What’s the point to this doom and gloom article?
Should the government step in and regulate auto industry interest rates? How about debt forgiveness like socialists want for student loans?
The real problem today in the auto industry is NOT subprime loans.
It’s the fact that a new car today has an average sale price of over 35,000 bucks. Even middle class 700 plus FICO scoring Americans who could buy these cars - Aren’t.
In fact the high prices of new vehicles are linked with the fact that most finance it. Nobody cares how much does it cost. Everybody is interested how much to pay each month. Here we have a 50k pickup truck as a result. It is not inflation. In Asia they still have nice 20k trucks and 18k cars too.
I bought a brand new Honda Fit for $15K cash a couple of years ago, a good deal for a brand new reliable car. I can afford to buy more expensive vehicles but I just don’t. Other (bigger) cars and trucks can be bought used with cash, but Cash for Clunkers made those deals less so of course. . .
Vehicles are so expensive because the government helped. Their mandates are driving up the prices faster and faster. Unrealistic mpg goals, making features mandatory that should be voluntary upgrades. Using gas car sales to fund electric cars. It goes on. It's nearly impossible to find a basic vehicle anymore.
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.