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(Jalopnik)   The next crisis? Car loans   (jalopnik.com) divider line
    More: Interesting, Loan, Debt, Default, auto loan payments, Student loan default, Money, Interest, great number  
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1309 clicks; posted to Business » on 16 Aug 2022 at 8:50 AM (6 weeks ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook



28 Comments     (+0 »)
View Voting Results: Smartest and Funniest
 
2022-08-16 7:27:21 AM  
Debt in general will lead to the next crash. It's pretty obvious.
 
2022-08-16 8:08:43 AM  
Auto Lending: Last Week Tonight with John Oliver (HBO)
Youtube 4U2eDJnwz_s
 
2022-08-16 8:21:30 AM  
It's still better than pre-pandemic levels!  Oh noes! Crisis!
 
2022-08-16 8:24:59 AM  

Benevolent Misanthrope: It's still better than pre-pandemic levels!  Oh noes! Crisis!


Well... not really.

US Auto Loan Debt (ycharts.com)

it's about on par with inflation but the level is kind of nuts.

Add in credit card debt, student loan debt, home loan debt minus equity... It's not a pretty picture.
 
2022-08-16 9:01:03 AM  

NewportBarGuy: Benevolent Misanthrope: It's still better than pre-pandemic levels!  Oh noes! Crisis!

Well... not really.

US Auto Loan Debt (ycharts.com)

it's about on par with inflation but the level is kind of nuts.

Add in credit card debt, student loan debt, home loan debt minus equity... It's not a pretty picture.


"Ownership society"
 
2022-08-16 9:10:40 AM  

Northern: NewportBarGuy: Benevolent Misanthrope: It's still better than pre-pandemic levels!  Oh noes! Crisis!

Well... not really.

US Auto Loan Debt (ycharts.com)

it's about on par with inflation but the level is kind of nuts.

Add in credit card debt, student loan debt, home loan debt minus equity... It's not a pretty picture.

"Ownership society"


Yup. We're owned.
 
2022-08-16 9:17:28 AM  
Fark user imageView Full Size
 
2022-08-16 9:30:15 AM  

Metaluna Mutant: [Fark user image 339x518]


Yeah, that's the part that gets me:  when the banks make risky loans, it's not like they're doing it with their big pile of bank money.  They're doing it with OUR money.
 
2022-08-16 9:32:08 AM  
In before the usual crowd that exclaims they buy 45-year old Pintos with cash and can't understand why people finance/lease cars.
 
2022-08-16 9:36:23 AM  
I only pay cash for my 45 year old Pinto.
 
2022-08-16 9:40:05 AM  

Bovine Diarrhea Virus: In before the usual crowd that exclaims they buy 45-year old Pintos with cash and can't understand why people finance/lease cars.


but the 'I have 35k in an account that satisfies insurance requirements ' will be in right behind them

see also: 'these are the years when you should eat unheated gruel so when you're too old to work, you'll be able to afford gruel'
 
2022-08-16 9:42:07 AM  

Rapmaster2000: I only pay cash for my 45 year old Pinto.


Well, you're throwing away money, what with low interest rates. With my perfect 1600 credit score (which I remember because it matched my SATs), I have a negative interest rates, so I financed 125% of my Pinto's value and put it all in crypto. Because of blockchain NFTs, my investments are going to the moon!

/hopefully they come back soon, I might need to cash here on earth
 
2022-08-16 9:43:48 AM  
People have been worrying about this for like 20 years, but default rates are never that bad because most people need their cars to get to work -- they'll find a way to pay so that they don't risk losing their job.

And because of that, car loans are not that risky, not even with people who have bad credit, making the high APR charged unnecessary.
 
2022-08-16 9:43:59 AM  
Going to pick up my new-to-me 2021 Toyota Tacoma this afternoon, so, getting a kick...

/buying well within my means and, if history is any indicator, I'll keep it for ~15 years or more
 
2022-08-16 9:51:59 AM  

chevydeuce: Going to pick up my new-to-me 2021 Toyota Tacoma this afternoon, so, getting a kick...

/buying well within my means and, if history is any indicator, I'll keep it for ~15 years or more


just got a '22   enjoy!
 
2022-08-16 10:09:41 AM  
I've had a loan for a vehicle once in 50+ years and that only because I had just moved and wasn't able to pay cash for my van until my previous house's escrow closed.
 
2022-08-16 10:26:35 AM  

Bovine Diarrhea Virus: In before the usual crowd that exclaims they buy 45-year old Pintos with cash and can't understand why people finance/lease cars.


What about people who pay cash for decade old Hondas, and still drive them, another decade later?
 
2022-08-16 10:44:24 AM  

NewportBarGuy: US Auto Loan Debt (ycharts.com)


Moar better chart from the St. Louis Fed with a longer time series. And yes it mostly follows the trend since the 80's.
 
2022-08-16 11:46:21 AM  
Good. I usually only buy used and need the inventory in place because my truck is way too long in the tooth. In the VA/DC/MD area folks are buying new and selling almost immediately to Carvana for more than they paid to the dealership. That's nuts.
 
2022-08-16 12:02:32 PM  
I go in and say " i can only afford $285 per month. Show me what you can work with me on." If they try and push to $300 or more I'm out. I didn't get this double wide trailer by going over budget.
 
2022-08-16 12:30:25 PM  

jdlenke: I go in and say " i can only afford $285 per month. Show me what you can work with me on." If they try and push to $300 or more I'm out. I didn't get this double wide trailer by going over budget.


I like to show up with a bag of cash and then wait to be treated with awe and respect.

Still waiting.
 
2022-08-16 12:47:41 PM  

TheYeti: jdlenke: I go in and say " i can only afford $285 per month. Show me what you can work with me on." If they try and push to $300 or more I'm out. I didn't get this double wide trailer by going over budget.

I like to show up with a bag of cash and then wait to be treated with awe and respect.

Still waiting.


For the bag of cash or the respect?
 
2022-08-16 12:51:59 PM  
There's a couple of youtubers who are in the car biz. One of them was showing how car auction businesses are expanding their lots. They expect lots of repo's and the banks concur. The lending standards at the beginning of covid were low and with people on deferred rent/house payments a lot of cars were purchased. I'm holding off on a purchase for another 12-18 months.
 
2022-08-16 1:18:45 PM  
Jokes on you. I just paid off my auto loan. In year three of a five year loan. When the crash comes, at least I know they can't repo my car.
 
2022-08-16 2:44:40 PM  
/used-car prices are still too damn high
//waiting...
 
2022-08-16 4:28:09 PM  
Maybe repos are down because the bank or car dealer hopes that eventually payments will be made.  the payments won't be made if the car is repossessed and, depending on the make and model, it may just sit on the lot for months unsold.
 
2022-08-16 7:20:15 PM  

Bovine Diarrhea Virus: In before the usual crowd that exclaims they buy 45-year old Pintos with cash and can't understand why people finance/lease cars.


LOL, that would actually be interesting.

More like:

- Buy a 3 year old Honda for $25K instead of $37K
- Take out a loan for part of it for credit vibes; Pay that off once it has shown up on your credit report.
- Do all the preventative maintenance so that Honda lasts forever.

Even if you're starting out with no equity and a car loan, once you pay off a car, after ~5 years, pay the "payment" into savings and/or investment accounts.  Drive that car for another 5 years and you'll have "bought" two.  Next time you want a car, you can buy it outright.

Someone on here will get sand in their crack because "Oe, it's nice to be rich!"  but this is just basic middle-class money management. As always, the best time to set yourself up for today is 10 years ago.

Yes, you can opt to take out a loan because the interest rates are great and it pays off in the end.  But to make that argument, you have to actually HAVE the funds to buy a new car.  Don't flap your lips with that "smart money" logic when you couldn't actually buy the car outright.
 
2022-08-16 10:32:15 PM  
The wife just bought a 2020 Ranger, the interest on the financing was lower then the HELOC I got a couple years ago for a new furnace.
 
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