The subprime auto loan crisis?

[Slater]

I don't know - this isn't something that seems to be brought up on the evening news. So, possibly more media hyperbole?

"A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide."

http://www.msn.com/en-us/money/marke...cid=spartandhp

[chuckman]

Is this really a thing? Have these people never been around a military or college town? This happens all. The. Time. So yeah, hyperbole.

[FromMyColdDeadHand]

The market for cars can clear itself a lot faster than the realestate market. As for the losses on the financial side, I just see enough capital leveraged to be a big enough issue. I keep waiting for interest rates to rise, and keep waiting.

[Arik]

It won't let me copy/paste but I call BS on the second paragraph after the graph. ..... People being lent money without income verification.....

I was in this business for a long time. While there certainly are good people who unfortunately fall on hard times, the overwhelming majority are people who just don't give a F. It's more like "how can I pay my monthly payment when I just put in a $500 stereo system and $8k rims!" Or simply cry about car payment when they always have the brand name top of the line phones and $100 sneakers.

When I ran credit reports I'd mostly see collections for other cars, collections for 7 credit cards with each being between $200 and $1000. The only collections I overlooked we're medical. But overall people didn't care, didn't prioritize. They just bought the next cool thing

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[hotrodder636]

I was a Command Financial Specialist when I was stationed in Charleston...I saw this all the time. I also had to sit young sailors down and explain to them that when you far outspend what you make you get into serious debt. For a lot of these kids it was the first time they ever had any money so they had no idea how to handle it. Most bought cars they couldn't actually afford.

Is this really a thing? Have these people never been around a military or college town? This happens all. The. Time. So yeah, hyperbole.

[Vandal]

I spent about 7 years selling cars for a living. All I have to say is this, the majority of car buyers are payment buyers. Very, very few pay cash. If the payment looks good, let's do it! They don't give a damn about the negative equity being rolled from car to car until eventually the dealer and financing company can't make it happen and they are stuck. Most I dealt with in that position never wanted to put any cash down either, just roll it all over.

Any "bubble" in the auto industry will quickly go away as the average buyer moves from one car to another every 3-4 years. Yes, there are outliers on each side of the curve, but 3-4 years is the average.

[TAZ]

Confused. I'm supposed to feel sorry for guys who buy above their budget and get their cars repossessed? Or for banks that don't do their due diligence when it comes to who they lend $$ to? Sorry, I'm too old school. Let the bank go bankrupt and if there is a need for more lenders the market will adapt to one less lender. Buy too much car and loose it, go to Walmart and buy a bike to get to work. Harsh lesson, but wanna bet it won't be forgotten.

I've often wondered how much effect on pricing these sheister lenders have. Would Chrysler be charging $30k for a car if banks actually vetted lenders correctly or would prices mysteriously drop?

[FromMyColdDeadHand]

If anything, it might mean some good deals on used cars.

[Arik]

I spent about 7 years selling cars for a living. All I have to say is this, the majority of car buyers are payment buyers. Very, very few pay cash. If the payment looks good, let's do it! They don't give a damn about the negative equity being rolled from car to car .

YES!!!!!!

I had a guy come in who owned $40k on his Scion tC. This was back in 2009-12 time frame. He kept rolling over payments from car to car and he came in looking to get out of that. Unfortunately the only options were either suck it up and pay it off....... eventually. Or roll over again, which he couldn't due to horrible credit and owing 4x what the car was worth. No one would take it in trade

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[Arik]

If anything, it might mean some good deals on used cars.

It doesn't. Banks know what those cars are worth and what they need for them. They want to recoup as much as possible. Not to say that deals don't pop up but generally they don't

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