Auto loan delinquencies spiked last year in troubling sign for economy

https://www.foxbusiness.com/economy/auto-loan-delinquencies-spiked-last-year-troubling-sign-economy

HYPERLINK has full article

snip

At the end of December, about 7.69% of auto debt moved into delinquency – the highest level since 2010, according to New York Federal Reserve data published Tuesday............

For many Americans, rising interest rates and high car prices have pushed their monthly payments above $1,000. In fact, the percentage of consumers paying at least $1,000 a month for a vehicle surged to 17.1% in the second quarter of 2023 – an all-time high and up from 16.8% at the start of the year, according to data from Edmunds.

end snip

More storm clouds. What a staggering figure that 17% of folks have a $1,000 + monthly payment. I feel no sympathy for them just like I feel no sympathy for those with student loans. They made those decisions to borrow.

RV and Marine industry hurting. Commercial real estate hurting. Credit card delinquencies on the rise and now this.

 

A lady I worked with bought a car a few years ago. I asked her what her interest rate was. She said: what’s that?
This is a woman in her 40s with 3 kids.

 

Credit is typically people buying things they don't need with money they don't have.

We recently bought a 2002 GMC Yukon and very good condition for $3,300

My dad asked us why we didn't put that as a down payment on a new car.

For one, credit isn't great and for two.... We don't want to be on the hook for the next 7 years paying more than rent. Not to mention you also have to have full coverage that entire time.

I'll take a used car that is fully paid off any day over a brand new vehicle even though there might be some more repair cost associated with maintaining it.

 

Great move.
Paying cash for a clean well-maintained pre-owned vehicle is fiscally sound.
I just got an awesome cash deal on a super clean mint condition Buick LaCrosse.

 

The guy wanted $3,800. I told him I'll just tell you what I've got in my pocket right now which is 33 $100 bills.

The Kelley Blue book Fair value is $4,500.

It has 203,000 mi on it but it also has the 5.3 LS motor which everyone wants to swap out to put in hot rods and that motor is well known to go 300,000 mi easily with proper maintenance.

So I would say even if we only got 80,000 mi out of it over the next several years we got our money's worth.

Same way I bought my motorcycle. Cash money and owned it when I rolled it out of the showroom.

I do not like debt and no repo Man will ever come looking for anything I own.

 

Most of these delinquencies are s in RED states.

There is a fundamental problem with red state economy which creates the poverty.

Average FICO score – the lowest FICO score state, 10 out of 10 are RED state. Oh this data is from 2020 when Trump was POTUS and American had the best economy.


Look at the average APR, this is the direct result of the average FICO score.


No wonder these RED states have the highest delinquency.

 

look at those interest rates; that's crazy

This IS NOT a Democrat voter or GOP voter thing. It is a harbinger of bad things coming.

 

Look at the percentage of Blacks in each of those States you just bad-mouthed. Sounds pretty racist to me.

Credit isn't for everybody, Some people do well using it, and for some people it's a curse.

But your credit score is based on two (2) things -- Your ability to pay back loans and, 2) Your willingness to pay back loans.

Those of you that don't like like to use credit......? I recommend you stay with that.

 

Interest rates were low for a number of years, and because of inflation, they had to be raised.

 

What a STEAL...
You got a great deal...

 

You just ignored my first data.

Before you look at the interest rate , look at the FICO score in those RED states. If my FICO score is 675 , I too will get 14% interest rate regardless what is the lowest interest rate in the country.

Problem is not the interest rate, problem is RED state policy.

 

I didn’t bad mouth any one. I just put up statistics.

Very simple facts. 72% US GDP are from blue state. The poorest states are the red state.

 

Interest rate is not that high.

When W Bush took office in 2000 , interest rate was higher then today.

Republican is making a big deal of this interest rate because it is election year.

 

Interest rates are higher than recently.

https://www.bankrate.com/mortgages/historical-mortgage-rates/

 

When W Bush took office in 2000 , interest rate was higher then today

 

Take one half that age and they'd have told you their still interested but not as much as when they first got it..

 

Today there was an article that a record number of Americans can't pay their rent.

 

https://themortgagereports.com/61853/30-year-mortgage-rates-chart

About the same.

 

Is blue state policy responsible for the highest home foreclosure rates being in blue states? Or is that red state’s fault as well? Just curious how this red/blue thing applies when the shoe is in the other foot.

 

grocery prices high, insurance high, essential items high, entertainment prices high

Yes, wages increased but DID NOT keep up. That is the reality of today. What do we get from DC? We get the "jobs report" saying life is just grand.

 

That's very good advice!
I've done that for many years. If you are patient and willing to search, there are used cars that are like new at low prices. I've driven some of them for a few years and then sold them at a profit. I owe nothing and have a strong cash reserve, I can afford new- but that's not the best value. This is especially good advice for people who must finance to buy, because the interest costs magnify the cost of the vehicle and you won't get any of that cost back when you sell or trade.

I buy cars from areas where the weather treats them best, down south. Hunt them up online. Check their history. Make a deal, fly down, drive them home. No rust/salt damage on most southern cars. I like to buy from areas where the typical buyers are seniors, who buy nice cars, drive carefully, do the right maintenance, keep them garaged and don't rack up the miles. My family and friends regularly ask me to find a car for them.

 

And there is so much cost associated with a new vehicle on top of the sticker price.

I bought my Kawasaki KLX 230 brand new and the spring of 22.
The sticker price on the bike was a bit over $5,000 and then you had a $400 assembly fee.... And this fee and that fee and the next thing you know, with the additional two-year warranty... It was a little over 7,000 out the door. But I got the fever and had to have that bike. The money was burning a hole in my pocket.

I won't make that mistake again. I should have been more patient and looked for a good used bike but like I said I had to have it then...

I probably could have got something similar for 3 to 4,000 had I been patient and not had to pay all of the costs associated with brand new. But you live and learn, that will probably be the only brand new vehicle I ever buy.

I was even considering paying off 85% or so on day one and financing the rest to improve my credit but I said the hell with that noise and just paid 100% and owned it when I left the dealership.

I can only imagine on a $40,000 new vehicle they probably tack on about $6,000 worth of fees.

 

Red states are certainly worthy of criticism, but if you are a Dem, you are not pointing with clean hands. CA leads the nation in poverty.

What we are seeing is that these people bought a car when they could afford the payments, then the cost of living went up. Partisan bickering aside, Americans tend to spend until they're broke, then borrow. Imagine what would happen to the economy if we started saving 20% of our pay?

 

Yet when the next bust cycle begins they will all cry about how the system is unfair... You bought a 40000 dollar car and you make 50000 a year! Moron.

 

Almost every month I put an entire paycheck into savings. I am fortunate to do so given my sweetheart deal on rent. Most people in my pay range who rent could not manage to do that.