Delinquency rate for subprime auto loans SOARS UP

[O3H]

This is just NUTS , auto lenders are choosing to roll negative equity at trade-in ; in to next vehicle loan.
Big spike in the proportion of "deep subprime" deals, those with avg. FICO score of less than 500.

Yep, the USA is just BOOMING wonderful, with everyone extremely happy, a brand new car, a chicken in the pot, well insured - and flush with extra cash ......Winning Bigly in the USA .......

http://www.businessinsider.com/wall-...r-loans-2017-3

Add in New data shows that 73% of American consumers die in debt. The average total balance left over is $61,554 [[and that includes mortgage debt).

http://time.com/money/4709270/americans-die-in-debt/

[professorscott]

This is just NUTS , auto lenders are choosing to roll negative equity at trade-in ; in to next vehicle loan.
Big spike in the proportion of "deep subprime" deals, those with avg. FICO score of less than 500.

Read "The Big Short" by Michael Lewis about the players who got rich on both sides during the flurry of subprime mortgage lending in the early to mid 2000s. There are people who make money, and great gobs of it, despite whether loans ever get paid back or not. Of course this is a zero-sum game and so there are also people who lose bigly. And, here as there, people without money who need things, or think they do, are always willing customers of these kinds of lending practices.

[Colombian Dan]

Sounds like Chrysler Financial and Triple M financing days...

[GMan]

As always, Caveat Emptor.

[Dan Wesson]

Our currency is debt...

What do you expect?

In our financial web of deceit and Orwellian Newspeak, money and currency are the same.

For some debt is not a bad thing, for them it is an asset. You can buy and sell debt.

Without debt the whole facade of prosperity would vanish, individual and as a Nation.

http://www.webofdebt.com

http://www.webofdebt.com/excerpts/introduction.php

As for the "Trade In Treadmill" and the need to push cars by rolling over "Negative Equity" into longer duration loans on rapidly depreciating cars, these lenders have already baked in the losses or have sliced and diced and sold the risks to investors. It is now somebody else's problem and where does the buck stop lately?

[O3H]

Detroit auto companies ONLY care about the Buying of the cars
-- not the fact of who can actually afford them

That's a bad business model - for America and for them

[professorscott]

As for the "Trade In Treadmill" and the need to push cars by rolling over "Negative Equity" into longer duration loans on rapidly depreciating cars, these lenders have already baked in the losses or have sliced and diced and sold the risks to investors. It is now somebody else's problem and where does the buck stop lately?

Mr. Lewis' book, to which I referred earlier in this thread, actually provides the answer to your question as it relates to similar types of home loans made, principally, between 2002 and 2006. The whole thing is unsustainable, in the manner of a classic Ponzi scheme, and somebody is left holding the paper when it is finally and unavoidably revealed to be the water that it always was.

[O3H]

The whole thing is unsustainable, in the manner of a classic Ponzi scheme, and somebody is left holding the paper when it is finally and unavoidably revealed to be the water that it always was.

General Motors , Chrysler, Ford - wouldn't be part of ponzi scheme - would they ?

Just shows how the Big 3 have the USA wrapped around their pinky - holding tight

[DetroiterOnTheWestCoast]

"Soars Up"? As opposed to....."soars"?

[professorscott]

General Motors , Chrysler, Ford - wouldn't be part of ponzi scheme - would they ?

Just shows how the Big 3 have the USA wrapped around their pinky - holding tight

The finance arms of the car companies, domestic and foreign, do not make these loans and never have. They are outside finance companies, although dealerships, who are supposed to keep the manufacturer's best interest in mind, do sometimes engage the outside finance companies.

[O3H]

To soar means more than just to fly; it means to feel the wind .
...and the wind can be felt via thermal going up, and racing downwards - before doing a loop in a glider.

Ever flown a plane, or glider, or parachute, or hang glider - DetroiterOnTheWestCoast ??????

[O3H]

The finance arms of the car companies, domestic and foreign, do not make these loans and never have. They are outside finance companies, although dealerships, who are supposed to keep the manufacturer's best interest in mind, do sometimes engage the outside finance companies.

The rescue of GMAC to the tune of $17 billion was USA tax $
Now did we bail out the bank or the auto company ? hmmmmmm

General Motors received $49.5 billion from
Treasury's Troubled Asset Relief Program

To be technical - Since the bailout, Ally sold assets and
put its subprime mortgage arm, Residential Capital, through bankruptcy.

For the entire TARP effort, the government disbursed
about $426.4 billion and recovered $441.7 billion.

NOW it's all made of play dough as no one repays their auto notes

[DetroiterOnTheWestCoast]

To soar means more than just to fly; it means to feel the wind .
...and the wind can be felt via thermal going up, and racing downwards - before doing a loop in a glider.

Ever flown a plane, or glider, or parachute, or hang glider - DetroiterOnTheWestCoast ??????

Check the actual definition. One does not soar down; it inherently means up so one does not need to say "soars up" any more than one would say "increases up."

[Zacha341]

I've seen the five+ year eh' mortgages, I mean finance plans for cars that become junk before the conclusion of all that.

Then you're upside down -- can't get out except to roll the mess into another finance. Yeah, that bubbles due to burst. Any minute now.

[Meddle]

Detroit auto companies ONLY care about the Buying of the cars
-- not the fact of who can actually afford them

That's a bad business model - for America and for them

It goes way beyond cars. 'Planned Obsolescence' is everywhere. Design things to last 5 years instead of 25, then make it more expensive to buy parts to repair than to replace. In that 5 years, newer, fancier, more expensive models have replaced what you bought, so you can't even buy the same thing again if you liked it.

Do we really need $2,000.00 web enabled refrigerators?

[O3H]

Across the U.S., 35 percent of Americans have debt in collections,
with a median amount of $1,541.

This does not make for a Healthy Economy in the USA.

Too many middle-class families finance their consumption increases
by reduced savings and increased debt.

[313WX]

The subprime auto loans are definitely a concern.

There's no question once interest rates go back up and banks stop handing out this credit like candy, it's going to really hurt the automakers again. Never mind the fact that gas prices are starting to head upward again [[which puts additional downward pressure on the sale of SUVs / Pickup Trucks).

The million-dollar question is whether they'll be able to remain profitable when these inevitable issues rear their ugly heads, or will it be 2008 all over again. I guess we'll find out soon enough.

[Zacha341]

Then you see wrecked/ junked up high-end cars where someone opted out of comprehensive insurance. Forced to drive the thing damaged and disfigured. The police sometimes flag those cars as they assume some paperwork is not in order [[car insurance). Worse yet is underwater with a 'totaled' car, un-drivable. Leaving one walking and paying a car note or walking away from it all. Yeah this is going to bode bad in the end!

These dealers will talk you into a situation unmanageable. That is their job. You have to be wise, long view, and FACTOR in the insurance costs -- paid regularly. Not just enough to get a plate. Or just pay for a used cash car under 5K or so. That's the edge.

[JBMcB]

Across the U.S., 35 percent of Americans have debt in collections,
with a median amount of $1,541.

Yeah I read that report, too. It's garbage. No mention of their sampling methodology. They acknowledge the data is skewed because they aren't taking into account people with no credit file, but there's no mention on how they correct for that skew, if at all. They only looked at one credit reporting agency, so no cross-checking. No verification [[just because someone reported a debt is going to collections to a credit agency doesn't mean it was) which is especially critical with non-credit based debts, which they just mush together as non-mortgage based debt.

Wanna know a shorthand way of telling a study is, at the very least, non-scientific? You don't use words like "astonishing" and "alarming" in a scientific study.

[O3H]

Pick a report - one of dozens out there, all about the same.
Sure the exact science of statistics is a bit skewed at times
but the end result is just about the same. Americans owe money.

American Credit Card Debt Statistics & Key Findings
- Updated May 2016

Average American Household Debt: $5,700.
Average for balance-carrying households: $16,048

Total Outstanding U.S. Consumer Debt: $3.4 trillion.
Total revolving debt: $929 billion

38.1% of all households carry some sort of credit card debt.

Households with the lowest net worth [[zero or negative)
hold an average of $10,308 in credit card debt.

The Northeast and West Coast hold the
highest average credit card debt – both averaging over $8,000.

[Wesley Mouch]

Yeah I read that report, too. It's garbage. No mention of their sampling methodology. ...snip...
Wanna know a shorthand way of telling a study is, at the very least, non-scientific? You don't use words like "astonishing" and "alarming" in a scientific study.

Yes. Yes.

This 'study' smells of PR for the credit bureaus. Somewhere, there's a publicist who needed something to send out to content-hungry media like Time and Business Insider. Everybody's happy. Media gets a yellow-journalism story to trumpet. Experian and other creepily-named companies get mentioned. And the reader gets titillation.

Only person unhappy is Ms. Truth... who can't be heard for the noise of debris like this.

Yet another tip to garbage.... words like 'soar'.

[O3H]

Yet another tip to garbage....

So Wesley thinks America is just fine - no debt issue among its citizens...... ?

[Wesley Mouch]

So Wesley thinks America is just fine - no debt issue among its citizens...... ?

Wesley worries about a lot of things, but in good moments believes self to be wise enough to know that not everything is what it appears to be.

Let's watch our debt levels. No, not biggest problem. That would be global warming which will eliminate all debt.

[O3H]

Pick a report - from an organization you know, love, trust, and admire

An Example, from literally hundreds

Pew Charitable Trusts - KEY FINDINGS
8 in 10 Americans have debt,
with mortgages the most common liability.

7 in 10 Americans said debt is a necessity in their lives,
even though they prefer not to have it.

The fact that the Big 3 would love everyone to have a Car Note
for $20,000, $30,000 or even $40,000 cannot go ignored.

I am quite happy with no mortgage, no car note, and no credit card debt

[Dan Wesson]

I am quite happy with no mortgage, no car note, and no credit card debt

Preach on , verily I say on to you...
I am quite happy with no mortgage, no car note, and no credit card debt

Amen