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| Economy |
| Auto Loan Bubble Is Beginning To Burst |
| 2016-09-08 |
| h/t Gates of Vienna Do you remember the subprime mortgage meltdown from the last financial crisis? Well, this time around we are facing a subprime auto loan meltdown. In recent years, auto lenders have become more and more aggressive, and they have been increasingly willing to lend money to people that should not be borrowing money to buy a new vehicle under any circumstances. Just like with subprime mortgages, this strategy seemed to pay off at first, but now economic reality is beginning to be felt in a major way. Delinquency rates are up by double digit percentages, and major auto lenders are bracing for hundreds of millions of dollars of losses. We are a nation that is absolutely drowning in debt, and we are most definitely going to reap what we have sown. The size of this market is larger than you may imagine. Earlier this year, the auto loan bubble surpassed the one trillion dollar mark for the first time ever... ...And it is undeniable that the stage is set for a crisis that will absolutely dwarf 2008. Our national debt has nearly doubled since the beginning of the last crisis, corporate debt has doubled, student loan debt has crossed the trillion dollar mark, auto loan debt has crossed the trillion dollar mark, and total household debt has crossed the 12 trillion dollar mark. We are living in the greatest debt bubble in world history, and there are signs that this giant bubble is now starting to burst. And when it does, the pain is going to be greater than most people would dare to imagine. |
| Posted by:g(r)omgoru |
| #13 The bubble may burst but there will less issues with repos versus foreclosures. Sub prime lenders are low jacking cars so they can track, shut down remotely and pick up vehicles much easier than ever before. |
| Posted by: airandee 2016-09-08 18:19 |
| #12 I have to blame Hank Paulson for the last eight years. Had he left the orderly disposition of assets under the supervision of FDIC Chair Sheila Bair--instead of the massive intrusion and arm twisting of TARP--we would have avoided the expenditures of $700-billion that instead of being returned to Treasury were blown on "shovel ready projects." Path, good intentions...outcome. http://fortune.com/2012/09/20/sheila-bair-and-the-bailout-bank-titans/ |
| Posted by: OregonGuy 2016-09-08 14:04 |
| #11 You have to know the whole industry is skanky when Hyundai pushes 72 month loans to sell their cheapest cars. That's a six year loan for a car that has a fair chance of not being around as a car in six years. One of the reasons why the self-driving car is interesting to some people is that when you're not using it someone else can. Over time we'll get away from the idea of "owning" a car to just "using" a car. |
| Posted by: Steve White 2016-09-08 12:08 |
| #10 When the F-150 dies, my next vehicle will be a 2017 Bentley Bentayga. Well I can dream can't I ? |
| Posted by: Besoeker 2016-09-08 11:38 |
| #9 It's another bubble bath on the taxpayers dime. Another student loan bubble has burst and more to come. 8,000 jobs lost, with some irate students pacified only by student debt erased, dumping the debt on taxpayers, and teachers on the unemployment rolls unable to pay mortgages and car loans thanks to a renegade Education secretary. Vets lost their benefits when they shuttered the door, too. University of Phoenix was resurrected by Obama buddy, Marty Nesbitt, and Devry Institute is probably next. |
| Posted by: Thor Lumumba3940 2016-09-08 11:15 |
| #8 There's a lot of churn in the auto-loan/sales business. Dealers sell a car, then repossess the car, then re-sell the car, usually to someone else who also cannot or does not pay on the loan. |
| Posted by: Pappy 2016-09-08 11:15 |
| #7 "private sector" = Wall Street Anything to make a couple of points...they really don't care about anything. That's why they give zillions to the Dems... |
| Posted by: Sock Puppet of Doom 2016-09-08 11:14 |
| #6 I thought the housing bubble was driven by Congress' desire to get more minorities into 'affordable housing'. Since interest rates are so low, more housing is affordable! Is there a similar parallel for auto-mobiles? Who is squeezing the car manufacturers to sell more cars to people who can't afford them? The housing bubble was government stupidity; this looks like private-sector greed. |
| Posted by: Bobby 2016-09-08 10:28 |
| #5 Bought a truck last winter. Used, because I couldn't see going into hock with an auto loan bigger than my mortgage. So - no auto loan at all. In 45 years of participation in the auto market I have bought two new vehicles, and only took a loan on one (which was wrecked & totaled a couple of months after the last payment.) |
| Posted by: Glenmore 2016-09-08 10:19 |
| #4 ...When I briefly sold Chryslers after retiring from the USAF (1998), the FIRST thing I discovered is that even then, roughly two thirds of the people who walked in the door didn't qualify for manufacturer or local bank financing. Our Finance guy would then make phone calls all over the US and it's possessions to find loans (we had some in Hawaii) for these folks. Looks like they found a way around that little problem. Mike |
| Posted by: Mike Kozlowski 2016-09-08 09:17 |
| #3 Just like with subprime mortgages, people are being taken advantage of severely...... Someone putting a gun to their heads and making them sign the lending agreement are they ? |
| Posted by: Besoeker 2016-09-08 08:59 |
| #2 I want them to bring back the "Junk Bonds for Junkers" trade-in program. |
| Posted by: Unainter Gray7529 2016-09-08 08:54 |
| #1 Who gets the bailout money this time? Depends on who writes the laws. Last time it was the Dems, this time it may be the 'pubs. Somehow I don't think it will matter. /cynicism |
| Posted by: AlanC 2016-09-08 08:06 |