Capt.Storm Posted July 1, 2016 Share Posted July 1, 2016 (edited) While American consumers have reduced their overall debt in the years since the Great Recession, car loans have grown at roughly the same rate as student loans, according to The St. Louis Federal Reserve. Together, loans for cars and education contributed 90 percent of the growth in consumer debt since the end of 2012. Outstanding auto loans have hit more than a trillion dollars, with an average balance of $12,000 per person (or nearly 8 percent of disposable income), while the dreaded student loans “epidemic” is not far ahead at $1.3 trillion outstanding. Juicing Subprime Auto Loans Auto Asset Backed Securities (ABS), securitized bundles of car loans not unlike the mortgage-backed securities at the heart of the 2008 credit crisis, are the hidden driver of the auto debt boom. In the first two months of 2016 lenders issued $17.69 billion in new auto ABS compared with just $1 billion in credit card debt-backed ABS and $600 million in student loan-backed ABS. With subprime auto loans growing faster than the regular market, the return on these investments are improving even as the risk grows. In 2015 some 23.5 percent of all new car loans were subprime, a significant proportion but not enough to trigger an economic meltdown. After all, relatively strong returns are what has stoked demand for auto ABS since the recession. With the Federal Reserve maintaining low interest rates and other central banks moving into negative rates, financial institutions have been seeking returns wherever they can be found, and bundles of car loans have filled that need nicely. But, like the MBS that brought down the market before them, those returns are juiced by a growing percentage of subprime loans mixed in with the safer but less lucrative prime loans. The collapse of the auto credit bubble is far more likely to take the form of falling vehicle values than defaulting loans. When that happens, car plants in the United States will likely be idled or shuttered in favor of cheaper Mexican production, and the contagion will begin to spread throughout the American economy. http://thefederalist.com/2016/04/04/why-the-auto-loan-bubble-is-as-important-as-the-student-loan-bubble/ Edited July 1, 2016 by Capt.Storm Quote Link to comment Share on other sites More sharing options...
Cold War Posted July 1, 2016 Share Posted July 1, 2016 Vehicles have become way too expensive, with way too much bullshit on them. Most people I know lease. They can't work on them and can't afford a 100$ an hour to have someone else do the work. When you live in Michigan the shit is all rotted out before it is paid for. Quote Link to comment Share on other sites More sharing options...
Rod Posted July 1, 2016 Share Posted July 1, 2016 Don't buy a Ford Quote Link to comment Share on other sites More sharing options...
Ebsell Posted July 1, 2016 Share Posted July 1, 2016 1 Quote Link to comment Share on other sites More sharing options...
GGNHL Posted July 1, 2016 Share Posted July 1, 2016 Can't wait, I'll be there to scoop up a new vehicle or lightly used cheap. Quote Link to comment Share on other sites More sharing options...
Boered Posted July 1, 2016 Share Posted July 1, 2016 I drive used, but think about new and then realize a house is more important. 1 Quote Link to comment Share on other sites More sharing options...
GGNHL Posted July 1, 2016 Share Posted July 1, 2016 Just now, Boered said: I drive used, but think about new and then realize a house is more important. That's why I drive $5k cash bought vehicles and saving up a massive down payment while my buddies are buying $50k pickups and living with mom and dad... 1 Quote Link to comment Share on other sites More sharing options...
Boered Posted July 1, 2016 Share Posted July 1, 2016 Just now, GGNHL said: That's why I drive $5k cash bought vehicles and saving up a massive down payment while my buddies are buying $50k pickups and living with mom and dad... Smart move IMO. Borrowing on a depreciating asset is not a good move for a young person trying to established. I see all the latest and greatest and think I need it, but then my common sense kicks in. Quote Link to comment Share on other sites More sharing options...
Anler Posted July 1, 2016 Share Posted July 1, 2016 When are people going to realize our economy is propped up by debt? Without massive debt our economy is shit. Quote Link to comment Share on other sites More sharing options...
Cold War Posted July 1, 2016 Share Posted July 1, 2016 10 minutes ago, Anler said: When are people going to realize our economy is propped up by debt? Without massive debt our economy is shit. Our society is consumer driven. Everything evolves around spending and buying more shit. Look how much we spend on our pets alone. Quote Link to comment Share on other sites More sharing options...
Ebsell Posted July 1, 2016 Share Posted July 1, 2016 I bought a new truck a few weeks ago. Never had a truck payment in my life but with 0% interest why not use their money 1 Quote Link to comment Share on other sites More sharing options...
Sal Rosenberg Posted July 1, 2016 Share Posted July 1, 2016 2 minutes ago, Ebsell said: I bought a new truck a few weeks ago. Never had a truck payment in my life but with 0% interest why not use their money It's tempting but when you take the 0% they just gaff you in the ass on the price of truck . I'd like a new one some day's but right now I haven;t made a payment in over 5 years and that's a nice feeling . Quote Link to comment Share on other sites More sharing options...
Ebsell Posted July 1, 2016 Share Posted July 1, 2016 18 minutes ago, Sal Rosenberg said: It's tempting but when you take the 0% they just gaff you in the ass on the price of truck . I'd like a new one some day's but right now I haven;t made a payment in over 5 years and that's a nice feeling . I toyed with them on a cash price buy not including factory incentives they would only come down a little over $1,500. Was tempted to go to a Chev because they have 20% off msrp right now. They can't even give them away. Bought the Ford instead. Quote Link to comment Share on other sites More sharing options...
Sal Rosenberg Posted July 1, 2016 Share Posted July 1, 2016 Just now, Ebsell said: I toyed with them on a cash price buy not including factory incentives they would only come down a little over $1,500. Was tempted to go to a Chev because they have 20% off msrp right now. They can't even give them away. Bought the Ford instead. Nice . Didn't you have a mid 90's 150 that you ran forever ? Quote Link to comment Share on other sites More sharing options...
SVT MXZ XRS Posted July 1, 2016 Share Posted July 1, 2016 2 hours ago, Cold War said: Vehicles have become way too expensive, with way too much bullshit on them. Most people I know lease. They can't work on them and can't afford a 100$ an hour to have someone else do the work. When you live in Michigan the shit is all rotted out before it is paid for. Not all of us 1 hour ago, Sal Rosenberg said: It's tempting but when you take the 0% they just gaff you in the ass on the price of truck . I'd like a new one some day's but right now I haven;t made a payment in over 5 years and that's a nice feeling . Not true. I just picked up a Flex for the wife today. Got 0% thru Ford Credit , plus my A Plan plus all the factory and dealer rebates. I'll use their money for free 1 Quote Link to comment Share on other sites More sharing options...
Ebsell Posted July 1, 2016 Share Posted July 1, 2016 1 hour ago, Sal Rosenberg said: Nice . Didn't you have a mid 90's 150 that you ran forever ? I had a 97 F150 that had 400k on it when the frame went. Toughest truck I ever seen lol. Last one was a 2010 with the 5.4 in it. 250k on it. Had a 88 Chev that lasted to 230k. It was a good truck but nothing like the other 2 Quote Link to comment Share on other sites More sharing options...
racer254 Posted July 1, 2016 Share Posted July 1, 2016 The Cash for Clunkers program didn't help. It took many used cars off the market requiring people to buy cars that were more expensive then they probably would have. Quote Link to comment Share on other sites More sharing options...
Capt.Storm Posted July 1, 2016 Author Share Posted July 1, 2016 33 minutes ago, racer254 said: The Cash for Clunkers program didn't help. It took many used cars off the market requiring people to buy cars that were more expensive then they probably would have. Gov subsidized car buying in that fawked up deal for sure. Quote Link to comment Share on other sites More sharing options...
racer254 Posted July 1, 2016 Share Posted July 1, 2016 7 minutes ago, Capt.Storm said: Gov subsidized car buying in that fawked up deal for sure. 3 billion worth. Quote Link to comment Share on other sites More sharing options...
Cold War Posted July 1, 2016 Share Posted July 1, 2016 1 hour ago, racer254 said: The Cash for Clunkers program didn't help. It took many used cars off the market requiring people to buy cars that were more expensive then they probably would have. What a fiasco that was. Another stupid lib program that hurt the lower / middle class. 10 hours ago, SVT Renegade XRS said: Not all of us Not true. I just picked up a Flex for the wife today. Got 0% thru Ford Credit , plus my A Plan plus all the factory and dealer rebates. I'll use their money for free Michigan is hard on vehicles............especially around here where there are still a lot of dirt roads. Humid in the summer, salt in the winter. Quote Link to comment Share on other sites More sharing options...
SVT MXZ XRS Posted July 1, 2016 Share Posted July 1, 2016 1 hour ago, Cold War said: What a fiasco that was. Another stupid lib program that hurt the lower / middle class. Michigan is hard on vehicles............especially around here where there are still a lot of dirt roads. Humid in the summer, salt in the winter. Yea , but not all of us take forever to pay out vehicles off and don't take care of them. I usually pay off a minimum of 2 years early. This one being 0% I may as well just use their money as long as I can since I'm not paying any interest on it 1 Quote Link to comment Share on other sites More sharing options...
GGNHL Posted July 1, 2016 Share Posted July 1, 2016 43 minutes ago, SVT Renegade XRS said: Yea , but not all of us take forever to pay out vehicles off and don't take care of them. I usually pay off a minimum of 2 years early. This one being 0% I may as well just use their money as long as I can since I'm not paying any interest on it Not all of us are angry UAW janitors either. Quote Link to comment Share on other sites More sharing options...
Cold War Posted July 1, 2016 Share Posted July 1, 2016 1 hour ago, SVT Renegade XRS said: Yea , but not all of us take forever to pay out vehicles off and don't take care of them. I usually pay off a minimum of 2 years early. This one being 0% I may as well just use their money as long as I can since I'm not paying any interest on it True, but know matter how well you take care of them, they will never last like they would in a southern State. I couldn't believe the amount of 80's & 90's cars & trucks still on the road in southern Florida . Unless something is special like a trans am, corvette, mustang, that has been kept out of the weather, you never see like a an escort or something around here. Motors, trans, etc. can all be replaced, once the body is compromised it is junk. Quote Link to comment Share on other sites More sharing options...
Ebsell Posted July 1, 2016 Share Posted July 1, 2016 2 hours ago, Cold War said: What a fiasco that was. Another stupid lib program that hurt the lower / middle class. Michigan is hard on vehicles............especially around here where there are still a lot of dirt roads. Humid in the summer, salt in the winter. Didn't effect anyone here. For what they were offering for beaters you could have sold them for anyways. I don't know of one person who bought a new vehicle because of that program Quote Link to comment Share on other sites More sharing options...
SVT MXZ XRS Posted July 1, 2016 Share Posted July 1, 2016 28 minutes ago, Cold War said: True, but know matter how well you take care of them, they will never last like they would in a southern State. I couldn't believe the amount of 80's & 90's cars & trucks still on the road in southern Florida . Unless something is special like a trans am, corvette, mustang, that has been kept out of the weather, you never see like a an escort or something around here. Motors, trans, etc. can all be replaced, once the body is compromised it is junk. I just turned my wife's in yesterday. '08 with 184500 on it and had zero rust on the body. Only reason I got rid of it is because the trans started slipping a bit and it was more to fix it than they gave me for trade in and I wanted it gone before trans got worse and then I didn't have a trade in. Not to mention, the deals are good right now making room for the '17s Quote Link to comment Share on other sites More sharing options...
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