Unable to afford homes, Americans dive into subprime auto debt

Despite the fact that you're mostly off-topic in this thread, I may partially agree with you there. Better to maintain a laissez-faire approach and not subsidize anything specific.

I'm going to disagree with you there, however, and have presented my reasons to you in past threads.
Please don't get further off-topic, in this thread, however, and if you want to discuss the pros and cons of homeownership specifically please start a new thread.

 

This made me laugh as you have homes in your title

Empirical evidence, via the likes of Luxembourg Income Study, confirms that countries with higher poverty have higher home ownership. Sociologists such as Kemeny also have shown that home ownership has knock on effects in reducing effectiveness of the welfare state.

The very nature of home ownership intensifies the threat of debt culture.

 

Correlation does not imply causation. It could well be that correlation is due to the "wealthier" countries tending to be more urbanized, which as we all know would have more high-rise homes and fewer houses. That is, adjusting for the factor of urbanization, the correlation might completely disappear, or even become inverse.

 

Nonsense. First, the evidence is from European developed countries. Urbanisation is standard. Second, this isn't correlation. This is hypothesis testing based on sociological analysis.

 

Quite a few people lost their homes to foreclosure in the 2008 crash and continue to live in their cars. Now, as you point out, there is an uptick in auto loan defaults and that means increasing repos of those cars. What will people with no home and no car do?

 

Look, I have lots of sympathy towards these people, but I'm sorry, you're talking like a progressive. I have a lot of trouble feeling sympathy toward a homeless person who got their car repossessed - a car they bought in full knowledge it was a loan, and a car which they still owe lots of money on. Your comment seems to send the message that people are entitled to be able to buy a car on credit and not pay it back, and still keep the car they don't really own, just because they're homeless. They probably should never have bought that car in the first place if they had to buy it on credit - a novel idea to many people, apparently.

Now, what I could possibly be a little sympathetic towards is people having to buy cars on credit because housing prices are so high, and so them having to shift some of the loan debt onto the car, because they are not able to borrow enough money for the home.

 

And these loan companies would sell off the loans or take out insurance for failure and they were bailed out by the taxpayer showing yet again that white collar crime does pay.

 

Many are living in travel trailers.

 

Evidently you are out of touch with the other billions of people who exist on the planet.

 

Unlike their president who has gotten out of paying debts several times by filing bankruptcy.

 

Either that, or your perspective is yet another example of the sort of senseless thought reactions to situations often held by progressives.

The lender of the money for the car should not be the one left on the hook. Homeless people are not entitled to buying free new cars to sleep in.

 

Crap happens contracts can be broken in such circumstances as failure to repair when one is disabled or hurt in a accident, laid off because of a force of nature..The limits of the dealer's liability doesn't end when the car is sold. That my friend is a rule in contract law progressive or not....

 

Yes, I agree. So send the car back if you can't pay. That's how it works.

Buying a car on credit is not an insurance policy for homelessness.

 

The smaller homes sold through Amazon and local dealers and builders have been selling quickly because they are affordable. The gentrification by bankers, affluent people and builders have created a market where buyers are forced to buy homes that are unecessarily to large and too high priced. Because wages have not kept up with living expenses.

 

I pay cash for a broken down car and fix it for much more less than buying one running. I hate car payments they are way too high. When they was fifty a month that was kewl.

 

You're against progress?

Oh! Here's a novel idea! How about we should have been raising the minimum wage according to inflation for the past 30 years? How about, instead of seeking a personal interpretation of the "message I seem to be sending" that is actually yours, that you realize incomes of all but the top 10% have been progressively lower and lower the farther down in the percentiles you go. Now, 40% of America can't scrape together $400 to cover an emergency, and 80% can't scrape together $1,000?

You try to turn it into a claim I never made, that people should be given free everything, instead of the idea that we should have an economy that works for every percentile.

No, they probably should have had an economy that works for all of us so they could live at least as well as we all did in the 50s, 60s, and 70s.

duh That's what we're talking about.

 

Yup.... those with enough money to have one even if they can't buy a house.

 

That is one of the purposes of a limited liability corporation: privatize the profits but socialize the losses.

 

And, more than likely, the whole shebang goes to hell in a handbasket!?! This younger generation was tripped by the Great Recession. From 2008 when it started to 2014 when the economy finally showed employment recovery (in the Employment-to-population Ratio).

That's the consequences that Uncle Sam merited by not paying attention to the Grave Error that the EU made by disregarding the evidence from Wuhan in January of this year. The first necessity to "do something" regarding Covid-19 came from China at the end of January and from then on we (for most part here in Europe) were on lockdown. Four months later and we are just coming out.

I simply cannot imagine the behaviour of fellow Americans who did not or cannot seem to heed the warning-advice of experts in the matter. ESPECIALLY at a time when the Daily News is international in a nanosecond.

No doubt, Uncle Sam is in for a very rocky-ride economically in the next months. With any luck it will rock right up to the presidential elections in November.

See below the "to date" GDP-info up to January of this year:


For the GDP numbers after January go to above graphic here. to find "Q2 second estimate -17%") ...

 

Middle-class families getting priced out of new American cars

 

The irony is that if you buy for a fleet they very much will strip down all those high tech features the dealerships say you cannot opt out of. A lot of cars from the Amazon fleet are being customized in our area by a company that finishes commercial fleets to whatever configuration the owner wants. Among the other things they are installing is simple AC because it is cheaper to get the local company to put in AC units than to buy them from the factory with AC units already installed in them.

My car has so much electronics in it, I cannot figure out half of it. I still haven't figured out how to reset my trip meter. It took me a day to figure out how to do the clock because it requires two buttons on the steering wheel and two button on the radio. Needless to say, they didn't bother with an owner's manual.....

 

Subprime auto defaults on path toward 2008 crisis levels, say portfolio managers

The surge in easy credit during the coronavirus pandemic, government stimulus payments, and skyrocketing car prices have all begun to bite borrowers with the lowest credit scores.

Subprime borrowers who financed used cars at record high prices in recent years have been acting more stressed than during the 2008 global financial crisis, even though the labor market has been resilient, according to a report from fixed-income asset manager Bramshill Investments.
While inflation and higher interest rates have been eroding paychecks of all U.S. consumers, "it is very apparent to us that it is negatively affecting subprime borrowers [who tend to have lower credit scores and lower incomes] more harshly than others," managers Paul Van Lingen and Ara Balabanian wrote, in a client note. "[C]ontinuing the current path, we are assuming defaults and recoveries will continue to deteriorate more toward levels not seen since the [Great Financial Crisis in 2007]."

60-plus day delinquencies hit 9% in March (2023) for borrowers with credit scores of 550 and below. That's up from a rate of about 7% in March 2019 before the coronavirus pandemic crisis.

These subprime auto loans are packaged into asset-backed securities, or bond deals.

Subprime auto defaults on path toward 2008 crisis levels, say portfolio managers - MarketWatch, Joy Wiltermuth, May 6, 2023

 

Consumer debt, like credit card and auto loans, is one way to make sure you will never be able to afford a home.