An Auto Loan Debt Crisis Looks Imminent
An Auto Loan Debt Crisis Looks Imminent
Car loan debt has ballooned, delinquencies are still rising, and major lenders are leaving the market. Is an auto loan debt crisis coming soon?
So basically,
- Banks will repossess vehicles to try and minimise losses
- Banks will not be able to sell those repossessed vehicles, resulting in losses
- Banks may become insolvent as they are unable to liquidate the vehicles
- Government steps in to bail them out
New vehicle prices are not in line with their actual value, so banks are making loans that aren’t covered by the collateral. This is shit management by the banking industry. If it’s impossible to get an auto loan then vehicle prices will eventually fall as supply stacks up. Banks are feeding this cycle by being unrealistic in these loan assessments.
Toyota is selling a basic (no ABS brakes, no airbags, crank windows) pickup in the rest of the world for $10,000. They could probably sell a version with the optional safety equipment in the US for $15-20k. But they will not sell it here and mess up the $50-100k luxury pickup gravy train.
American banks fucking the world once again.
Hopefully. Maybe I wont see so many people who make very little money driving pickups so large they can't even park them right and then returning them 4 years later to get an even larger one.
I have an economy car. My whole family fits it, it is already more car than I actually need. I bought it when it was 5 years old. I will repair it until the point it can no longer be repaired. At which point I will buy another reliable used economy car in cash.
A car is not an experience, it is not a status symbol, it is not compensation for your tiny penis, it is not for showing off, it is a machine that moves humans and goods from A to B.
I have known a retired accountant who lived in an apartment with an oversized pickup, I have known people who make $11 dollars an hour with a bright shiny pickup, I have known a small retail store manager drive around in a Hummer they got modified to look militarish-copish, homemakers with one kid with a SUV that sits 8, people on the verge of bankruptcy telling me how they will be rich restoring a mercedes from the 70s.
Where are we on the whole used car market thing? This could get wiggly if tons of people can't pay their car note, but for at least the first few they might actually be able to sell and turn around some money. Not a ton, mind, but until recently it was a given that your car is worth less than you owe on it.