Posted on 04/18/2016 6:47:42 PM PDT by george76
New car loans have become the new hot product and Wall Street, not car-loving Americans, is the real market.
The growth of student loan debt has received no shortage of attention from politicians and the media in recent years, making it one of the top economic anxieties in post-mortgage-meltdown America. Behind the front-page investigations and populist political platforms, the numbers are indisputably chilling: student loan balances have surged from less than $18,000 per person to $25,000 per person in the ten years since 2005. But another class of debt is also growing at troubling rates without attracting anywhere near the same level of attention: car loans.
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Together, loans for cars and education contributed 90 percent of the growth in consumer debt since the end of 2012. Outstanding auto loans have hit more than a trillion dollars, with an average balance of $12,000 per person (or nearly 8 percent of disposable income), while the dreaded student loans “epidemic” is not far ahead at $1.3 trillion outstanding.
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Auto Asset Backed Securities (ABS), securitized bundles of car loans not unlike the mortgage-backed securities at the heart of the 2008 credit crisis, are the hidden driver of the auto debt boom.
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In 2015 some 23.5 percent of all new car loans were subprime
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rising delinquencies and defaults are finally opening the media’s eyes to the risk of an auto credit bubble collapse
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it’s time to recognize that expanding auto credit is not a substitute for the missing piece of the puzzle: rising wages. Until American consumers start seeing a genuine improvement in their financial position, it’s critical that we not encourage yet another debt bubble simply because it provides the appearance of economic growth.
(Excerpt) Read more at thefederalist.com ...
And people on government assistance can lease a vehicle as to not show ownership.
The last car we just got rid of cost $2500. We put about a thousand in repairs to it while we owned it. We drove it for 110,000 plus miles. It finally died when I hit a deer and cracked the motor.
The truck I had before that We bought for $1250. It had about $1500 in repairs and went about 125,000 miles before the motor went out. It killed 2 deer and only had 2 dent about the size of quarters from them.
We spend about 6 months picking something out to drive and pay cash. Easy to find out what vehicle is dependable when you get them used before you buy.
Of course My credit report says my lack of credit brings it down to 718. I suppose I could pay hundreds more per month for a better score.
I’ve been keeping my 12 year old car running, waiting to pick up a very cheap, low-milage one when this bubble pops. I hope it hurries up.
I bought a new car once. Pen to paper the dumbest thing to do.
Cash for Clunkers took all the cool classic Jeep Cherokees off the road.
Obama’s fault.
I heard Obama is going to forgive auto loans for blind people. /s
That seldom ends well .
Invest in the companies making repo equipment and ‘stealth’ tow gear.
If you know how to work on cars yourself, you can find screaming deals all day long on the 2003 to 2007 Ford 6.0 liter diesels. You have to do some upfront work to undo the crappy engineering job on the oil cooler and EGR cooler, but once that’s done they’ll give you plenty of service. If you want to boost the motor you’ll also need to replace the head bolts with hardened studs.
I bought a 2003 F250 crew cab 4x4 with an upgraded 2005 engine and turbo for $11,700. I put 17 hours and $500 in parts under the hood, and she’s been running like a top for three years now. The chassis and transmission have 210,000 miles, but the engine just turned 100k.
Maybe I should run out and get that CTS V AWD coupe that I really can’t afford. 640 horse.. Gitty up. Maybe my hubby could grab the escalade.. As it stands, I am looking at a low Mileage tt coupe, in a discount color, cash. Ugly, but fast.
In 2015 some 23.5 percent of all new car loans were subprime
rising delinquencies and defaults are finally opening the media’s eyes to the risk of an auto credit bubble collapse
....
With the great Obama economy, how can that be?
Part of this is the effect of the additional costs (thousands per car) of all the regulations that the EPA and NHTSA have heaped onto carmakers, and they’ve only just begun.
well my 71’ International harvester 1210 (freshly painted) with just 93k is running just fine...as i pass the 20-40 thousand dollar pick-ups on my way to work I imagine the monthly payment and option one insurance costs these people pay.....I pay 50 dollars a year to register and 300 dollars for basic insurance .....no computer codes to deal with and I twist my own wrenches....even tire change (has split ring rims).....when trucks and cars cost as much as houses and pieces of land its time to get a good used vehicle and keep it....people are stupid.
I don’t think it is any coincidence that many new cars are made with keyless entry & ignition; towing the cars is less and less necessary.
The problem is that you’ll have to give the Caddy back. You can’t give a student loan back, as much as many kids would like to do that.
You’ll be able to get a good deal on a near-new Escalade within a year - just like you can hire a newly-minted psychology major with experience as a barista for pretty cheap too, if you can find one that works.
Student loans are going to be subject to bankruptcy sooner or later. Secured auto loans......not so much.
Even without those systems, it wasn’t like it was hard. Dealers could make keys from VIN numbers for decades.
The American public was doomed to be forever at the mercy of the financial industry when they quit asking “how much does it cost” and replaced it with “how much is the monthly payment”.
The only reason that inflation of prices has occurred is due to the fact that we will buy anything that can be purchased with that little bit of extra money we have at the end of the month. However, the price of everything will eventually reach the upper level of what the people will pay...MONTHLY.
I was born in 1946. I was poor. I started work when I was 9 and I earned the discipline to save up for what I wanted. To this day I still do the same and now I own 2 houses, vehicles, a business and a wealth of physical assets.......and still don’t owe anyone a monthly penny except for monthly utility bills on a monthly basis.
Easy money was a trap by the financial industry to make slaves of the gullible people....and it worked!
My brother-in-law works for a water utility and he says they work the same way. Show up early in the morning, turn off the water (or attach the tow bar) while they are still sleeping and split. No confrontation whatsoever.
Hey, not all of us have Caddy’s! My F150 should be FREE!!!
In all seriousness, this is a similar thing to the subprine housing bubble. Many lenders are worried about denying loans for fear of being called racist.
And my F150 is almost paid off.
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