Used car prices are 30% higher than 2019 and 'affordable' cars now require 7-year loans at 10%+ interest

A 2020 Honda Civic with 50,000 miles costs $22,000 at a dealership. In 2019, the same car (2016 Civic, 50K miles) cost $15,000. The buyer earns $50K/year. They put $2,000 down. The dealer offers financing: 84 months (7 years) at 10.5% APR. Monthly payment: $330. Total cost over the loan: $27,720 — they will pay $7,720 in interest on a $20,000 loan. By the time the loan is paid off, the car is worth $5,000. They are underwater on the loan for the first 4 years. If the car breaks down in year 3, they owe $15,000 on a car worth $12,000 and need to buy another car. So what? Car ownership is not optional in most of America — 85% of workers drive to work. When car prices spike 30% but wages only grow 20%, the math gap gets filled with longer loan terms and higher interest rates. The average new car loan is now 69 months (5.75 years) at 7.1% APR. The average used car loan is 67 months at 11.4% APR. These are not mortgages building equity — cars depreciate. A 7-year car loan means you are still paying for a car that is already broken down. Why does this persist? New car production dropped 25% during COVID (chip shortage), which reduced the supply of 2-3 year old used cars entering the market. Prices spiked. Production recovered but prices have not returned to 2019 levels because: (a) manufacturers learned they can sell fewer cars at higher margins, (b) dealer markups became normalized, and (c) the Federal Reserve's rate hikes made financing more expensive, but consumers stretch loan terms instead of buying cheaper cars because cheaper cars no longer exist.