Record number of car buyers underwater on their trades; loan lengths increasing

[MetroMPG]

Just another datum for the pile...

Outstanding auto loans hit record $1.1 trillion

Outstanding auto-loan balances in the U.S. reached a record-high $1.1 trillion in the second quarter, a 7.1 percent rise, according to Experian's latest State of the Automotive Finance Market report released Thursday.


The source of the growth was loans to prime buyers, as subprime and deep subprime originations continued to fall in the second quarter.

Streeeeeetch it out!

For new-vehicle loans, 61-72 and 73-84 month terms each grew about 1 percentage point to 40.4 percent and 32.5 percent, respectively.
Meanwhile, 85-96 month loans increased, accounting for 1.25 percent of new-vehicle loans, vs. 0.95 percent a year earlier.

Source: http://www.autonews.com/article/20170907/FINANCE_AND_INSURANCE/170909823/outstanding-auto-loans-hit-record-$1.1-trillion

Via: Jalopnik

[jamesqf]

Originally Posted by MetroMPG

Outstanding auto loans hit record $1.1 trillion

]

None of which is owed by me :-) It's been over 30 years since I paid off my first and only auto loan.

[Xist]

So, most auto loans last longer than I have owned any car. Neither part of that sounds good, but if I spend $2,700 every three years, that is $900 annually, or $75 monthly, plus I save on insurance.

One of my Facebook friends traded in her car that was only a couple of years old when her wife bought a new car.

I stared at her as she dismissed rolling her old car loan into the new one and saying "It is fine."

Apparently she also has a habit of purchasing jewelry on credit.

[freebeard]

I had my Dasher up on the rack before it's road trip; and the mechanic, Jerry, said "You should buy yourself a good car".

Knowing him I took to one of two ways; either the closest he could bring himself to 'sweet ride', else he still can't believe I traded a set of mag wheels for it.

[JockoT]

One of the young guys where I worked suggested I buy a "good" car. I asked why, and he said, "well, your old one could give up the ghost at any time". I asked him what he was paying for his new Ford and he told me £300/month. I told him my car cost me £300 and if it died tomorrow I'd go out and buy another £300 car - and still be better off than him!

[RedDevil]

Originally Posted by jakobnev

I wonder if the Dutch have this problem with boats.

The only bank that still issued mortgage on house boats has announced it will stop doing so. Houseboats are on the decline, and this won't help.

But there is a shift in the population of house boats; new owners are typically wealthy, using the house boat as a 'pied a terre'.
All house boat owners go to lengths to prevent their house from going 'under water'. It is second nature to them

[wdb]

Ninety Six Months! Eight Years!! For a car loan!!! *Boggle* I mean, I know cars are getting more complex and expensive, but that's nuts. People need ECON 101.

I had two 5-year car loans in my life. Paid them both off early. Effective APR was about 1.5% on the first and under 1% on the second.

[JockoT]

The only car loan I ever got was in 1978, for £1000, from my mum. I would just about have it paid off now - if she hadn't died in 1990!

[darcane]

Originally Posted by MetroMPG

Just another datum for the pile...

Outstanding auto loans hit record $1.1 trillion

Inconceivable!

$1.1 trillion in loans, the 1 in 5 of which are subprime, 2 in 5 of which are underwater. This is a recipe for disaster, the only question is when does this collapse?

One good thing... the trend here at EcoModder seems to be that of avoiding auto loans entirely. Like many here, I had one auto loan, hated it so much that I've paid cash for every other vehicle I've purchased (and that's a long list...). I hate making payments on a depreciating asset.

Every time we try to boost the economy by financing products, we inflate the cost, and place more burden on the consumers trying to acquire those products. Whether it's housing, autos, or college, the solution is to make it more difficult to get loans, rather than easier to get loans.

[Xist]

I am not a big fan of creating new laws, but maybe they should not be able to finance for longer than the warranty lasts. Can you imagine still owing money on a car that does not run?