Subprime Auto Loans: A Mess

[errolanderson]

Just when you think the lessons of the financial crisis of 2008 would sink in, it hasn't. Now the U.S. subprime auto loan fiasco may be ready to blow.

And there is yet another version of the U.S. Housing subprime mortgage fiasco brewing.

If this blows, you won't see a central banker for miles . . . .

[furrowtickler]

Just when you think the lessons of the financial crisis of 2008 would sink in, it hasn't. Now the U.S. subprime auto loan fiasco may be ready to blow.

And there is yet another version of the U.S. Housing subprime mortgage fiasco brewing.

If this blows, you won't see a central banker for miles . . . .

Yup
Anyone remember the price of vehicles back then just befor it happened???
They were jacked up for two years previous....... hmmmmm , do a check on auto prices the past 2-3 years .
Just sayin
The big players know , they suck as much as they can before the balloon pops

[errolanderson]

An opinion, but this fallout may impact the Cdn auto industry and pricing by fall . . . .

The consumer stateside is totally tapped out. Now these loans will reset at much higher levels. Just like the 2008 housing crisis. Plus as one U.S. analysts stated, these loans are 'toxic waste financial' instruments. The glut of vehicles on the market could be staggering over the next year.

[Oliver88]

Will this lead to opportunities for purchasing vehicles with cash at lower prices?

[farmaholic]

Will this lead to opportunities for purchasing vehicles with cash at lower prices?

"CASH"? They'll look at you like you're from another dimension from another planet. You "have to" finance! It's geared that way. You're going to ask for a cash discount on an already "discounted" vehicle?

[errolanderson]

Will this lead to opportunities for purchasing vehicles with cash at lower prices?

Oliver, my big fat opinion . . . yes. Personally, I'm in the market for a vehicle, but must admit I'm dragging my feet right now. This should hit by fall . . . but what do I know?

[biglentil]

Not sure if 0% 60 months is still available but why not real inflation is easily 3% and climbing fast.

[farmaholic]

Biglentil, is it really 0% or is the interest over the term built into the purchase price. I bet so few pay cash that there isn't any decent discount if you choose that option. I don't know the dynamics of an auto sale/purchase but I bet it's in everyone's best interest the vehicle gets financed, except the purchaser's. Now go negotiate the best cash deal you can.

Gotta love that MSRP though, lol. Rebates and discounted down....even if its financed.

Ya, my wheat is "worth" $20/bu too but......

[tmyrfield]

If I am not mistaken the housing subprime mortgage crisis was $1.5 trillion. Sub prime car loans maybe $10b. a lot. but not in the same league by any stretch of the imagination. used car prices may in fact be keeping up the value of new cars which is what the industry and governments want. why else would the liberals give toyota billions of your hard earned taxes?

[the big wheel]

Biglentil, is it really 0% or is the interest over the term built into the purchase price. I bet so few pay cash that there isn't any decent discount if you choose that option. I don't know the dynamics of an auto sale/purchase but I bet it's in everyone's best interest the vehicle gets financed, except the purchaser's. Now go negotiate the best cash deal you can.

Gotta love that MSRP though, lol. Rebates and discounted down....even if its financed.

Ya, my wheat is "worth" $20/bu too but......

Yes someone explain how the bank gives you 0 percent interest loan to buy he vehicle so in other words the banks are giving money for free? They don't make any money on the deal? There must be some built into the price deal between bank and dealers. Wouldn't make sense otherwise.

And as far as 25% off vehicles they aren't even worth what they are after the 25% is taken off. Take another 25 and it would be closer. Lol

[Jay-mo]

I was watching hockey last night and the truck commercial comes on.
"$18,000 cash back!!" touted the headline! LoL
You know pickups are overpriced, when the advertisement makes little to no mention of the actual price and only tells you how much of your own money you get to keep!

[grefer]

The Auto industry loves leased vehicles because it allows a huge number of people to drive a new vehicle who could not afford to otherwise even though at the end of it all they either buy it out or get another lease they cant afford or dont have a vehicle to drive. On the other hand you have Joe consumer who says screw that. I want to own my own vehicle. The auto makers say have we got a deal for you. Here is the MRSP that you cant afford and we will discount it to a new lower ridiculous price you cant afford but we will give you a loan with zero interest(wink wink) spread it out over 7 years make the payments biweekly so the payments seem even more affordable and presto. They have everyone in a vehicle they cant afford and locked in for a very long time. Really sweet for them not so much for the consumer who is being duped imo. Now make the comparison to ag equipment. Difference is the dealers cant sell the used stuff off their lots because farmers would figure this shit out so we will call Ritchie Bros and make it appear we are losing our asses when we arent. Win win until the music stops and who knows when that is going to happen.

[errolanderson]

If I am not mistaken the housing subprime mortgage crisis was $1.5 trillion. Sub prime car loans maybe $10b. a lot. but not in the same league by any stretch of the imagination. used car prices may in fact be keeping up the value of new cars which is what the industry and governments want. why else would the liberals give toyota billions of your hard earned taxes?

tmyrfield . . . you are right. 2008 housing subprime was much bigger than current auto subprime loans.

But there is again sister products of subprime housing mortgages again circulating through the American real estate market. Unbelievable (IMO). If auto subprime loans blow . . . this may be enough for these new housing subprime mortgages to blow . . . . It won't take much to knock the consumer over.