Author Topic: Auto Loans  (Read 3153 times)

0 Members and 1 Guest are viewing this topic.

CleaningUp

  • Valued Member
  • Posts: 10700
Auto Loans
« on: April 15, 2017 02:35:14 AM »
Interesting article the The Telegraph today regarding auto loans and what we here in the US call leasing.

While leasing is a fine way to get a new car if you have a way to write-off the interest, leasing for personal purposes has you paying serious money without having any rights to the asset at the end of the lease.


Bruno the JDB Killer

  • BANNED
  • Posts: 14304
Re: Auto Loans
« Reply #1 on: April 15, 2017 02:00:34 PM »
It is more expensive, but it's also nice to pull into the court parking lot in your new leased Jaguar to attend your debtor's exam and know they can't do anything about it.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

montag

  • Valued Member
  • Posts: 553
Re: Auto Loans
« Reply #2 on: April 15, 2017 03:47:32 PM »
leasing for personal purposes has you paying serious money without having any rights to the asset at the end of the lease.
It's not for nothing that some personal finance gurus, especially Dave Ramsey, call it a fleece. :vbeek:
When Mrs. Montag & I looked into replacing a vehicle, we quickly got turned off by the idea of a lease/fleece.

flaccito

  • Valued Member
  • Posts: 55
Re: Auto Loans
« Reply #3 on: April 16, 2017 05:59:53 AM »
Anyone else noticed all the "shiny new" 2016-2017 cars driving around lately or "suddenly"?

Must be a new sub-prime auto loan bubble or something else going on. I seriously doubt most people's income "suddenly" went up, so some kind of auto loan bubble (approving "anybody with a pulse" including poor people) is the more likely explanation.

Not sure if it matters, but my observations come from the denver area. Seems not a day goes by without me seeing at least a handful of "brand new" cars on the road. The majority of them still have the temporary dealer tag on them, so you can tell they are all recent purchases.

Anyone else noticed something like this where they live?
« Last Edit: April 16, 2017 06:04:08 AM by flaccito »

Flyingifr

  • -DEAN EMERITUS-
  • Valued Member
  • Posts: 8584
  • Welcome to my Temper Tantrum
Re: Auto Loans
« Reply #4 on: April 16, 2017 01:46:36 PM »
I see the same thing in Tucson, but I attribute it to the 2008 recession that increased the increase in the average age of cars on the road caused by a combination of high unemployment, customer insecurity, banks refusing to lend and other adverse factors that propelled people to hold onto cars longer than they ordinarily would have. Now those cars are getting close to 10 years old or more and the repair costs are starting to exceed the replacement costs.
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Debtors Exams are the perfect place for us Senior Citizens to show off our recently acquired Alzheimers.

Founder of the Credit Terrorist Training Camp (Debtorboards)

Clydesmom66

  • Valued Member
  • Posts: 2160
Re: Auto Loans
« Reply #5 on: April 16, 2017 04:35:18 PM »
I see the same thing in Tucson, but I attribute it to the 2008 recession that increased the increase in the average age of cars on the road caused by a combination of high unemployment, customer insecurity, banks refusing to lend and other adverse factors that propelled people to hold onto cars longer than they ordinarily would have. Now those cars are getting close to 10 years old or more and the repair costs are starting to exceed the replacement costs.

THIS.  I traded in my 11 year old car in 2015 for a new one.  I tend to hold on to my cars at least 10 years but when the repair ticket is going to start running it is time to get a new one.  I have MANY friends that held on to their cars after 2008 not wanting another payment in turbulent times but now are all in the market for something newer and more reliable.

The auto lending bubble is at a crisis because unlike a home it is WAY easier to repossess the collateral in the event of default therefore the lenders will underwrite just about anyone who will sign on the dotted line regardless of the interest rate.
Be VERY careful following advice from the internet! What worked for someone with thousands of posts on a message board may not work for YOU in your state.  Consult a lawyer when ever possible.

flaccito

  • Valued Member
  • Posts: 55
Re: Auto Loans
« Reply #6 on: April 16, 2017 08:41:57 PM »
Those are plausible explanations, but at the same time I personally know at least 2 of these so-called "owners" of brand new 2016/2017 cars and they are poor or low-wage workers and literally like 50-60% of their take-home pay goes to car payment + insurance?  :vbrofl:

Doesn't make sense, which leads me to believe there's yet another sub-prime bubble brewing. I don't even know how these people qualified for these loans or who the company(s) are that are apparently handing them out so freely? One of those 2 people also has student loans, so I would guess she had a co-signer or boyfriend in the background or something, cause I just don't see her getting approved on her own.

It's like, how can you be working just over minimum wage, with a $400/month student loan payment, and be driving a brand new car with another $300-$400/month car payment and $200+/month insurance AND the gas costs? That's like $1k a month just on debt service and car/insurance costs... forget food, housing, utilities, etc. Interestingly, this girl also has the latest iPhone and a maxed-out wireless plan. I just don't know how some people do it to be honest, must be more people living with their parents than we realize.
« Last Edit: April 16, 2017 08:48:06 PM by flaccito »

Flyingifr

  • -DEAN EMERITUS-
  • Valued Member
  • Posts: 8584
  • Welcome to my Temper Tantrum
Re: Auto Loans
« Reply #7 on: April 16, 2017 09:09:37 PM »
Those are plausible explanations, but at the same time I personally know at least 2 of these so-called "owners" of brand new 2016/2017 cars and they are poor or low-wage workers and literally like 50-60% of their take-home pay goes to car payment + insurance?  :vbrofl:

Doesn't make sense, which leads me to believe there's yet another sub-prime bubble brewing. I don't even know how these people qualified for these loans or who the company(s) are that are apparently handing them out so freely? One of those 2 people also has student loans, so I would guess she had a co-signer or boyfriend in the background or something, cause I just don't see her getting approved on her own.

It's like, how can you be working just over minimum wage, with a $400/month student loan payment, and be driving a brand new car with another $300-$400/month car payment and $200+/month insurance AND the gas costs? That's like $1k a month just on debt service and car/insurance costs... forget food, housing, utilities, etc. Interestingly, this girl also has the latest iPhone and a maxed-out wireless plan. I just don't know how some people do it to be honest, must be more people living with their parents than we realize.

People will stop getting in over their heads only when bankers start saying the word "no".
BTW-the Flyingifr Method does work. (quoted from Hannah on Infinite Credit, September 19, 2006)

I think of a telephone as a Debt Collector's crowbar. With such a device it is possible to pry one's mouth open wide enough to allow the insertion of a foot or two.

Debtors Exams are the perfect place for us Senior Citizens to show off our recently acquired Alzheimers.

Founder of the Credit Terrorist Training Camp (Debtorboards)

Moonshine Maker

  • Valued Member
  • Posts: 50
Re: Auto Loans
« Reply #8 on: April 17, 2017 03:27:16 AM »
Where I live the cars are brand new (makes me wonder how they afford it) or as old as dirt. My car is now 12 years old Getting certain parts is impossible. I have a part on the salvage alert now going on 2 months and you cannot but it new. I am going to have buy a new or newer one this Fall. I am not looking forward to the payments.   

flaccito

  • Valued Member
  • Posts: 55
Re: Auto Loans
« Reply #9 on: April 17, 2017 03:42:46 AM »
Something else I think is no doubt contributing to this strange phenomenon: over 7-9 years have now passed since 2008 when tons of Americans got laid off, defaulted on their credit cards, fell into foreclosure, went bankrupt, got divorced, etc. By now all that negative or derogatory credit information from default/delinquent trade-lines has "fallen off" or begun to fall off of people's credit reports.

This has the effect of making people's financial picture artificially look better to the finance industry, even though most Americans are probably making LESS money in 2017 than they made in 2007-2008. So in a case of deja vu, a lot of Americans "suddenly" qualify (again) for that big auto loan or credit card or mortgage.
« Last Edit: April 17, 2017 03:54:30 AM by flaccito »

fisthardcheese

  • Valued Member
  • Posts: 3840
  • They forced arbitration into your contract. Use it
Re: Auto Loans
« Reply #10 on: April 17, 2017 10:19:53 AM »
Must be a new sub-prime auto loan bubble or something else going on.

Bingo.  There absolutely is a major increase in sub-prime auto lending happening and it's worse than the peak of the housing bubble.  Dealers are making a ton of money off the same vehicle once it is sold, repossessed, sold again at a high interest, repoed, and so on.

There are many articles and stories about repackaging of sub-prime auto debts as well. Just like they did with bad mortgages.
11 Arb Settlements (9 AAA, 2 JAMS)
3 JDB Suits Dismissed With Prejudice (2 pro-se, 1 consumer atty)
3 TCPA Settlements (2 pro-se, 1 consumer atty)
2 FCRA Settlements (consumer atty)
1 FDCPA Settlement (w consumer atty)
1 Small Claims Win (pro-se; Landlord/state consumer law violations)
1 State UDAP Settlement (ITS)
1 Federal PTC Settlement (before hearing; pro-se)

BrokeBob

  • Valued Member
  • Posts: 1570
Re: Auto Loans
« Reply #11 on: April 17, 2017 12:12:28 PM »
Dealers make their money off if selling the car over and over.
No incentive to make sure the customer can actually pay.

Just like the days when loan officers made their money off of processing the mortgage and didn't care if the home loan was repaid.

Bruno the JDB Killer

  • BANNED
  • Posts: 14304
Re: Auto Loans
« Reply #12 on: April 17, 2017 12:53:51 PM »
How do you make money selling the same car over and over to people who A. will not pay you, and B. beat the car half to death while they have it. That math doesn't work.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

BrokeBob

  • Valued Member
  • Posts: 1570
Re: Auto Loans
« Reply #13 on: April 17, 2017 01:04:08 PM »
Not sure how it works, but it is extremely common now.
I wonder if there are some down payments involved. That could be enough to make a profit.

In any case, the interest rates are so high there is a ton of money to be made despite the frequent repos.

The biggest debt bubbles now are student loans and auto. As long as lenders can make a profit from bad loans the bubbles will expand until the economy crashes.

Bruno the JDB Killer

  • BANNED
  • Posts: 14304
Re: Auto Loans
« Reply #14 on: April 17, 2017 01:12:40 PM »
I can see maybe the down payment angle, but not the interest rate. 25% of nothing is still nothing.
I am not an attorney. Any information I post is strictly my opinion and should be treated as such.

 

credit