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So basically,
- Banks will repossess vehicles to try and minimise losses
- Banks will not be able to sell those repossessed vehicles, resulting in losses
- Banks may become insolvent as they are unable to liquidate the vehicles
- Government steps in to bail them out
New vehicle prices are not in line with their actual value, so banks are making loans that aren’t covered by the collateral. This is shit management by the banking industry. If it’s impossible to get an auto loan then vehicle prices will eventually fall as supply stacks up. Banks are feeding this cycle by being unrealistic in these loan assessments.
But… But price only go up?
The sky daddy book of economics says price only ever goes up and concentrated wealth is a good thingThis is what my partner and I call a “state’s right to what” problem. The centralized wealth says that centralizing wealth is good. Centralizing wealth is good for whom, Mr. Finance?
- Government steps in to bail them out *with tax money taken from the people who couldn’t pay their car note in the first place
So either banks make money or banks take money.
Well, yes and no. It’s grey like most things in life.
Banks and credit are a means to “grow the pie” by allowing us to factor in future value. Before banks and credit, the world was a zero sum game where one person only had because the other person had not.
They do serve a real purpose but are only valuable when properly managed.
Yeah that isn’t true. The world never ran on the mathusian nightmare. If it had everything would be gone by now. You see wild edible plants and wild edible animals. Also census numbers and tax revenues would have been stable. The people of the past had the same issues we had. They starved on fertile farm land, they had economic downturns, they had baby booms, farms would switch from high end cash products to cheap grains they could sustain themselves with and back again.
Banks aren’t doing us some favor by being the engine of economic growth. Every bank you see has become a corny capitalism abomination that makes most of its money lending money to people who don’t need it, government infusions, and fees. Even the things that you can point to like financing a home ignore that it is a disease that they helped cause and they are selling the cure to.
They won’t have to worry about selling the cars, some used car dealer will take them off their hands gladly. What the banks and the financiers will have to worry about is how to bundle all of that bad debt into CDOs. There’s a movie about this I think.
Why wouldn’t they? You said it yourself, they will get bailed out. This is classic moral hazard. Once you remove risk of lose people will make decisions that are reckless.
Exactly. Consequences are necessary to curb reckless behaviour. That’s why the leaders of these entities should be punished separately.
Don’t forget people also not being able to go to work anymore potentially
Toyota is selling a basic (no ABS brakes, no airbags, crank windows) pickup in the rest of the world for $10,000. They could probably sell a version with the optional safety equipment in the US for $15-20k. But they will not sell it here and mess up the $50-100k luxury pickup gravy train.
At least they aren’t doing what the big 3 do with their trucks. A mid range XLT F-150 will cost about the same as a fully decked out Tundra, and a fully decked out F-150 will set you back over $100K, but these were sold for $50-$75K just before the pandemic, so what changed? They just decided to charge more due to greed.
I look at it as fleecing the assholes who buy those fucking things for vanity. Keep it up Ford and GM. Make them go fucking broke.
Maverick is okay, if you can find a hybrid.
I’d love a Maverick hybrid, but I just can’t find one for sale right now. They’re very popular apparently.
And also the chicken tax
Yeah there’s no way they’re ever going to touch the cash cow that is the Tacoma. If they had any desire to, they would have started selling the Hilux here decades ago.
They don’t sell vehicles without ABS in the US because they are required by law here.
Did you read the rest of the post where they mention a full US spec one would probably be $15-20K?
“Probably”
Oh shit, I want one soo bad now
The shift towards massive vehicles (SUVs) and trucks loaded to the tits with tech junk is to blame. Auto industry sold the idea to Americans that their fat ass needs a compensator instead of psychiatric help.
Nah.
It’s poor planing and over spending that is the issue. People who lease cars are on an endless cycle of never owning anything and always laying a premium.
Just actually buy a car you can actually afford.monthly payments on and drive the car into the ground. Every car in have owned has made it at least a decade and a 150k miles. Once you are done paying off take what the monthly payment would be and out it into two banks account split 20/80. Woth the 80% being towards a new car and the 20% being for repairs.
My wife’s Honda has over 300k and still runs fine and doesn’t use oil. We put $10k aside for an emergency down payment, but every month it keeps going we are a few hundred dollars wealthier.
I laugh at my buddies who constantly need to have new vehicle.
Too many see their car as a measure of their worth.
Funny thing is my wife bought herself a beat up 1980 squarebody pickup for hauling stuff around the farm and you cannot take it out anywhere without people stopping to comment it and she only paid 4k for it… Hell, we have near weekly offers from strangers to buy it off of us at a premium. I want to emphasise it is not some pavement princess it has whiskey wrinkles from past owners and plenty of rusty bits.
I have a similar truck. It’s great for hauling junk around. I’ve had it since college. It used to be my daily driver. Now I have a commuter car, but I use that for errands. The thing is a tank. I also get notes on it all the time. I paid $500 for it 10 years ago. People have offered me $10k. It’s very tempting, but I love that truck.
Yea, I don’t think there is a dollar amount that would make my wife sell hers.
whisky wrinkles
Love it.
I have a most similar vehicle, a battered 12 year old F150 that started life as a Menard’s rental truck. The most notable feature about it is that it’s a long-bed, single cab truck that isn’t white. People who ride in it are either confused or enthralled with it’s lack of whiz-bang features. There are no power windows, no power locks, no keyless entry, no color touchscreen infotainment center, no CD player, and no carpet. It’s not driven every day because motorcycle, so it should hold up a long time.
that’s what i’m hoping for with my 1st gen yaris, 100k and no signs of wear besides the 3 previous owners fucking up the clutch and synchronizer gears.
poor planing
well you got the poor part right
Buy what you can afford.
And if someone can’t afford a car, and they live within a car-centric area of the world, and they can’t afford to move?
Maybe they make a gamble and buy a car with the hope it will be an investment, and provide them with more income…
But when interest rates have been at near zero for over a decade, and now they have shot up - it could upset quite a lot of finances!
That’s one of the big problem with unwalkable cities, yeah. In Amsterdam, if you’re poor you don’t have to buy a car. Bikes are way cheaper than a beater car.
In the US, we’ve decided to design nearly all cities and towns to make life impractical if you don’t have a car. Just another way we fuck over poor people.
I see people who can’t afford a car trying to make it using an e-bike or a cheap scooter. Where I live, scooters are allowed to get up to 32mph, and e-bikes are limited to 20mph. That can make for a long, rough commute in any place except urban settings (where you have a fighting chance at public transportation), 55+ communities where everyone drives golf carts, or resorts, where traffic is usually painfully slow to begin with.
Exactly. I like cars so it starts to suck keeping them for 10 years but otherwise I’d be in continual car payments.
Also taxes and insurance get cheaper as the car gets older too, so that helps.
Yup. We run two cars since we both commute for work but one is fully paid off and the other one is almost done. They payment for the first one is now going into a repair account for it and a down payment account.
The reason we haven’t paid off the other car is because we had 0% financing. So the money going into the ally account is making us money vs the bank having it.
We also have a gm card and both cars are gm. So we should have several thousands to redeem on that towards a new down payment.
Name a person you know who over spends like this.
My brother in law and sister in law. They have two brand new leases and a house they can’t afford and have been borrowing money from my in laws to keep afloat.
Lots of people over spend this way. I had a friend who was making $700 a month payments on a used Mercedes suv as a new teacher.
Lots of people over spend on dumb shit.
Ten years and only 150k? Must be nice to work from home. A home located in the south where they don’t salt the roads.
Must also be nice to be able to afford to live somewhere where your tools don’t get stolen every time you leave the house. Because of course you are going to need tools to maintain your car to 10yrs and 150k… unless you are one of those really rich people who can afford to have someone else fix your car.This doesn’t work for me specifically, so it’s absurd and stupid that anyone else does it.
Dude also just injected a bunch of assumptions into his post and forgot I stayed to put 20% of what your payment was into an account for repairs.
Wherever you live sounds like a shithole.
At my last place where we live for over a decade we had nice patio furniture and garden tools out on the front lawn and the only time something was touched is when a neighbor borrowed it for a day. Never had so much as a little kids toy taken.
You should hop in your car and move someplace where people don’t steal your shit. It’s easier than you think to set up in a new area ( I’ve done it multiple times in my life with less than $100 in my pocket. ) people only think they are stuck and it become a self fulfilling prophecy.
He must be from New york
New York is pretty safe now.
District of Columbia,
Washington, Oregon, Colorado, Louisiana, New Mexico, Hawaii, Arkansas, South Carolina, Texas, Tennessee, Delaware, Missouri, Arizona, Oklahoma, California, Montana, North Carolina, Kansas, Utah, Minnesota, Nevada, Nebraska, and VermontAll have higher larceny theft rates.
I live in NJ and my last car before this had a 100mile round trip commute on it. Last I checked they salt the roads. I don’t do any maintenance on my car. I take it in for service at the dealer during the finance period and then a local shop near me for larger repairs. I take it to a valvoline for oil changes. Last car I retired needed a total of 6grand in repairs over its life that weren’t regular maintaine. That is why I said to take 20% of the payment and put it in a bank account for repairs. You should read another person’s posts before making a bunch of self serving assumptions to make your self feel better
https://www.trustedchoice.com/insurance-articles/wheels-wings-motors/average-miles-driven-per-year/
Looks about dead average to me.
Auto industry sold the idea to Americans that their fat ass needs a compensator instead of psychiatric help.
True or not, that got a good belly laugh out of me.
People in power will squeeze and squeeze. They’ll crank up the interest rates. They want you to default on the equity. Take your payments and your car. That’s how they make their money.
Have to be sure they don’t repo a running usuable car, then.
I understand the sentiment but please leave us decent cars on the used market.
My wife and I bought a Nissan Rogue in 2020 for 22K. 2020 model with 1400miles on it. We paid it off in 3 years. Today with 35k miles on it the trade in value is 23k at the Nissan Dealership. What a crazy time in the industry!
I bought an 81,000 mile F150 for $12k in january of 2022, it now has 100,000 miles and I’m pretty sure I could sell it for at least what I paid for it.
You only put <35k miles on it in 3 years? Damn.
12K miles per year is considered normal / average usage.
So what I’m seeing is to find any way I can to short the auto lenders so when they declare bankruptcy I can finally be able to afford a car?
“ok Google, how do I buy a short position on auto lenders?”
American banks fucking the world once again.
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Dealers are starting to call around. They’re acting confident but they know the market has collapsed… they’re all trying to sell the last NFT.
they can hear the music and see the lack of chairs…
My dad found a rural lot near here where a bunch of dealers are parking inventory so they can still make it look like a shortage. One dealer still has $5k markups last I checked, but also still have the car I looked at ~5 months ago.
Lots are full where I am. I asked about one car a few months ago and they wouldn’t haggle. Tempted to call back and ask when they car’s lot birthday is so I can bring a cake.
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I don’t understand how people buy new cars. They cost like 1/4 of a house.
Debt that they can’t afford. You can get approved generally for more debt than you can feasibly make payments on. Easier for a working class schmo to get approved for a $90K truck than a $500K house.
Who the fuck pays $90k for a truck?
Anybody willing to do that deserves it.
Lots of people. I don’t get it either, but here we are.
Have you looked at the price of trucks lately?
People assume they wouldn’t be approved for a loan amount they couldn’t afford
Not many people understand they the debt is sold to someone else and soon as you walk out the door
Like a quarter of the US, lol
I mean it depends on what you’re looking for. For some the ability to have all the features they want and not have any small issues are worth the premium. You can choose what you value.
I think it’s a different argument where people buy products outside their means.
A lot of people earn a lot of money. Especially in the US.
Hopefully. Maybe I wont see so many people who make very little money driving pickups so large they can’t even park them right and then returning them 4 years later to get an even larger one.
I have an economy car. My whole family fits it, it is already more car than I actually need. I bought it when it was 5 years old. I will repair it until the point it can no longer be repaired. At which point I will buy another reliable used economy car in cash.
A car is not an experience, it is not a status symbol, it is not compensation for your tiny penis, it is not for showing off, it is a machine that moves humans and goods from A to B.
I have known a retired accountant who lived in an apartment with an oversized pickup, I have known people who make $11 dollars an hour with a bright shiny pickup, I have known a small retail store manager drive around in a Hummer they got modified to look militarish-copish, homemakers with one kid with a SUV that sits 8, people on the verge of bankruptcy telling me how they will be rich restoring a mercedes from the 70s.
“My opinion is right any everyone else who doesn’t agree is wrong” if only it were that easy.
Clearly not a car person. Many people enjoy their car because they think they’re cool, they enjoy them, and its how they chose to spend their money. I don’t necessarily agree but they’re entitled to their view as equally as you are to yours.
It’s ok if they are actually spending their own money, the issue here is that those people have no self control or financial skill as they drive a vehicle they can’t afford because the dealer happily drags then down the drain and they believe his lies.
Dumb idiots shouldn’t be dragged down for their whole worth, people who don’t know how to money need help.
But seeing how the average american only cares about: “muh guns, murica” i’d say good luck as a nation to fix their dumb dealers filthy tricks.
Money doesn’t grow on trees, it needs to come from someone and that someone tends to be the tax payer when shit hits the fan.
Stop defending your own future downfall for the sake of some minimum wage workers Hummer H1.
Fine they are entitled to their dumbass views and I am entitled to laugh at their dumbasses when their life sucks. Which for most “sports utility vehicles” it already sucks due to micropenis.
My wife’s head gasket went and we had to decide do we get a new car or replace the entire engine and the fact the engine was the better option these days is just wild. Those new monthly payments are wild
I mean, that kinda makes sense? An engine should be cheaper than a whole car, shouldn’t it?
Ya but usually to justify doing large jobs like these you gotta weigh out how much your repairs are annually and if you put more work Into a car a year than the cost of a car payment per year it use to be betrer to just get another car.
Replace the entire engine over a head gasket?
Yupp. New HG for a subaru is nearly the same price as an engine and once you’re in high miles it just saves time and money doing the entire engine. The engine takes about 4h to do vs a head gasket which is about 12h. It’s stupid.
Head gaskets, plural, on a Subaru boxer engine! One on each side. The procedure for that job basically starts with step 1: Remove engine.
So at that rate, if you have a new crate motor on hand you can skip all the shit in the middle and proceed straight to step 2: reinstall engine. It doesn’t surprise me the parts cost for an engine outweighs the labor cost for removing it plus taking it apart twice.
I’m not sure it’s possible to get the heads out of a modern Subaru without pulling the engine. An older one where there was more room in the engine bay, maybe. But there’s too much shit in the way and the unibody and wheel arches are like 1/2" away from the tops (sides) of the heads. I’d doubt you could get a wrench on all the bolts, let alone snake the head bolts out which are like 10" long.
And what happens to the old engine? Does it get refurbished somewhere slow&cheap and become a crate motor for step 2 a few months down the line? Or thrown out?
Depends, but most likely it is either parted out or sent back to be refurbished. Failing that, it will certainly be recycled. There is a shitload of aluminum in any vaguely modern engine (like, from the 1990’s onwards) so even the shadiest of shadetree mechanics will have it melted down for cash before just chucking it in a landfill.
Same thing happens with transmissions. It’s nearly impossible to buy a new transmission for cars that are more than a couple of years old – they’re all remanufactured by Jasper or whoever.
The place I’m going through will take the old engine once it’s out and refurbish it if they can or part out if the components are good. Personally I think they’ll scrap it as it’s over 150k miles
Yes there are companies out there that buy and refurbish engines. You give them yours as a core and they send you a ‘refurbished’ one.
Honestly I didn’t even know it was plural. There’s no way to work on the engine while it’s in sadly so the engine does have to be pulled, heads removed, get everything resurfaced, and since it’s out replace hard to reach components or pay the price again a few months later. Knowing what I know now I won’t be getting another vehicle like this. The old legacy models it was $1,200-$1,500 for the head gasket so when the shop said $3,000 I nearly had a heart attack. My shop did the right thing and said engine swap with a few buddies and save some serious money so that’s our plan.
Honestly not that surprising. It’s the same reason why electronics don’t get repaired, they just get whole new boards installed even if it’s just a single bad component. Labor costs can easily outweigh the cost of any single part.
head gasket on a gd Subaru boxer engine, who coulda guessed. Anyone with the power of access to a search engine. Do your research and stop buying crap, people. If the junk don’t sell, they’ll stop making it
Where are we on the whole used car market thing? This could get wiggly if tons of people can’t pay their car note, but for at least the first few they might actually be able to sell and turn around some money. Not a ton, mind, but until recently it was a given that your car is worth less than you owe on it.
We were in the market for a new car about 6 months ago. I wanted to buy used, but a used version of the exact same car (except a year or two older, obviously with mileage) was roughly the same price as the new car on the lot. Needless to say we bought the new car
Used cars are still more expensive than their new counterparts, at least in San Diego. It’s almost cheaper to buy a classic car than a used car in many cases.
I was looking at the amount of bad debt that Americans are in with mortgages, and with the moratorium over on student loan repayments, earlier this year it looked like another 2008 on the horizon. I never considered though that it would be the car payments getting defaulted on.
Cars are becoming the new houses, so kinda makes dystopian sense?
Car payments are a poverty trap. Save and pay cash for cars, it’s harder now that used prices are absurd, but it doesn’t change the math.
No, remortgage your property at super low interest rate below inflation and then buy with the cash you got. This way you’re saving crap loads of money.
That’s even worse. Now you have your house on the line for a depreciating asset. It’s the depreciation that makes financing cars such a bad deal.
Only if you want to sell your house in a few years. If not, it’s a money printing machine.
People should stop buying 40k vehicles and get the shitty econbox then 🤷♂️
Yes, it sucks you can’t get a free loan and stretch your $700 to 6 years.
Shitty econboxes don’t exist anymore
*in the US, because we’ve all got tiny-penis trucks
Shitboxes are the bread and butter of car companies in modern countries
Shit, entry-level cars still run you $20k or better in the US, and that’s without any options. I just had to price a new car last year and literally nothing new was on the market in my area for less than $25k. Your old Toyota Tercel that you bought for $6k in the 80s doesn’t exist anymore. That brand-new Camry that’ll run for 30 years and only costs $12k is now double that, at least.
$6000 in 1980 is equivalent to over $23k in 2023.
https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=6%2C000.00&year1=198001&year2=202309
I got a 2023 Hyundai Elantra Limited with all the options for $27,000 earlier this year and that was brand new. The standard/base Elantra was several thousand less. There was another model below the Elantra for even less. I also didn’t haggle and took the price as marked, so who knows. Perhaps someone more charismatic than myself could have done better on it.
I still over paid, don’t get me wrong. The same car with all the features before Covid would have probably been around $22-23k.
the last gen Aygo was 10K€ new.
the current gen Aygo “X” crossover SUV replacement is 16K€.
i would have bought one.
sad to see toyota of all companies to stop making small cars.
This is just an anecdote, not a defense or counter argument by any means. Somebody around me has figured out how to import what I think is a Suburu Sambar. It’s a micro suv/truck, and I’ve seen more than three around my area suddenly. I’ve also seen a couple of right hand drive skylines all of a sudden, so I don’t know if something has changed, but maybe importing is an option
You can import cars 25 years after they’ve been released.
