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'Where Are You Guys Buying These Cars?': Man Admits he Owes $34,000 On His Car. Then He Learns It's Worth $16,000

"Pretty sure even GAP insurance wouldn’t cover the entire difference."

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Steve Ecker

By: Steve Ecker

Sep 3, 2025 at 5:00pm ET

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In a TikTok that’s generated over 1,260 views as of this writing, Manny (@msrp_manny) reveals how a customer currently owes $34,000 on a car worth $16,000.

“So I just got off the phone with somebody that owes $34,000, and it’s worth 16 grand,” Manny shares.

The brief TikTok concludes with Manny questioning, “Where are you guys buying these cars?”

Viewers chimed in and shared their thoughts and stories about this situation.

“The dealership bro. THE DEALERSHIP,” one TikTok commenter added.

“Not gonna lie I was pretty upside down on a challenger at one point. Not that bad though,” a second replied.

How can someone owe $34,000 on a car worth $16,000?

To end up in this upside-down situation, there are multiple factors at play. Depreciation, loans, and where the vehicle was purchased all need to be considered.

When buying a car, taking out an auto loan to finance the car is a popular option. An auto loan can make car ownership possible by reducing upfront expenses and allowing you to spread out the purchase cost over years, BankRate reports.

According to the FTC, these loans can be obtained either through a direct lender or dealership financing. Both options will entail monthly payments with interest applied to borrow the money.

Typically, car loans are set up to be paid off in 24, 36, 48, 60, 72, and 84 months, NerdWallet reports. Edmunds recommends a 60-month auto loan if you can manage it.

Car depreciation also comes into play. It represents the current value of the vehicle as it loses value over time, Progressive shares. Kelley Blue Book reports that, on average, new cars depreciate about 30% over the first two years, and continue to depreciate 8-12% each year after that.

As a car buyer pays off the loan, the car's value will depreciate over time. So while the person is paying monthly payments and interest on the loan, the car's resale value decreases as more time passes. This can lead to a situation known as an upside-down loan.

What is an Upside-down Loan and How Do People Get Into It?

“Being upside down on your loan means you owe more money on your vehicle than it's currently worth,” PNC states.

Being in a situation where you owe more money on a car than it’s currently worth is definitely not ideal.

Here are some common scenarios that get you into an upside-down loan and how to avoid them, according to PNC:

No or Low Down Payment: However how much money is put down when signing the lease will determine the amount of money that needs to be borrowed. By having no down payment or a small amount of money down, a loan will take longer to pay off, with more time for depreciation to kick in. A way to avoid this is to put more money down up front.
Buying Luxury or New Vehicles: As soon as the car is purchased, depreciation takes place. Buying a new or luxury car could potentially leave you at a loss right after you purchase the car. To avoid this, it’s recommended to buy a used car where the depreciation has already happened.
Extended Loan Repayment Period: By using more time to pay off the loan, the car could depreciate faster than you pay. While the monthly payments will be lower, you may end up in an upside-down situation. To avoid this, consider doing a shorter-term loan and having higher monthly payments.
High Interest Rates: With a high APR, the majority of your payments will be applied to the interest first instead of paying off the car.

In the case of the TikTok, the customer may have had a longer loan as the depreciation outpaced the equity of what is being paid down on the loan.

What’s GAP Insurance?

Manny captioned the post with “hope you've got GAP insurance.”

“GAP insurance is an optional car insurance coverage that helps pay off your auto loan if your car is totaled or stolen, and you owe more than the car's depreciated value,” AllState notes.

AllState continues to mention that drivers should consider gap insurance when leasing a vehicle, financing a longer-term lease, putting down a small or no down payment, and buying a car that depreciates quickly.

This GAP coverage will protect you from negative equity, WalletHub shares. Buying GAP coverage from the dealership will cost between $400 and $700. Additionally, GAP insurance can be purchased through your insurance provider, which will cost between $20-40 per year when added to your car insurance policy.

What do you think?

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It is advised to get gap insurance if the financial burden of paying the difference between what you owe on the car and the car's value is a significant amount.

Motor1 has contacted Manny via email and TikTok direct message. This story will be updated should he respond.

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