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General Category => Off the Record => Topic started by: jimmy olsen on February 12, 2019, 07:51:58 pm

Title: A record number of Americans are 90 days behind on their car payments
Post by: jimmy olsen on February 12, 2019, 07:51:58 pm
This looks like a real bad sign.

https://www.cnbc.com/2019/02/12/a-record-number-of-americans-are-90-days-behind-on-their-car-payments.html

Quote
A record number of Americans are 90 days behind on their car payments

•More than 7 million Americans are at least 90 days behind on their auto loans, according to the New York Fed.

•That's higher than the peak in 2010 as the country was still reeling from the devastating financial crisis.

•The "number of distressed borrowers suggests that not all Americans have benefited from the strong labor market and warrants continued monitoring and analysis of this sector," Fed economists say.

Jeff Cox   | @JeffCoxCNBCcom
   Published 4 Hours Ago  | Updated 2 Hours Ago

As auto loan debt has soared, so has the number of people who can't pay, with the level of serious delinquencies breaking past the heights reached just after the financial crisis.
 
More than 7 million Americans are 90 days or more behind on their vehicle loans as of the end of 2018, according to data released Tuesday by the New York Federal Reserve. That's more than 1 million higher than the peak in 2010 as the country was recovering from its worst downturn since the Great Depression.

"The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market and warrants continued monitoring and analysis of this sector," Fed economists said in a report that accompanied their quarterly look at U.S. consumer debt.

The surge in delinquencies came along with a $584 billion jump in total auto loan debt, the highest increase since the New York Fed began keeping track 19 years ago.

On the bright side, the overall level of overall credit quality actually improved, with those at the lower end of the spectrum declining to 22 percent of the total share while 30 percent of the $1.27 trillion in total auto debt is now held by those on the higher end of the scale.

Those numbers "would suggest that the overall auto loan stock is the highest quality that we have observed since our data began in 2000. However, with growth in auto loan participation, there are now more subprime auto loan borrowers than ever, and thus a larger group of borrowers at high risk of delinquency," the report said.

Debt issued by auto finance companies, rather than at the dealer level, is responsible for most of the growth by less-qualified borrowers. Of the total auto finance debt, 6.5 percent was past due in the fourth quarter.

The flow of debt that slipped into the 90-day past due category edged up to 2.4 percent in 2018, compared with a low of 1.5 percent in 2012.

Overall, household debt rose by $32 billion, or 0.2 percent, to $13.54 trillion in the fourth quarter. That's $869 billion higher than the crisis peak of $12.68 trillion and is 21.4 percent above the post-crisis low point in the second quarter of 2013.

Student loan debt edged higher to $1.46 trillion while credit card balances rose to $870 billion, right around their crisis peak.

Generally, though, Americans were less hungry for debt than in the past: Credit inquiries fell to their lowest level in the history of the Fed survey, driven largely by a decline in refinancing requests.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: dps on February 12, 2019, 07:59:10 pm
It's largely because credit is still too easy to obtain, and lenders are still willing to loan money to people who aren't really able to repay it.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: fromtia on February 12, 2019, 08:10:19 pm
Imminent automotive debt meltdown has been forewarned for a while now. Despite not being a christian I like what Dave Ramsay says about automotive debt. I bought my truck for $1500 cash.  :cool:
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: mongers on February 12, 2019, 08:39:36 pm
Imminent automotive debt meltdown has been forewarned for a while now. Despite not being a christian I like what Dave Ramsay says about automotive debt. I bought my truck for $1500 cash.  :cool:

 :cool:

Wise man.

Over here I think we've move rapidly towards a US situation, a big chunk of cars are now bought on lease arrangement, so people don't own their cars and are tied into a higher consumption and debt model.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: HVC on February 12, 2019, 09:16:02 pm
Gonna be a lot of cheap cars on the market I guess
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: Tyr on February 13, 2019, 02:11:45 am
Why the hell don't people buy what they can actually afford?
My sister is after a new car and going to go down this loan route too. Its madness.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: Richard Hakluyt on February 13, 2019, 02:33:58 am
The paradox of thrift at work. If the 1% or 0.01% are going to engross most of the profits and wealth and not spend it then it is essential that most of the 99% and the state get heavily into debt to keep the wheels of commerce turning.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: Tamas on February 13, 2019, 02:39:46 am
The paradox of thrift at work. If the 1% or 0.01% are going to engross most of the profits and wealth and not spend it then it is essential that most of the 99% and the state get heavily into debt to keep the wheels of commerce turning.

Yes it is worrying. From my cursory look at this topic it seems like the economy is entirely dependent on people getting stupidly deep into debt. If we manage a second crisis in little more than a decade, things will turn very bleak.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: dps on February 13, 2019, 03:33:53 am
Why the hell don't people buy what they can actually afford?
My sister is after a new car and going to go down this loan route too. Its madness.

Part of it is that even used cars aren't necessarily all that affordable and are often bought on credit.  Sometimes the choice is between a 10 year old or so car that you can pay cash for, but which has no warranty at all;  or a 1 or 2 year old car which you'll have to finance, but at least will have some form of warranty.  (The warranties on late model used cars nowadays are often better--sometimes quite better--than the warranties on new cars were 40 years ago, BTW.) 

And of course, the salesmen have incentives to try to sell you something more expensive than you really wanted, too, so that they get a better commission.  Unless the dealership itself finances the purchase (which is sometimes done), the dealership and the salesman get their money, even if you default on your payments to the lending institution.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: Syt on February 13, 2019, 05:11:38 am
Gonna be a lot of cheap cars on the market I guess

And a lot of people without cars in a country where you're fucked without a car.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: dps on February 13, 2019, 07:54:00 am
Gonna be a lot of cheap cars on the market I guess

And a lot of people without cars in a country where you're fucked without a car.

Probably not.  What will likely happen is that there will be a lot of clunkers that otherwise would have been junked that will be kept on the road instead.  Not good for the environment (worse gas mileage and worse emissions) and not good for traffice safety, either.
Title: Re: A record number of Americans are 90 days behind on their car payments
Post by: fromtia on February 13, 2019, 11:01:33 am
https://www.youtube.com/watch?v=NvZJb_ydvUk (https://www.youtube.com/watch?v=NvZJb_ydvUk)