The Holy-Cow Moment for Subprime Auto Loans; Serious Delinquencies Blow Out

Wolf Street ^ | Nov 13, 2019 | Wolf Richter

[Vermont Lt]

No,the lenders have to make these loans because rates are so low that they cannot stay in business otherwise.

It also means that the default rates on everything else will shoot up because people NEED to get to work.

It is an early indicator that the debt tower is getting pretty high.

[SPDSHDW]

My 2016 escape is the last car I buy off a dealer lot. Will have paid 24k over 6 years for the bloody thing. Now I have enough cars where I do not have to work on one all weekend to keep one running for the week, as was the case when I got the escape.

[CurlyDave]

...Yep, I read the article as an opportunity and a reminder...

I would not touch a repo vehicle with a barge pole.

Do you really think that people who will take on cars with outlandish interest rates and then not be able to make the payments will keep up with the maintenance schedule?

You will be lucky to get 50% off the normal life out of those vehicles.

[PGR88]

My wife and I make well north of $200k a year. I drive a 18 year old Tacoma,

I have a Toyota 4Runner with 215K miles. With basic maintenance, it has given me zero problems. Its rusting in spots. I like having an old car, and staying "under the radar" although I could afford a new one. Recently, some cretin put a big ding in my bumper while my car was parked in a shopping-mall parking lot. Having an old car, it didn't bother me too much.

[NorseViking]

And what is the point of making money in this case? It is not that you should waste in on 85k F-150 or Escalade but...

[zeugma]

I'm not entirely surprised by this. A friend of mine was recently looking at buying a pick up truck. He was looking at paying more than $40K. For a used vehicle. Insane.

[Mogger]

paying more than $40K. For a used vehicle. Insane.

I paid 30K for a used truck that has appreciated over $10,000 in 5 years.

A Mercedes Benz U1300L Unimog.

[Caipirabob]

But that would be common sense. Like defending borders, not crapping in the streets and not turning once great cities into vile petri dishes for plague.

I wonder what color the sky is on that world? 🤔😕

[Sirius Lee]

Save cash. Pay cash. Save cash.

Yup. Why go into debt over something that loses value with every passing year ad with every mile you drive?

[zeugma]

I paid 30K for a used truck that has appreciated over $10,000 in 5 years.

As I said, that just seems insane. One of the things that I thought was weird about what he was telling me, was when he would tell the salesman that he was paying cash, it was like they didn't really want to talk to him anymore. They really were more interested in selling the note than the truck.

[sanjuanbob]

They really were more interested in selling the note than the truck.

You’re right. In my first life I was in that business. It’s called dealer reserve.
A bonus percentage paid to the dealer on each sale.With full recourse agreement, dealer could sell unlimited volume without any approvals and still get the reserve. We had the biggest dealership in America of a very popular vehicle. Everybody was making huge $. We had six repo agencies working for us. As long as we could return the car to the dealer, we’d be paid in full. It was like a pyramid scheme.

[strider44]

Got 3 kids to put through college for one. Traveling with the family is a better to spend money. Activities, new experiences, etc. For me a car just gets you from a to b. But like I said, if you dig expensive cars, to each his own.