https://www.entrepreneur.com/article/273598
Many car buyers are extending their car loans to 84 months!
Many car buyers are extending their car loans to 84 months!
Last edited:
https://www.entrepreneur.com/article/273598
Many car buyers are extending their car loans to 84 months!
Don't worry about the coming recession because the sky is falling first.
They laughed at and ridiculed all the chicken littles in 2006-2007 also.
http://www.npr.org/templates/story/story.php?storyId=97801606
http://www.theguardian.com/business/2009/jan/24/nouriel-roubini-credit-crunch
http://intheblack.com/articles/2015...-and-why-we-should-listen-to-them-from-now-on
And then you have the ones who promoted the "don't worry be happy" anti doom and gloom experts who were defended by all those that did the ridiculing and laughing.
http://www.businessinsider.com/bernanke-quotes-2010-12
Similar to what I was thinking, but a lot more in depth. If you have the money to purchase a more expensive car, why would you take a shorter loan at 1% instead of paying it off longer term and using the extra money to your advantage? But if more and more people are using 84 month loans for $12k autos, isn't that increasing the number of sales of new vehicles? Sounds good for the auto industry.There have always been 84mo car loans, always. However, it's always been with prime and super prime borrowers and mainly new cars, but some used, and mostly with banks. That's still the case. I have yet to see one subprime lender utilize 84mo loans. Furthest they have reached is 75. Many? Where is the proof it is "many"? He provides no charts to show long-term trends in 84mo originations, or who holds them. Why?
The Moodys/Fitch/S&P dire warnings about subprime auto because of the highest delinquencies is a crock.
1. There has been a huge amount of index composition shift. Most deeper subprime auto wasn't securitized. Now it is becoming more prevalent as larger, more experienced, better capitalized, and stable lenders enter the market.
2. YoY static pool loss and delinquency numbers for most subprime, even deep subprime, lenders are mostly flat. Some exceptions exist but more or less they are the same.
3. There are no NINJA loans in auto. Nobody is buying a Ford to flip it or speculate on prices going up.
4. There wasn't a single loss on a single tranche of a single major subprime auto issuer even during the crisis. Why? Because you need a car to go to work. That likely won't change.
ZOMG! 250k jobs worldwide, out of how many *BILLIONS* of workers? And not a single mention of how lower energy prices also benefit consumers. Ohh darn, looks like the end of the world.
Grant Cardone is a motivational speaker that went to McNeese University. Has he ever held a major economist, analyst, or financial job that qualifies his prognostications? No. He is a guy that takes a few disparate pieces of info, without doing any fundamental research, slaps them up on a website, calls the doom, and tries to sell his university.
Epic fail.
None of us know when its gonna happen but this video is worth seeing!woolfe9998 said:If I had a dime for every one of these predictions, I'd be wealthy enough to be recession proof myself.
Similar to what I was thinking, but a lot more in depth. If you have the money to purchase a more expensive car, why would you take a shorter loan at 1% instead of paying it off longer term and using the extra money to your advantage? But if more and more people are using 84 month loans for $12k autos, isn't that increasing the number of sales of new vehicles? Sounds good for the auto industry.
Such longer loans wouldn't have been a good idea a few decades in the past, when your vehicles broke down and needed new engines sooner. But, vehicles are being built better, and last far longer without major mechanical problems. Power-train warranties are much longer than ever in the past. Extending loan periods, provided they don't exceed (or even come close to) the expected lifetime of a vehicle enables more consumers to purchase more recent models of vehicles. That makes our roads safer by reducing the number of $500 vehicles that someone slapped an inspection sticker on, not to mention the increased safety to passengers in the newer vehicles. It also reduces fuels usage in the country as newer models generally get better gas mileage. And, sends more vehicles to the scrap yard where they should be, rather than out on the road.
So, someone defaults on the loan, and you can likely send the tow truck and recoup the rest of your investment. I don't see the risk.
84 month auto loans are kinda dim for consumers given that they'll likely spend more in payments the last year than the vehicle would fetch on the market.
At 7 years old, the average vehicle mileage is 100-120K miles which is basically the limit of how long they were designed to last.
One aspect of the CBD is that it focuses on disaster. Show a liberal and a conservative a picture of lilies in the field and a nuclear blast and the liberal will look at the lilies and the conservative at the blast. These facts are sued by the cunning intuitives to make money.
Good points. When someone is predicting a major recession and his business is selling you information to survive a major recession, he's likely always predicting a major recession. That's how he makes his nut.There have always been 84mo car loans, always. However, it's always been with prime and super prime borrowers and mainly new cars, but some used, and mostly with banks. That's still the case. I have yet to see one subprime lender utilize 84mo loans. Furthest they have reached is 75. Many? Where is the proof it is "many"? He provides no charts to show long-term trends in 84mo originations, or who holds them. Why?
The Moodys/Fitch/S&P dire warnings about subprime auto because of the highest delinquencies is a crock.
1. There has been a huge amount of index composition shift. Most deeper subprime auto wasn't securitized. Now it is becoming more prevalent as larger, more experienced, better capitalized, and stable lenders enter the market.
2. YoY static pool loss and delinquency numbers for most subprime, even deep subprime, lenders are mostly flat. Some exceptions exist but more or less they are the same.
3. There are no NINJA loans in auto. Nobody is buying a Ford to flip it or speculate on prices going up.
4. There wasn't a single loss on a single tranche of a single major subprime auto issuer even during the crisis. Why? Because you need a car to go to work. That likely won't change.
ZOMG! 250k jobs worldwide, out of how many *BILLIONS* of workers? And not a single mention of how lower energy prices also benefit consumers. Ohh darn, looks like the end of the world.
Grant Cardone is a motivational speaker that went to McNeese University. Has he ever held a major economist, analyst, or financial job that qualifies his prognostications? No. He is a guy that takes a few disparate pieces of info, without doing any fundamental research, slaps them up on a website, calls the doom, and tries to sell his university.
Epic fail.
lol +1Yes, people have predicted about 9 out of the last 2 recessions. A stopped clock and all that.
I mean just look at Peter Schiff, he got all sorts of credit for predicting the 2008 crash. Then he predicted a 2010 crash, a 2011 crash, a 2012 crash, 2013 crash, etc. It turns out he had no clue what he was talking about.
Good points. When someone is predicting a major recession and his business is selling you information to survive a major recession, he's likely always predicting a major recession. That's how he makes his nut.
Regarding car loans, worst I've seen is a coworker's neighbor who took out a 15 year second mortgage (back when interest rates were around 10% on a first) to buy a Porsche. After all, everyone knows you can't lose money on a Porsche; they appreciate. They are investments. Anyone remember the ROI on a fifteen year old 924?
Also, if subprime autoloans include the buy here pay here people, I don't think they care that much about delinquent accounts. The down payment is commonly what they have in the car, so they are whole or near it on day one. Any further payments are profit, and if the borrower falls behind, the dealer pops the car, pays himself a nice recovery, processing and storage fee, and sells it again, usually managing to eat any equity in the car so the poor slob who made all those weekly payments gets nothing for them. (Well, beyond temporary use of the car.)
lol +1
Good to know. I know only one as well. In talking with the owners of a particular machine shop, they tell me he is the only dealer they deal with (out of literally dozens) who will actually spend the money to FIX the vehicle rather than just patch it up as cheaply as possible. Although now that I think about it, he's been out of business a decade or so.There is only 1 buy here pay here guy I know that securitizes loans and they are a reasonable shop that isn't just in it for the down payment.
Which super long mortgages were those?Regardless of "doom" or no, I can't help but see these very long loans as a bad idea. It was (partially) the super-long mortgages that got people into so much trouble when the housing bubble popped a few years back...
You think vehicles are designed to last 7 years and only 100-120k miles?
http://www.rita.dot.gov/bts/sites/r...ortation_statistics/html/table_01_26.html_mfd
http://business.time.com/2012/03/20/what-you-only-have-100k-miles-on-your-car-thats-nothing/
I do. I worked on cars for years. Yeh, sure, they'll last longer if driven sparingly, garaged & well maintained. Out past 100K miles maintenance starts to cost more than payments, not to mention the down time. It's different for people who do their own work, of course.
My 2006 Scion xB is going strong but it only has 50K miles on it.