Author Topic: Auto Equity...the next great opportunity for credit!  (Read 2526 times)

elgordorojo

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Auto Equity...the next great opportunity for credit!
« on: June 04, 2015, 07:16:22 AM »
http://www.zerohedge.com/news/2015-06-03/presenting-next-great-source-middle-class-prosperity

I'm not even sure this ridiculousness needs to be expanded upon (oh and hello Mustacians...first post!)

forummm

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Re: Auto Equity...the next great opportunity for credit!
« Reply #1 on: June 04, 2015, 08:28:55 AM »
Isn't that what those shady title loans available everywhere are?

http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/84-month-car-loans!!!!/

elgordorojo

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Re: Auto Equity...the next great opportunity for credit!
« Reply #2 on: June 04, 2015, 09:19:27 AM »
could be, but I think of title loans as being like payday loans, whereas the equity loan seems more like based on the value of the vehicle (potentially thousands of dollars)..but fortunately don't have a clue

Jack

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Re: Auto Equity...the next great opportunity for credit!
« Reply #3 on: June 04, 2015, 09:43:03 AM »
Isn't that what those shady title loans available everywhere are?

Yes, but what's new is that they want to market predatory bullshit loans to [the remains of] the middle class. The financial leeches doing this won't be happy until they have all the money instead of just 40% of it.

forummm

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Re: Auto Equity...the next great opportunity for credit!
« Reply #4 on: June 04, 2015, 02:57:58 PM »
Isn't that what those shady title loans available everywhere are?

Yes, but what's new is that they want to market predatory bullshit loans to [the remains of] the middle class. The financial leeches doing this won't be happy until they have all the money instead of just 40% of it.

OK, I'm in! Just as soon as someone will lend to me at a better interest rate than the 0% I'm paying...

ncornilsen

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Re: Auto Equity...the next great opportunity for credit!
« Reply #5 on: June 04, 2015, 03:49:17 PM »
First off, those who're doing predatory loans like this aren't the 1%er's.

Second, I've used vehicle equity to get a loan... I went to the credit union at work, handed over the title for my motorcycle, paid 1.95% interest, and used that $6,000 to pay off my student loans.

This isn't really new...

mlipps

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Re: Auto Equity...the next great opportunity for credit!
« Reply #6 on: June 04, 2015, 03:52:11 PM »
Yeah, we just did this to pay for $10k of grad school that savings couldn't cover. It was way cheaper than a normal student loan, only 1.49%.

NorCal

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Re: Auto Equity...the next great opportunity for credit!
« Reply #7 on: June 04, 2015, 05:29:30 PM »
At least it's better than payday loans (as long as you make the payments)?

TheGrimSqueaker

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Re: Auto Equity...the next great opportunity for credit!
« Reply #8 on: June 04, 2015, 05:59:10 PM »
I dug into this a bit, and it turns out to be not quite the same as a title loan.

It's basically a refinancing of an existing auto loan. People with mortgages often refinance to obtain better terms, lower payments, or a better interest rate. Some also refinance to take cash out from the equity in the property. The idea is to get car owners to do the same. There's nothing inherently wrong with it, except that whereas real estate is a mostly appreciating asset in the long term, the value of a car that's being driven around is almost certain to depreciate.

The requirements, from the bank's perspective, are the same as for an auto loan. The borrower must maintain insurance on the vehicle, and the bank is the primary beneficiary of the insurance if the vehicle is totaled or stolen. They reserve the right to repossess the car if payments are not made, or to call the loan if the insurance lapses.

From the bank's perspective, the only risk would be if something happened to the vehicle that dramatically reduced its value, but that was not covered by the insurance for whatever reason.