7 Million people are late with car payments

[ArrestMeRedZ]

Originally Posted by StevieC
Originally Posted by ArrestMeRedZ
Bingo, Krisz, you nailed it.

In this country poor natives often don't realize they are poor.

I have had a lot of contact with landscaping workers from south of the border. They make it to work on time, they live comfortably, and manage to send half of their comparitively low wages home. You won't find one of them in a $1300 a month single apartment or driving a new car. There may be 8 coworkers in a 3 bedroom house, but it's clean, warm, a roof over their heads, and affordable. They may carpool to work in a 20 year old pickup, but it's maintained and reliable.

Simply live within your means. When I was young and poor I realized I couldn't afford finance charges, so I never financed anything. If you are so bad at math you don't realize that, you are going to be exploited for life.

So much for the American dream then?

That landscaping worker is living the American dream at $12 an hour. Conditions many times better than where he came from, even after sending half his paycheck home. The native American with a liberal arts degree, $70k in student debt, $10k in credit card debt, and a financed BMW is living the nightmare they earned, and they need to own it.

 

[NormanBuntz]

My opinion: most but not all of these 7 million people make the major mistake of living beyond their means.

 

[02SE]

Originally Posted by StevieC
Originally Posted by ArrestMeRedZ
Bingo, Krisz, you nailed it.

In this country poor natives often don't realize they are poor.

I have had a lot of contact with landscaping workers from south of the border. They make it to work on time, they live comfortably, and manage to send half of their comparitively low wages home. You won't find one of them in a $1300 a month single apartment or driving a new car. There may be 8 coworkers in a 3 bedroom house, but it's clean, warm, a roof over their heads, and affordable. They may carpool to work in a 20 year old pickup, but it's maintained and reliable.

Simply live within your means. When I was young and poor I realized I couldn't afford finance charges, so I never financed anything. If you are so bad at math you don't realize that, you are going to be exploited for life.

So much for the American dream then?

I'd say they're living the American Dream. Life. Liberty, and the Pursuit of happiness. Obviously they consider that to be a better alternative than where they came from.

 

[Mr Nice]

I asked both my adult sons if the 'American Dream' was still alive in 2019 and they laughed and looked at me if I was crazy.

Of course the American Dream is still alive...

Both are NOT momma's boys still living at home.

 

[SZR48207]

Even if Kia sold a fashionable and reasonable car for $7k and it came with free maintenance for life, young people wouldn't buy it.

Young people are short sighted and image conscious and this drives them to take student loans for expensive schools to impress others, buy cars they can't afford to own*, and get high end tech equipment for typing papers and buying stuff on amazon.

Meanwhile older people who are past that stage of life have forgotten how numb skulled most of them were in their 20s. Old man yells at cloud.


In other words nothing has changed since the beginning of time.

 

[StevieC]

Originally Posted by NormanBuntz
My opinion: most but not all of these 7 million people make the major mistake of living beyond their means.

My point exactly.

 

[dishdude]

Something's up here. In a strong economy, most people can find a way to make ends meet even if they overextended themselves a bit on a car. The article says at the height of the great recession in 2010, 5.8 million loans were in default and back in 1999 when the economy was strong, only 1.7 million.

Even with additional subprime loans tossed in, 7 million today doesn't make sense.

 

[jeepman3071]

Originally Posted by DoubleWasp
This is BITOG, so I know that I should post about how good my finances are, and lay the blame exclusively on mismanagement of the owners, but things are significantly more complicated.

There is a Devil's Triangle that exists in many areas:

1. Poor wages
2. Incompetent or Non-existent Public Transit
3. Long commutes

Where I live is an incredible example of that.

A typical request of even the most rudimentary employment is to provide proof that one has a motor vehicle in their name, and insurance. No, not for jobs that require driving for the job. Could be for a floor sweeper or telemarketing. Then, combine that with the simple fact that if one is late for transportation issues, one will simply be fired. Since almost nobody wants to hire full time workers anymore, a person will likely have to be on time for 2 jobs.

Logistic analysis? One must have a car, and breaking down before or on the way to work means the apocalypse. Only answer? A new car.

How are the wages? About the same as they were in 1998. Cost of living? Insane. A basic one-bed apartment starts at $1300 a month and works it's way up. One is pretty much beyond a $2000 a month point of breaking even. The chances of them earning that much are tough.

There's not a lot of ways to "manage" that situation. One either needs outside help, or they are living on the precipice of doom.

We are not the only area living in such a logistical nightmare for the common employee. Plenty others. Especially those where the weather patterns are significantly more aggressive and dangerous.



This.

Times have changed. I'm very fortunate that I was raised to be financially responsible and have always been a saver. I buy things I want with cash, and worked hard enough to graduate with no student debt. Most millennials I know work multiple jobs just to pay student loans and housing. If their $1200 Civic or Camry breaks down, most don't have money for repairs and either buy another $1200 Civic or buy a new one with 30 years of payments. I try to help a lot of my friends fix their cars when I can, because for many of them a $1000 repair bill is out of the question, and they need the car to commute to school and work.

My father moved out at 18. He went to a state college full-time, lived in his own apartment, and worked part-time. He didn't have a car payment, but I don't know anyone at least in my area that could pay their own way through school, and pay for an apartment while only working a part-time job. One of my friends just started an entry level help desk type job for a company. One of the requirements for this position was a bachelor's degree, along with 2-3 years of experience. The starting pay is $13/hour. The supermarket down the street that requires no degree, but also has very little future potential, pays $12/hour.

That isn't to say people are helpless. A lot can easily save money by researching. I saved my friend a $120 service call on her dryer in her apartment simply by watching a youtube video on how to repair it. No doubt that strong marketing also has a huge influence on what people buy. It is all a perfect storm if you aren't careful.

 

[SatinSilver]

The credit subsidiary of three manufacturers are known for easy financing approvals. They are Nissan, Mitsubishi and FCA.

 

[Jimzz]

Originally Posted by KrisZ
So there is a potential for nice supply surge in the used car market, I consider it good news, as long as my tax dollars will not be used to bail out failed businesses.


For higher priced newer cars maybe.

But when people lose their car they have to find something they can afford so it drives the prices of lower end or even junk cars up.

So if looking for a Cadillac or Lexus a year or two old deals may pop up later this year. But if looking for a sub-5k car then probably will be slim pickings.

 

[BigD1]

Originally Posted by DoubleWasp
There is a Devil's Triangle that exists in many areas:

1. Poor wages
2. Incompetent or Non-existent Public Transit
3. Long commutes

Where I live is an incredible example of that.

A typical request of even the most rudimentary employment is to provide proof that one has a motor vehicle in their name, and insurance. No, not for jobs that require driving for the job. Could be for a floor sweeper or telemarketing. Then, combine that with the simple fact that if one is late for transportation issues, one will simply be fired. Since almost nobody wants to hire full time workers anymore, a person will likely have to be on time for 2 jobs.

Logistic analysis? One must have a car, and breaking down before or on the way to work means the apocalypse. Only answer? A new car.

How are the wages? About the same as they were in 1998. Cost of living? Insane. A basic one-bed apartment starts at $1300 a month and works it's way up. One is pretty much beyond a $2000 a month point of breaking even. The chances of them earning that much are tough.

There's not a lot of ways to "manage" that situation. One either needs outside help, or they are living on the precipice of doom.

We are not the only area living in such a logistical nightmare for the common employee. Plenty others. Especially those where the weather patterns are significantly more aggressive and dangerous.


Good post!

Back in 1998 a standard car loan was four to five years with a down payment of $2,000 or so for a sedan. Now the norm is six to seven year loans for compacts.

If the trend continues, I think it's possible that 10 year loans will be the future norm for a sub-compact.

 

[PimTac]

This recent article on Edmunds tells how the average length of car loans has crept up.

https://www.edmunds.com/car-loan/how-long-should-my-car-loan-be.html


What is surprising is that used car loans are also being stretched out.

 

[SteveSRT8]

It's really getting ridiculous out there.

We recently worked for a guy with a gorgeous new Sea Ray Sundancer 260 who has a ten year loan! I was stunned. Cannot imagine those ridiculous terms for a depreciating boat.

On the other hand, it is a beautiful rig, and actually trailerable...

 

[CKN]

Originally Posted by SteveSRT8
It's really getting ridiculous out there.

We recently worked for a guy with a gorgeous new Sea Ray Sundancer 260 who has a ten year loan! I was stunned. Cannot imagine those ridiculous terms for a depreciating boat.

On the other hand, it is a beautiful rig, and actually trailerable...


Most who can truly afford a boat keep them a long time.

 

[Mr Nice]

Maybe interest rate is 5% and his money is making 17% in the stock market ?

I know a guy with a legitimate net worth of $5M and he finances all his vehicles...

 

[jeepman3071]

Originally Posted by Mr Nice
Maybe interest rate is 5% and his money is making 17% in the stock market ?

I know a guy with a legitimate net worth of $5M. and he finances his vehicles...


In some cases financing makes sense. 0% interest loans, or financing a vehicle and earning money on the cash in the market like you stated.

The people late on their payments often do not fall into this category.

 

[PimTac]

Originally Posted by jeepman3071
Originally Posted by Mr Nice
Maybe interest rate is 5% and his money is making 17% in the stock market ?

I know a guy with a legitimate net worth of $5M. and he finances his vehicles...


In some cases financing makes sense. 0% interest loans, or financing a vehicle and earning money on the cash in the market like you stated.

The people late on their payments often do not fall into this category.




For sure. In 2000 I took advantage of Mitsubishi's zero rate for two years. Payments were optional on that plan which a lot of customers took advantage of and in the end really hurt Mitsubishi Motors. I did the opposite and used a arbitrage scheme that let me keep my money and make accelerated payments at the same time.

 

[Saul]

Originally Posted by Fitter30
https://thehill.com/policy/finance/...egulation-of-banks-sending-bill-to-trump

When car dealers let a 20 year old making $450 a week purchase a new car for $20k sad. Not all the blame goes to the kid some has to go to schools that don't teach finance and lenders that don't care who they hose.



This is one of the biggest problems. The dealerships/car salesmen will sell a car at any cost. They come up with new shady tactics to hide what they are doing because even they know its wrong.

 

[SatinSilver]

Originally Posted by SteveSRT8
We recently worked for a guy with a gorgeous new Sea Ray Sundancer 260 who has a ten year loan! I was stunned. Cannot imagine those ridiculous terms for a depreciating boat.


Small airplanes and RV's are the same way with long term loans available and common place.

 

[jeepman3071]

Originally Posted by Miller88
If I lived in a part of the country that didn't salt everything to death, I wouldn't even have anything under 20 years old. That drives a lot of people to continue buying new. It's not possible to daily drive something up here for 10 years unless you want to start paying serious coin just to keep up with parts rusting off. I said I was done with new vehicles, maybe this time I am, but when all three of my older rusty vehicles break at once .. it's frustrating. If I can keep the Subaru from rusting, it will be the last new car I will buy.



This is the issue with long term loans on newer vehicles too. 84 month loans on most vehicles means the buyer is still making payments long after the warranty is up, meaning they will be paying for repairs AND payments. With anything used or off lease the chances of this happening are greater. Not too much of an issue with your basic Camry, but with all modern cars being complex with turbos, DI, and infotainment, the repairs will be pricey. I can't imagine the repairs these people with 7 year loans on diesel trucks will be experiencing down the road. Not to mention expensive maintenance items like tires, brakes, and fuel to feed them.