Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Americans can't afford their cars any more and Wall Street is worried

telegraph.co.uk

Post reply on HN
Print view View original

61–70 of 149 posts

Re: Americans can't afford their cars any more and Wall Street is worried

#61

Post by johnnyanmac »

o11c wrote: post #8
vondur wrote: post #3

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.

It's in the bank's best interest to have constant revenue stream, even if that means destroying lives. Cars keep their value much better than, say, houses.

I think the better phrasing here is "cars are easier to seize than houses" should someone default. And much easier to resell once you seize it.

Re: Americans can't afford their cars any more and Wall Street is worried

#62

Post by DaveZale »

bb88 wrote: post #41
DaveZale wrote: post #4

I use the Loud Muffler Index for judging the economy. Traffic gets louder when working people are under financial stress. It's easily measurable.

I found the waiter/waitress quality model was pretty effective for judging the economy. If the economy was strong, the service would be worse, since the best people could get better jobs elsewhere. And if good people were having a hard time making ends meet, they would end up in the service industry displacing those that weren't good in their jobs. You could probably come up with similar metrics on the number of dent…

that- that ppl go elsewhere- like with the aws rto demands- have serious repercussions, true

Re: Americans can't afford their cars any more and Wall Street is worried

#63

Post by ajsnigrutin »

kristopolous wrote: post #15

And 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.

https://www.reddit.com/r/electricvehicles/comments/1ehfe04/v...

Many things are more affordable overseas.... aVW ID.3 is 15k eur in china, 32k over here in my small eu country.

Re: Americans can't afford their cars any more and Wall Street is worried

#64

Post by r_lee »

tamimio wrote: post #44
vondur wrote: post #3

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.

> . I can’t understand why banks keep lending money for deals like that Because that's literally the only way banks make money. Cars, houses, whatever -banks are after the interest money. The loan is a fake number that gets transferred from your account (as debt) to theirs, as digital numbers too, all under the "trust" that you can withdraw all of it one day. The real money in this is the interest that the bank will…

I'd say the problem with house prices is that unlike with other assets, a regular person can go absolutely insane with the leverage on Real Estate because it can be used as collateral that is expected to hold value, thus interest is low and you can only put in a small down payment

so mix in the "house prices always go up" and you've got a whole nation (world?) who are using housing as the ultimate get rich quick scheme

all while leveraged quite a lot because hey, the prices will never go down so why not, it's a profit multiplier!

And you pay the rent via the tenants who will always be out there to rent any property no matter what.. it's not like the economy will somehow suffer and people will be unable to pay that ever increasing rent right?

Re: Americans can't afford their cars any more and Wall Street is worried

#65

Post by antinomicus »

x3n0ph3n3 wrote: post #58

If you had to get a loan for a car, you already couldn't afford it.

Nope. This one out of all the comments in this thread screams out of touch tech guy. 80% of car purchases in America are financed. There are over 100 million car loans in America. Though in a more ideal world car loans should not be necessary, in this one, they very much are.

Re: Americans can't afford their cars any more and Wall Street is worried

#67

Post by vjvjvjvjghv »

giobox wrote: post #11
vondur wrote: post #3

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.

> 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. This has happened for as long as there has been car finance (i.e. practically since the dawn of private vehicle ownership), it's nothing new. Given most folks cannot purchase a vehicle outright, the customer only really cares about the monthly payment, a sizeable amount of w…

"the customer only really cares about the monthly payment,"

I noticed this when I bought my Subaru. There was a young couple next to me that worked hard with the sales guy to get an acceptable monthly payment for their desired car. No thought about actual price or duration of the loan. I wanted to scream at them that they were making a big mistake.

Re: Americans can't afford their cars any more and Wall Street is worried

#68

Post by monster_truck »

Shouldn't they have seen this coming when insurance premiums, rent, etc started shooting up? It's not just healthcare either.

Used to be that you could winter paid off 'fun' cars at nice (live security, climate controlled, fire suppression, low risk zip code) storage units for the steep discount on the auto insurance.

Where I'm at, the cost of units like this are up by >20%. The introductory rates at new places are minor and only good for 1-3 months. The insurance discount (which was previously as much as -35%) is gone because of the risk from increased tenant churn at the storage places, and the insurance is up almost another 20% anyways.

Re: Americans can't afford their cars any more and Wall Street is worried

#69

Post by thaumasiotes »

tamimio wrote: post #44
vondur wrote: post #3

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.

> . I can’t understand why banks keep lending money for deals like that Because that's literally the only way banks make money. Cars, houses, whatever -banks are after the interest money. The loan is a fake number that gets transferred from your account (as debt) to theirs, as digital numbers too, all under the "trust" that you can withdraw all of it one day. The real money in this is the interest that the bank will…

> Because that's literally the only way banks make money. Cars, houses, whatever -banks are after the interest money.

Lending for bad investments isn't a way to make money. It can work for the banks if they resell the loan, but in that case one thing they definitely aren't after is the interest money on the loan they no longer hold.

> The loan is a fake number that gets transferred from your account (as debt) to theirs, as digital numbers too, all under the "trust" that you can withdraw all of it one day. The real money in this is the interest that the bank will take. This is why if all people decided to withdraw all their money, banks would refuse, aka a bank run.

The reason banks "refuse" to redeem all of their deposits at once isn't that this would stop them from earning interest on their loans. (This sounds like nonsense, but I don't see another way to interpret your sentences...?) It's that they can't, because they are never holding enough money to cover all deposits at once.

> The loan is a fake number that gets transferred from your account (as debt) to theirs, as digital numbers too, all under the "trust" that you can withdraw all of it one day.

Also, this sounds like you're describing a loan from the customer to the bank. A deposit can indeed be modeled that way, but in context you appear to be talking about loans from the bank to the customer. Can you clarify this?

Re: Americans can't afford their cars any more and Wall Street is worried

#70

Post by johnnyanmac »

NDizzle wrote: post #35

Why more people don't keep their cars long term has always been a mystery to me. Sure, I had plenty of them in my 20s when I was young without a bunch (3) of responsibilities roaming the earth. But currently, counting my oldest kid's (19) car, we have 4. I don't worry about any of them. 2008 Land Cruiser and RAV4, 175k on one, 185k on the other. Both bought used. 2013 Sienna, bought new (with a huge discount) - 161k.…

Next to a house, a car is one of the biggest status symbols you can grab. Those people aren't buying Ford F350's because they need significant pickup and towing ability. It's the last bit of personal expression they have in life.

Now that said: I own a 2008 car with 180k miles, bought used over a decase ago. and I'm really hoping I can ride it out another 2 years. I wanted to go FEV a while back, but then the market got rough.

Post reply on HN