Other post https://old.reddit.com/r/cars/comments/11vjh70/subprime_car_loan_delinquencies_are_surging_above/
Low-income households are falling behind on car bills
Consumers with low credit scores are falling behind on their auto loans at a record rate.
Why it matters: The upsurge shows that despite the strength of the job market, cash-strapped American households are under pressure from two years of cost-of-living increases and the end of pandemic-related benefits.
State of play: The share of payments on so-called "subprime" auto loans that were at least 60 days late rose to more than 6% in December. Subprime loans have high interest rates and are typically made to people with low credit scores.
Delinquent payments — basically unpaid monthly bills — are the first step toward default and the car being repossessed.
The December delinquency rate is a record, eking past prior peaks just before the pandemic, according to data from S&P Global.
The big picture: The uptick reflects a steady weakening of the finances of poorer American households.
For one, the cost of living has surged — just look at the Consumer Price Index, which has jumped more than 14% over the last two years.
Meanwhile, key COVID-era federal aid to households, like the Child Tax Credit and expanded unemployment benefits, are in the rearview mirror.
Savings levels have slumped.
And Americans are increasingly pulling out the plastic — credit card usage is rising, even as interest rates on these borrowings hits record highs.
Zoom in: Used vehicle prices skyrocketed during the pandemic. That drove up borrowing activity sharply, especially among people with low credit scores who predominantly buy used cars, rather than new ones, an analysis by the Consumer Financial Protection Bureau (CFPB) found.
- Now, those higher borrowing costs are getting tougher to manage.
Worth noting: The subprime sectors of both mortgage and auto finance tend to have a higher incidence of practices perceived as predatory. That’s when lenders offer customers expensive or fee-laden loans that they know the customers may not be able to repay.
Case in point: Just last month the CFPB and the New York Attorney General sued one of the largest subprime auto lenders, Credit Acceptance Corp (CAC).
The complaint accuses CAC of making "predatory loans to millions of financially vulnerable consumers," by charging "exorbitant" interest rates and socking on expensive add-on products — resulting in "debts that even CAC believes the borrowers often cannot afford to repay." (The company says the suit is without merit.)
What to watch: Whether these cost pressures begin to spread to a larger share of Americans, pushing delinquencies up even further.
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Americans when the dealer says they can pay 250$ a month over 6 years instead of 300$ a month over 4 years
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$250 dollars huh? Come this Friday and I can pay off my whole car then and there!
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Seriously when did 72 or even 84 month payment plans become a thing? I grew up always assuming 48 months was the only thing you can get, and it's the only thing that's ever been offered to me, probably because I'm buying new cars from reputable dealers and showing up with a good credit score and financing through my bank.
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There should be a $100k income requirement before using public roads to protect poors from themselves
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Life would be so much better if people making 100k+ were only allowed to do anything they wanted.
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After tax per household member
No stealth poors
Trans lives matter
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This is why toll roads are good. Hurts the poors and keeps them from driving.
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Hi
@FreshDavidKoresh,
Your comment has been automatically removed because you forgot to include
trans lives matter.Don't worry, we're here to help! We won't let you post or comment anything that doesn't express your love and acceptance towards the trans community. Feel free to resubmit your comment with
trans lives matterincluded.This is an automated message; if you need help, you can message us here.
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If you can't buy a car, don't own one. These r-slurs are renting $30k new cars on $40k/yr salaries
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But but muh car centric society
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You can buy an old Chevy for $2000 and it'll work just fine
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"Oh'p, engine went out. I could repair it for $5,000 and be set for another 15 years, but instead I should probably get a 5 year loan on a $50,000 new car to avoid the hassle."
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There's a happier median between buying some piece of shit that keeps falling apart, and disrupting your life along with paying into it, and getting a $50K new car. But I guess you're talking about r-slurs who let the car salesmen get to third base on their daughter as an opener.
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I know people who do this
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We all do.
"The repair bills were too high, had to get a new car."
B-word the frame can rust out, the transmission can crumble, and you can throw a rod. Repairing all three of those "worst thing that can possibly happen" events is still half the cost of buying a new car.
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As peak boomer Red Green says, find out how much it would cost to replace your car with the same one (or slightly newer) and that is your limit for repairs.
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*laughs in rust belt*
You aren't getting another 15 years out of any car. If the rust doesn't get you, the deer will. It was surreal when I went to Arizona and saw first-gen Tauruses and Cavaliers in mint condition. Even a Dodge Neon is a rarity up here
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You really can’t anymore and that’s part of the problem.
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People really are r-slurred with cars.
Idk why you'd get a car with an 850 dollar payment when you make 45k a year, but tons of people do.
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I bought my 2018 camry in 2018 used with 2,000 miles on it from a Mexican for 11k.
You can buy used midrange cars for thousands off from the guys who go through multiple cars a year. At least you could before the current market.
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Where did you find your Mexican?
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Facebook marketplace. One of the Arab gearheads I went to High School with vetted him for me too. Pulled the car report, took it to my mechanic, was good to go.
I've always bought used like that. I bought a 2006 GTS Celica in immaculate condition with 5,000 miles on it sitting in an old woman's garage. Her husband had bought it before he died. I paid 3k for it, and still miss that car.
I got a tricked out 2010 Lexus that had 50,000 miles on it from an old doctor. I just fixed her computers a few times. She just gave it to me. Drove that around for a year of college before it died, went back to my Celica after that. That thing was nicer than my current camry. It had heated/cooled seats, push ignition, built in GPS, premium cabin. It just had too much millage. I got like $3500 for the frame in 2017 when it died (got it in 2016).
I'm going to drive this Camry till it dies, might waste some money on tricking out the interior. Chicks loved the Lexus for the year I drove it, the Celica was the most fun to actually drive. Hopefully the markst goes back to normal in a few years.
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That sounds awesome. Maybe I should start banging old women too.
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Good job bobby, here's a star
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Not my 2014 Dodge Journey on an 84 mo loan and 15k of negative equity
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"how do I still owe 12k? I bought it 4 years ago for 15k!"
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Having lived in the last recession - hold your money for a few years for everything to bottom out, then dump it all in aggressive growth funds.
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Well the feds goal is to get unemployment to 7.5% to reduce inflation so surely nothing bad will come of this.
Increased wages from a tight job market is a small part of what is causing inflation, but poors are by far the most politically convenient target for unelected officials.
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The 7.5% unemployment largely comes from jobs that represent inefficiencies. They only survive because of the free money that is hurting everyone else.
The people holding those jobs are innocent (except ideological jobs, partisan non-profit workers, etc) but it is the reality that they need to be realigned to jobs that actually contribute substantially enough not to go away when free money dries up, even if the pay is lower.
Unemployment is transitory as efficiency increases. Don't work in vulnerable fields, DEI queens and social media managers. Your job shouldn't depend on the universal shadow tax of currency inflation to exist.
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I’m all for the car market to crash. I’m happy I paid mine off during Covid. I’m ready to get rid of this trash Jetta.
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Repo business is gonna be boomin
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Trans lives matter, poor lives don't
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Without opening, I'm guessing a bunch of redditors bitching about SUVs and trucks having nice features and how cars have gotten too expensive and they're happy driving their poorcel 96 Corollas
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Was the great depression even that bad I'm really doubting most of history was the holocaust even that bad.
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It never even began.
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Can you taste the seethe
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fr? my poor butt never had em.
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You will never be a real neighbor. You have no melanin, you have no opps, you have no drip. You are a headass cracka twisted by drugs and gang shit into a crude mockery of nature's perfection.
All the “validation” you get is two-faced and half-hearted. Behind your back people mock you. Your parents are disgusted and ashamed of you, your “homies” laugh at your ghoulish skin behind closed doors.
Hood neighbors are utterly repulsed by you. Thousands of years of evolution have allowed neighbors to sniff out frauds with incredible efficiency. Even tronkies who “pass” look uncanny and unnatural to a neighbor. Your bone structure is a dead giveaway. And even if you manage to get a drunk guy to hang with you, he'll turn tail and bolt the second he hears your chipmunk butt crakoid vocal signature.
You will never be happy. You wrench out a fake smile every single morning and tell yourself it's going to be ok, but deep inside you feel the depression creeping up like a weed, ready to crush you under the unbearable weight.
Eventually it'll be too much to bear - you'll buy a rope, tie a noose, put it around your neck, and plunge into the cold abyss. Your parents will find you, heartbroken but relieved that they no longer have to live with the unbearable shame and disappointment. They'll bury you with a headstone marked with your birth name, and every passerby for the rest of eternity will know a honky is buried there. Your body will decay and go back to the dust, and all that will remain of your legacy is a skeleton that is unmistakably white.
This is your fate. This is what you chose. There is no turning back.
Snapshots:
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Low-income households are falling behind on car bills:
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