Skip to comments.Subprime Auto Nation
Posted on 09/08/2012 6:27:11 AM PDT by gotribe
...During the first quarter of this year, total U.S. car loans totaled $52.5 billion. Thats 49% higher than the same period in 2009. Also during the first quarter, the average amount financed on new vehicles rose by $589, to $25,995, and for used cars by $411, to $17,050. Furthermore, buyers are stretching out payments for longer terms: The average length of new- and used-vehicle loans jumped a full month during the first three months of this year, to 64 and 59 months, respectively. The surge in auto sales is being completely driven by doling out more loans for a longer time frame to deadbeat borrowers. Subprime auto loans now make up 45% of all car loans and the vast majority of all used car loans. They have even created a category called Deep Subprime. Borrowers classified as deep subprime (i.e. those with Vantage scores below 600) account for 10.7% of auto loans. You can also classify them as loans that will never be repaid....
I’ve seen a lot of thirty day tags recently here in NC, on vehicles driven by individuals who would not appear to have much reason for strong optimism regarding their continued employment and future economic stability.
It’s more of the same that brought us the housing bubble and crash, just funnel stuff to poor people, requiring any sort of qualification is unfair, consequences, what consequences? We’ll just throw more Obama Stash at it when the time comes.
It’s a win-win for the radical left, really a trifecta. Give more stuff to people who vote for them, wreck the economy and destroy the currency in the process.
I’ll bet a lot of those new car tags you see are GM cars. It wouldn’t surprise me that GM is using the government loan money they owe to subsidize loans to reprobates - people who have no earthly way to completely complete their loans. Most of the ones I see are Chebby Cruz’s, etc....
Well, we could go Cloward-Piven on them and overwhelm the system.
Buy a few Chevys, don’t pay for them and just part them out.
I think your right. I remember reading an story a few weeks ago that GM was writing notes for just about anyone with a pulse.
me, I hate payments. I have a house payment. My van, while a GM (Sorry.. it’s pre-bailout) has 300,000 miles on it and because of that, I could just pay cash for it.
If you think about it, when you are on Section 8 housing (where you pay 1/4 of your ‘spendable’ income-whatever that is and whatever counts as income), TANF (welfare), get your food with SNAP and WICs, get your vacation or bigscreen TV money with your yearly multi-thousand dollar EITC check, agreeing to a car loan with usurious terms is a no-brainer.
You make a few payments with the leftover EITC check and then coast!...They can only take the car - when they can find it. They can’t garnish your welfare check or WICs or TANF or EITC or Section 8....in their mind, if the dealer is stupid enough to let them drive off the lot with the car, they deserve to get screwed - just like they screw the taxpayer every month.
I have a 30 day tag on my new Honda and yes, in North Carolina. I was willing to pay cash but why do it. They offered 0.9 for 60 months. I can guarantee the rate of inflation is much higher than that. Honda can pay it.
OMG, does that bring back memories. I recall as a teen, my parents decided to "move up" to a new car instead of the "good used cars" that were the norm in the family but in order to swing it, they had to go with the newly available 18 month financing. Not only was this a "new experience" but also one they were not too proud of and it was an unspoken "family secret" that they had to finance for 18 months. How times have changed............
Yeah, it really is all being done for votes. I thought one of he most interesting points in the long article was the connection between student loans and the unemployment rate. I had never made that connection before: the more student loans that are made, the more people are full-time students and officially out of the workforce, so the unemployment rate goes down. Very tricky accounting there by our government-banksters.
If you need a new vehicle and can afford to do so, then you’re not who I’m talking about. I’m talking about temporary thirty day tags on new vehicles on the poor side of town, quite a lot of them and not especially inexpensive ones at that. This should be viewed as not being particularly advisable by anyone with even a basic grasp of economics.
Unemployment here is above the national average, cost of living continues to increase. It’s time to hunker down and ride it out, not go on a spending spree funded by too-easy credit. Perhaps some macroeconomics experts can rationalize their way into this on a broader scale since the sellers certainly are benefitting, but on an individual level, that of the buyer, there will be more regret than rejoicing in this environment.
And then ther’s the note and the repossessionfest to come.
I understand. I bought my car last Monday and they ran a credit check. They actually pulled up my score and gave me a copy. I don’t think Honda would have financed me if my score was below 700 or so.
I can remember when it was common to get a three year car loan. But, if you really had to stretch, you would get a four year loan. Now, seeing 7 year loans or 5 year leases is common.
This subject makes me thing we don’t educate young people very well about how to handle money, how and when to borrow money for big purchases, etc.
My interest on a new Accord will be 471.00 after 5 years. Tell me that my 20 something thousand now will be worth more than that loss in 5 years. I don’t think so.
GREAT article !