Author Topic: US auto debt tops $1 trillion  (Read 5153 times)


AH013

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Re: US auto debt tops $1 trillion
« Reply #1 on: August 14, 2015, 03:30:08 PM »
About makes sense.  253 million cars on the road in America.  That equates to about $4,000 of debt per car.  I'm actually surprised it isn't higher.  Most idiots seem to go and buy a $25,000 car with all of about $2,000 down, and then roll the loan into a new car almost as soon as they stop being upside down on the loan.

Syonyk

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Re: US auto debt tops $1 trillion
« Reply #2 on: August 14, 2015, 07:03:29 PM »
About makes sense.  253 million cars on the road in America.  That equates to about $4,000 of debt per car.  I'm actually surprised it isn't higher.  Most idiots seem to go and buy a $25,000 car with all of about $2,000 down, and then roll the loan into a new car almost as soon as they stop being upside down on the loan.

You don't have to be "not-upside down" to roll it into a new loan, from what I hear.  They'll happily roll the excess into the new loan for you!  $30k left on the loan, but the tradein value is only $24k?  No problem!  They'll just tack that onto your new 84 month loan!

innkeeper77

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Re: US auto debt tops $1 trillion
« Reply #3 on: August 14, 2015, 09:23:31 PM »
About makes sense.  253 million cars on the road in America.  That equates to about $4,000 of debt per car.  I'm actually surprised it isn't higher.  Most idiots seem to go and buy a $25,000 car with all of about $2,000 down, and then roll the loan into a new car almost as soon as they stop being upside down on the loan.

About makes sense- but the average vehicle age in the US (for registered vehicles) hit 11.5 years this year. (Caveat: New car purchases are at an all time high...)

Our car is only ten.. but modern vehicle quality means we still feel like it is brand new.

nobodyspecial

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Re: US auto debt tops $1 trillion
« Reply #4 on: August 15, 2015, 11:05:43 AM »
So $125Bn predicted for the year, 17 million sales = $7500/car.
Seems suspiciously low, unless that is just this years payment for the car

If they currently do 84month loans then soon they will be doing interest-only.
$20,000 car at 2% = $400/pa lease, doesn't sound bad !

« Last Edit: August 15, 2015, 03:32:09 PM by nobodyspecial »

ClassyCat

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Re: US auto debt tops $1 trillion
« Reply #5 on: August 15, 2015, 01:23:54 PM »
A scary number, but it sounds about on par with people's spending habits. I'm thankful I had enough saved to purchase my current car with cash, right as my old car died. It's extremely frustrating to see people with zero wiggle room in their budget get loans that have ridiculous terms for a car that's going to depreciate so quickly. My friend bought a brand new $35,000 car upon graduating. The bank turned down his loan (surprise!), but the dealer offered him one. Now he's forking over ~$600 of every paycheck for the next six years.

EricP

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Re: US auto debt tops $1 trillion
« Reply #6 on: August 17, 2015, 10:18:19 AM »
About makes sense.  253 million cars on the road in America.  That equates to about $4,000 of debt per car.  I'm actually surprised it isn't higher.  Most idiots seem to go and buy a $25,000 car with all of about $2,000 down, and then roll the loan into a new car almost as soon as they stop being upside down on the loan.

You don't have to be "not-upside down" to roll it into a new loan, from what I hear.  They'll happily roll the excess into the new loan for you!  $30k left on the loan, but the tradein value is only $24k?  No problem!  They'll just tack that onto your new 84 month loan!

To me, you only "roll it" into the next loan if you are upside down, otherwise you're just selling one car, clearing a debt and then buying another car with a new debt.

Money Mouse

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Re: US auto debt tops $1 trillion
« Reply #7 on: August 18, 2015, 12:41:32 PM »
Not surprised in the least. I belong to another internet forum, that forum as a whole isn't finance related but it has a sub-topic area for finances. People who belong there aren't at the MMM level but tend to make far, far better financial choices than the average American. Many new posters to the sub-forum will be in financial distress and ask the other posters to review their monthly budgets and help them get on a better path (much like case studies here). 9 times out of 10 they will have at least one but often two OUTRAGOUS car payments, we're talking amounts that can exceed 40% of net take home a month (before gas, insurance, etc.).  The first thing posters comment on are the cars, and the original poster almost always says that the car(s) are non-negotiable for some stupid-ass reason. Almost always one of the vehicles in question are a huge SUV, truck, or minivan with all the bells and whistles, sometimes it's both. And often, because they are so far underwater and the poster has no real cash on hand, even if they want out of the vehicle it can be nearly impossible to dump it.

backyardfeast

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Re: US auto debt tops $1 trillion
« Reply #8 on: August 18, 2015, 12:57:42 PM »
Don't have a link handy (maybe I'll look for one), but there have been some articles recently talking about auto loans in both Canada and the US as the new subprime mortgage risk...not hard to see why.  Don't know about everywhere, but around here there was a distinct shift in advertising over the last year or so toward listing the price of a lease by the WEEK!  Ie "Just $129!*   *weekly for 84 months at x%"  Much head-shaking!

slugline

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Re: US auto debt tops $1 trillion
« Reply #9 on: August 18, 2015, 02:06:58 PM »
So . . . if this turns out to be the next subprime bubble, could there be a glut of bargain used cars on the horizon when it "pops"?

Paul der Krake

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Re: US auto debt tops $1 trillion
« Reply #10 on: August 18, 2015, 02:19:58 PM »
So . . . if this turns out to be the next subprime bubble, could there be a glut of bargain used cars on the horizon when it "pops"?
Nah. This is talked about regularly, currently the consensus is that people rely so much on their cars that they'll be out on the street before they let someone repo their vehicle.

They might sell them voluntarily, though.

Syonyk

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Re: US auto debt tops $1 trillion
« Reply #11 on: August 18, 2015, 02:25:57 PM »
You can live in a car/truck.  You can't drive a house to work.

odput

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Re: US auto debt tops $1 trillion
« Reply #12 on: August 19, 2015, 08:34:53 AM »
Don't have a link handy (maybe I'll look for one), but there have been some articles recently talking about auto loans in both Canada and the US as the new subprime mortgage risk...not hard to see why.  Don't know about everywhere, but around here there was a distinct shift in advertising over the last year or so toward listing the price of a lease by the WEEK!  Ie "Just $129!*   *weekly for 84 months at x%"  Much head-shaking!

I can do one better...car dealerships in my old area were advertising car costs per day!  "Your car costs less than lunch! Only $5 a day!"

Fuck me running

nobodyspecial

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Re: US auto debt tops $1 trillion
« Reply #13 on: August 19, 2015, 09:01:39 AM »
I can do one better...car dealerships in my old area were advertising car costs per day!  "Your car costs less than lunch! Only $5 a day!"
Kia dealer here is running an ad "lease this car for $6/day = cheaper than a bus ticket".

Except insurance, if you have no driver history, will be $2000/year, gas is close to $6gal and servicing etc etc
« Last Edit: August 19, 2015, 09:40:51 AM by nobodyspecial »

jba302

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Re: US auto debt tops $1 trillion
« Reply #14 on: August 19, 2015, 09:13:08 AM »
About makes sense.  253 million cars on the road in America.  That equates to about $4,000 of debt per car.  I'm actually surprised it isn't higher.  Most idiots seem to go and buy a $25,000 car with all of about $2,000 down, and then roll the loan into a new car almost as soon as they stop being upside down on the loan.

You don't have to be "not-upside down" to roll it into a new loan, from what I hear.  They'll happily roll the excess into the new loan for you!  $30k left on the loan, but the tradein value is only $24k?  No problem!  They'll just tack that onto your new 84 month loan!

Sad to say I did this twice! I traded in an extremely impractical 2005 Infiniti G35 (rear wheel drive, I moved from CA to MN) for a just-slightly-less-practical 2006 TJ (right! practical! 33" tires! ugh). AND THEN, I did it again. Traded in the TJ for a Honda Civic. The Civic will be paid off in November and I'll be officially Never Do That Again.

TheAnonOne

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Re: US auto debt tops $1 trillion
« Reply #15 on: August 19, 2015, 09:39:02 AM »
Just gonna leave this right here:

http://www.msn.com/en-us/money/markets/us-auto-debt-tops-dollar1-trillion-amid-booming-sales/ar-BBlJXSh?ocid=mailsignout

I have an itch to make that $1,000,000,065,000 and buy a new Corvette. . .

^My Anti-Mustache post of the day.

RWD

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Re: US auto debt tops $1 trillion
« Reply #16 on: August 19, 2015, 12:46:05 PM »
Not surprised in the least. I belong to another internet forum, that forum as a whole isn't finance related but it has a sub-topic area for finances. People who belong there aren't at the MMM level but tend to make far, far better financial choices than the average American. Many new posters to the sub-forum will be in financial distress and ask the other posters to review their monthly budgets and help them get on a better path (much like case studies here). 9 times out of 10 they will have at least one but often two OUTRAGOUS car payments, we're talking amounts that can exceed 40% of net take home a month (before gas, insurance, etc.).  The first thing posters comment on are the cars, and the original poster almost always says that the car(s) are non-negotiable for some stupid-ass reason. Almost always one of the vehicles in question are a huge SUV, truck, or minivan with all the bells and whistles, sometimes it's both. And often, because they are so far underwater and the poster has no real cash on hand, even if they want out of the vehicle it can be nearly impossible to dump it.

/r/personalfinance/?

Sibley

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Re: US auto debt tops $1 trillion
« Reply #17 on: August 28, 2015, 09:26:44 AM »
Well, I have about $13k of that pie. Definitely some stupidity behind it, but it's better than it was last year and I've now learned my lesson.

EricP

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Re: US auto debt tops $1 trillion
« Reply #18 on: August 28, 2015, 09:47:14 AM »
Not surprised in the least. I belong to another internet forum, that forum as a whole isn't finance related but it has a sub-topic area for finances. People who belong there aren't at the MMM level but tend to make far, far better financial choices than the average American. Many new posters to the sub-forum will be in financial distress and ask the other posters to review their monthly budgets and help them get on a better path (much like case studies here). 9 times out of 10 they will have at least one but often two OUTRAGOUS car payments, we're talking amounts that can exceed 40% of net take home a month (before gas, insurance, etc.).  The first thing posters comment on are the cars, and the original poster almost always says that the car(s) are non-negotiable for some stupid-ass reason. Almost always one of the vehicles in question are a huge SUV, truck, or minivan with all the bells and whistles, sometimes it's both. And often, because they are so far underwater and the poster has no real cash on hand, even if they want out of the vehicle it can be nearly impossible to dump it.

/r/personalfinance/?

Why be cagey about reddit, though? Plenty of people know about reddit, and I'm fairly certain most of us have been to /r/PF more than a few times.  Heck, MMM even talks about /r/FI in one of his articles.

RWD

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Re: US auto debt tops $1 trillion
« Reply #19 on: August 28, 2015, 10:31:11 AM »
Not surprised in the least. I belong to another internet forum, that forum as a whole isn't finance related but it has a sub-topic area for finances. People who belong there aren't at the MMM level but tend to make far, far better financial choices than the average American. Many new posters to the sub-forum will be in financial distress and ask the other posters to review their monthly budgets and help them get on a better path (much like case studies here). 9 times out of 10 they will have at least one but often two OUTRAGOUS car payments, we're talking amounts that can exceed 40% of net take home a month (before gas, insurance, etc.).  The first thing posters comment on are the cars, and the original poster almost always says that the car(s) are non-negotiable for some stupid-ass reason. Almost always one of the vehicles in question are a huge SUV, truck, or minivan with all the bells and whistles, sometimes it's both. And often, because they are so far underwater and the poster has no real cash on hand, even if they want out of the vehicle it can be nearly impossible to dump it.

/r/personalfinance/?

Why be cagey about reddit, though? Plenty of people know about reddit, and I'm fairly certain most of us have been to /r/PF more than a few times.  Heck, MMM even talks about /r/FI in one of his articles.

I'm pretty sure I found MMM from a comment on /r/PF.

MgoSam

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Re: US auto debt tops $1 trillion
« Reply #20 on: August 29, 2015, 12:43:25 PM »
Not surprised in the least. I belong to another internet forum, that forum as a whole isn't finance related but it has a sub-topic area for finances. People who belong there aren't at the MMM level but tend to make far, far better financial choices than the average American. Many new posters to the sub-forum will be in financial distress and ask the other posters to review their monthly budgets and help them get on a better path (much like case studies here). 9 times out of 10 they will have at least one but often two OUTRAGOUS car payments, we're talking amounts that can exceed 40% of net take home a month (before gas, insurance, etc.).  The first thing posters comment on are the cars, and the original poster almost always says that the car(s) are non-negotiable for some stupid-ass reason. Almost always one of the vehicles in question are a huge SUV, truck, or minivan with all the bells and whistles, sometimes it's both. And often, because they are so far underwater and the poster has no real cash on hand, even if they want out of the vehicle it can be nearly impossible to dump it.

/r/personalfinance/?

Why be cagey about reddit, though? Plenty of people know about reddit, and I'm fairly certain most of us have been to /r/PF more than a few times.  Heck, MMM even talks about /r/FI in one of his articles.

I'm pretty sure I found MMM from a comment on /r/PF.

That's one thing to remember, very few heard about MMM from a good friend who sent me his review of "A Guide to the Good Life," because she thought the book might be good for me. She was absolutely correct and as a result I discovered the site.

A good friend of mine won a great espresso maker but lamented that the pods are expensive. I found someone on here that has a similar maker and found a better quality and way cheaper pod, plus coupons, that I was able to send to my friend. I plan on introducing her to MMM once she gets the pods.