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6 million Americans have stopped paying their car loans, and it's becoming a 'significant concern'
Business Insider ^ | 11/30/2016 | Matt Turner

Posted on 11/30/2016 10:18:58 AM PST by SeekAndFind

There is a lot of talk out there about the auto-loan market right now.

Hedge fund manager Jim Chanos has said the auto-lending market should "scare the heck out of everybody," while the auto-lending practices of some used-car dealerships has been given the John Oliver treatment on TV.

It's a topic we've been paying attention to as well. In a presentation in September at the Barclays Financial Services Conference, Gordon Smith, the chief executive for consumer and community banking at JPMorgan, set out some eye-opening statistics on the market.

Now the New York Federal Reserve is taking a closer look at the market. In a blog published Wednesday on the New York Fed's Liberty Street Economics site, researchers highlighted the deteriorating performance of subprime auto loans and set off the alarm.

"The worsening in the delinquency rate of subprime auto loans is pronounced, with a notable increase during the past few years," the report said.

To be clear, the overall delinquency rate for auto loans is pretty stable, and the majority are performing well.

There are, however, signs of stress in the subprime market segment, which has seen rapid growth. Here are the key numbers from the report:

* The subprime delinquency rate for the trailing four quarter period moved to 2% in the third quarter. The only other time it was 2% or more was in the aftermath of the financial crisis.

* Subprime auto loan originations hit $31.3 billion in the third quarter, down from $33.6 billion in the second quarter. Bank and credit unions originated $9.5 billion in subprime auto loans in the period, a record high.

* Outstanding subprime auto loan balances now stand at $280.2 billion, a record high. For perspective, the pre-crisis high was $249.5 billion, in the fourth quarter of 2007.

(Excerpt) Read more at businessinsider.com ...


TOPICS: Business/Economy; Society
KEYWORDS: autoloans; automotive; banking; bhoeconomy; carloans; debt; default; economy; loans; trends
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To: ThisLittleLightofMine
They live in a dorm and basically their entire check goes to paying insurance and car payment.
Therefore, they are not underpaid.
61 posted on 11/30/2016 11:34:22 AM PST by oh8eleven (RVN '67-'68)
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To: Vermont Lt

That’s probably a good thing. The used car market still hasn’t recovered from the cash for junkers purge. The primary source for used cars right now are rental companies, so the usage is high mileage and pretty expensive. I had to buy a car last year and was intending on going used (as I usually do) but the used market is so grossly overvalued I went new. Basically for $3G more I got a car 3 year younger car with 50,000 less miles plus all the warranties.


62 posted on 11/30/2016 11:36:03 AM PST by discostu (If you need to load or unload go to the white zone, you'll love it, it's a way of life)
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To: SeekAndFind

Sucks for the lenders. Me? Not so much.


63 posted on 11/30/2016 11:40:24 AM PST by Wolfie
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To: castlegreyskull
Everytime I go to a place like McDonalds or a convenient store, I always see every worker with smart phones. I don’t understand how they afford them. I don’t even have one, I don’t want the extra $25 added to my phone bill, and I simply do not need one.

I got a used Apple 5S last summer. The landline was costing me a minimum of $30 a month. I downgraded my internet to the slowest speed. It works just fine. My total out of pocket expenses for communications are about the same. I also have a backup if I cable goes out..

64 posted on 11/30/2016 11:43:21 AM PST by EVO X
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To: T. P. Pole
Cheap is unlikely - have you seen what they are asking for a two-year old with 40kish on it? Why would I pay 20k for that when I can get it new for 25k?

You're correct - the price of used cars now is (and has been) stupidly high. That's my point - in 6+ months will we see a flood of repo cars hitting the market and /or under-water owners looking to sell?

65 posted on 11/30/2016 12:10:22 PM PST by PGR88
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To: oh8eleven

The new trucks came about because of Marines being deployed to Iraq and Afghanistan and not having anywhere to spend the Imminent Danger Pay they received. It happened all over the Marine Corps. Many of them paid cash for their vehicles.


66 posted on 11/30/2016 12:15:05 PM PST by sean327 (God created all men equal, then some become Marines!)
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To: sean327
Many of them paid cash for their vehicles.
New PUs go for $30K-$40K ... just how much is that Imminent Danger Pay?
67 posted on 11/30/2016 12:24:21 PM PST by oh8eleven (RVN '67-'68)
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To: editor-surveyor

What’s a blister car?


68 posted on 11/30/2016 12:33:44 PM PST by Mamzelle
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To: Red Badger

You’re lucky. After I make my payment tomorrow, I still have 25 more to go. :(


69 posted on 11/30/2016 12:41:42 PM PST by EvilCapitalist (Lock her up!)
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To: SeekAndFind

heck I know folks who have bought cars, never paid, then turned the car in to dealer over court order, and bought another car from them, rinse, lather, repeat..


70 posted on 11/30/2016 12:42:57 PM PST by aces ( Islam is the religion of the dead, Got Jesus?)
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To: EvilCapitalist

I’m not ‘lucky’.
I worked hard and paid for it.

I bought a new car back in the 90’s and was washing it when a neighbor lady walked by and said “you are sooooo lucky to get a new car!”

I bit my tongue and said thank you, but I wanted to scream at her, “WHAT PART OF WORKING HARD AND ENJOYING THE FRUITS OF MY LABOR DO YOU NOT UNDERSTAND?”.................


71 posted on 11/30/2016 12:48:25 PM PST by Red Badger
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To: Red Badger

I’m working hard, and paying for mine too. I just meant you’re lucky to have made your last payment.


72 posted on 11/30/2016 12:50:09 PM PST by EvilCapitalist (Lock her up!)
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To: oh8eleven

Well that plus regular pay. Point is, these Marines had nowhere to spend their money for 9 months. Don’t begrudge them for buying a vehicle after coming home from a combat zone. They pretty much earned it.


73 posted on 11/30/2016 12:51:26 PM PST by sean327 (God created all men equal, then some become Marines!)
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To: RegulatorCountry

Obama phones are crappy little phones. Not sure why anyone would want one.

In the 1980s, during the Reagan administration, the Federal Communications Commission (FCC) created the Universal Access Initiative. The goal was to “promote the availability of quality services at just, reasonable and affordable rates for all consumers.” After years of study, they proposed what we now call the Obama Phone.


74 posted on 11/30/2016 12:56:03 PM PST by ilovesarah2012
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To: EvilCapitalist

Now that it’s paid for, I have to repair it constantly.............But repairs are cheaper than a new car..............


75 posted on 11/30/2016 12:56:15 PM PST by Red Badger
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To: Opinionated Blowhard

A lot of cars financed are equipped with a device to disable them if the payments aren’t made.


76 posted on 11/30/2016 12:57:26 PM PST by ilovesarah2012
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To: discostu

Just a guess, but I’ll bet your credit score is on the north side of 700.

If it was in the 500s, you would have bought a car with twice the options and run it into the ground.


77 posted on 11/30/2016 1:18:55 PM PST by Vermont Lt (Brace. Brace. Brace. Heads down. Do not look up.)
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To: Vermont Lt

Credit score’s got nothing to do with it. The used market is just very thin right now mostly populated by high mileage cars for only about 20% less of the equivalent new model.


78 posted on 11/30/2016 1:33:21 PM PST by discostu (Alright you primative screwheads, listen up!)
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To: sean327
Don’t begrudge them for buying a vehicle after coming home from a combat zone.
Never said that at all. In fact, I came home from VN with a pocket full of cash myself.
My point was that military personnel are not underpaid as so many claim.
Semper Fi ...
79 posted on 11/30/2016 1:43:19 PM PST by oh8eleven (RVN '67-'68)
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To: SeekAndFind

Got no job...we don’t care.
Got a prison record.....we don’t care.

You don’t expect to pay us.....THAT’S when we care!


80 posted on 11/30/2016 1:45:32 PM PST by dfwgator
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