Another failure of the Obama years. Those TV ads are TOO GOOD TO BE TRUE.
Many bankruptcies today and in the near future are a result of the sham auto loan issues.
Maybe the Federal Reserve can buy up a couple $$ hundred billion worth of these
problem solved.
Surprise...Surprise... People took out subprime auto loans, so they could ‘afford’ the nice new care they deserved, and now when they want another nice, new car, they realize they owe a ton more money than the car is worth! IDIOTS!!!
Let’s see how the car market shakes out after President Trump gets rid of the ridiculous mileage standards.
Sixty-seven to 72 month loans on a piece of merchandise that depreciates in value month-to-month. Wow! If you’re paying 10-20% interest on that loan, you’re gonna learn what upside-down means.
How to sucker a car Mark
Sell new car AND financing.
Get buyer to trade car for newer car and roll negative equity into new financing. Repeat until they have a massive car payment
If they don’t pay, repossess.
Sell repo’ed car AND financing.
Sell beater to Mark AND financing.
No more ‘Cash for Clunkers’!
It damn near destroyed the Used Car market!..................
I’d like to know what manufacturers do with all of the UNSOLD vehicles they can’t get rid of. There has to be tens of thousands every year.
First we would sell houses to those who could not afford them, and nearly destroyed the economy. Now we sell expensive cars to those who can not afford them and expect a different result?
The federal government never should have bailed out the failed lenders 8 years ago.
Now they believe they can run amok and count on Uncle Stupid to bail them out again.
All for a consumer purchase that looses nearly 25% of its value the moment you take possession of it - and continues to drop precipitously through the first 4 years of ownership (losing value far faster than you are paying the debt).
Of course, the average price of an automobile has gone up so much that consumers feel the only way to be able to afford them is to finance them longer. Which opens up another can of worms - how much of the current cost of a new vehicles is essentially the result of government regulations/mandates? I would suspect that the figure is pretty high as a percentage.
Two words: Uber and Lyft.
Once people realize they can walk away from loan / insurance / maintenance and shift those expenses to the Uber / Lyft owner/driver they did.
This problem will self-correct.
For those dumb enough to invest in this crap, I have no sympathy.
Bought a 2016 Honda CR-V last year. Wife and I have excellent credit. Was going to pay in full, but they offered 0.9% for 60 months. They’re basically lending me money for free.
I’m mostly concerned about these guys:”yield-hungry institutional investors”.
I hope none of those guys have wormed their way into my portfolio.
Cash for Clunkers encouraged people that could not afford a new car to buy one anyway. I think that put the idea out there that “I deserve a new car and I can save the planet” when reality is the new car has to be paid for at some point.
Cash for Clunkers also raised the cost of used cars to the point many could not afford to buy them either.
Does this mean cheap used autos will enter the market?
I am guessing “ no” because most of these loans are made on 3K junkets. Anybody know?
Buying a new car is DUMB. My wife and I clear over $175k a year. Not trying to brag. I drive a 2001 Toyota Tacoma that I bought used. The family car is a 2013 Honda Pilot we bought in 2016. It had about 34k miles on it. Paid cash, vehicle is basically as good as new. Haven’t had a car payment since 1997.
I have funny conversations with my neighbor. They were getting some major improvements done to their house and are also looking at schools for their oldest child who will be a senior in HS next year. She was complaining about how expensive everything is, money was tight, hoping their kid can get a scholarship, etc. I just chuckle and shake my head as I look at their cars in their driveway : a Lexus SUV, and a Range Rover. Dumb.
As a lawyer, Obama sued and won and forced financial institutions to make sub prime mortgage loans.
As President, Obama sued those same financial institutions for making those same loans.
Pres. Obama turns around and requires sub-prime auto loans, as they are not like mortgages.
Obama’s favorite rag’s subdued notice of said sub-prime loans with no mention of Obama being huckster in chief for them.
https://www.nytimes.com/2015/06/14/opinion/sunday/putting-an-end-to-abusive-car-loans.html
Now the sky is falling ?
buy a new car, pay less than $200 per months for 100 months
by 60 months, the loan is upside down