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Car Repos Are Exploding. That’s a Bad Omen

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Re: Car Repos Are Exploding. That’s a Bad Omen

#51

Post by fy20 »

greenthrow wrote: post #40
javajosh wrote: post #8

Why do people borrow money to buy a car? Why not save money, maybe invest in something safe(ish), and buy your car in cash, preferably used? I get it that people get emotional about cars, but good heavens, this impulse puts you in the hole for years. It's almost as bad as cheating on your wife (and far, far worse than cheating on a gf).

Inflation has been higher than the interest rates most people can get on a car loan. So by paying cash you are losing money.

This is pretty much it, in the US it's cheap (low interest rates) and easy to get consumer credit. If you compare how much you would earn on $40k if you invested it compared to the cost of the loan, it's often more financially effective to take the loan.

In Europe it's not so easy to get credit, and interest rates are usually higher (in my country, even before the current situation, car loans were close to 10%). It is usually more expensive to take credit, except maybe with real estate.

Re: Car Repos Are Exploding. That’s a Bad Omen

#52

Post by cyberge99 »

Rury wrote: post #22
stefan_ wrote: post #15

Why would someone extend a loan to people based on one-time or limited time stimulus payments?

Maybe to take their one-time/limited stimulus payments, and then repossess when people can no longer pay? I'm sure if they felt that they wouldn't be able to repossess, they wouldn't be nearly as incautious in extending the loan.

Plus technology and some loan terms enable vehicle location and tracking on later model vehicles.

Re: Car Repos Are Exploding. That’s a Bad Omen

#53

Post by seanmcdirmid »

noirbot wrote: post #35
tomschlick wrote: post #12

Earlier quoted context omitted.

If you have good credit (>760) you can get 0% interest or close to it loans pretty regularly if you wait. At that point there is no reason for me not to take on the loan and just setup autopay.

Yea, for sure. I got a 0.5% loan on my first car and had a moment when I had some spare cash and realized "Wait, I'm essentially being paid money to have this loan after inflation" and there was no reason to really pay it off quicker vs. just saving/investing the money.

What was your loan origination cost? Usually, when the rate is that low, the catch is that you paid $1k to $2k for the loan. This really annoys me...like, the higher interest rate with the lower loan fee would be OK since I'm going to pay the loan off quickly anyways.

Re: Car Repos Are Exploding. That’s a Bad Omen

#54

Post by seanmcdirmid »

srvmshr wrote: post #39
tomschlick wrote: post #12

Earlier quoted context omitted.

If you have good credit (>760) you can get 0% interest or close to it loans pretty regularly if you wait. At that point there is no reason for me not to take on the loan and just setup autopay.

Slightly OT: how long does it take to get a credit score of 750+ typically? Someone I know who recently moved to US, claims his less-than-a-year credit line is already at 770. It sounds a bit dubious but I would like to hear some validation about it. For e.g. it took me 4 years (admittedly on a junior researcher salary) to get to 780, so it surprised me.

Immigrants get some kind of weird break on their credit history. My wife is a new immigrant, and she has higher credit than me even though our financial history has been intertwined ever since she came here. On the other hand, I got dinged a bit for not using any American-based credit for the 11 years I was out of country: we got married when I was living abroad, and I checked our credit scores when we moved to the states.

Re: Car Repos Are Exploding. That’s a Bad Omen

#55

Post by Underphil »

MisterMower wrote: post #45
providedotemacs wrote: post #9

Earlier quoted context omitted.

People cannot forgo having a car for the time it would take to save up the cash.

Yeah, I’m not buying it. It’s not a choice between having a tricked out 2022 Lexus that costs $70k and no car at all. It’s the choice between a 2005 beater Toyota with 200k miles on it and no car. Once you have that beater, you can start saving for something nicer. Find a make and model with decent reliability history that has hail damage or minor collision damage. It’s not hard to do. If you can’t scrape together $2…

You tried buying a used car in this market? Even junk commands a ridiculous price tag.

Re: Car Repos Are Exploding. That’s a Bad Omen

#56

Post by everybodyknows »

seanmcdirmid wrote: post #53
noirbot wrote: post #35

Earlier quoted context omitted.

Yea, for sure. I got a 0.5% loan on my first car and had a moment when I had some spare cash and realized "Wait, I'm essentially being paid money to have this loan after inflation" and there was no reason to really pay it off quicker vs. just saving/investing the money.

What was your loan origination cost? Usually, when the rate is that low, the catch is that you paid $1k to $2k for the loan. This really annoys me...like, the higher interest rate with the lower loan fee would be OK since I'm going to pay the loan off quickly anyways.

Further to that, was the price agreed to before the salesman knew how you would paying, cash or credit?

Re: Car Repos Are Exploding. That’s a Bad Omen

#58

Post by srvmshr »

seanmcdirmid wrote: post #54
srvmshr wrote: post #39

Earlier quoted context omitted.

Slightly OT: how long does it take to get a credit score of 750+ typically? Someone I know who recently moved to US, claims his less-than-a-year credit line is already at 770. It sounds a bit dubious but I would like to hear some validation about it. For e.g. it took me 4 years (admittedly on a junior researcher salary) to get to 780, so it surprised me.

Immigrants get some kind of weird break on their credit history. My wife is a new immigrant, and she has higher credit than me even though our financial history has been intertwined ever since she came here. On the other hand, I got dinged a bit for not using any American-based credit for the 11 years I was out of country: we got married when I was living abroad, and I checked our credit scores when we moved to the s…

The way I look at it, likely seems based on some autoregressive type adaptive model. So having a couple of years of not using definitely dings it down. The score flattens off to some lower value. You keep using it well, pay back on time as good kid - you keep getting higher number. You wean off credit or stop using it - they tone it down.

But without spending thousands and repaying on- or before-time consistently over few financial quarters, how do some people manage to get so close to 800?

(Then, this is either a loophole or some kind of gaming the credit system ? This would be very exciting to understand, if it is)

Re: Car Repos Are Exploding. That’s a Bad Omen

#59

Post by phendrenad2 »

javajosh wrote: post #8

Why do people borrow money to buy a car? Why not save money, maybe invest in something safe(ish), and buy your car in cash, preferably used? I get it that people get emotional about cars, but good heavens, this impulse puts you in the hole for years. It's almost as bad as cheating on your wife (and far, far worse than cheating on a gf).

I did it to grow my credit score. I'm not sure what I'm supposed to do with a high credit score once I get it though.

Re: Car Repos Are Exploding. That’s a Bad Omen

#60

Post by wyclif »

naikrovek wrote: post #46
tomschlick wrote: post #12

Earlier quoted context omitted.

If you have good credit (>760) you can get 0% interest or close to it loans pretty regularly if you wait. At that point there is no reason for me not to take on the loan and just setup autopay.

what planet are you on? my credit meets your criteria and I am regularly asked to finance for 12% or more by everyone, including the bank and credit union where I store my money.

Did you try getting pre-approved for a car loan? If you applied, what rate did they offer?
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