The used car market is in one of the weirdest places it , and possibly the weirdest, with new and used inventory down and . This is a great situation if you have a car loan that was previously underwater, or if you’re an auto lender who is used to writing off millions when borrowers default.

It is also a good situation for dealers, who can mark up cars even more (if they have cars to sell, that is.) It () is good for automakers, who can’t make cars fast enough. About the only entity it is bad for is you, a person interested in buying a car, whether for work, leisure, or by necessity. But let’s focus on auto lenders specifically, who tend to fly under the radar. The Wall Street Journal that lenders are seeing some unprecedented things.

Ally Financial Inc., one of the country’s largest auto lenders, recouped $5 million on defaulted car loans in the second quarter, a first for the bank and a giant reversal from the $97 million in defaulted auto loans it charged off in the first quarter.

“It is a huge shift from where we’ve seen historic loss levels,” Ally Chief Financial Officer Jenn LaClair said.

JPMorgan Chase, PNC Financial Services Group Inc. and U.S. Bancorp also reported net recoveries on defaulted auto loans between April and June. Each of the banks said its policy after selling a repossessed vehicle is to return any surplus funds above the unpaid loan balance to the borrower.

[...]

The banks said high used-car prices have helped lower charge-off rates since more struggling borrowers can sell their vehicles for more than their loan balance before a repossession. And the solid financial standing of many consumers means that most have been able to keep up with their payments and pay off balances on previously defaulted loans.

And while I say this is bad for buyers, that is very much generally speaking as, in any market, deals can still be found, and if not deals then something less than highway robbery, as some cars are seeing greater demand than others. The following, for example, does not sound all that bad, depending on how much was paid for the Civic:

Chad Simmons got $15,400 this summer for his 2018 Hyundai Ioniq—$2,900 more than his unpaid loan balance. He used the difference as a down payment on a 2020 Honda Civic with 4,000 miles. He had racked up about 60,000 miles on his 2018 model while traveling for work from his home in Troy, Ala.

“Every car I’ve ever had I’ve had negative equity,” Mr. Simmons said. “[Trading in] wasn’t even something I was considering.”

I’m interested in more reports like this from the ground; if you’ve tried to buy a car in recent months, how did it go? And how did it go compared to pre-pandemic times? Every time someone tells me about their experience doing it recently in the New York City era, it does not sound fun.