This article was written by Michael Snyder and originally published at Economic Collapse blog.
Editor’s Comment: They have set things up in a way that they are doomed to fail. Most struggling people are so used to drowning in debt, that they think nothing of getting over extended in a car loan, or house loan they can’t afford. If failure is imminent, they may as well enjoy the ride… Meanwhile, the system is preying upon the built in flaws, while the problem is so big it is dragging and threatening to implode the economy if too many subprime auto loans default. The same could happen again, as it did in 2006-2008, with the housing bubble.
All the normalcy that shows on the surface is nothing more than a house of cards, and is threatening now to blow in the wind. How close are we to economic chaos? Time will tell, but things look more dangerous than at any other point in our lifetimes.
The Subprime Auto Loan Meltdown Is Here
by Michael Snyder
Uh oh – here we go again. Do you remember the subprime mortgage meltdown during the last financial crisis? Well, now a similar thing is happening with auto loans. The auto industry has been doing better than many other areas of the economy in recent years, but this “mini-boom” was fueled in large part by customers with subprime credit. According to Equifax, an astounding 23.5 percent of all new auto loans were made to subprime borrowers in 2015. At this point, there is a total of somewhere around $200 billion in subprime auto loans floating around out there, and many of these loans have been “repackaged” and sold to investors. I know – all of this sounds a little too close for comfort to what happened with subprime mortgages the last time around. We never seem to learn from our mistakes, and a lot of investors are going to end up paying the price.
Everything would be fine if the number of subprime borrowers not making their payments was extremely low. And that was true for a while, but now delinquency rates and default rates are rising to levels that we haven’t seen since the last recession. The following comes from Time Magazine…
People, especially those with shaky credit, are having a tougher time than usual making their car payments.
According to Bloomberg, almost 5% of subprime car loans that were bundled into securities and sold to investors are delinquent, and the default rate is even higher than that. (Depending on who’s counting, delinquency is up to three or four months behind in payments; default is what happens after that). At just over 12% in January, the default rate jumped one entire percentage point in just a month. Both delinquency and default rates are now the highest they’ve been since 2010, when the ripple effects of the recession still weighed heavily on many Americans’ finances.
The chart below was posted by David Stockman, and it shows how the delinquency rate for subprime borrowers has hit the highest level since 2009. In fact, we are not too far away from totally smashing through the previous highs that were set during the last crisis…
It is quite foolish to try to sell expensive cars to people with bad credit. This is especially true now that the economy is slowing down significantly in many areas. But people are greedy and they are going to do what they are going to do.
The most disturbing thing to me is that many of these loans are being “repackaged” and sold off to investors as “solid investments”. The following description of what has been happening comes from Wolf Richter…
The business of “repackaging” these loans, including subprime and deep-subprime loans, into asset backed securities has also been booming. These ABS are structured with different tranches, so that the highest tranches – the last ones to absorb any losses – can be stamped with high credit ratings and offloaded to bond mutual funds designed for retail investors.
Deep-subprime borrowers are high-risk. Typically they have credit scores below 550. To make it worth everyone’s while, they get stuffed into loans often with interest rates above 20%. To make payments even remotely possible at these rates, terms are often stretched to 84 months. Borrowers are typically upside down in their vehicle: the negative equity of their trade-in, along with title, taxes, and license fees, and a hefty dealer profit are rolled into the loan. When the lender repossesses the vehicle, losses add up in a hurry.
It almost makes you want to tear your hair out.
This is exactly the kind of thing that caused so much chaos with subprime mortgages.
When will we ever learn?
Meanwhile, we continue to get even more numbers that indicate that a substantial economic slowdown has already begun…
We just got the clearest sign yet that something is wrong with the US economy.
Markit Economics’ monthly flash services purchasing manager’s index, a preliminary reading on the sector, fell into contraction for the first time in over two years.
The tentative February index was reported Wednesday at 49.8.
Statistic after statistic is telling us that a new recession is already here. And of course some would argue that the last recession never actually ended. According to John Williams of shadowstats.com, the U.S. economy has continually been in contraction mode since 2005.
If we do not learn from history, we are doomed to repeat it. All over the world, “non-performing loans” are starting to become a major problem, and already some financial institutions are starting to get tighter with credit.
As credit conditions tighten up, this is going to cause economic activity to slow down even more. And as economic activity slows down, it is going to become even harder for ordinary people to make their debt payments.
Deflationary forces are on the rise, and most global central banks are just about out of ammunition at this point.
Everyone knew that the global debt bubble could not keep expanding much faster than the overall rate of economic growth forever.
It was only a matter of time until the bubble burst.
Now we can see signs of crisis popping up all around us, and things are only going to get worse in the months ahead…
Michael T. Snyder is a graduate of the University of Florida law school and he worked as an attorney in the heart of Washington D.C. for a number of years.
Today, Michael is best known for his work as the publisher of The Economic Collapse Blog and The American Dream.
If you want to know what is coming and what you can do to prepare, read his latest book [amazon text=Get Prepared Now!: Why A Great Crisis Is Coming & How You Can Survive It&asin=150522599X].
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Call the repo man-
$200 billion is not very much money in the big picture.
if we could barter that would be about 3 each 105mm HE rounds for an M1 Abrhams tank for a brand new Subaru. We could get a whole fleet of Subarus for a cruise missile.
Same as with subprime mortgages, I ask how any if these “investments” can be AAA rated, when (by definition), subprime loans are made to people who don’t pay their bills?
The banksters are confident of another bailout.
Didndonuffin
they bundle them and insure them. The insurance policy turns it into a AAA investment. The big problem with home mortgages was they sold the same bundles 5 to 10 times. If they did that with the car loans, fraud will get them another bailout. Tip: cars loans are minor…. they have done the same with government debt… not just ours but worldwide. It is how so many governments are borrowing so much money. It adds up to quadrillions in derivatives.
seriously!?!?
who goes into debt for 84 months over a car?
Sheeple…
These Godless heathens have nobody to blame but themselves! The Lord will surely smite them for the evil sin of pride, thinking that it was ok to buy a car on credit! They will all be consumed in the molten lake o’ fire in Revelations for their sinful acts of being in debt! When will the sheeple learn only those as pious as myself will be taken up during the Rapture? Forgive them Lord for their sins of not listening to ME! No, on second thought Lord, cast them in that molten lake, that will be a good example for the rest to see. Thanks again Lord!
wow your kind of a dick?
Kind of???
I vish mine vaz as big az this fellow iz… How yoo say… a large dick, ya, ya, das ist wonderbar.
Shockingly, a lot of people.
I used to be surprised when I run into a 22 year old guys with a $15/hr job who have $60,000 pickups.
Not any more. I feel sorry for them THey could be making a house payment for what they are paying for that truck.
Cars are ridiculously expensive these days. My daughter just bought a scion for $19000. With a $9000 down payment the payment was still $320 per month. My father used to tell me long ago that your car budget for a car purchase shouldn’t exceed 2 months salary. My first new car was a $2200 VW beetle when I made $1000 per month and I thought that that was tough because I was over the limit.
Yeah, but that truck will get you more girls.
At least the temporary kind that don’t end up costing you more than a house.
So you can buy a house making 30k a year? And yeah, it would be really great to buy a new car for 2200.00 and making 1000.00 per month. My only question is where is the time machine to transport us back to when this was possible? In case you haven’t noticed, times have changed just a little. So your daughter bought a new car for 19k, Something tells me that I’m sure she didn’t want to pay that much for it but new cars aren’t cheap. Maybe you can find her a new car for 2200 bucks like you had way back in the last century, Hell, why not take us all back there with you so we can all enjoy the good ole days? I’m sure we’d all like to enjoy the lifestyle you were able to have.
The ‘good ‘ol days’ weren’t always good.
It all depends on where you live and your monthly expenses. There are still plenty of dead end places where you can get a house in a semi-safe working class neighborhood for under $80k. It may not be a big house, but it will still be better than the apartment you could rent for the same money as the mortgage.
Right on, Anon–They’re probably better off blowing their money on a truck than a wife who’s now blowing their best friend.
Still never paid greater than 10k
Still never plan to.
Sweet spot for me is 7k, that’s getting absurdly harder to find though.
And even that’s… stupidly expensive. 30k for a car is like comedy.
Ed, I have to agree. I have ALWAYS gone to private owners and bought a vehicle for cash only, ever since I was a teenager. I still follow that same strategy to this day. I’ve never bought anything from a dealer. I won’t play the ‘finance game’, PERIOD. When you have to get a loan to buy something you like, then something is seriously wrong. Vehicle prices are outrageous these days and it’s always a bitch trying to get something financed. To me it’s not worth the effort you have to go through. Nowadays you can get a decent vehicle for between $2000 to $4000. No need to come up with a huge down payment, collateral for the loan, and then sacrifice a lot of other things you do just to pay for the car. GO TO A PRIVATE OWNER, BUY SOMETHING FOR CASH, GET IT PAID FOR RIGHT THERE ON THE SPOT AND YOU’RE DONE WITH IT. And you don’t have that extra bill to worry about every month. The only insurance you’ll need is liability coverage. And you won’t have to worry about the ‘repo man’, either. There’s a lot of used cars on Craigslist every day.
Brave,
Amen… I’m now driving a 1979 Dodge D100 pickup…
When I need to put a wrench or a screwdriver on it, I know what I’m screwing…
😉
I paid 2k for a hunk a junk that has an old slant 6, the toughest hunk of iron ever to leave Detroit.
When I get done restoring it, it’ll be 100% factory, and like new.
Except for the HHO add in, that is increasing the gas mileage by about 100% or more, and you can’t smell any exhaust.
We could have done this years ago, in fact, we did. Folks the internal combustion engine was invented in 1807… gasoline didn’t exist. Do you know what it ran on?
…
water.
yup. Look up Stanley Meyers patent.
Becoming a blacksmith,
priceless.
These are the kinds of articles I think Mac should be offering, instead of mere doom porn…
😉
Yeahhh the problem is if I throw less than 6500 into it, I end up taking it right back up there in parts. Tend to find that. May be my choice of vehicle or my location, not sure.
PM, in my last year in FL, 1982, I bought a 1972 Dodge Tradesman Cargo Van for $1500 cash. It had the slant six and 3-on-the-tree. Had to get carb rebuilt, replace fuel pump and filter, and tuneup when I first got it. I moved back to TN from FL in that same van. Mechanically it did fine, but I had electrical problems left and right. Even after getting the whole system rewired it still gave me problems. One day on the expressway something popped inside the dashboard and smoke started pouring out. I stopped the van as fast as I could and got out. I finally said, “F#$% it, let it burn.” I had $2000 in savings at the time, so I had another vehicle only 2 days later. Never bought another Chrysler product afterward. Careful with that 79 Dodge, PM. Back in the 60s, 70s, and 80s, Chrysler products were the first to end up in the junkyards because of their electrical systems. If your Dodge has been totally been rewired, you might be OK. My experience with that van left the worst taste in my mouth.
…but it was just said that “these days” ain’t like the old. Everyone (pretty much) is stating they are living ‘check-to-check’ or on nothing at all (but they’re on the web)? Point is, where’s the cash going to come from to pay the seller? I do believe that if everyone had no choice but to save up for wheels suitable to get them to a job …a great many would be walking (which seems to be sort of coming into fashion lately). Repo cities all over the USA, large and small-town “mid-night thieves.” Then, they’ve gone through all that expense and trouble of seizing property …and now THEY can’t get rid of it (and so they sell it for nothing and then want YOU to pay the ‘balance due’). HA! Want in one hand and shit in the other …see which one fills up first…
I rode a bicycle for years cuz I couldn’t afford a car. But in many places, you take your life in your hands cuz people don’t see bicycles. Hell, they don’t see cars around here! We have one of the highest accident rates in TN! So we found a 2004 Honda for our son to drive to school and work. He’s paying us a little at a time, but it’s nearly paid off. He’s a six year Navy veteran and was shocked at the job market when he got back from the Sandbox. So he’s working and in school to better his chances of finding something better than a restaurant job.the car cost 3 k and is in excellent condition. 🙂 National Auto warehouse.
I tend to either buy brand new vehicles or cheap fixer uppers with 4 cylinder engines from major Japanese manufacturers (easier to work on and more reliable than anything else). I recently bought a new car to use for my work. I drive around 35,000 miles a year and bought it because my health will not always let me work on cars anymore and I need to work. However, I also kept my old Nissan truck with 400,000 miles on it. Since buying the new car, I have been slowly refurbishing the Nissan when my health allows, having rebuilt the suspension, brakes, steering and put on 4 cheap new tires. I do all my own work and it doesn’t cost me a lot to do it. It should be back to near perfect condition with everything including a new timing set in the (original) engine, a refurbished interior and working A/C in the next month or so. Heck, I may even try to paint it if I feel well enough. Now, this may seem foolish to some but for me it’s a fall back point. If it all goes bad and I have to let my new car be repossessed, I will simply pay what little I may be upside down to the bank and wash my hands of it and have a fully functional, reliable vehicle to drive. A repossessed new car is bad, but having to go to the buy here pay here lot afterwards is worse. The payment won’t be much lower but the quality of the vehicle sure will be.
Yes. Our younger son “had” to have a new car after he graduated college and got his first full time job. He quickly grew tired of being a debt slave to his toy. We helped him get out from under that, and he bought his next gently used vehicle in cash from a small auto repair shop we have used for years for the repairs my husband doesn’t want to tackle that also sells well maintained used cars on the side. He is much happier now, but sometimes they got to learn through the pain, rather than just listening. 😉
Usually those 84 month loans are for BIG TRUCK 4×4’s and luxury SUV’s. These vehicles are in big demand in Arizona.
I have noticed that the used car lots are overflowing with these kinds of vehicle and only a couple of years old. They are so new that I thought at first that maybe they were expired leases.
They aren’t. They are repos. Someone with cash ought to be able to get a smokin deal next year at this time. 🙂
who would go into debt for 84 months for a car? you would be surprised.
You’re shitting me………
Re: “All the normalcy that shows on the surface is nothing more than a house of cards…”
Remember this?
Fall of New York Stock Exchange – 12/21/12
“On Dec. 20, the Atlanta-based Intercontinental Exchange (ICE) announced the purchase of the NYSE, ending what USA today called “a storied 220-year reign over financial markets.”
The New York Times reported: “It was the temple of commerce, the symbol of New York’s status as the nation’s – and for many decades, the world’s – financial center.”
“In the days of judgment, the foundations of a nation’s power are laid bare.”
ht tp://www.wnd.com/2012/12/fall-of-new-york-stock-exchange-the-10th-harbinger/
New York Stock Exchange Ends It’s 200 Years of Independence, Sold for $8B To Its Rival – 12/20/12
“Pre-NWO consolidation. Less competition. Just like the Banks being consolidated because of Dodd-Franks. Easier to nationalize when the time is right in the future. Gotta have the dominoes in place before the flick of the finger.
Maybe sooner and softer (nationalization) than we think. What if ICE defaults on this purchase? Will the Government be required to bail them out? Will the GSE be relocated to Washington, D.C., Chicago, Denver, or George Town (Grand Cayman Island)?
Like Acorn, ICE changed their name, they used to be CCX. You know, the ones that were going to trade carbon credits for Hank Paulson and Al Gore’s global warming scam. Now they own the NYSE. Good grief, what next?”
Let’s see:
Religion – done
Health – done
Energy – done
Banks – done
Military – done
NASA – done
Small business – done
Manufacturing – done
Self preservation – done
Family – done
Private Gun ownership – working on
The American way of life as we knew it – done
And this administration has four more years!?
ht tp://patriotaction.net/forum/topic/show?id=2600775%3ATopic%3A6034734&xgs=1&xg_source=msg_share_topic
(link to article has been removed)
If Clinton or Sanders gets elected…..they we all be “bailed out”, along with all the student loan borrowers (now over a trillion in debt), by YOU…the taxpayer.!!! Welcome to the new socialist states of America. viva revoltion
J
I don’t think they will all be bailed out. Just like when they turned supreme mortgages into derivatives, insured them, then sold the bundles 5-10 times… the banksters were bailed out, wall street got covered. The 4.1 illegally foreclosed homes were not given back to the homeowners. That happened under Bush/Obama. Under Boehner/Obama the Republican House and Senate passed a much larger bailout plan for the banksters written by Chase Bank’s attorneys, so we are already back on the hook.
Individuals will not be covered. Even the HARP loans were barely used because good luck getting a bank to refinance you for it. I only know one person who got one, my son when he worked for a big bank. Bailouts are for global megacriminals, not people. I don’t care what Hills and Sandy say… total bs.
Clinton will not bail anyone out. That would be diametrically opposed to her Wall Street backers. They didn’t given her $200,000 per speech to crush their trillion dollar student loan securities market. And she won’t.
Bernie ? Yes. 🙂
was just talking to my truck sales guy at my local Chevy Dealer .. funny this comes up on here at this time , he made some of the same comments , and he also touched on the huge numbers of lease cars they have out there , and what its going to do to the market when they all come up on their lease end
these auto makers are still pumping out cars , and there aint this many getting sold , folks just arnt buying right now , maybe leasing yes and those numbers have gone up ..
all I gotta say is it cant continue on this way for much longer ..
somethings gonna give . and there are pictures of acres of new cars sitting in abandoned yards and airfields all over this country.. if those pictures prove out to be real and true .. thats a glut of autos that they arnt selling
EOTS, what about the USED car lots in your area? In my area, the wholesale dealers and the ‘we tote the note’ dealers are usually packed with cars, some cars they’ve had for up to 2 years that I know of for sure. The only time these lots even sell anything is from Jan. thru June, the income tax season. From June until the end of the year, they sell very few. Plus, in my area over the last 4 years I’ve seen an increase in the number of people either walking or riding the bus.
yup, i see the same thing as you
I will only buy my personal cars or trucks from a private seller
been that way my entire life .. it aint broke, cause i can fix it
EOTS, AMEN. That is the SENSIBLE way to buy a car.
They pump em out but are too damn expensive,,,
Ill stick with my 96 F350 thanks
Yep. Our 2002 Suburban has 300,000 miles and still turns over like clockwork every morning I turn the key. We had bought her new with my grandfather’s GM discount (easier new car transaction, ever) and my husband was always vigilant about keeping it meticulously preventatively maintained (transmission service, belt replacements, etc) rather than waiting for things to “go”.
We buy new so that we can control the maintenance history, and we hold them for a long time. I imported my 1995 Passat TDI with me when I immigrated to the US, we sold it when it had over 600K kms on it (yes, you read that right) and a few preventative timing chain replacements later. The young man who bought it, a proficient tinkerer, kept it going for quite a few years after that!
My 1992 jeep has 305.000 on the clock she runs well only wish it had points and condenser the upcoming EMP will crash the computer..
Probably a smart move KFarmer,, its pre tattle tail computer too
Pre tattle tail computer and old enough that i can drop a couple grand on hotrod parts from summit and have a bare bones non electronic anything other than radio, wipers lights and ac etc with old school gauges hard big block runner.
Going to get doner driveline and title from an older CJ for my newer JK and do the same thing, nice little V8 with a 4 speed and Atlas transfer case should do. Dump all the electronic crap,,just useless.
And I see GM selling a lot of new cars to the rental companies who run them about 6 months then sell them to the dealers at auction. The dealers sell them as GM Certified vehicles which become a lower cost alternative to new vehicles. If GM didn’t do that, they wouldn’t sell as many new cars as they are.
Easy credit and inflated car prices feed on each other.
You have loans with an 84 month repayment plan because vehicles cost $40,000+.
Of course, the whole idea is to get people indebted so that they have a car payment forever. I suspect a huge percentage of the population is NEVER without a car payment.
I have two vehicles….one is a 20 year-old Toyota and the other a 13 year-old F-150 pickup. Both are paid for. Both have high miles. But fixing them is still cheaper than a $500 a month car payment.
Anonymous 5
I have a 10 year old Tacoma. No payment for me, it has been great and I’d rather fix it. A car payment that would buy a house? Absurd.
2006 Taco with 167Kmi… Paid for
2000 Dodge Ram1500 with 200Kmi…Paid for
1989 Chrylser LeBaron 100Kmi…Paid for but needs a head gasket ($15) plus my time.
New cars are getting too expensive, parts- un-obtainable except from the dealer…$$$
Another one of my favorite topics: toxic waste in the securities markets. Easiest way to understand the term “tranche”: it’s modeled on the squares you play in any Super Bowl pool in any bar, American Legion or VFW in this country. Our financial engineers manufacture financial instrument out of thin air by bundling squares of varying degrees of quality into things like ABSs and CDOs.
The whole mentality behind sub-prime auto loans is people would let the sub-prime mortgage go, and be booted out of the house, before they let the sub-prime auto loan go because they need the car to go to work. If you have people thinking this way while they are manufacturing financial instruments out of thin air, nothing good is going to come from it.
Believe it or not, I can see where this line of thought actually makes sense. You don’t really need the house if you know what you’re doing and know what to look for. A 24-hour self-storage gives you a place to store any important survival gear, plus a food and water supply; there are plenty of them out there where you can actually sleep in the unit. If there’s a 24-hour gym nearby, you have a place to get a fresh shower every day, along with use the toilet. A mail drop site gives you a real street address, meaning you don’t need to list a shelter as your address on job applications. As for living outside, if you have a couple of heavy grade space blankets with grommets in the corners, along with some clear plastic drop cloths, you have a quick and dirty shelter that you should be able to rig up in about 15 minutes.
Where does the problem begin? When the financial engineers build everything I laid out in the previous paragraph into the model used for manufacturing financial instruments out of thin air. Their model has everyone to whom they make a crappy sub-prime auto loan doing what I laid out. The reality: if 5% of the people to whom these sub-prime auto loans are made have the capability of doing what I laid out, I would consider that to be a big number.
Here’s another thing to think about on sub-prime auto loans: the person can always blow town with the car, and the majority of them will; it’s a lot less work than becoming the Grey Man. They won’t have to look very hard to find a junkyard, where they can find a VIN number for an identical vehicle. Before you know it, the car vanishes off radar and can’t be repossessed.
Save up and pay cash for your vehicles.
If you can’t pay for it, it is because you can’t afford it. Buy something cheaper.
No debt is never a bad thing, especially no debt for things that wear out before they are paid for.
Anon, AMEN to that. Only way to go.
I know extended family that have these seven year notes on new vehicles. They could have bought the car outright for around 15 grand… sticker… but the loan was nearly double that at seven years.
They only care about the size of the monthly payment.
———————————————————
The car manufacturers are playing loose with words when they claim record sales. The vehicle is considered sold on the books when it goes to the dealer. Then it sits around on the lot.
The local Chevy dealer had the same lot for at least forty years. Two years ago, they expanded it to triple the size. It sits full of shiny new crew cab 4wd trucks that no one can afford
Yep. I sold cars at Key Ford Navy when my husband was stationed at Pensacola (full time work was hard to find) and was taught to sell WEEKLY payment amounts. Actual APR and final cost was NEVER discussed!
Automobiles depreciate by 15-20% when their tires break the plane of the dealership driveway. How is EVERYONE with ANY auto loan not INSTANTLY upside down???
The wheels will have to fall off mine before I consider jumping back into a payment. All mine have been paid for long ago. I’ll probably just look around and buy used/private sale and pay cash like I did on the last one.
same here , Ive had no problem keeping 14 to 18 year old cars running .
PO’d Patriot, BRAVO. From an economic standpoint, that’s the best move you can make. I’ve always gone that route and never regretted it. I don’t even have $600-$1000 to give up every month in notes and full-coverage insurance combined for a vehicle. I’ve been looking on Craigslist for an old truck from the 90s.
My problem is location. Most the trucks on Craigslist are the same age and make as my truck that I want to retire to farm only use. But then I live in the poorest county in my state so everyone keeps the old shit running. Old trucks from the 90’s here leak and have lots of rust. I wish I could import a used Toyota diesel from Iraq.
Rellik;
You are absolutely correct. Fucking epa wont allow the toyota diesels to be sold in the us. Either that or Japan won’t export them to us but I doubt that. Besides, you might get one from Iraq with some artillery in the back.
Ditto POP, can do a hell of a lot of repairs for just the equivalent of the interest on a new car
I’m looking for a truck myself now. I can spend $5000 cash. Period. Not a cent more
Southside, you can find trucks on Craigslist for that amount and less. No need for any $40000-$50000 truck. I’m looking for one myself. $4000-$5000 is my limit too.
It’s pretty bad when you have to take out a loan to buy a Mattress!
Oh SNAP! Alot of the new vehicles are being bought with the new Government EBT program. I see more and more people that ate receiving SNAP benefits driving expensive cars.
Mexican Peso is collapsing. If you thought immigration was bad already, just wait.
Yes. Now might be a good time to undergo a refresher course on defensive strategies, while there is still time to prepare, and, equally important, secure the resources in order to put many of the suggestions into play.
http://tinyurl.com/z788vjq
I want to know why a 2016 Ford F350 is going for $71K.
And yet they sell. Why? 84 month loans. I can buy a house with acreage for that much money.
It’s the consumer, not the bank, not the automaker, not the government.
All you free market capitalist types should agree on this. If you’re selling bags of dog shit and people can’t seem to get enough what do you do? Get MORE DOGS! Same thing here.
PEOPLE are signing up for this crap day in and day out so are the banks, et al NOT supposed to sell the product? Is there no longer personal responsibility?
really?,
It’s better then you think! According to the poster ” Ed” earlier in this thread, you can buy a house while only making 30k per year! Yeehaw! Lets’ all board the train back to 1980 folks, I’m looking forward to it!
Yes, out here in the sticks you can buy a home with some land for 70k. It is not much of a home but it is livable. Or you can just buy some land and put a mobile home on it. Not everyone needs a 300k home.
Here is the deal on the vehicles that are not worth half of the retail price…like the big Duallys and SUV’s, plus the over priced luxury and sports cars.
While there are about 10,000 Boomers retiring every day in the USSAG, a large percentage of them grew up poor, worked all their lives paying a mortgage and raising kids, while stashing a little away for a rainy day.
Some of those were smart with those rainy day funds and just didn’t stash it under a mattress. They got a decent broker/brokerage firm to invest that money, and now that it has rebounded over the past few years,and they have in some cases, quadrupled those funds, or greater.
They see all those years of work and living frugal as being their “now it’s time for me to shine and show the world i have made it with success”.
Nothing says success like a new shiny $50K vehicle to sport around town and to church in.
I know people that don’t even haul anything heavier than a bag or two of mulch or fertilize for their yards, but they sure look good pulling up to Lowes or Home Depot in that Crew Cab Dooley that they recently dropped 70k for.
They wreak of, “Look at me….I am special and i earned it.” That is fine with me, but that is not my style. I don’t begrudge them one dime, nor am i jealous.
The old man has a big shiney diesel dooley, with a 30 foot fifth wheel camper sitting in a $10k 36 ft. garage. Neither vehicle has been on the highway over 100 miles for the past two years. They are his…”hey ya’ll, look at me; I have arrived and i am special because of my big shiney expensive shit”.
He earned them because he held a job for 45 years and invested wisely.
Going into debt to buy a car? Americans are so stupid. But they make great slaves.
Americans are so stupid.
You can’t say that because the majority almost become violent when they hear it. With all the phd and masters degrees, they refuse to accept it so the only explanation is that they must have been taught how to be stupid.
It typically requires an advanced degree to achieve the level of stupidity that so defines the ruling class in this country.
“I prefer the company of peasants because they have not been educated sufficiently to reason incorrectly” –Michel De Montaigne–
Most of the used vehicles I see for sale are grossly overpriced and with high miles. Greed rules, once you buy it you are stuck with it and the the associated repair costs, because people are basically selling because they know the vehicle is near finished as to any carefree longevity. I know I’ve said it before, my car is 25 years old, I’ve owned it since I bought it new for $7500 total in 1991. I’d like to get another vehicle, don’t want to pay it off since it can be taken through civil asset forfeiture on this nations highways with no crime being committed. I thought used car prices might crash but have seen no indication of that.
All this talk of used (older) cars in re to price. Lets not forget about the LACK of technology on these things too. Very useful.
My work car is a 98 Stratus with 202,xxx on it. My gettin’ around town truck is a 95 F150 with 136,xxx on it and I’m giving it the TLC (just bought it) it needs to keep it going longer.
It can be done and is done everyday.
BUT we also have a 2013 F150 that we leased from new and now just purchased. We’re sort of out there so a good, reliable vehicle is almost a need. But we can afford it too – THANK GOD.
Really???, the last vehicle I owned was a 90 F150. It was a one-owner and had only 80000 miles on it when I bought it in Nov. 1998. I paid $3000 for it, which is the most I ever paid for any vehicle. Kept it for 6 years with very little trouble. In Nov. 2004 I got broadsided by a Uhaul truck. I walked away with just a few cuts and bruises, but with the frame being bent I had to let the truck go. Shortly afterward I was offered a company vehicle and accepted it. Even to this day I would still go to private owners for cash. Best way to go in my view.
I will say in support of car makers, cars last much longer than they did decades ago.
Time was cars rarely went a 100k miles and during that time they needed thousands in repairs. I don’t even remember the last time I had to change a muffler or tail pipe. Many changes in cars that made them more expensive are mandated by law, and I can’t blame car makers for a crazy governments regulations.
I have a 2007 Camry hybrid that has saved me 7 or 8 thousand dollars in fuel costs. It gets 35 mpg on average. It has 150,000 miles. I do my own repairs, and so far it needed a $75 water pump, $120 for rear breaks and a $150 12 volt battery. Normal maintenance is just oil changes and tires.
In a previous post, I stated that I owned a 20 year-old Toyota and a 13 year-old F-150….both with high miles.
I bought the Toyota after I bought the F-150…and for two reasons.
1. The Toyota gets twice the mileage as the F-150
2. To keep miles off the F-150
I drive a lot and when gas was approaching $4.00/gal I noticed that I was paying close to $600/mo to keep gas in the truck. I realized that what I would save in gas driving the Toyota would just about cover what I paid for it within two years.
Of course now, with lower gas prices, I don’t realize as much savings…but….I’m still keeping miles off my truck by driving the Toyota.
The Toyota now has more than 240,000 miles on it. The F-150 has about 181,000 miles. Previously, I owned a 1999 F-150 that had 297,000 miles on it when I gave it to my daughter and son-in-law. It was still running strong at the time.
The last time I bought a new car from a dealer was 1987….and that was a lease.
I have to say, I would seriously consider replacing my Camry Hybrid with another Toyota hybrid as mine is approaching ten years old literally without a hitch.
The Arabs have crashed the price of oil to kill fracking in the US. We are now going back to 80% to 90% oil imports. Exactly where the
Muslimsoops –ArabsOops Obama want us.I really think this low oil price is temporary until the fracking industry is bust.
Make sure you have a means to keep your car charged, if parked outside during daylight a dash solar charger works well.
Many new cars have short battery life due to excessive battery draw from computers that run 24/7.
I haven’t had a car payment in over 10 years.
One place you can get a good used car is Enterprise car rental. They sell their fleet cars at pretty good prices, and you know they take care of them. The Impala looks good, and my personal small-town mechanic says they’re easier to work on that a lot of others.
I’ve never had more than a 3-year loan on a car, so I can’t imagine being stuck paying 7 years for just a car. That used to be the standard term for a double-wide mobile home.
I plan to pay cash for any future vehicles.
Cash for Klunkers anyone?
The Obama Administration convinced people to trade in their working late model automobiles for credit towards a brand new one. These ‘Klunkers’ were serviceable vehicles that has some value, but they were crushed destroying their asset value. These assets were replaced by debt.
The idea was to boost the economy through car sales and manufacturing. Unfortunately the economy went down rather than up, the folks with the new auto loans couldn’t pay exacerbating the situation.
Once again we are faced with excessive debt, unemployment, inability to pay, and a Government that can’t control its spending. Buy guns and ammo – you are going to need them.
Torres, I’ll take one of those ‘klunkers’ any day over these overpriced POS being built these days.
A lot of those Klunkers never went to the crusher. They went through a circuit of auction houses before finding their way back into circulation. If there’s a “buy here, pay here” dealership near you, chances are they have a good number of those Klunkers in stock, and they’ll be more than happy to finance it to you for seven years. I’m also sure those Klunkers were washed with VIN numbers from identical vehicles which were purchased from junkyards.
Peter, you would be surprised how many people get turned away from car lots these days. In my area, all the dealers, including the “buy here pay here” lots, turn away more people than they used to due to credit issues. Repos are at an all-time high now and they’ve been getting burned so much at the dealerships that they’ve tightened up on their credit policies. What the “buy here pay here” dealers charge for a vehicle I can buy for thousands of dollars less from a private owner for cash. I don’t make enough money to make a huge down payment, get a loan with a 25 per cent interest rate, and pay $600-$1000 per month in notes and full coverage insurance combined. I say credit is a luxury, but that’s just me. I lost count of how many car lots I’ve had to walk away from because my income level was too low.
Their loss Brave, morons.
People spend way too much on vehicles. It’s a much higher percentage of income today that it was in past decades. Real after-tax and after inflation earnings peaked in 1974. They’ve been declining ever since but vehicle prices have gone up faster than inflation for the last 40 years.
I remember back in 1989 when my dad spent $14,000 on a new car and thought he was being wildly extravagant. He was a mechanical engineer and made $40,000 a year.
This article makes interesting reading:
http://www.fool.com/investing/general/2014/03/16/why-the-average-american-can-no-longer-afford-a-ne.aspx
Our household income is at about the national average. I would never buy a new car. We have no debt. I go on Craigslist. Buy low mileage Buicks and Oldsmobiles that are 15 or 20 years old. The last car I bought was a 1995 Olds Cutlass Ciera with 33,000 miles. It cost me $2000. Trucks and SUV’s are a waste. Most people don’t need them. They cost way too much.
You knew that this was coming when cars and truck cost as much as frigging house.
I’m buying a new truck this summer. f no deal no truck.
Sgt
Well since after the coming collapse I plan to live in my car I should get a nice one right?
And dont worry Hillary will soon have the debt forgiveness program as part of the lets bribe the sheeple to vote for me….
Go to an auction and buy a used police Ford Crown Vic…they run forever and people get out of your way…they think your a cop 🙂
They were ‘nice rides’ in their day. But, nothing rides like a Cadillac. 🙂
The best ride I ever had was a 1966 Lincoln. It floated down the road, and the engine was so quiet that I couldn’t hear it at all at stoplights.
Snyder still writing his trash? What happened to the economic collapse he predicted every year for the last 8 years? Get a job hack.
C’mon now, you know old Snydley can’t make any money if the world actually DOES ever end, right?
Bought my ford ranger new. Now it’s 11 yrs old hasn’t cost me much to own. Been without car payment for 5 years now. Don’t like car payments. I will buy brand new truck when this ones worn out and I have a hard time getting it through inspection without dumping cash into it. Everyone I have ever known to buy 5 to 10 thousand used vehicles bought somone else’s problem. I’ve seen vehicles that were missing airbags because they were totaled at one time. I buy brand new or pay $500 there is no in between for me. The key is to put a big lump of cash down after the purchase. This will shorten the loan for you. If you need gap insurance then your starting out under water. I’ve bought 3 brand new vehicles in my life. Don’t get conned by sales managers moving the numbers around. Cadillac is nice. But your gonna pay for it. guys I know claim they need 4wd. It snows crazy here and I’ve never wished I payed the extra$. Saved $5000 off the price right there. 4wd is a waste of $. It’s rare you will need it if you know how to drive.
I had a friend who once told me that all a 4wd vehicle was good for was getting you stuck in 4wd places.
I can’t agree with you that when you buy used all you do is buy someone else’s problem. A lot of 2 year-old used cars are simply lease returns. There’s nothing wrong with the car, the previous owner just got a new one. For some people…they’ve never been without a car payment and they like the idea of having a new car all the time. Their lack of financial understanding creates opportunity for somebody else.
Buying off of an individual as opposed to a used car dealer is probably the best way to go. A car dealer will do a lot to conceal a car’s problems and they will concentrate on making the car cosmetically attractive over mechanical reliability.
Looking at the interior of a car can tell you a lot about how the car has been treated. If someone won’t take care of the interior, they aren’t likely to take care of what’s under the hood.
The best used vehicle I ever bought was the 1999 F-150 I mentioned in a previous post….and I bought it off a used car lot. I was two years-old when I bought it, but it had 108,000 miles on it. The original owner had put all those miles on it in two years. I watched it on the car lot for over a month, and couldn’t figure out why it hadn’t sold because it was priced about $4000 under other similar F-150’s. When I finally talked to the dealer about it, he told me that they were planning to put in out to auction because it hadn’t sold. And he thought the reason was because it was green in color. I was nervous about it because it was priced so low. I thought there just HAD to be something bad wrong with it. But I took a chance anyway. It turned out to be the most dependable vehicle I’ve ever owned. And as I said previously, it had 297,000 miles on it when I gave it to my son-in-law…and was still running strong. I made three trips back and forth to California from Texas in that truck…one of them pulling a 6X12 fully loaded U-haul trailer. Plus a couple of trips to Wyoming and back. Did all of that with the original transmission too…and it was still good.
I ended up regretting giving that truck to my son-in-law because he only kept it for about 6 months before trading it in on some POS SUV. I actually like that truck better than the 2003 F-150 that I have now.
I prefer imperfect used vehicles. Not flashy, and they don’t draw any attention.
I like a vehicle that looks like a beater, but runs like a top.
Cars are appliances to me. If Toyota made a toaster, I’d buy it.