If you trade in a car with negative equity, dealerships can offer to pay it off for you if you buy a car from them. But sometimes, they'll just fold that into the customer's [music] new loan or take it from the down payment without making that clear in the contract. Customers end up paying interest rates on an even higher principal without fully realizing it. Once the industry learned it could sell increasingly expensive vehicles [music] through financing, something changed. Affordable cars began to vanish. If buyers shop by monthly payment, why keep making cheaper vehicles? The Big Three, Ford Motor Company, General Motors, and Stellantis, [music] mostly stopped building the kind of $25,000 work trucks that once formed the backbone of the American auto industry. The simple, affordable pickups that people had relied on for decades were disappearing. In their places came trucks like the Ford F-150, a rolling luxury suite [music] made to jack up profit margins during chip shortages. Data from Cox Automotive shows that the average price of a full-size truck as of July 2025 was almost $64,800. >> [music] >> And prices are often deceptively even higher than that. For example, a Ford F-150 [music] starts at 38,800, which seems reasonable. But in 2025, five of the eight available trims cost over 65,000 [music] after mandatory fees are included. Part of the huge price hike in trucks is a reflection of the general automotive price hikes. >> [music] >> Between 1999 and 2019, car prices rose by an aggregate of 2.3%. But in just the six years after that, between 2019 and 2025, [music] prices rose 23%, 10 times higher. >> [music] >> The luxury truck market is even worse. Prices went through the roof, and automakers knew they could increase them because of insanely high demand, especially in the US. The US pickup truck market makes up 37% of worldwide demand. In 2024 [music] alone, consumers in the US bought 4.1 million pickup trucks, a 12% increase over the previous year. That's the equivalent of every single resident in Los Angeles buying a pickup truck in the same year. For most people, these fully decked out and overpriced trucks are completely unnecessary. >> [music] >> Stats show that 35% of Ford F-150 owners use their trucks for hauling once a year or less. Three quarters of those owners tow something with their truck once a year or less, and only 30% will go off-road more than once a year. That's like buying a $1,200 deep-sea diving suit and wearing it for your daily showers. Most luxury truck owners don't actually need a truck. Any sedan or crossover would work just fine for 99% of their needs, if not all of them, and be available at a much lower price. These owners' refusals to get their vehicles dirty gave these cars a nickname, [music] pavement princesses. But, automakers are pumping out the highest-end trims for these trucks faster than ever, [music] while cutting their supply of the base model trucks. In the beginning of 2026, Ford increased their inventory of the highest trim F-150s, [music] including the Platinum and Platinum Plus, while slashing their base model production of the XL by 19%. This has happened every time supply gets tight. >> [music] >> After the pandemic, Ford prioritized luxury trims over entry-level work trucks. A shortage forces choices, [music] and a truck that generates an extra $35,000 in revenue is an easy choice to make. While Ford doesn't release their exact profit margins [music] for vehicles, we found that the Platinum trim is a huge upsell, costing $87,000 compared to the XL's base trim sticker price of $38,800. >> [music] >> In an increasingly uncertain economy, how are so many people affording these prices? The simple answer is, they can't. But, dealerships and banks are tricking them into thinking these luxury trucks are within their budget. When buyers focus on monthly payments instead of total price, affordability becomes flexible. By extending loan terms to 7 years, dealerships can make even expensive vehicles appear manageable. Banks are encouraging them by making 84-month terms a new norm. In the second quarter of 2025, 22.4% of new vehicle financing was made up of 84-month loans. That's up from 17.6% the year before. Though these loan terms emerged around the mid-80s, they were rarely used for decades. They were heavily criticized as borderline unethical by the auto industry. As recently as 2015, sources quote John Mendel, Honda's US sales chief, as saying, "84-month loans are, quote, stupid, not just for us, but for the industry." Which is why even in 2018, only 10 and 1/2% of new car loans had terms that long. In 2026, they're used to finance well over a fifth of new cars. Even Honda caved in 2022 and started offering 7-year loans to their customers. Automakers changed their tune because they realized it was the only way they could pitch increasingly unaffordable cars to consumers. I guess finding a way to sell affordable cars was apparently out of the question. The problem with the 84-month loan term is that it makes negative equity a virtual certainty, especially for luxury trucks. Initially, this loan term worked because of a prevalent myth in the US that trucks hold their value better than any other vehicle. While this may have once been true for the sturdy utilitarian trucks that helped people build and expand their businesses, it is far from today's reality. In fact, the Ford F-150 Platinum and GMC Denali experience a shocking 25 to 30% of year-over-year depreciation. Long-term car loans are becoming the US's silent wealth killer. A Ford Platinum averaging about 87,000 retail can lose around half its value within 5 years. In fact, most of that depreciation hits within the first three. And that leads directly to negative equity. A customer puts some money down and only takes out a loan for 80,000 to the Platinum's value. They have pretty good credit, so they get a 7% interest rate. That means they're going to pay nearly $21,400 [music] in interest over the next 7 years. For just a couple thousand more, they could have bought a practical 2026 Toyota Corolla with just the interest from their Ford Platinum. Even after the initial down payment of 7,000, the [music] customer will have 101,400 dollars left to pay on their luxury truck. Unfortunately, three years later, their truck is only worth 43,500. While if you've made all your full payments on time, you still have 50,400 dollars left to pay off, leading to almost 7,000 dollars in negative equity. The F-150 is no exception, either. From 2021 to 2026, the Chevrolet Silverado 1500 and GMC Sierra also depreciated by 42%. And if you try to sell those trucks, the secondary market has imploded because consumers are finally moving away from trucks, partly due to higher costs of living and gas prices. Reports from early 2026 show a 3% drop in people who think their next car will be an SUV or a truck. All of this has created a situation in which consumers are trapped in increasing cycles of debt with negative value assets and no clear way out. The fallout has already started. We found sources from Moody's [music] that 30% or more of subprime auto loans are defaulting. That is just about the rate of subprime mortgage default that caused the Great Recession. So, what are banks doing with all these defaults? Aren't they unhappy with the money that they're losing? Not really, because they're not really losing money at all. They created these loans to protect themselves while consumers go bankrupt. In 2025, Bloomberg reported that car loans made to consumers with bad credit backed more than 37 billion [music] dollars in bonds. But Wall Street found a way to profit off them. They started charging absurdly high interest rates to customers with [music] risky credit and spread the risk out. It's a process known as securitization. The practice was heavily regulated with mortgages after the Great Recession, thanks to new [music] laws and the formation of the Consumer Financial Protection Bureau, or CFPB. Companies were supposed to investigate consumers' financial situation to make sure that they had a good chance of paying their loans off. But, car dealerships fought hard for and won exemptions from supervision by the CFPB, arguing that [music] cars were an absolutely necessary good for Americans. Plus, banks aren't taking on much risk at all because most auto loans are not systemically held by the same banks. They are spread out across credit unions and captive finance arms like Ford [music] Credit. So, the consumer defaults and loses everything, but the bank still wins. One example is the Drive 2019-3 Trust. Though its face value was $1.21 billion, an extra $344 million in auto loans was bundled in to cushion against losses. It was handled by Santander Consumer USA, one of the country's largest subprime lenders. Santander's plan was simple and designed to [music] produce mass amounts of profit for them. They offered car loans to generally risky borrowers [music] with an average interest rate of 19%. Some loans had interest rates as high as 29.99%. But, the bonds paid [music] interest rates of 2 and 1/2 to 3.2%. The interest rates were so high, Santander [music] predicted that even if 42% of consumers defaulted on payments, the bank would still come out ahead. Since the average default rate in 2025 reached 30%, that was a pretty good bet. To further cushion against defaults, Santander got creative when it came to Drive 2019-3's structure. Even if every single borrower defaulted, investors [music] in the top three tranches, the first to be repaid, would see no losses. The company [music] itself only had to have a 5% interest in their securitization, in this case, $71 million of its own money. If there was a massive amount of excess defaults, it would be the last to get repaid. But, if defaults [music] came in at the pretty high percentages expected or under, it would get a huge share of any leftover money. In fact, reports from [music] S&P Global Ratings showed that even if up to 60% of borrowers defaulted, every senior bondholder would get repaid. One source from a private investment bank said, "You could think of it as structured like a bomb shelter against a nuclear blast." Not to mention GPS technology and license plate tracking [music] has made finding, repossessing, and reselling cars whose owners have defaulted on payments easier than ever. The money from those sales go straight into the bondholders' accounts. Statements from the National [music] Automotive Finance Association say that these subprime loans are intended to help consumers. Otherwise, people without good credit wouldn't be able to get transportation in a heavily car-dependent country like the US. Industry experts disagree. One law professor and former member of the CFPB said, "This market is structured to make money even though it may be preying on borrowers." Which is exactly what happened with Drive 2019-3. When it wound down, 25% of the loan money had not been paid back. [music] Since Santander was expecting a default rate of 42%, this led to a windfall of profits for the group. We investigated SEC [music] filings and found that in addition to roughly $121 million Santander received in servicing fees, it also collected at least $155 million in bonus payments. But that came alongside a far harsher reality. More than a quarter of its customers saw their vehicles repossessed with [music] many trapped in cycles of escalating debt. In some cases, they were pushed toward bankruptcy. >> [music] >> The worst part? When these repos happen, it's not just family cars being towed away. They're taking most people's American dream right with them. Truck payments themselves are eating into Americans' wealth much more than they think. It's not [music] just the money they're putting toward the truck. It's what they could be doing with it instead. People who manage to swing a monthly four-figure truck payment [music] could instead be making millions for their retirement. A $1,300 truck payment invested monthly into the S&P 500 for 30 years would yield $2.97 million. That's not only enough for a very cushy retirement, but also three luxury homes or an entire private island to enjoy in your older years. That's how these [music] payments become an invisible wealth transfer. They're destroying household income and weakening people's ability to save for a home. Someone making 75,000 a year while making $1,200 monthly payments factoring in the loan terms and rapidly depreciating vehicles is eroding their buying power by $165,000. Considering the average home price in mid-2026 sits at [music] $368,198, that is 45% of the average home's total sales price. It's the difference [music] between eventually owning a four-bedroom house or living in a studio apartment. And unlike [music] homes, luxury trucks are only going to plummet in value. Consumers are left financially underwater, deeper in debt, with their future prospects being stolen out from under them by banks and dealerships. Even with all of these insane [music] financial moves happening, some people think that one man's car debt is his problem. But the $100,000 truck isn't just a bad purchase, [music] it is a systemic canary in the coal mine for a looming credit collapse. Just like the mortgage crisis that caused the Great Recession, the auto loan bubble is starting to burst and the results [music] will be devastating. New car sales are slowing down. Inventories are increasing and luxury trucks are sitting for longer in dealership parking lots with no one able to buy them anymore. Data from Cox shows that after May 2025, inventory volume has been increasing at a steady pace. Dealers are now sitting on endless days of supply as givebacks begin from people realizing they can't afford what they were led to believe they could buy. While the average days supply in the US across all brands was 84, for the big luxury truck automakers, almost all of them have a backup of 100 plus days. Chrysler was up to a backup of 111 day supply, while Ford's clocking in at a shocking 113. This led to 2.87 million new vehicles sitting available and unused on dealer lots in October 2025. >> [music] >> That is an increase of almost 5% from the month before. That is more than all of the