I’ve seen some crazy stories on YouTube about people trading in cars they’re already underwater on just to finance an even more expensive one. I can’t understand why banks keep lending money for deals like that.
[deleted]
Americans can't afford their cars any more and Wall Street is worried
51–60 of 149 posts
Re: Americans can't afford their cars any more and Wall Street is worried
#52And yet automakers think that the smaller more affordable cars that do well overseas somehow have no audience in the US. For instance, the Geome Xingyuan is $10k, Hongguang Mini EV is $5k. Instead we have the average cost of a new car at $50k.
If they sold well in the US, they would bring in more of them. But they don't.
No, the big 3 can’t compete. Thats why Chinese cars are straight banned here. Not because of economics
Re: Americans can't afford their cars any more and Wall Street is worried
#53I’ve seen some crazy stories on YouTube about people trading in cars they’re already underwater on just to finance an even more expensive one. I can’t understand why banks keep lending money for deals like that.
Well hey it’s not like subprime loans ever got us in trouble
Good news is the current US government is rolling back all of the regulation to prevent these bad loans from being given out, just to keep the music going for a little longer before this all blows up.
Re: Americans can't afford their cars any more and Wall Street is worried
#54It's fine, in the future we will all subscribe to the self driving robot taxi, own nothing, and be (un)happy
You might enjoy this
Re: Americans can't afford their cars any more and Wall Street is worried
#55I’ve seen some crazy stories on YouTube about people trading in cars they’re already underwater on just to finance an even more expensive one. I can’t understand why banks keep lending money for deals like that.
Long ago I had a girlfriend who was still paying on a Ford Bronco which had broken down. The repair was going to cost $300, which she didn't have.
She was able to trade that car in for a brand new one without spending any money. It was literally cheaper (in the short term, of course) to buy a new car than to fix the old one.
It was one of the reasons we broke up -- she was the type of person who counted the amount she could borrow as an asset.
Banks keep lending money for stuff like that because they can repossess your car if you stop paying.
Re: Americans can't afford their cars any more and Wall Street is worried
#56Earlier quoted context omitted.
What!? Houses degrade but the land it sits on usually appreciates faster.
Think in terms of banks not borrowers. Houses are a much better long term bet for buyers, but car depreciation is more predictable. Lend someone 500k to buy a house and during a recession it might tank in value by 20-40% while a bunch of people walk away. Worse the’ll likely pull out their equity before defaulting in mass. Cars value on the other hand is more counter cyclical. When the economy is bad people still get…
That's why banks require huge deposits though, or charge you for insurance for this exact risk. If the house tanks 20% but you had to put in a 20% deposit in + whatever payments you made up until that point, you eat all of the losses first before the bank.
Re: Americans can't afford their cars any more and Wall Street is worried
#57I was curious about the big spike in delinquency in the late 90s, turns out there was a big subprime lending meltdown in 97/98 too.
Re: Americans can't afford their cars any more and Wall Street is worried
#58If you had to get a loan for a car, you already couldn't afford it.
Re: Americans can't afford their cars any more and Wall Street is worried
#59Earlier quoted context omitted.
Well hey it’s not like subprime loans ever got us in trouble
Good news is the current US government is rolling back all of the regulation to prevent these bad loans from being given out, just to keep the music going for a little longer before this all blows up.
At this point I just want it to happen. Americans won't react otherwise, as history has shown.
Yes, the working class will suffer the most, but they are already doing so by default. The rich won't crash but they have a much bigger fall.
Re: Americans can't afford their cars any more and Wall Street is worried
#60I just read that the average price of a car is now more than 50k. People are insane to buy these with huge loans. There are plenty of very nice cars in the 20k-40k range but somehow people feel compelled to spend a ton of money on their cars.