$45k loan for a $27k car!

Status
Not open for further replies.
Originally Posted by Mad_Hatter
Originally Posted by csandste
I pay cash. I get 'em from Hertz. The next recession/depression will be caused by idiot people and idiot companies taking on debt.

That was certainly one of the causes of the last recession. Unscrupulous lenders putting people in homes they simply could not afford. The same is being done with these car loans...6, 7, 8yr loans and $600, $700, $800 payments (or more) for run of the mill vehicles are now common place. Yet discretionary income hasn't risen but a few points over the last decade or two. I haven't had a car payment in over 6yrs now and love it. Neither do I owe anybody anything in the form of unsecured debt.. and I sleep well at night as a result....


Precisely....the housing market is an example of what could happen with the auto market....just wait until all the defaults begin.
 
In the early 1980s a guy I knew got a job selling cars. He was unhappy to learn if a person couldn't afford the down payment on a $15k car they would raise the seling price to $20k and he has an instant $5k down payment and the dealer got full MSRP. Stupid people and shady financing have been around for a long time.
 
Originally Posted by Mr Nice
He's an idiot and I don't feel sorry for him.

LOL that's not a very "nice" thing to say, Mr. Nice.

But I agree, seems like that fella is doing his thinking with the wrong head.
lol.gif

Originally Posted by JC1
No, but they look stylish heading to the dollar store in those Fancy rides.

Don't forget running said vehicles on Dollar General oil and regular fuel.
Then approaching BITOG and wondering why their vehicle failed prematurely.
28.gif
 
Originally Posted by Mr Nice
Next bubble will be very bad.

Lots of people over leverage themselves to their eyeballs and think they are living the American Dream.

Young folks today just know how to sign on the dotted line and worry about the bills later.



I think a lot of it has to do with many college grads starting out in the world with massive student loans they will likely never be able to pay back. They are used to debt, hence the "how much can you afford monthly" trap by dealerships being so effective.

To these individuals, "affording" means being able to make the monthly payment, not necessarily owning it.
 
Originally Posted by AZj
He was unhappy to learn if a person couldn't afford the down payment on a $15k car they would raise the seling price to $20k and he has an instant $5k down payment and the dealer got full MSRP. Stupid people and shady financing have been around for a long time.


While that's clever, doubt it works now unless it's a car selling well under book.
 
Originally Posted by atikovi
Originally Posted by Mad_Hatter
This is bonkers..In one example 2 young ppl rolled in nearly $15k in negative equity!

Link to WSJ article


Article says he is 40, not what I'd call, "young ppl." And as long as the borrower makes the monthly payment, what's the big problem. He's an electrician and they make good money. While not the smartest financial decision, if he can afford it, who cares?

You obviously didn't read the entire article. The two young people I referenced in the article, towards the end, are in their 20's (making me nearly 30yrs their senior). Go back and re-read the entire thing before commenting
 
Last edited:
Originally Posted by Mad_Hatter
In February of this year the Federal Reserve of NY issued a report saying that a record number of car loans are in excess of 90dys late - not good. That's repossession territory.

That's the problem. They don't want them back. The loans are too far underwater, and the value of the car has depreciated too much for them to get out without a huge loss all the way around. Regardless of what they can sell it for. The loan is too big, and the value of the vehicle is too low. Everyone loses.

It's better to let them keep it, and hope they pay what they can, when they can. Again, this whole mess can be traced back to the bigger idiot theory, just like the housing debacle. The banks and credit unions became the bigger idiots, by OK'ing such large loan disasters on vehicles that have depreciated faster, and beyond their needed recovery value. All because borrowers owe too much in the first place.

This is what happens when people don't put enough down on these large purchases. Be they homes or cars. No one has any, "skin in the game". It's no different then when these same banks and credit unions were loaning out $350K to buy homes that weren't worth $200K. All to people who put diddly squat down.

But houses NEVER go down in value.... Or so everyone believed. Now they have to come to terms that these new cars are dropping in value quicker than the balance of the loan can be paid off.

Add to that the purchasers didn't come in with enough money down in the first place, and it's going to be the same mess we had with housing a decade ago. They won't need tow trucks and repo men to take them. People will be walking away from them, just like they did their homes.
 
While a Jeep Cherokee is hardly a good choice for a growing family, unless the guy was trading a Miata, there is a financial product for those who love that new car feeling.
It's called a lease.
I'll add that for every financially challenged buyer there's an equally challenged lender.
Credit always gets really easy late in an economic expansion and then instantly dries up when the inevitable contraction comes.
Retail buyers might be forgiven their lack of financial acumen, but lenders really should know better by now.
 
Originally Posted by fdcg27
........ Credit always gets really easy late in an economic expansion and then instantly dries up when the inevitable contraction comes.

That is the biggest problem. Credit should NEVER be, "really easy". That's what destroyed the stock market in 1929. The housing market in 2009. And will destroy the car market in 2020.
Originally Posted by fdcg27
Retail buyers might be forgiven their lack of financial acumen, but lenders really should know better by now.

I couldn't agree more. The lenders have always been the financial safety valve that keeps the whole system in check. Or at least should be. It's when they became the bigger idiots, everything went south fast. They didn't learn a thing from the housing debacle. As always, when you ignore history, it has a ugly way of repeating itself......... And please don't get me started on car leases.
 
The buyer, John Shricker, is a total MORON

He rolled one loan into another at least three times simply because he could afford the payment. As mentioned previously, no one forced him to buy four cars in two years.

The sad thing is a short article on MarketWatch.com appearing online this afternoon blamed "rising car prices" for his $45,000 loan on a $27,000 Jeep.

We should pity his victimization. NOT!
 
Originally Posted by dkryan
The buyer, John Shricker, is a total MORON

He rolled one loan into another at least three times simply because he could afford the payment. As mentioned previously, no one forced him to buy four cars in two years.

The sad thing is a short article on MarketWatch.com appearing online this afternoon blamed "rising car prices" for his $45,000 loan on a $27,000 Jeep.

We should pity his victimization. NOT!



Tell us what you really think, dkryan. LOL!
I guess I have to ask who's the greater fool here.
The buyer, who clearly does a good dumb blond imitation, or the lender who lends nearly double bucks on the piece?
If the buyer runs into any financial difficulties, the lender is then stuck with collateral that won't bring more than 30% of the amount loaned at auction.
Who is the moron here?
 
Originally Posted by fdcg27
Originally Posted by dkryan
The buyer, John Shricker, is a total MORON

He rolled one loan into another at least three times simply because he could afford the payment. As mentioned previously, no one forced him to buy four cars in two years.

The sad thing is a short article on MarketWatch.com appearing online this afternoon blamed "rising car prices" for his $45,000 loan on a $27,000 Jeep.

We should pity his victimization. NOT!



Tell us what you really think, dkryan. LOL!
I guess I have to ask who's the greater fool here.
The buyer, who clearly does a good dumb blond imitation, or the lender who lends nearly double bucks on the piece?
If the buyer runs into any financial difficulties, the lender is then stuck with collateral that won't bring more than 30% of the amount loaned at auction.
Who is the moron here?

The lender is because the guy can ultimately file for bankruptcy (his ace up the sleeve so to speak) leaving the lender holding the bag/with the loss.

And many might not be aware of this but it's actually quite easy to get auto financing after a Ch. 7 filing..ya know why?.. because lenders know you can't file bankruptcy again for another 10yrs...so if you default on your loan after a bankruptcy filing, they got your arse. They'll reposes and sue you to garnish your wages for the payoff amount... and they will win that lawsuit 100% of the time....
 
Last edited:
Originally Posted by Mad_Hatter
Originally Posted by fdcg27
Originally Posted by dkryan
The buyer, John Shricker, is a total MORON

He rolled one loan into another at least three times simply because he could afford the payment. As mentioned previously, no one forced him to buy four cars in two years.

The sad thing is a short article on MarketWatch.com appearing online this afternoon blamed "rising car prices" for his $45,000 loan on a $27,000 Jeep.

We should pity his victimization. NOT!



Tell us what you really think, dkryan. LOL!

I guess I have to ask who's the greater fool here.
The buyer, who clearly does a good dumb blond imitation, or the lender who lends nearly double bucks on the piece?
If the buyer runs into any financial difficulties, the lender is then stuck with collateral that won't bring more than 30% of the amount loaned at auction.
Who is the moron here?

The lender is because the guy can ultimately file for bankruptcy (his ace up the sleeve so to speak) leaving the lender holding the bag/with the loss.

And many might not be aware of this but it's actually quite easy to get auto financing after a Ch. 7 filing..ya know why?.. because lenders know you can't file bankruptcy again for another 10yrs...so if you default on your loan after a bankruptcy filing, they got your arse. They'll reposes and sue you to garnish your wages for the payoff amount... and they will win that lawsuit 100% of the time....


Anybody can get financed on a new car.
It's just a matter of the terms they're looking at.
If a buyer has had a recent bankruptcy filing, he'll be paying the same deadbeat rates as any other sub-prime borrower.
Not being able to file under the federal bankruptcy statute for ten years means little or nothing since most lenders are aware that you can't get blood out of a turnip and there will likely be other creditors lined up to win judgments against the deadbeat.
In many cases, lenders will simply sell what is called the salvage at a deep discount to a vulture law firm that specializes in wringing what blood they can from these deadbeat debtors.
 
Originally Posted by fdcg27
Originally Posted by dkryan
The buyer, John Shricker, is a total MORON

He rolled one loan into another at least three times simply because he could afford the payment. As mentioned previously, no one forced him to buy four cars in two years.

The sad thing is a short article on MarketWatch.com appearing online this afternoon blamed "rising car prices" for his $45,000 loan on a $27,000 Jeep.

We should pity his victimization. NOT!



Tell us what you really think, dkryan. LOL!
I guess I have to ask who's the greater fool here.
The buyer, who clearly does a good dumb blond imitation, or the lender who lends nearly double bucks on the piece?
If the buyer runs into any financial difficulties, the lender is then stuck with collateral that won't bring more than 30% of the amount loaned at auction.
Who is the moron here?


I think you miss the big picture. What's the interest rate the lender is charging again? If there are 10 people like that out there doing the same thing and the lender knows that 2 of them will default, but charges the other 8 a high enough interest rate so that they're covered when the two do go under, does that really make them the moron? They're taking on a risk that the higher interest rate will make up for eventual losses. If they've done their business models correctly, they will still make money when people default. Their model probably calls for a certain amount. Where they get in trouble is when too many default. But that's the risk with any business, they go under or get in trouble when the markets don't go according to their business places. Look at WeWork, they were trying for a high valuation, but the markets said otherwise.
 
Its REALLY amazing what people do.
Quite scary the way people drive cars they can not afford to buy. If you cant pay cash or cant pay it off in less then 36 months, you should not own it.
Wait till the market crashes, people will be crying in the streets that they owe the car company thousands of dollars but no longer have a car to drive to work.
People drive off the car lot now, and literally lose almost $5,000 to 10,000 dollars in the first month, then already backwards on the car and what they have left to pay off.

Know what that means? Another taxpayer bailout for the people who make bad decisions.

My god, 6 year auto loans, only in the USA. Do you know expert cars from the USA to other countries have less options? Even the luxury brands.
Why? Because people do not borrow the insane amount of money to buy cars overseas.
Its nuts, over 50% of the population who takes out an auto loan now goes for over 60 months! If you need to do that, you should be buying a used $10,000 car and that is only if you think a car is such a "status' symbol.
https://www.creditkarma.com/auto/i/car-loan-term/
 
Last edited:
Originally Posted by Wolf359
Originally Posted by fdcg27
Originally Posted by dkryan
The buyer, John Shricker, is a total MORON

He rolled one loan into another at least three times simply because he could afford the payment. As mentioned previously, no one forced him to buy four cars in two years.

The sad thing is a short article on MarketWatch.com appearing online this afternoon blamed "rising car prices" for his $45,000 loan on a $27,000 Jeep.

We should pity his victimization. NOT!



Tell us what you really think, dkryan. LOL!

I guess I have to ask who's the greater fool here.
The buyer, who clearly does a good dumb blond imitation, or the lender who lends nearly double bucks on the piece?
If the buyer runs into any financial difficulties, the lender is then stuck with collateral that won't bring more than 30% of the amount loaned at auction.
Who is the moron here?


I think you miss the big picture. What's the interest rate the lender is charging again? If there are 10 people like that out there doing the same thing and the lender knows that 2 of them will default, but charges the other 8 a high enough interest rate so that they're covered when the two do go under, does that really make them the moron? They're taking on a risk that the higher interest rate will make up for eventual losses. If they've done their business models correctly, they will still make money when people default. Their model probably calls for a certain amount. Where they get in trouble is when too many default. But that's the risk with any business, they go under or get in trouble when the markets don't go according to their business places. Look at WeWork, they were trying for a high valuation, but the markets said otherwise.


No, I think I have a pretty good grasp of the bigger picture.
Marginal borrowers agree to insanely high APRs because that's the only way they can get financed in a new car.
Lenders have dollar signs in their eyes but fail to consider what will happen when the next economic contraction comes.
All of a sudden, those high-profit marginal borrowers lose their jobs and stop making their car payments, focusing their unemployment benefits upon paying for food and housing. The value of the collateral also takes an instant added hit since the market for repo cars shrivels as the availability of credit and the willingness of buyers to incur debt dries up.
This has happened in every serious recession in my lifetime and yours. It happened only ten years ago.
There is nothing new under the sun and the current easy credit environment is nothing more than what one can observe as happening late in every economic expansion.
Any bailouts will benefit the lenders, since saving the banking system will be seen as vital to continued economic survival, as it probably is.
 
Originally Posted by pbm
Originally Posted by Slick17601
I don't like the fact that the article plays him up as a victim. No one held a gun to his head.


Being a 'victim' is the best strategy in modern America....right now it looks like all the 'victims' of college loan debt may
fare better than those who paid their way.

Schools used to teach 'home economics'.....now they teach 'social justice'....it's all part of 'dumbing down' (by design)....



Exactly right ^^^^
 
"My perfectly good [5 year old car] needs [small repair] so i better just trade it in for a brand new upgraded model." -america.
 
Status
Not open for further replies.

Similar threads

C
can u get a reliable used car for under $3k anymore?
4 5 6
Replies
103
Views
8K
Cheetah-kins
SwampSurvivor
Bought out our Nissan Lease - VERY difficult!
2 3
Replies
50
Views
6K
CKN
B
Five Euro Car Myths?
7 8 9
Replies
167
Views
19K
Stumpy
D
Replaced Golf Sportwagen with an Alltrack
2 3 4
Replies
75
Views
9K
AZjeff
wwillson
  • Locked
Answers - Pennzoil Technology behind "Made From Natural Gas" and Vehicle maintenance while driving less Q&A
Replies
5
Views
31K
RateNate
Back
Top