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US car repossessions surge as more Americans default on auto loans

theguardian.com

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Re: US car repossessions surge as more Americans default on auto loans

#11

Post by nine_zeros »

jfengel wrote: post #5

I'm surprised it has taken this long. Everything I thought I knew about economics (and basic finance) has pointed in the direction of imminent pain for consumers, but what I've been hearing is more of a dull ache at most. I don't want a crisis, and if we avert one I'll happily update my beliefs. But even if the crisis comes I'll have to figure out why it has been so slow.

It took long because during the last Trump era, lenders figured out a neat trick - extend the loan terms to 7 years instead of the conventional 5. That, and the low interest rates hooked people. This exaggerated during the pandemic with people taking insane $1000/month loans.

Trump comes back, downturn comes back to main street, and voila - loans running naked.

Re: US car repossessions surge as more Americans default on auto loans

#12

Post by hyghjiyhu »

arjvik wrote: post #8
dijit wrote: post #2

It's an extremely inconvenient situation that Americans find themselves in, a sort of self-perpetuating cycle of car dependency that they reinforce because alternatives require far too much investment to make worthwhile. I'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot mor…

> if you don't properly invest in the maintenance of the thing For me, it's not the money that's annoying (though of course I'm not pleased by the bills every once in a while). It's the amount of time it takes to keep a car maintained! Seems like just yesterday I took a whole day remote to sit at the mechanics shop for a tire change, but now I have to do the same for an oil change! For this precise reason I end up do…

I haven't done it myself but isn't a tire change suppose to be pretty easy thing to do, certainly better than sitting the whole day in the shop?

Re: US car repossessions surge as more Americans default on auto loans

#13

Post by conception »

arjvik wrote: post #8
dijit wrote: post #2

It's an extremely inconvenient situation that Americans find themselves in, a sort of self-perpetuating cycle of car dependency that they reinforce because alternatives require far too much investment to make worthwhile. I'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot mor…

> if you don't properly invest in the maintenance of the thing For me, it's not the money that's annoying (though of course I'm not pleased by the bills every once in a while). It's the amount of time it takes to keep a car maintained! Seems like just yesterday I took a whole day remote to sit at the mechanics shop for a tire change, but now I have to do the same for an oil change! For this precise reason I end up do…

This is my favorite thing about getting an EV; effectively zero maintenance except for tires.

Re: US car repossessions surge as more Americans default on auto loans

#14

Post by electric_muse »

jfengel wrote: post #5

I'm surprised it has taken this long. Everything I thought I knew about economics (and basic finance) has pointed in the direction of imminent pain for consumers, but what I've been hearing is more of a dull ache at most. I don't want a crisis, and if we avert one I'll happily update my beliefs. But even if the crisis comes I'll have to figure out why it has been so slow.

You’re probably underestimating how much credit is available to people. Having money issues? Keep paying your car while you borrow money from Klarna for your DoorDash chipotle.

Re: US car repossessions surge as more Americans default on auto loans

#15

Post by harmmonica »

As if I need to make another comment about a, or multiple bubbles, but something has to give and here it's of course the consumer. New and used car prices are at all-time highs (nominal it sounds like, but tell that to someone whose wages haven't kept pace (i.e., almost everyone)). Housing prices are at all-time highs (in terms of price:income so no qualifier needed there). Tariffs are not being 100% eaten by the producers (duh), nor by the importers (double duh), and so the consumer is being hit by those. Health care costs are about to rise materially as we flip to 2026 for large swaths (all?) of the US population. Any tax relief seen by the average consumer is likely not even close to enough to counterbalance all the increased prices/costs.

HN is fond of saying that the only thing propping up the US economy at this point is AI investment (not informed enough to know if that's actually true, but outside of equity prices it sure seems like everything else is blinking "this economy sucks.").

So when will the music stop? Seems like it should've been "yesterday," but what's the argument for it to continue playing for the foreseeable future? The great wealth transfer? AI efficiency/productivity gains (without the vast elimination of jobs)? Something else?

Re: US car repossessions surge as more Americans default on auto loans

#16

Post by 0cf8612b2e1e »

arjvik wrote: post #8
dijit wrote: post #2

It's an extremely inconvenient situation that Americans find themselves in, a sort of self-perpetuating cycle of car dependency that they reinforce because alternatives require far too much investment to make worthwhile. I'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot mor…

> if you don't properly invest in the maintenance of the thing For me, it's not the money that's annoying (though of course I'm not pleased by the bills every once in a while). It's the amount of time it takes to keep a car maintained! Seems like just yesterday I took a whole day remote to sit at the mechanics shop for a tire change, but now I have to do the same for an oil change! For this precise reason I end up do…

You need to find a new mechanic if it is taking them an entire day to replace tires or do an oil change.

Re: US car repossessions surge as more Americans default on auto loans

#17

Post by SecretDreams »

ifyoubuildit wrote: post #9
dijit wrote: post #2

It's an extremely inconvenient situation that Americans find themselves in, a sort of self-perpetuating cycle of car dependency that they reinforce because alternatives require far too much investment to make worthwhile. I'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot mor…

I'm glad you have that opportunity too, but purely on the financials it's probably not so much of a win when you consider the heightened cost of everything (housing in particular) in a city, right?

Depends when you got into it. If you're an older gen, you got into that city early and are likely unburdened by high dwelling costs - instead, you've got a windfall of appreciation ahead of you.

Reality is, outside of housing, city life is generally cheaper because it's much more accessible and the tax base is better suited to covering those expenses. So, older generations get the best of all worlds, per usual.

Re: US car repossessions surge as more Americans default on auto loans

#18

Post by SecretDreams »

electric_muse wrote: post #14
jfengel wrote: post #5

I'm surprised it has taken this long. Everything I thought I knew about economics (and basic finance) has pointed in the direction of imminent pain for consumers, but what I've been hearing is more of a dull ache at most. I don't want a crisis, and if we avert one I'll happily update my beliefs. But even if the crisis comes I'll have to figure out why it has been so slow.

You’re probably underestimating how much credit is available to people. Having money issues? Keep paying your car while you borrow money from Klarna for your DoorDash chipotle.

It's a game of musical chairs. Very fun until the music stops!

Re: US car repossessions surge as more Americans default on auto loans

#19

Post by JohnFen »

scotty79 wrote: post #6

I wonder ... who are they gonna send the repossessed cars to? I think old models of operation are breaking down.

They're typically sold at auction to dealers and individuals. If there's a flood of them, that means that they'll cost less at auction and the prices in the used car market may start coming back down from the crazy heights they've been at.

Re: US car repossessions surge as more Americans default on auto loans

#20

Post by carabiner »

SecretDreams wrote: post #17
ifyoubuildit wrote: post #9

Earlier quoted context omitted.

I'm glad you have that opportunity too, but purely on the financials it's probably not so much of a win when you consider the heightened cost of everything (housing in particular) in a city, right?

Depends when you got into it. If you're an older gen, you got into that city early and are likely unburdened by high dwelling costs - instead, you've got a windfall of appreciation ahead of you. Reality is, outside of housing, city life is generally cheaper because it's much more accessible and the tax base is better suited to covering those expenses. So, older generations get the best of all worlds, per usual.

> Outside of housing

> Outside of what makes it more expensive for virtually everyone, it is actually cheaper

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