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Americans Struggle to Pay Auto Loans

posted by mrpg on Saturday February 18 2017, @10:01AM   Printer-friendly
from the dude-where's-my-bicycle dept.

Phoenix666 writes:

Auto loan delinquencies in the fourth quarter hit their highest level since the financial crisis, a report out Thursday revealed.

About $23.27 billion in loans were 30 days or more late as of Dec. 31 — a whopping 14 percent increase from the year earlier and the most since the $23.46 billion in the third quarter of 2008, according to the New York Federal Reserve.

Delinquencies have moved up as the credit quality of the loans has deteriorated and the length of the auto loans has increased — sometimes to 84 months. [...] Delinquencies are the canary in the coal mine when it comes to losses for carmakers.

[...] The average monthly car payment in the fourth quarter rose above $500 for the first time, according to the credit-rating agency Experian.

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  • (Score: 0) by Anonymous Coward on Sunday February 19 2017, @12:39AM

    by Anonymous Coward on Sunday February 19 2017, @12:39AM (#468782)

    Which is a kinda dumb thing to say.
    Interest rates will fuck you in the long run, but in the short term they don't make a huge difference.

    For example, a 4 year loan of $15,000 has $362/month payment at 7.5%
    A 15% APR bumps that up $417/month.

  • (Score: 2) by davester666 on Sunday February 19 2017, @06:24AM

    by davester666 (155) on Sunday February 19 2017, @06:24AM (#468877)

    Not really. An extra $55 a month is significant.

    There's a reason why vehicle defaults have risen back to the level they were at back in 2008, at the height of that recession.

    • (Score: 2) by davester666 on Sunday February 19 2017, @06:50AM

      by davester666 (155) on Sunday February 19 2017, @06:50AM (#468882)

      And to follow up, some of the scummier used car dealers use this to increase their profits, by taking a significant down payment, then with monthly payments they know the person can't cover, after a couple months they get to repossess the car and sell it again. Lather, rinse, repeat.

  • (Score: 2) by TheRaven on Sunday February 19 2017, @12:30PM

    by TheRaven (270) on Sunday February 19 2017, @12:30PM (#468917) Journal
    If you have over $400 in disposable income, including a buffer zone so that unexpected expenses won't make the payments impossible, then you can probably get the loan at 7.5%. If you can't, then you're going to default on the 15% loan. The lender knows this, and expects to milk you at a high profit until you can't afford the payments and then take back whatever the deposit was (or get a judgement against you that lets them take a cut from your salary effectively in perpetuity, which then gives them a low-risk, low-return, security that they can trade).
    --
    sudo mod me up