Long ago I had a girlfriend who was still paying on a Ford Bronco which had broken down. The repair was going to cost $300, which she didn't have.
She was able to trade that car in for a brand new one without spending any money. It was literally cheaper (in the short term, of course) to buy a new car than to fix the old one.
It was one of the reasons we broke up -- she was the type of person who counted the amount she could borrow as an asset.
Banks keep lending money for stuff like that because they can repossess your car if you stop paying.
She was able to trade that car in for a brand new one without spending any money. It was literally cheaper (in the short term, of course) to buy a new car than to fix the old one.
It was one of the reasons we broke up -- she was the type of person who counted the amount she could borrow as an asset.
Banks keep lending money for stuff like that because they can repossess your car if you stop paying.