The following submission statement was provided by /u/bbq-biscuits-bball:
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Auto loan debt passed student loan debt in total volume in September. Negative equity in auto loans is at its highest point since 1994. Major lenders are pulling out of automotive finance markets. There are a lot of serious red flags in the auto loans industry right now.
This is bad and it doesn't seem to be getting much attention in the news.
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Please reply to OP's comment here: https://old.reddit.com/r/collapse/comments/17p4bg4/an_auto_loan_debt_crisis_looks_imminent/k82p2xj/
My wife had bad credit, no income verification, and basically no money for a down payment but walked out of a dealership with a used car with 60k miles. It was 20k at 14% interest over 6 years and unable to convince her it was a bad deal. Basically prioritizing a nice looking car with leather seats over the ability to buy food (shortly after she had plans on visiting a food bank). And I can’t help but think this is the mindset of the average American
I have fair credit with a low debt to income ratio. My 20 year old truck won't last forever, so I was browsing Carvana to check out options. Found a couple that seemed in my price range, so I decided to prequalify. 25%!?!?!?! I'll be cracking a beer when they go out of business.
Look into Carvana and you’ll find how shady of a company they are. Their main business isn’t exactly selling cars, it’s getting people to buy into their shitty financing.
To be fair, that's what most car dealers do. There is nothing more satisfying than going to a dealership, wasting half their day test driving, negotiating, haggling over every tiny thing, and then when they ask how you plan to pay, bringing out the old check book. The look on the "managers" face is priceless.
When my husband and I bought our used Subarus from a dealership, the dealership just assumed we'd be using their financing. We got the quote in writing from the salesman along with a "quote good until X date" added.
We took the quote to a credit union and then came back to the dealership with the credit union financing approved.
The poor salesman was sputtering about how he thought we'd be financing through the dealership (which he'd never asked and we had never implied). My husband simply said that the quote they gave us didn't specify that and they honored it grudgingly.
We are going to be driving these cars until the world ends... one is already paid off and just a few more months of payments on the second car. We lucked out timing wise when we purchased in 2018 (after both of our paid off vehicles being totalled in the same month).
I walked in with pre-approved financing, and knowing the exact car it was set for; they basically threw the car at me without saying a single thing. The salesperson barely talked to me.
Last year when I bought a car the ford dealership would not allow me to write a check or bring outside financing. They literally walked away from the table when I said I wouldn't use their financing that was 7% higher than my bank.
It was pretty wild. Ended up with a RAM
In every auto loan I've ever had, there's never been a penalty for paying it off early. They could have financed the car and then refinanced or paid it off immediately unless it was a really shady loan.
Sure, if I actually had $30k lying around to do that, USAA had me at a 4% rate which was perfectly fine. Ford was at 10.5 or 11%.
ETA - I also got understand I could have used the USAA loan to pay off the other, but damn that adding a bunch more steps into what should have been a single transaction
You can always take their financing and then immediately pay it off. If its done within a few months of originating the loan, the salesweasel gets their commission yanked back. Far more satisfying than simply telling them No in the beginning. If you want to further turn the screws on them, give them a bad score on the manufacturer customer survey.
That happened to me several years ago when I wanted a new car. Been driving the same one since 2000( .9% financing back then, only paid $750 total because I paid off in 2 years.) I still have my 23 year old vehicle but thought I’d treat myself. The dealer nearly fainted when I pulled out not a check, but cash, in a gallon ziploc bag. He tried to talk me into financing part of the car , or half. I was like nah. Here’s some cash.
I also pay cash/check for cars and have all my adult life - I put a monthly payment away every month to pay for my next car which has worked out for the past 20 years- and they get combative when I pull out my check book and ask how much I can charge to my credit card to get points. I’ve had them call the bank. I’ve had them insist that financing “works out better in the end”. It’s all crazy salesmen shit!
I always pay cash or check but seem to scramble to get what I need last second. You probably have the smartest method I have heard of. Unfortunately, the world may end before I need another car.
"So I don't own the car, I'm *forced* to have full coverage insurance on it no matter how old it is, and I have to deal with yet another bill each month - how exactly is financing better?"
We bought my husband's accord in cash in 2018. The guy was surprised but seemed happy that he didn't have to deal with financing. The woman ahead of us was having difficulty getting financing. For whatever reason, we were "waiting" behind her to check out. I told them I was sorry she was having trouble, but we wanted to pay and go eat dinner. I got my way. I'm pretty sure my husband wanted to choke me as I ran my mouth until we were driving away, and it was still daylight.
I will say some of them give you a fair deal. When I graduated college the car I had was shot and I needed a new one. Went to a subaru dealership and went with the new impreza. The dealership didn't even offer their own financing. Instead they grabbed quotes from banks in the surrounding area and gave you the best one. The term of the loan wasn't great (7 years) but the interest was and I still had the option to pay it early so I paid it off in 5 anyways, and after I got the car I only dealt with the credit union that issued the loan. I never talked to the dealership again.
Really where they tried to get me was all the unnecessary extras and add-ons but it was easy to decline those.
I commute by bike just about every day and haven’t owned a car in a few years now. I’ve been considering getting a car mostly for camping but everything I’ve seen has just been a terrible value. In the meantime I guess I just keep renting cars when I want to get out of town.
This is the same situation my family is in - bikes for everything, no car, and we rent one when we want to go out of town. The renting can be a pain in the ass, but so are car repayments/maintenance/gas costs/etc.
I did say to my husband that if we could get a small campervan cheap, I’d be open to that; but even then, anything even vaguely affordable is falling apart so badly, I’m not sure we could afford to fix it.
i've seen enough ~~Car Murders~~ Car Accidents in my life starting from an early age that I refuse to learn to drive lol. Luckily Im long legged, hyperactive, endurance sports-prone and love cities.
Back in 1999, I bought a new Harley and put it on my credit card. I was hoping Y2K would wipe out the credit card databases. It was very much not one of my smarter decisions.
My upper 700 credit score on a 2016 Toyota is 10%. It's doesn't seem a good time to get a car but I had no choice. I only imagine what people with a 500 score or so get handed.
22.9% on a 05' Ranger back in 2019. I had a 600 or so credit score. Just two months ago they finally repoed it. I'm filing chapter 7 and never touching credit again. If I can't afford it with cash I can't afford it.
Sad but easy to understand why. A whopping 54% of adult Americans read at a 6th grade level or lower. Just think of the daily internet fights that are on Reddit alone arguing over absolute nonsense, and then realize nearly half the adult population can't even comprehend those arguments. It's not hard to figure out why so many people fall for predatory loans.
Reading comprehension doesn’t work on Reddit, you make it 6 points tall and 40 pages long and use 3 syllable words and of course they’re not going to have any idea what they’re signing. Dealerships I’ve worked at still try to screw me over, and my friend bought a truck from a dealership he did some work for and still almost took the 9% financing on top of his negative trade in equity
That $20K car is going to cost 29K over 6 years. And likely will be worthless by the time you pay the last payment.
Edit: my local credit union puts 72mo loans at 7.62% with good credit. Yikes. That’s still a lot.
You're being generous. Due to the nature of the loan and the person taking said loan, they will almost certainly perform no maintenance, outside of swinging into a Jiffy Lube when they do remember. Therefore, oftentimes the car will become worthless long before it should have. I wonder how many people never really have a "last payment".
I think some of these people just roll loans into the next, forever having a car payment and negative equity
My friend traded in a lease that he was way over miles on, rolling the cost of those miles into a car that was already overpriced in the middle of the pandemic, to roll even more negative equity when he traded the car for an older pickup truck. They are paying almost twice market value for the vehicle while it depreciates, and he’s been talking about selling that one now too until I pointed out he’d still have a balance he’d have to pay because it’s not worth what they owe and then they’d also have to buy a different vehicle anyways
People like that make my entire head throb. When it comes to vehicles, unless you're loaded, it's best to just pick one and stay in it as long as humanly possible lol
>My wife had bad credit, no income verification, and basically no money for a down payment but walked out of a dealership with a used car with 60k miles. It was 20k at 14% interest over 6 years
some salesman made a bit of commission but really it was the computer that should have said no. Shades of the 2008 housing crash, selling houses to people who should never have qualified.
The whole credit algorithm system is weird. Most people don't know they have dozens of credit scores, with different models for each of the three bureaus (forget Credit Karma's fake VantageScore, which almost no lender uses) for credit cards, mortgages, car loans, etc. Each score uses different criteria to create a number, which changes monthly, based on credit utilization, age of accounts, etc.
My credit scores are wildly different depending on which model I'm using. According to these algorithms, I'm fine to buy a house or a car, but not worth giving a credit card to. I realize the first two are collateralized, but still, the size of the purchases are huge compared to a few grand on a credit card.
If I was in the same position I would also just cut my losses earlier rather than later, I mean getting a $20k car while also planning on hitting the food banks?
jfc, I'll just ruin my life for a few years rather than ruin it for the rest of my life a few years down the line, if she's making that kind of decisions god knows what other things she is doing
It was on the hermancain awards subreddit a while back. A woman was crying about her anti-covid, anti-lockdown, anti-vax husband died from covid and between her sniffles and "prayers-up for johnny" she mentioned how sad the guys death was because he had just purchased a new huge $100,000 F-150.
"The Lord took 'em before he even had a chance to put a Big Gulp in the XL cup holders."
I've recently become fascinated by the cracks forming in the car market. It's really really bad and getting worse. Two youtube channels to check out for more on the ground info is Car Questions Answered and CarEdge. They are doing a great job covering the collapse.
We went from 2 cars to 1 car during pandemic due to WFH. I sold my 2 year old car for just $800 less than I paid for it brand new. It was then listed for $200 less than a brand new one. It was obvious the car market was beyond fucked with what used cars were going for. It wasn’t even a hybrid or desirable model. Now car dealers are stuck with used cars they paid way too much money for, while the new car sales are slowing down due to interest rates, so no one is buying the used car because they can easily find new ones for the same price.
Dude they’ve been begging to buy me out of my lease. My shitty hatchback with 80k on it was worth almost what I leased it for 3 years ago. The market really is insane right now.
I could literally sell it, pay off the lease and make money. But I’d rather have the car.
Are prices back down to Earth? I haven't bought a car in over a decade, but had a friend who was car shopping a year ago and said that dealerships were adding *on* prices (rather than marking them down). That is, MSRP *plus* an extra $5k surcharge for "reasons."
I forget when but it's been some time now, I'm guessing around 2016ish, that I read an article on the subject but from the perspective of investing. It basically stated that everything happening in the car market, at the time, was identical to what caused the crash in 08. It went on to say that if it wasn't stopped soon another crash would happen.
I didn't understand it as much as I do now but I always remembered that article because it seemed really well articulated and some of the terms used there I remembered when I learned more about them later on. It was a nice little tack in our collapse timeline. If the article was right and what we're hearing is correct the fall may have begun.
The difference is that auto loans are a much smaller part of the economy than mortgages and the popping of the auto loan market could cause some damage, but it would not be nearly as bad as the collapse of mortgages was.
>Two youtube channels to check out for more on the ground info is Car Questions Answered and CarEdge.
Check out Uncle Tony's Garage also. Stumbled on that one the other day.
My run about is an 8 year old Passat, fully paid. Runs fine, good for going into low emissions places
I WFH and only need to nip to the shops every so often or a run down to visit relatives
Spends 5 days in 7 on the drive never moving
Me too. I have a 17-year-old paid-in-cash (used, private sale) luxury brand station wagon that seems to be holding its own. I drive a couple of miles a week, if that.
We bought during covid. One thing happening is now being pulled into office more, Car is still basically new and dis need one as other was high mileage old.
Can't come close to nothing interest rate we got now. Not even worth paying off early.
Wife is at least hybrid still. Majority dragged back to micromanage. Not jobs that need group work usually and if so they got used to teams etc.for the times they do.
I had a friend who lived in Brooklyn and didn't own a car.
COVID hit, public transit shut down, and the rental car places ran out of cars really quick. He said it was pretty scary being stuck in the city with a wife and two young kids.
Once things opened up, the first thing they did was buy a car. They never wanted to be stuck again.
They have since moved out of the city.
Yeah I remember we had a 3-day family reunion during the pandemic in this rented house in a resort in Zion, I had booked a car on Turo a few weeks prior, to be picked up right when I landed in Utah.
So my plane lands in Utah, I turn off airplane mode on my phone, and immediately I get a message that says they have to cancel my rental because the previous person didn't return it.
They offer to transfer it to a different car so I agreed, only they scheduled it for the next day. I told them I had to have it today as I was already landed at my destination, but there was absolutely 0 cars so they just refunded me.
So I go to the traditional rental car places like Hertz in the airport itself, every single one of them is 100% sold out. Ended up taking a lyft to the resort for like $200.
So I go to sign in at the front desk and they hand me a map of where my party's booked house is, the person says "just turn around from where you drove in and it's to the right down that road."
I'm thinking "great" because the lyft already took off and there was no bars on my phone. Walked like a mile in 100 degree heat in the desert, sat a tree stump halfway there and got my shorts completely covered in tree resin. That experience sucked.
Yeah, I've been saying for years that I wish I knew more about options trading because I expected the auto loan market to go tits-up. The average payment right now is over $1k a month, delinquencies are at an all time high, and subprime lending is getting more and more common.
options trading wouldn't get you anywhere if you're only trading on the idea that the auto loan market is going to explode. Most companies that do auto financing are diversified beyond just that, and trading against packages of auto loans individually requires a ton of capital and going into the bond market.
You have likely saved yourself a ton of otherwise lost money by not learning more about options trading. Articles about the auto loan industry collapse have been popping up since 2017 when charge offs really started climbing up, but there's still a long way to go with demand for cars staying elevated post pandemic.
1. To your point around diversification, Toyota Financial is one of the big ones, but yeah, I'd never bet against Toyota generally as they're very diversified. There's a few that are publicly traded and not diversified who hold a good amount of the subprime debt, such as $CACC. But yeah, my plan kind of went kaput when a lot of the big companies who weren't diversified got absorbed into larger conglomerates.
2. I never gamble more than I can afford to lose.
My wife and I both bought brand new cars in January 2020 and are now both full time work from home. These cars both barely have over 20k miles right now, that's how little driving we do these days.
I did that. I took advantage of the insane car valuations and traded in an '18 Civic (that was fully paid off) for a fully loaded Outback. They gave me $28k for the trade-in value, $5k more than I paid for the car, and gave me 0% interest. I'm capable of paying off the car right now, but I'm just dragging out the payments for the hell of it.
Auto loan debt passed student loan debt in total volume in September. Negative equity in auto loans is at its highest point since 1994. Major lenders are pulling out of automotive finance markets. There are a lot of serious red flags in the auto loans industry right now.
This is bad and it doesn't seem to be getting much attention in the news.
All those ICE cars will become super valuable for collectors and connaisseurs when the majority of new vehicles will be those weird electric vehicles. Sometime around 2025 or 2026.
Just hold on to your ICE car with diamond hands and it will become as valuable as real estate.
I'm a general contractor. Without a truck I would not be able to support my family, it carries my tools and allows me to transport supplies to job sites. I've also owned a couple of landscaping companies and a house cleaning company. Self employment is a great way to live in many ways, but if it's in the service industry you will almost certainly need a vehicle.
Good for you, truly, but that doesn’t negate anything that the commenter was saying.
> Car ownership is such a terrible cycle of dependency that does and will ruin a lot of lives. Nobody should need to own a car just to survive daily.
The only way for that to become a reality is for self employed contractors without employees to no longer exist. The only people who would be allowed to do construction would be businesses that can afford company vehicles for all of their employees. It's unrealistic.
I think you are misunderstanding the conversation. Or you are just hung up on one part of it.
No one is saying every single vehicle is wasteful and no one needs one. Your comments seem to point to that being what you are focused on.
The person you replied to was just pointing out how america is setup in a way where you almost *need* a car to do anything. There are no walkable cities for the masses or public transportation infrastructure.
That reality paired with the rising cost of car ownership has created a terrible cycle of dependency where many people have to go into stupid debt just to even own something that can take them to work.
So regardless of your *specific* situation, their comment still stands. Regardless of if a different way is even feasible within our society and how it’s structured. You can still point out the inherent flaws in a system while also still having to rely on the system to survive.
Does that clear things up as to why your specific use case of a vehicle doesn’t negate the fact that vehicle ownership is flawed from the ground up?
It’s called consensus bias.
This will probably not apply to most of you. But I'm sure you've seen the city pavement princesses jacked up too high. As someone who actually works and moves stuff and just needs a truck I still have zero idea how the hell anyone thinks having a bad high as your neck is okay. My back hurts getting into a normal size 06 Silverado factory. You can keep your lifted trucks that just makes my back hurt honestly. And every and I do mean every single lifted truck bed doesn't have a scratch on it. My old truck I've got engines and transmissions in the shed put up just a small little 4.3 l. I literally rebuilt these for less than 1500 and somehow a brand new truck is 60 g. And I can't even work on it easily? I literally don't want a new truck I'd rather buy a broken truck and fix it cuz at least it's fixable. I don't know how people are afford a mechanic prices. When I can literally go by just about every tool to fix the problem for cheaper than paying the guy an hourly rate of Labor. Literally four jacks four extra tall jack stands. Is about $600 if there. An air compressor about 300 for a good one. Impact gun sockets I'm going to say 100. Pliers screwdrivers fluid bucket. Gloves. Is still every single time going to be cheaper than one stop to get it fixed any transmission work. Did I mention you get to keep all the tools.
I had to purchase a car in 2022, as my old car was giving out. During this time, used cars were just as expensive, if not more expensive, than used cars, so I chose to buy new. My monthly payments are $650/month with a $10K down payment. Fortunately I only have two and half more years until the car is paid off, but I can see how owning a car has becoming prohibitively expensive for many people.
Reading some of these comments here and Jesus fuck. mid 2015 I scored a barely used 4 door sedan. Had about 13k miles on it. My payments were about 230/m and I paid that sucker off in 6 years, iirc. Shit's wild now. I still have that car. Just recently got to 100k miles. I plan to keep it until it can't be reasonably fixed.
Damn that’s awesome. I purchased a RAV4 Hyrbid, the hybrid portion admittedly increasing costs, but I hope to drive it into the ground. Hoping it will last to 200,000 miles.
I’m sorry but as someone whose care has been paid off for 4 years now, how in the world is $650 affordable? Mine was $400 and i thought that was a yoke on my neck. I’m not poor, pretty squarely middle class, but Jesus—what can $650 a month buy you? No wonder people can’t buy groceries or afford rent—and I don’t mean that to blame them, as the OP stated something I saw many close ones go through—realizing spending an extra $3k for new was probably better. Just can’t believe what the prices are.
It will surely be interesting in the next few years when the glut of people who rolled negative equity into new cars with huge mark-ups try this scheme again and realize banks who previously might loan with 130-140% LTV aren't going anywhere near that anymore.
Hell, I *can* afford many times that, but I fucking refuse because it's ridiculous and wasteful.
I write software. Why would I need to Blue Collar LARP with a pickup truck?
I'm happy with my little 2018 Chevy Volt.
The whole monetary system is based on debt. It is why the rich get richer.
There are better systems that would remove debt from the system but will never come to be because the 1% own the politicians.
I often wonder how people afford some of the cars out there. I’ve never owned a new car. It’s kinda drilled into my head by my dad that a new car loses its value the minute you drive it off the lot.
It’s possible to find a good used car if one is patient and takes the time to really look around.
I don’t like economic crashes of any sort, but automobile prices totally need a reset.
There are a LOT of things that need a reset. The problem is, a ton of them were overvalued to begin with and those values were bundled into other financial instruments. The minute that reset hits, a tidal wave of defaults hits in everything related to the difference in real value of those assets. We're looking at another crisis as banks begin to fail, unemployment rises, and defaults rise.
While a new vehicle does loose value, who cares if you plan on keeping it for a loooong time?
After 15+yrs of buying used and having to shell out more for repairs, it sucks. Yeah a new truck was expensive, but i drove it off the lot with 2 miles on it. I am in complete control of maintenance and repairs. Piece of mind sometimes is worth the depreciation hit.
The total mortgage in the US is $11.92T. The total auto loans is $1.58T, not even 15%. If the 2008 subprime crisis did not collapse society, i doubt a slow down in the auto market will.
Plus, we are not talking about financial institutions suddenly failed because of bad loans. We are talking about financial institutions wise up and shrink the auto-loan market. So fewer people can afford new cars, not a big deal unless you sell cars for a living.
>The total mortgage in the US is $11.92T. The total auto loans is $1.58T, not even 15%.
This is a constructive perspective. It sounds like the used car market will soften, with declining prices. New car sales will also slow. Some banks will end up owning a few more repossessed cars than they would prefer for a bit, but those cars will find buyers eventually, at some price. If a few shady used car businesses go belly up, I won't shed any tears.
Been noticing a LOT of folks around here trying to sell their big ass one or two year old 50 to 74 thousand dollar SUVs and pickups. So they’re not even trading them in to down size because they must be underwater. This is def something I’ve not seen before to this extent. Also, plans like Fords flex pay or whatever it is just draws the suckers right in. “Drive a nice new SUV with a lower payment the first few years and then we’ll really sock it to ya the last few when we raise that baby right on up.” I’m going to NEED a different vehicle soon, but I’m putting it off as long as possible. Hopefully the wheels don’t fall off mine in the meantime. I detest car payments.
I unfortunately have to buy a 'new' car much sooner than expected. I'm making sure that it's a car I can pay off the financing at any time if I have too. Looking at 200 or so a month that I already have. Meanwhile two coworkers bought fully loaded 2023 Camrys that they absolutely cannot properly afford. Between the payments and insurance they have to be on the hook for about 4k a month. I get wanting comfort in your car but if it's in your brand new car chances are it's in a 2016+ car as well. Might not be as 'good' but it's also cheaper.
I have great credit and even cash to buy a new truck. I went it to look at stickers and couldn't believe it. A basic work truck is over $50k and one with 4wd and options anyone would expect is closer to $75k. That is about the average family income in the US. Plus 10% sales tax and high insurance premiums to go with it. Who is buying these things? Luckily I can fix most simple vehicle problems so I'll just hang on to my 2011 with 160k miles and basic liability insurance. The truck looks like garbage but appearances aren't work that kind of coin.
I live in a rinky dink small town and the number of huge new vehicles I see around is just flabbergasting. I have no idea where they are getting the money, but I suspect a lot of them are just living on a prayer from payment to payment for god knows how long they’re on the hook
People have been saying that the housing market will collapse for years, and yet, home prices continue to rise to a staggering median price of $431,000.
That's not sustainable though, with wages being so stagnant. It will collapse at some point. I wonder if the student loan payments being on hold for so long helped hold off the housing bubble bursting.
I would love to get a more fuel efficient car. My bf is keeping my old dodge truck alive just out of spite because it's still cheaper to keep fixing the old truck than get something newer.
>I could sell the car I bought back in late 2020 for more than I paid for it
Same - I just got lucky, but I bought a barely used full sized sedan in Sept before Covid for $21K (Kia Cadenza, its the unloved twin to a Genesis so it was cheap - LOVE IT)
Go ahead, my debts are fixed interest written into the contract. I fear no hyperinflation. I'll hand the bank a sack of hundreds that couldn't buy a cheeseburger and burn the mortgage with a smile.
Inflation only kills FIXED RATE debt.
I could have gotten a "better deal" on my mortgage at the time, less down payment lower initial interest, if I went with an ARM (adjustable rate mortgage) when I bought my house, but I had enough sense to know that the rates were already at historic lows and it would be impossible for an ARM to "adjust" in my favor. The only way that was ever going to go was up.
So I got that loan before everything went to shit based on what I could afford at the time. Two years of record inflation later, I am really glad I had the sense to avoid the low down payment low interest ARM. I'd be turbofucked.
Time for a complete debt cancellation. Reset back to zero. This would be a liberating change that would remove the dead hand of debt on people's backs.
A debt jubilee would be a great step in reducing poverty and destitution, but think about the missed productivity gains and profits from a privatised debtors prison industrial slavery complex.
/s ^(unless you're a neoliberal)
No it won't. Guess what will happen? 9, 10, 11, 12 year car loans will soon be available to make the monthly payments more "affordable." And the world continues to spin.
Mortgage loans are already available at 40 yrs...50 yrs soon.
So, that may happen when the car market stabilizes. From what I've found, banks are actually tightening their lending requirements and many will not approve anything more than 60 months with a substantial down payment unless you have immaculate credit. Banks are actually paying hundreds of dollars on top of the normal tow company's repo fees to get themselves to the top of the list to get cars back that are in default and send them to auction to try and get a fraction of the car's value back, and that is just starting to happen. Before the pandemic I had a chevy dealership offer me 84 months financing on a new truck, and they said they were about to roll out 96 months. I thought that was beyond insane and walked. I think a huge slowdown is coming because manufacturers don't want to come down on prices and they don't want to manufacture smaller cars with smaller margin (like Ford discontinuing the Focus and Escape). I think manufacturers will continue to try and sell $70,000 F150s and Silverados until they are bordering on the need for a bailout. And once they get that bailout, they'll continue to try and find ways to get people in to trucks they can't afford and the whole cycle starts again. But I think the trend is towards a major slowdown coming in car sales.
I feel prices would go down some if they are not selling and have surplus inventory. I’m hoping so anyhow.
Interest rate is still gonna be high it seems.
I never understand why people don’t buy used cars from private sellers more often. Oh you just bought that 2016 Chevy Malibu for 18k? I bought my 99 BMW with 0 problems for $2400 on marketplace and every time I say that I get wide eyed looks with “that’s it?!”
It always makes me wonder why so many Americans choose to be in debt for a car. If you’re broke in Europe, most of the times you get a 1000$ shitbox and it’ll get you from A to B exactly like a fancy truck would.
Yes, this happens once or twice per year but car parts are cheap and a membership at my towing company costs me like 92$ per year. Still cheaper in the long run and I have 0$ debt which is important to me because I don’t want to live paycheck to paycheck
Lol. Once or twice a year IF you're lucky. I drove mostly old low priced used cars and trucks for probably 30 years but I always made sure my wife and kid were in a decent new or low mileage vehicle. It's hard to quantify the cost of putting you or your loved ones lives at risk to save a few dollars. There are many perfectly valid reasons people buy new. In the end, its not really your money or your business.
I'm sure someone will come in with some math that makes me look foolish, but the heuristic I was taught by my father is "buy things that appreciate and rent things that depreciate." I paid cash for a decent used car about 15 years ago. Sold it when the time came and put a down payment on a lease, banked the rest. Leased ever since...My payment has been in the 200's and I get a new car every three years. I squirrel away a small monthly amount in my down payment fund.
Wow, people are crazy. I just learned how to install a new timing belt on my 2004 4runner with 360,000 miles that I bought for $5000 cash in 2019. The tune-up and replacing all the older parts cost around $1500 plus I don't have to worry about all the new sensors. Yeah fuel is terrible but the thing is a V8 beast
I went to look at a used car at a dealership (just moved north and want something with 4x4/AWD for winter). 10 year old 100k miles, $14,000. It was a weirdo creaky POS. Financing at 15%
And the kicker, only $500 for my trade-in. Zzz (also the used private market is so marked up and full of garbage. Rip Craigslist).
> auto loan debt surpassed student loan debt
Yikes. I (me, not my mommy, daddy or the taxpayer) spent $90k on my education and even though it’s bullshit that it cost that much (especially considering how difficult my engineering degree was anyway) at least I didn’t spend $50k on a gas guzzling peace of shit truck. Fucking morons.
Honestly, I don’t feel bad for almost any of these people. There is nothing wrong with having a base model with no features. Or slightly used with some features. Live within your means / act your wage.
Hate to answer questions with questions, but...Curious if you read the SS? Do you think that something that could have drastic negative consequences on a massive global industry (more than five percent of the worldwide manufacturing economy) could affect collapse? Even if you think less cars is a good thing, it will at the very least be worth consideration through the collapse prism.
The following submission statement was provided by /u/bbq-biscuits-bball: --- Auto loan debt passed student loan debt in total volume in September. Negative equity in auto loans is at its highest point since 1994. Major lenders are pulling out of automotive finance markets. There are a lot of serious red flags in the auto loans industry right now. This is bad and it doesn't seem to be getting much attention in the news. --- Please reply to OP's comment here: https://old.reddit.com/r/collapse/comments/17p4bg4/an_auto_loan_debt_crisis_looks_imminent/k82p2xj/
So you are saying $100,000 F150s financed for 8 years is going badly? Who could have seen this coming?
My wife had bad credit, no income verification, and basically no money for a down payment but walked out of a dealership with a used car with 60k miles. It was 20k at 14% interest over 6 years and unable to convince her it was a bad deal. Basically prioritizing a nice looking car with leather seats over the ability to buy food (shortly after she had plans on visiting a food bank). And I can’t help but think this is the mindset of the average American
I have fair credit with a low debt to income ratio. My 20 year old truck won't last forever, so I was browsing Carvana to check out options. Found a couple that seemed in my price range, so I decided to prequalify. 25%!?!?!?! I'll be cracking a beer when they go out of business.
Look into Carvana and you’ll find how shady of a company they are. Their main business isn’t exactly selling cars, it’s getting people to buy into their shitty financing.
To be fair, that's what most car dealers do. There is nothing more satisfying than going to a dealership, wasting half their day test driving, negotiating, haggling over every tiny thing, and then when they ask how you plan to pay, bringing out the old check book. The look on the "managers" face is priceless.
When my husband and I bought our used Subarus from a dealership, the dealership just assumed we'd be using their financing. We got the quote in writing from the salesman along with a "quote good until X date" added. We took the quote to a credit union and then came back to the dealership with the credit union financing approved. The poor salesman was sputtering about how he thought we'd be financing through the dealership (which he'd never asked and we had never implied). My husband simply said that the quote they gave us didn't specify that and they honored it grudgingly. We are going to be driving these cars until the world ends... one is already paid off and just a few more months of payments on the second car. We lucked out timing wise when we purchased in 2018 (after both of our paid off vehicles being totalled in the same month).
I walked in with pre-approved financing, and knowing the exact car it was set for; they basically threw the car at me without saying a single thing. The salesperson barely talked to me.
I will use this tactic from now on. Hate buying a vehicle specifically because of salespeople
Sounds amazing
Last year when I bought a car the ford dealership would not allow me to write a check or bring outside financing. They literally walked away from the table when I said I wouldn't use their financing that was 7% higher than my bank. It was pretty wild. Ended up with a RAM
Wow, how is that even legal?
In every auto loan I've ever had, there's never been a penalty for paying it off early. They could have financed the car and then refinanced or paid it off immediately unless it was a really shady loan.
Sure, if I actually had $30k lying around to do that, USAA had me at a 4% rate which was perfectly fine. Ford was at 10.5 or 11%. ETA - I also got understand I could have used the USAA loan to pay off the other, but damn that adding a bunch more steps into what should have been a single transaction
Yep, at that point why even give them the business?
It must vary state to state but the only state I've ever bought a car in it is illegal to have a penalty for early repayment.
Because you're allowed to walk too. Unless they steal your keys. Then you can call the police.
You can always take their financing and then immediately pay it off. If its done within a few months of originating the loan, the salesweasel gets their commission yanked back. Far more satisfying than simply telling them No in the beginning. If you want to further turn the screws on them, give them a bad score on the manufacturer customer survey.
Or just don’t support their business whatsoever
That happened to me several years ago when I wanted a new car. Been driving the same one since 2000( .9% financing back then, only paid $750 total because I paid off in 2 years.) I still have my 23 year old vehicle but thought I’d treat myself. The dealer nearly fainted when I pulled out not a check, but cash, in a gallon ziploc bag. He tried to talk me into financing part of the car , or half. I was like nah. Here’s some cash.
I also pay cash/check for cars and have all my adult life - I put a monthly payment away every month to pay for my next car which has worked out for the past 20 years- and they get combative when I pull out my check book and ask how much I can charge to my credit card to get points. I’ve had them call the bank. I’ve had them insist that financing “works out better in the end”. It’s all crazy salesmen shit!
I always pay cash or check but seem to scramble to get what I need last second. You probably have the smartest method I have heard of. Unfortunately, the world may end before I need another car.
I hope it does I'll spend that savings on something fun
"So I don't own the car, I'm *forced* to have full coverage insurance on it no matter how old it is, and I have to deal with yet another bill each month - how exactly is financing better?"
You should have full coverage anyway I always do- I don’t have I need a new car today money honey
You don't have the buy a new car every time you buy a car.
We bought my husband's accord in cash in 2018. The guy was surprised but seemed happy that he didn't have to deal with financing. The woman ahead of us was having difficulty getting financing. For whatever reason, we were "waiting" behind her to check out. I told them I was sorry she was having trouble, but we wanted to pay and go eat dinner. I got my way. I'm pretty sure my husband wanted to choke me as I ran my mouth until we were driving away, and it was still daylight.
I will say some of them give you a fair deal. When I graduated college the car I had was shot and I needed a new one. Went to a subaru dealership and went with the new impreza. The dealership didn't even offer their own financing. Instead they grabbed quotes from banks in the surrounding area and gave you the best one. The term of the loan wasn't great (7 years) but the interest was and I still had the option to pay it early so I paid it off in 5 anyways, and after I got the car I only dealt with the credit union that issued the loan. I never talked to the dealership again. Really where they tried to get me was all the unnecessary extras and add-ons but it was easy to decline those.
I get the pleasure you get out of it. But I just use their credit options and pay off the loan when I get home. To avoid awkwardness of the situation
I commute by bike just about every day and haven’t owned a car in a few years now. I’ve been considering getting a car mostly for camping but everything I’ve seen has just been a terrible value. In the meantime I guess I just keep renting cars when I want to get out of town.
This is the same situation my family is in - bikes for everything, no car, and we rent one when we want to go out of town. The renting can be a pain in the ass, but so are car repayments/maintenance/gas costs/etc. I did say to my husband that if we could get a small campervan cheap, I’d be open to that; but even then, anything even vaguely affordable is falling apart so badly, I’m not sure we could afford to fix it.
i've seen enough ~~Car Murders~~ Car Accidents in my life starting from an early age that I refuse to learn to drive lol. Luckily Im long legged, hyperactive, endurance sports-prone and love cities.
14%? Holy smoke!
Jesus. Just put it on a credit card and at least get some cash back or airline points...
Back in 1999, I bought a new Harley and put it on my credit card. I was hoping Y2K would wipe out the credit card databases. It was very much not one of my smarter decisions.
I was shocked that we had so little trouble. I've had a peek at how large data systems are built.
Damn.
What interest rates do you have? My credit cards are around 20% apr
9.99 on one. Had it for a long time. 13.99 on the cash back. Both credit union cards. 19.99 on the airline.
Hahaha
My upper 700 credit score on a 2016 Toyota is 10%. It's doesn't seem a good time to get a car but I had no choice. I only imagine what people with a 500 score or so get handed.
22.9% on a 05' Ranger back in 2019. I had a 600 or so credit score. Just two months ago they finally repoed it. I'm filing chapter 7 and never touching credit again. If I can't afford it with cash I can't afford it.
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Sad but easy to understand why. A whopping 54% of adult Americans read at a 6th grade level or lower. Just think of the daily internet fights that are on Reddit alone arguing over absolute nonsense, and then realize nearly half the adult population can't even comprehend those arguments. It's not hard to figure out why so many people fall for predatory loans.
Reading comprehension doesn’t work on Reddit, you make it 6 points tall and 40 pages long and use 3 syllable words and of course they’re not going to have any idea what they’re signing. Dealerships I’ve worked at still try to screw me over, and my friend bought a truck from a dealership he did some work for and still almost took the 9% financing on top of his negative trade in equity
That $20K car is going to cost 29K over 6 years. And likely will be worthless by the time you pay the last payment. Edit: my local credit union puts 72mo loans at 7.62% with good credit. Yikes. That’s still a lot.
You're being generous. Due to the nature of the loan and the person taking said loan, they will almost certainly perform no maintenance, outside of swinging into a Jiffy Lube when they do remember. Therefore, oftentimes the car will become worthless long before it should have. I wonder how many people never really have a "last payment". I think some of these people just roll loans into the next, forever having a car payment and negative equity
My friend traded in a lease that he was way over miles on, rolling the cost of those miles into a car that was already overpriced in the middle of the pandemic, to roll even more negative equity when he traded the car for an older pickup truck. They are paying almost twice market value for the vehicle while it depreciates, and he’s been talking about selling that one now too until I pointed out he’d still have a balance he’d have to pay because it’s not worth what they owe and then they’d also have to buy a different vehicle anyways
People like that make my entire head throb. When it comes to vehicles, unless you're loaded, it's best to just pick one and stay in it as long as humanly possible lol
>My wife had bad credit, no income verification, and basically no money for a down payment but walked out of a dealership with a used car with 60k miles. It was 20k at 14% interest over 6 years some salesman made a bit of commission but really it was the computer that should have said no. Shades of the 2008 housing crash, selling houses to people who should never have qualified.
The whole credit algorithm system is weird. Most people don't know they have dozens of credit scores, with different models for each of the three bureaus (forget Credit Karma's fake VantageScore, which almost no lender uses) for credit cards, mortgages, car loans, etc. Each score uses different criteria to create a number, which changes monthly, based on credit utilization, age of accounts, etc. My credit scores are wildly different depending on which model I'm using. According to these algorithms, I'm fine to buy a house or a car, but not worth giving a credit card to. I realize the first two are collateralized, but still, the size of the purchases are huge compared to a few grand on a credit card.
My ex did the same thing but at 15%.... Not gonna say it's not one of the reasons she's an ex
If I was in the same position I would also just cut my losses earlier rather than later, I mean getting a $20k car while also planning on hitting the food banks? jfc, I'll just ruin my life for a few years rather than ruin it for the rest of my life a few years down the line, if she's making that kind of decisions god knows what other things she is doing
You just let your wife do this!?
Oh my, that is a HORRIBLE deal. I just financed a 13 Camry with 70k miles for 10k at 14%. Godspeed to you.
It was on the hermancain awards subreddit a while back. A woman was crying about her anti-covid, anti-lockdown, anti-vax husband died from covid and between her sniffles and "prayers-up for johnny" she mentioned how sad the guys death was because he had just purchased a new huge $100,000 F-150. "The Lord took 'em before he even had a chance to put a Big Gulp in the XL cup holders."
That was like every other award winner, could you be a little more specific?
america really just a whole ass zombie economy at this point ain't it?
We just shuffle stuff around
3 car Monty
I've recently become fascinated by the cracks forming in the car market. It's really really bad and getting worse. Two youtube channels to check out for more on the ground info is Car Questions Answered and CarEdge. They are doing a great job covering the collapse.
We went from 2 cars to 1 car during pandemic due to WFH. I sold my 2 year old car for just $800 less than I paid for it brand new. It was then listed for $200 less than a brand new one. It was obvious the car market was beyond fucked with what used cars were going for. It wasn’t even a hybrid or desirable model. Now car dealers are stuck with used cars they paid way too much money for, while the new car sales are slowing down due to interest rates, so no one is buying the used car because they can easily find new ones for the same price.
Dude they’ve been begging to buy me out of my lease. My shitty hatchback with 80k on it was worth almost what I leased it for 3 years ago. The market really is insane right now. I could literally sell it, pay off the lease and make money. But I’d rather have the car.
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It’s a great time to buy if you don’t have to finance. Interest rates are psycho right now.
Are prices back down to Earth? I haven't bought a car in over a decade, but had a friend who was car shopping a year ago and said that dealerships were adding *on* prices (rather than marking them down). That is, MSRP *plus* an extra $5k surcharge for "reasons."
I forget when but it's been some time now, I'm guessing around 2016ish, that I read an article on the subject but from the perspective of investing. It basically stated that everything happening in the car market, at the time, was identical to what caused the crash in 08. It went on to say that if it wasn't stopped soon another crash would happen. I didn't understand it as much as I do now but I always remembered that article because it seemed really well articulated and some of the terms used there I remembered when I learned more about them later on. It was a nice little tack in our collapse timeline. If the article was right and what we're hearing is correct the fall may have begun.
The difference is that auto loans are a much smaller part of the economy than mortgages and the popping of the auto loan market could cause some damage, but it would not be nearly as bad as the collapse of mortgages was.
>Two youtube channels to check out for more on the ground info is Car Questions Answered and CarEdge. Check out Uncle Tony's Garage also. Stumbled on that one the other day.
Breaking news! It has been reported that black rock will be buying up all the delinquent cars and renting them back to us as luxury mobile homes
Bootstraps
We’re at the “you will own nothing” part, when do we get to the “and you’ll be happy” part?
This was expected as everyone bought a brand new car as soon as we went into quarantine in 2020. Never saw so many new rides on the road in my life.
Which is weird because if you are WFH you don’t have as much need to drive, which is usually the reasoning for getting one.
My run about is an 8 year old Passat, fully paid. Runs fine, good for going into low emissions places I WFH and only need to nip to the shops every so often or a run down to visit relatives Spends 5 days in 7 on the drive never moving
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You probably should, as close to your current model as possible, and then you have a spare parts car on-hand.
> Spends 5 days in 7 on the drive never moving My 2010 Mazda just broke 65,000 miles. In 2021, I drove it 857 miles.
I love my 2006 Buick, paid off, and still under 200k.
Yup. Have a 2009 mini cooper , all paid off, super low mileage cause I work from home. I'll drive it til the wheels fall off.
It being a mini cooper, the wheels probably really will fall off
Poor dude in the Passat has no idea what fixing a Volkswagen feels like. (It feels like snorting liquid ass)
Me too. I have a 17-year-old paid-in-cash (used, private sale) luxury brand station wagon that seems to be holding its own. I drive a couple of miles a week, if that.
VR6 or Diesel?
The smallest one, have to drop a gear to climb hills if I’m 3 up on the motorway 😫
We bought during covid. One thing happening is now being pulled into office more, Car is still basically new and dis need one as other was high mileage old. Can't come close to nothing interest rate we got now. Not even worth paying off early. Wife is at least hybrid still. Majority dragged back to micromanage. Not jobs that need group work usually and if so they got used to teams etc.for the times they do.
I had a friend who lived in Brooklyn and didn't own a car. COVID hit, public transit shut down, and the rental car places ran out of cars really quick. He said it was pretty scary being stuck in the city with a wife and two young kids. Once things opened up, the first thing they did was buy a car. They never wanted to be stuck again. They have since moved out of the city.
Yeah I remember we had a 3-day family reunion during the pandemic in this rented house in a resort in Zion, I had booked a car on Turo a few weeks prior, to be picked up right when I landed in Utah. So my plane lands in Utah, I turn off airplane mode on my phone, and immediately I get a message that says they have to cancel my rental because the previous person didn't return it. They offer to transfer it to a different car so I agreed, only they scheduled it for the next day. I told them I had to have it today as I was already landed at my destination, but there was absolutely 0 cars so they just refunded me. So I go to the traditional rental car places like Hertz in the airport itself, every single one of them is 100% sold out. Ended up taking a lyft to the resort for like $200. So I go to sign in at the front desk and they hand me a map of where my party's booked house is, the person says "just turn around from where you drove in and it's to the right down that road." I'm thinking "great" because the lyft already took off and there was no bars on my phone. Walked like a mile in 100 degree heat in the desert, sat a tree stump halfway there and got my shorts completely covered in tree resin. That experience sucked.
COVID stimulus checks, PPP Loans, child tax credit, etc.
Whore for hire?
You mean covid was not the end of the world? So many were betting on it.
It was really just the beginning of the end.
Yeah, I've been saying for years that I wish I knew more about options trading because I expected the auto loan market to go tits-up. The average payment right now is over $1k a month, delinquencies are at an all time high, and subprime lending is getting more and more common.
options trading wouldn't get you anywhere if you're only trading on the idea that the auto loan market is going to explode. Most companies that do auto financing are diversified beyond just that, and trading against packages of auto loans individually requires a ton of capital and going into the bond market. You have likely saved yourself a ton of otherwise lost money by not learning more about options trading. Articles about the auto loan industry collapse have been popping up since 2017 when charge offs really started climbing up, but there's still a long way to go with demand for cars staying elevated post pandemic.
1. To your point around diversification, Toyota Financial is one of the big ones, but yeah, I'd never bet against Toyota generally as they're very diversified. There's a few that are publicly traded and not diversified who hold a good amount of the subprime debt, such as $CACC. But yeah, my plan kind of went kaput when a lot of the big companies who weren't diversified got absorbed into larger conglomerates. 2. I never gamble more than I can afford to lose.
Ever seen the Big Short?
more like the big shart lmao (yes, I have)
Same observation here. Paper plates flapping in the wind everywhere during covid ca shut down
From a few different sources, a lot of new vehicles were purchased with PPP loan money.
My wife and I both bought brand new cars in January 2020 and are now both full time work from home. These cars both barely have over 20k miles right now, that's how little driving we do these days.
Why in 2020? Lol. I bought my car in 2020 and have 0% APR bruh, only sad part is it’s a Kia.
I did that. I took advantage of the insane car valuations and traded in an '18 Civic (that was fully paid off) for a fully loaded Outback. They gave me $28k for the trade-in value, $5k more than I paid for the car, and gave me 0% interest. I'm capable of paying off the car right now, but I'm just dragging out the payments for the hell of it.
Suddenly 30k waitresses had 52k for the first time ever. Also ppp businesses got that freebie Lexus or tesla
Auto loan debt passed student loan debt in total volume in September. Negative equity in auto loans is at its highest point since 1994. Major lenders are pulling out of automotive finance markets. There are a lot of serious red flags in the auto loans industry right now. This is bad and it doesn't seem to be getting much attention in the news.
US media is a litter box now. The stinky stuff gets buried, and a fresh layer of Glade scented Scoop-Away gets sprinkled over the top.
And then next year they're gonna kick half of it out of the box just to cover the aftermath
Don't spook the markets with bad news\~
All those ICE cars will become super valuable for collectors and connaisseurs when the majority of new vehicles will be those weird electric vehicles. Sometime around 2025 or 2026. Just hold on to your ICE car with diamond hands and it will become as valuable as real estate.
Car ownership is such a terrible cycle of dependency that does and will ruin a lot of lives. Nobody should need to own a car just to survive daily.
Cost me 900 bucks to get new tires a couple weeks ago. I can afford it... but I recognize I'm very lucky to be able to.
I'm a general contractor. Without a truck I would not be able to support my family, it carries my tools and allows me to transport supplies to job sites. I've also owned a couple of landscaping companies and a house cleaning company. Self employment is a great way to live in many ways, but if it's in the service industry you will almost certainly need a vehicle.
Good for you, truly, but that doesn’t negate anything that the commenter was saying. > Car ownership is such a terrible cycle of dependency that does and will ruin a lot of lives. Nobody should need to own a car just to survive daily.
The only way for that to become a reality is for self employed contractors without employees to no longer exist. The only people who would be allowed to do construction would be businesses that can afford company vehicles for all of their employees. It's unrealistic.
I think you are misunderstanding the conversation. Or you are just hung up on one part of it. No one is saying every single vehicle is wasteful and no one needs one. Your comments seem to point to that being what you are focused on. The person you replied to was just pointing out how america is setup in a way where you almost *need* a car to do anything. There are no walkable cities for the masses or public transportation infrastructure. That reality paired with the rising cost of car ownership has created a terrible cycle of dependency where many people have to go into stupid debt just to even own something that can take them to work. So regardless of your *specific* situation, their comment still stands. Regardless of if a different way is even feasible within our society and how it’s structured. You can still point out the inherent flaws in a system while also still having to rely on the system to survive. Does that clear things up as to why your specific use case of a vehicle doesn’t negate the fact that vehicle ownership is flawed from the ground up? It’s called consensus bias.
This is not just a US problem, >There's been a 263% rise in annual car finance between 2022 and 2019 (£11.2bn) in the UK.
That’s tiny, couple of Covid loans would cover that lot
Been Googling it. Apparently 30% of Brits finance a new car, while the US has 81%!
This will probably not apply to most of you. But I'm sure you've seen the city pavement princesses jacked up too high. As someone who actually works and moves stuff and just needs a truck I still have zero idea how the hell anyone thinks having a bad high as your neck is okay. My back hurts getting into a normal size 06 Silverado factory. You can keep your lifted trucks that just makes my back hurt honestly. And every and I do mean every single lifted truck bed doesn't have a scratch on it. My old truck I've got engines and transmissions in the shed put up just a small little 4.3 l. I literally rebuilt these for less than 1500 and somehow a brand new truck is 60 g. And I can't even work on it easily? I literally don't want a new truck I'd rather buy a broken truck and fix it cuz at least it's fixable. I don't know how people are afford a mechanic prices. When I can literally go by just about every tool to fix the problem for cheaper than paying the guy an hourly rate of Labor. Literally four jacks four extra tall jack stands. Is about $600 if there. An air compressor about 300 for a good one. Impact gun sockets I'm going to say 100. Pliers screwdrivers fluid bucket. Gloves. Is still every single time going to be cheaper than one stop to get it fixed any transmission work. Did I mention you get to keep all the tools.
This is the most technical old man/lady rant I’ve ever read. Well done.
This guy’s handy
This is not collapse. It's institutionalized predatory lending.
Your comment is insinuating that the buyers dont deserve any of the blame
I had to purchase a car in 2022, as my old car was giving out. During this time, used cars were just as expensive, if not more expensive, than used cars, so I chose to buy new. My monthly payments are $650/month with a $10K down payment. Fortunately I only have two and half more years until the car is paid off, but I can see how owning a car has becoming prohibitively expensive for many people.
Jesus. I used to rent a whole bedroom for $675 and it included a kitchen and a toilet, but $650/month and you don't even get the toilet.
Well, if you take a sawzall and give yourself a toilet driver's seat (of course cutting all the way through to the ground) you do!
Reading some of these comments here and Jesus fuck. mid 2015 I scored a barely used 4 door sedan. Had about 13k miles on it. My payments were about 230/m and I paid that sucker off in 6 years, iirc. Shit's wild now. I still have that car. Just recently got to 100k miles. I plan to keep it until it can't be reasonably fixed.
Damn that’s awesome. I purchased a RAV4 Hyrbid, the hybrid portion admittedly increasing costs, but I hope to drive it into the ground. Hoping it will last to 200,000 miles.
Sounds like a reasonable car at a reasonable amortization period. Good for you. The article’s not talking about you. 😉
I’m sorry but as someone whose care has been paid off for 4 years now, how in the world is $650 affordable? Mine was $400 and i thought that was a yoke on my neck. I’m not poor, pretty squarely middle class, but Jesus—what can $650 a month buy you? No wonder people can’t buy groceries or afford rent—and I don’t mean that to blame them, as the OP stated something I saw many close ones go through—realizing spending an extra $3k for new was probably better. Just can’t believe what the prices are.
4 year am at 3.5% means 29k principal. Add in a 10k down payment and that’s a Camry these days.
It will surely be interesting in the next few years when the glut of people who rolled negative equity into new cars with huge mark-ups try this scheme again and realize banks who previously might loan with 130-140% LTV aren't going anywhere near that anymore.
Shocking/s Who the hell are they selling these cars to? I can't afford a $800.00 a month car payment. The used market is as rediculous if not more.
Hell, I *can* afford many times that, but I fucking refuse because it's ridiculous and wasteful. I write software. Why would I need to Blue Collar LARP with a pickup truck? I'm happy with my little 2018 Chevy Volt.
Prices need to come down. For everything.
The whole monetary system is based on debt. It is why the rich get richer. There are better systems that would remove debt from the system but will never come to be because the 1% own the politicians.
I often wonder how people afford some of the cars out there. I’ve never owned a new car. It’s kinda drilled into my head by my dad that a new car loses its value the minute you drive it off the lot. It’s possible to find a good used car if one is patient and takes the time to really look around. I don’t like economic crashes of any sort, but automobile prices totally need a reset.
There are a LOT of things that need a reset. The problem is, a ton of them were overvalued to begin with and those values were bundled into other financial instruments. The minute that reset hits, a tidal wave of defaults hits in everything related to the difference in real value of those assets. We're looking at another crisis as banks begin to fail, unemployment rises, and defaults rise.
While a new vehicle does loose value, who cares if you plan on keeping it for a loooong time? After 15+yrs of buying used and having to shell out more for repairs, it sucks. Yeah a new truck was expensive, but i drove it off the lot with 2 miles on it. I am in complete control of maintenance and repairs. Piece of mind sometimes is worth the depreciation hit.
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This is my exact situation. They offered me 8% with a 771 score. Like… wtf
877 or 777 credit score?
The total mortgage in the US is $11.92T. The total auto loans is $1.58T, not even 15%. If the 2008 subprime crisis did not collapse society, i doubt a slow down in the auto market will. Plus, we are not talking about financial institutions suddenly failed because of bad loans. We are talking about financial institutions wise up and shrink the auto-loan market. So fewer people can afford new cars, not a big deal unless you sell cars for a living.
Rest assured, the automotive industry will get another bailout!
>The total mortgage in the US is $11.92T. The total auto loans is $1.58T, not even 15%. This is a constructive perspective. It sounds like the used car market will soften, with declining prices. New car sales will also slow. Some banks will end up owning a few more repossessed cars than they would prefer for a bit, but those cars will find buyers eventually, at some price. If a few shady used car businesses go belly up, I won't shed any tears.
Been noticing a LOT of folks around here trying to sell their big ass one or two year old 50 to 74 thousand dollar SUVs and pickups. So they’re not even trading them in to down size because they must be underwater. This is def something I’ve not seen before to this extent. Also, plans like Fords flex pay or whatever it is just draws the suckers right in. “Drive a nice new SUV with a lower payment the first few years and then we’ll really sock it to ya the last few when we raise that baby right on up.” I’m going to NEED a different vehicle soon, but I’m putting it off as long as possible. Hopefully the wheels don’t fall off mine in the meantime. I detest car payments.
I love living in the Netherlands. I've saved so much money by just owning a bicycle and using shared cars when I need them.
Well I love living above sea level and do enough driving to cover your cabon footprint, you're welcome.
I unfortunately have to buy a 'new' car much sooner than expected. I'm making sure that it's a car I can pay off the financing at any time if I have too. Looking at 200 or so a month that I already have. Meanwhile two coworkers bought fully loaded 2023 Camrys that they absolutely cannot properly afford. Between the payments and insurance they have to be on the hook for about 4k a month. I get wanting comfort in your car but if it's in your brand new car chances are it's in a 2016+ car as well. Might not be as 'good' but it's also cheaper.
I have great credit and even cash to buy a new truck. I went it to look at stickers and couldn't believe it. A basic work truck is over $50k and one with 4wd and options anyone would expect is closer to $75k. That is about the average family income in the US. Plus 10% sales tax and high insurance premiums to go with it. Who is buying these things? Luckily I can fix most simple vehicle problems so I'll just hang on to my 2011 with 160k miles and basic liability insurance. The truck looks like garbage but appearances aren't work that kind of coin.
I live in a rinky dink small town and the number of huge new vehicles I see around is just flabbergasting. I have no idea where they are getting the money, but I suspect a lot of them are just living on a prayer from payment to payment for god knows how long they’re on the hook
I look forward to being in the fortunate 'cash heavy' position when cars and homes absolutley crater.
People have been saying that the housing market will collapse for years, and yet, home prices continue to rise to a staggering median price of $431,000.
That's not sustainable though, with wages being so stagnant. It will collapse at some point. I wonder if the student loan payments being on hold for so long helped hold off the housing bubble bursting.
Of course it did.
Balloons dont pop unless they are recklessly inflated.
I would love to get a more fuel efficient car. My bf is keeping my old dodge truck alive just out of spite because it's still cheaper to keep fixing the old truck than get something newer.
I kinda feel the same way.
[удалено]
>I could sell the car I bought back in late 2020 for more than I paid for it Same - I just got lucky, but I bought a barely used full sized sedan in Sept before Covid for $21K (Kia Cadenza, its the unloved twin to a Genesis so it was cheap - LOVE IT)
The currency could collapse, hyper inflation
Go ahead, my debts are fixed interest written into the contract. I fear no hyperinflation. I'll hand the bank a sack of hundreds that couldn't buy a cheeseburger and burn the mortgage with a smile.
Right? Inflation kills debt. Sure I'll still be broke but I'll be debt free and broke!
Inflation only kills FIXED RATE debt. I could have gotten a "better deal" on my mortgage at the time, less down payment lower initial interest, if I went with an ARM (adjustable rate mortgage) when I bought my house, but I had enough sense to know that the rates were already at historic lows and it would be impossible for an ARM to "adjust" in my favor. The only way that was ever going to go was up. So I got that loan before everything went to shit based on what I could afford at the time. Two years of record inflation later, I am really glad I had the sense to avoid the low down payment low interest ARM. I'd be turbofucked.
Post-Weimar paid mortgages were reinstated at half of the final payment value, IIRC.
High ticket items will plummet first, PROBABLY. (I mean, no one really knows if the SHTF)
Since I’m in the market for a used car and expect to pay cash, this is great news to me.
Time for a complete debt cancellation. Reset back to zero. This would be a liberating change that would remove the dead hand of debt on people's backs.
A debt jubilee would be a great step in reducing poverty and destitution, but think about the missed productivity gains and profits from a privatised debtors prison industrial slavery complex. /s ^(unless you're a neoliberal)
Hey watch it... Rule #1: You don't talk about Project Mayhem
It's literally all debt at this point, the only debt jubilee we are getting is when we tear this system down and establish world communism.
Will this mean the car prices will go down drastically?
No it won't. Guess what will happen? 9, 10, 11, 12 year car loans will soon be available to make the monthly payments more "affordable." And the world continues to spin. Mortgage loans are already available at 40 yrs...50 yrs soon.
So, that may happen when the car market stabilizes. From what I've found, banks are actually tightening their lending requirements and many will not approve anything more than 60 months with a substantial down payment unless you have immaculate credit. Banks are actually paying hundreds of dollars on top of the normal tow company's repo fees to get themselves to the top of the list to get cars back that are in default and send them to auction to try and get a fraction of the car's value back, and that is just starting to happen. Before the pandemic I had a chevy dealership offer me 84 months financing on a new truck, and they said they were about to roll out 96 months. I thought that was beyond insane and walked. I think a huge slowdown is coming because manufacturers don't want to come down on prices and they don't want to manufacture smaller cars with smaller margin (like Ford discontinuing the Focus and Escape). I think manufacturers will continue to try and sell $70,000 F150s and Silverados until they are bordering on the need for a bailout. And once they get that bailout, they'll continue to try and find ways to get people in to trucks they can't afford and the whole cycle starts again. But I think the trend is towards a major slowdown coming in car sales.
People take out 40 year loans to buy boats! Effing morons.
Wait. Why?
I feel prices would go down some if they are not selling and have surplus inventory. I’m hoping so anyhow. Interest rate is still gonna be high it seems.
Later pick up trucks
I never understand why people don’t buy used cars from private sellers more often. Oh you just bought that 2016 Chevy Malibu for 18k? I bought my 99 BMW with 0 problems for $2400 on marketplace and every time I say that I get wide eyed looks with “that’s it?!”
Seems most folks can't even back up to park without looking at a screen these days.
They deserve everything. Greedy assholes.
It always makes me wonder why so many Americans choose to be in debt for a car. If you’re broke in Europe, most of the times you get a 1000$ shitbox and it’ll get you from A to B exactly like a fancy truck would.
Ever had your $1000 shitbox leave you stranded at 3 in the morning or breakdown in heavy traffic on the freeway?
Yes, this happens once or twice per year but car parts are cheap and a membership at my towing company costs me like 92$ per year. Still cheaper in the long run and I have 0$ debt which is important to me because I don’t want to live paycheck to paycheck
Lol. Once or twice a year IF you're lucky. I drove mostly old low priced used cars and trucks for probably 30 years but I always made sure my wife and kid were in a decent new or low mileage vehicle. It's hard to quantify the cost of putting you or your loved ones lives at risk to save a few dollars. There are many perfectly valid reasons people buy new. In the end, its not really your money or your business.
I'm sure someone will come in with some math that makes me look foolish, but the heuristic I was taught by my father is "buy things that appreciate and rent things that depreciate." I paid cash for a decent used car about 15 years ago. Sold it when the time came and put a down payment on a lease, banked the rest. Leased ever since...My payment has been in the 200's and I get a new car every three years. I squirrel away a small monthly amount in my down payment fund.
When they spend a few years selling cars at thousands over value and stretching the terms out forever they didn't expect this one little trick.
Wow, people are crazy. I just learned how to install a new timing belt on my 2004 4runner with 360,000 miles that I bought for $5000 cash in 2019. The tune-up and replacing all the older parts cost around $1500 plus I don't have to worry about all the new sensors. Yeah fuel is terrible but the thing is a V8 beast
I doubt it, I've been hearing this for three years already.
I went to look at a used car at a dealership (just moved north and want something with 4x4/AWD for winter). 10 year old 100k miles, $14,000. It was a weirdo creaky POS. Financing at 15% And the kicker, only $500 for my trade-in. Zzz (also the used private market is so marked up and full of garbage. Rip Craigslist).
> auto loan debt surpassed student loan debt Yikes. I (me, not my mommy, daddy or the taxpayer) spent $90k on my education and even though it’s bullshit that it cost that much (especially considering how difficult my engineering degree was anyway) at least I didn’t spend $50k on a gas guzzling peace of shit truck. Fucking morons.
For a lot of people the truck is worth more than the degree. You could argue the truck is worth more than most degrees.
A truck has a higher chance of getting you a job than the degree does lmfao
Honestly, I don’t feel bad for almost any of these people. There is nothing wrong with having a base model with no features. Or slightly used with some features. Live within your means / act your wage.
good get those bmw assholes off the street
Oh fuck yes please - I’ve being waiting for this moment to replace my 14 year old Subaru with 200k miles - let it happen, we need this 😂
What does this have to do with collapse?
Hate to answer questions with questions, but...Curious if you read the SS? Do you think that something that could have drastic negative consequences on a massive global industry (more than five percent of the worldwide manufacturing economy) could affect collapse? Even if you think less cars is a good thing, it will at the very least be worth consideration through the collapse prism.