Care to guess which bubble is about to burst? Automotive...

YeuEmMaiMai

Well-Known Member
The sub-prime auto lending bubble could be about to burst - Business Insider

Average loan term for new cars is now 67 months — a record.
•Average loan term for used cars is now 62 months — a record.
•Loans with terms from 74 to 84 months made up 30% of all new vehicle financing — a record.
•Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.

•The average amount financed for a new vehicle was $28,711 — a record.
•The average payment for new vehicles was $488 — a record.
•The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

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Auto Loans: Next Bubble to Burst?

What do you all think?
 

Círeth

Purry, roary, one.
I'm confused. How do Americans buy a car? It sounds like you pay a deposit and then make payments until you've paid off the cost of the car, like a mortgage on a house.

Here in Britain, (as far as I'm aware) if you have the money you go and buy a car, you hand over anything from £2,500 (minimum price if you don't want an old banger) to £10,000 (or more if you're insanely rich and buying a very expensive car) and it's yours. If you haven't got the money you don't buy the car. People might get a bank loan for it but there's no mortgage-like deal with car dealers here.
 

ShilohRose

Well-Known Member
In the U.S., you can make payments on a car, much like a mortgage. Interest rates vary. My dh bought a car a couple of years ago, and the car company loaned him the money with no interest. I can't remember how many years it is to pay it off.

I think, in America, a car is almost a necessity if you live very far from work at all. My dh drives 30-40 minutes each way to work every day. There is no mass transit from our home to his office, and that's true for most places, and a taxi would be prohibitively expensive. Most Americans live a long way from their workplaces. I have never lived within walking distance of any place I worked. Usually, it was a 40 minute drive, sometimes more depending on the traffic. I couldn't afford an apartment/condo/house in town.
 
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Tall Timbers

Imperfect but forgiven
The stretched out loans for vehicles would indicate that the majority can't afford to purchase a car outright and couldn't afford to make the payments on a shorter loan. The good news is that new vehicles nowadays can last a lot longer than vehicles of days gone by. The flip side of that coin is it seems that people keep wanting to get into new vehicles so they keep themselves buried in debt. We in America are programmed to live a debtor's life from the time we see our first commercial.

It is unfortunate that so many are willing to enslave themselves to debt. Many will say they have no choice but there is often more choice involved in how one lives their lives and how they go about making all of their financial decisions than might be realized. The problem is we're truly programmed to be debtors and there is very seldomly any counter-influence financial education-wise. A very small percentage of the population understands basic finance and can manage things well, no matter their wealth or lack of it, but most of us aren't in good financial shape, and if there is blame to impart, then that blame lies very close...
 

Dana

Well-Known Member
In the U.S., you can make payments on a car, much like a mortgage. Interest rates vary. My dh bought a car a couple of years ago, and the car company loaned him the money with no interest. I can't remember how many years it is to pay it off.

I think, in America, a car is almost a necessity if you live very far from work at all. My dh drives 30-40 minutes each to work every day. There is no mass transit from our home to his office, and that's true for most places, and a taxi would be prohibitively expensive. Most American live a long way from their workplaces. I have never lived within walking distance of any place I worked. Usually, it was a 40 minute drive, sometimes more depending on the traffic. I couldn't afford an apartment/condo/house in town.
Here in Texas the only transit system we have are buses. The smaller cities like Arlington Texas which lies between Dallas and Fort Worth where I live doesn't even have buses. Everyone who can afford to pay a car payment monthly has a car, and those who don't have to take the bus, and the buses only go to really busy parts of the city.
 

Simon of Syrene

Well-Known Member
I'm confused. How do Americans buy a car? It sounds like you pay a deposit and then make payments until you've paid off the cost of the car, like a mortgage on a house.

Here in Britain, (as far as I'm aware) if you have the money you go and buy a car, you hand over anything from £2,500 (minimum price if you don't want an old banger) to £10,000 (or more if you're insanely rich and buying a very expensive car) and it's yours. If you haven't got the money you don't buy the car. People might get a bank loan for it but there's no mortgage-like deal with car dealers here.
The same deals are on offer here in UK via lease agreements. They typically run for 24 months or 10000 miles and also many car dealerships have finance arrangements similar to US one.
Here are typical deals:- https://www.gateway2lease.com/cars/audi/tt-coupe/tt-2.0-tdi-184ps-sport.php?id=12826
And http://www.nationalvehiclesolutions...-1.6-TDI-110ps-Match-5DR-Personal-Lease/37621
 

Círeth

Purry, roary, one.

Mustang

Well-Known Member
I bought a new truck, (my very first) in 2000. I'll never take the depreciation hit again buying a new vehicle. I still have and drive the truck and I'm not planning on getting another one, certainly not a new one in the near future. Automobiles are nothing but money pits any way you look at it.
 

Randy - Saved by Grace

Well-Known Member
The stretched out loans for vehicles would indicate that the majority can't afford to purchase a car outright and couldn't afford to make the payments on a shorter loan. The good news is that new vehicles nowadays can last a lot longer than vehicles of days gone by. The flip side of that coin is it seems that people keep wanting to get into new vehicles so they keep themselves buried in debt. We in America are programmed to live a debtor's life from the time we see our first commercial.

It is unfortunate that so many are willing to enslave themselves to debt. Many will say they have no choice but there is often more choice involved in how one lives their lives and how they go about making all of their financial decisions than might be realized. The problem is we're truly programmed to be debtors and there is very seldomly any counter-influence financial education-wise. A very small percentage of the population understands basic finance and can manage things well, no matter their wealth or lack of it, but most of us aren't in good financial shape, and if there is blame to impart, then that blame lies very close...



Well stated.................
 

Suzanne

Well-Known Member
The stretched out loans for vehicles would indicate that the majority can't afford to purchase a car outright and couldn't afford to make the payments on a shorter loan. The good news is that new vehicles nowadays can last a lot longer than vehicles of days gone by. The flip side of that coin is it seems that people keep wanting to get into new vehicles so they keep themselves buried in debt. We in America are programmed to live a debtor's life from the time we see our first commercial.

It is unfortunate that so many are willing to enslave themselves to debt. Many will say they have no choice but there is often more choice involved in how one lives their lives and how they go about making all of their financial decisions than might be realized. The problem is we're truly programmed to be debtors and there is very seldomly any counter-influence financial education-wise. A very small percentage of the population understands basic finance and can manage things well, no matter their wealth or lack of it, but most of us aren't in good financial shape, and if there is blame to impart, then that blame lies very close...

You made a lot of really good points.
 

Tall Timbers

Imperfect but forgiven
We drive our cars until they die. No new car every couple of years like most people I know. I would like to get an Elio when it comes out. Only $6,800 base price. My current vehicle is held together with spit and prayer.

I'd never heard of the Elio. Just looked it up on the web. Looks like a great commuter car at a sweet price.
 
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