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The used car market is on the brink of an auto loan collapse
Posted on 7/2/22 at 10:14 am
Posted on 7/2/22 at 10:14 am
LINK
quote:
Just like how the housing market collapsed from the loan crisis in 2008, the same thing is said to be starting to happen in the Auto Loan market.
As the supply chain and chip crisis has improved from COVID times, used car prices have dropped for 4 consecutive months & are now down 6.4% since January.
This is a nightmare for the banks that have lent money on these cars, whose value is rapidly beginning to fall.
quote:
Just recently, Equifax reported that 8.5% of subprime borrowers defaulted on their car loans - the second-highest on record!
WSJ also found that more subprime borrowers have started missing out on payments as rising inflation made them choose between essentials & auto loans.
quote:
KPMG predicts that used car prices can drop 30% as more supplies hit the market and Ally Financial predicts a 20% drop.
The timing is a bit uncertain but it looks like it's going to unravel in the next 12-18 months.
31
Posted on 7/2/22 at 10:19 am to WPBTiger
What does this mean for those of us who bought a 2018 Kia Optima with 98,000 miles for $46,000?
Posted on 7/2/22 at 10:20 am to WPBTiger
We never learn, do we?
Posted on 7/2/22 at 10:21 am to Lsuhoohoo
Posted on 7/2/22 at 10:21 am to WPBTiger
quote:
the same thing is said to be starting to happen in the Auto Loan market.
The used car market seems to be over supplied right now.
Posted on 7/2/22 at 10:21 am to Lsuhoohoo
quote:
What does this mean for those of us who bought a 2018 Kia Optima with 98,000 miles for $46,000?
It means you should buy a new electric car and save the planet.
Posted on 7/2/22 at 10:22 am to WPBTiger
Interesting read but I don't think there is any chance that car values drop anywhere near what 2008 real estate did. Car loans are much smaller for much shorter terms so there is far less incentive to strategically default.
Posted on 7/2/22 at 10:22 am to Lsuhoohoo
Doesn't mean shite if you keep paying. If people default then it gets repoed they aren't making shite at auction compared to what people owe.
Posted on 7/2/22 at 10:24 am to WPBTiger
quote:
This is a nightmare for the banks that have lent money on these cars, whose value is rapidly beginning to fall.
Why lose sleep if the values drop?
Ohhh. They made loans to people who won't pay. Ohhhh. Hmm.
Posted on 7/2/22 at 10:24 am to WPBTiger
No worries....FJB will give you an EV! You watch, he will start handing out free EVs to the unfortunate in this country.
And that will frick up the free market, AGAIN.
2024 can't get here fast enough.
And that will frick up the free market, AGAIN.
2024 can't get here fast enough.
This post was edited on 7/2/22 at 7:06 pm
Posted on 7/2/22 at 10:25 am to WPBTiger
In 12-18 months, who’s going to buy an expensive electric car when they will be giving away used cars?
Posted on 7/2/22 at 10:26 am to WPBTiger
Normally I wouldn't give a shite, but history has shown that the government will pass any losses onto the taxpayers before letting the banks take the hit.
Posted on 7/2/22 at 10:26 am to WPBTiger
Maybe the banks should more selective as to who they give loans too.
Posted on 7/2/22 at 10:27 am to WPBTiger
Screw them!
They’ve been fleecing their customers and will get what they deserve.
I could use a new car now but I’ll be damned if I’m willing to get ripped off. I’ll just keep my reliable old Tacoma until the wheels fall off. I can outlast them in this financial climate.
They’ve been fleecing their customers and will get what they deserve.
I could use a new car now but I’ll be damned if I’m willing to get ripped off. I’ll just keep my reliable old Tacoma until the wheels fall off. I can outlast them in this financial climate.
Posted on 7/2/22 at 10:30 am to WPBTiger
I was driving a 2011 Mercedes GLK 350(kinda a chick vehicle 
) 7 months ago.
It had never given me a problem but I hadn’t taken great care of it and didn’t want to be left holding the bag if something went wrong with it so I sold it.
Lucked into a 2018 Nissan Frontier with 42,000 miles on it that my mom hooked me up with for $7000.
It’s been tough not to turn around and sell it for $20+ thousand but I think I’m going to drive this thing until the wheels fall off. It’s nice not having a car payment and really nice not looking for something nicer in this market.
) 7 months ago. It had never given me a problem but I hadn’t taken great care of it and didn’t want to be left holding the bag if something went wrong with it so I sold it.
Lucked into a 2018 Nissan Frontier with 42,000 miles on it that my mom hooked me up with for $7000.
It’s been tough not to turn around and sell it for $20+ thousand but I think I’m going to drive this thing until the wheels fall off. It’s nice not having a car payment and really nice not looking for something nicer in this market.
Posted on 7/2/22 at 10:31 am to LSUwag
quote:
I’ll just keep my reliable old Tacoma until the wheels fall off. I can outlast them in this financial climate.
My daily driver is a 2002 Lexus GS300 with only 113K on it. It can easily go another 20 years.
Posted on 7/2/22 at 10:33 am to WPBTiger
I just ordered a new hemi motor for my Charger for 12k and will just keep right on driving. Trying to find a used hemi is hard enough but the used ones with 60k miles on them are getting what the new ones did 18 months ago. I'm riding it out and will just keep this one and buy something else down the road. And FJB
Posted on 7/2/22 at 10:37 am to Lsuhoohoo
quote:
Posted by Lsuhoohoo ? ? on 7/2/22 at 10:19 am to WPBTiger
What does this mean for those of us who bought a 2018 Kia Optima with 98,000 miles for $46,000
It means you become someone like me, who will drive a car that is 20, my latest 2001 mitsubishi montero xls, or my almost 30 year old, 1994 gmc z71, with no notes, no finance charges. Look brand new because I slowly redo everything on them for less than 3000 bucks. Run good with rebuilt or crate engines, have cold blowing ac and everything.
Or you are worried about how you look and status symbol and pay 46000 for a used foreign car.
Just to be clear, not making the comment directed towards you but the millions of people who will pay more or almost ad much for a used vehicle rather than something to live in
Posted on 7/2/22 at 10:37 am to NineLineBind
quote:'never learning' constitutes our entire economy
We never learn, do we?
Posted on 7/2/22 at 10:38 am to eelsuee
quote:
Interesting read but I don't think there is any chance that car values drop anywhere near what 2008 real estate did. Car loans are much smaller for much shorter terms so there is far less incentive to strategically default.
Car defaults are usually a signal of real estate defaults and recession. There about a 6-month preview of what's to come and all the other industries. People will default on cars because it's not seen as essential as something like a home and you're also just dealing with people who can get approved for loans on the small scale who can't get mortgages or bigger loans
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