I believe the constantly increasing price of vehicles is not sustainable. With over 7 million vehicle loans in default the highest time in history we have a problem.
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Do new cars cost too much?
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I believe the constantly increasing price of vehicles is not sustainable. With over 7 million vehicle loans in default the highest time in history we have a problem.
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I thought he made some great points as well, I actually just watched it. Although the average car price is rising, I feel like some it comes down to consumer spending as well. A lot of people feel like they "need" that fully loaded model, or that all wheel drive three row crossover, or that new full size truck. People just don't seem to want to buy the basic, "cheap" cars that manufacturers produce.
OP
Thread Starter
#4
Thread Starter
#4
Unfortunately a lot of people follow the pressure of commercials from TV, radio, Instagram, and Facebook dictate their spending habits. If people were actually buying Vehicles they could afford truly afford, we never would have lost all the cars. Financial health is a huge passion of mine. You can't have freedom if you don't have financial freedom.
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On the topic of finance, vehicles are but a microcosm of the larger problem. Back in the 50s, there weren't nearly as many options for blowing your money. With modern communications tech, there are more ways than ever, for those endless spending options to come find you... and tempt you. Those that repeat $3.99 as "$3"... instead 4 or "4 + tax"... are already at a disadvantage...
I'll watch the video later. But to the question of, "do new cars cost to much," the question is, whether advancements and features are outstripping the costs. The answer to that I'd wager is a 'no'. From start/stop, turbo, hybrid tech, to keyless and infotainment, there's a crapload of tech in modern vehicles that isn't in prior generations.
Still, ultimately they perform the same A-to-B function.
There's some tech that I'd rather not pay for though... particularly the CD player and many bombs placed throughout the vehicle. (...and with recent reports of backseat safety, there will likely be even more coming...)
Then there's tech I'd rather have paid for, but wasn't an option. Heated mirrors, LED lighting, blind-spot monitoring, projector headlamps and DRL... not an option. (if you're wondering, the heated mirrors are tied to the "uncomfortable" $3,000 Ricky seats)
I'll watch the video later. But to the question of, "do new cars cost to much," the question is, whether advancements and features are outstripping the costs. The answer to that I'd wager is a 'no'. From start/stop, turbo, hybrid tech, to keyless and infotainment, there's a crapload of tech in modern vehicles that isn't in prior generations.
Still, ultimately they perform the same A-to-B function.
There's some tech that I'd rather not pay for though... particularly the CD player and many bombs placed throughout the vehicle. (...and with recent reports of backseat safety, there will likely be even more coming...)
Then there's tech I'd rather have paid for, but wasn't an option. Heated mirrors, LED lighting, blind-spot monitoring, projector headlamps and DRL... not an option. (if you're wondering, the heated mirrors are tied to the "uncomfortable" $3,000 Ricky seats)
H e makes good points but when I was a teenager even when my siblings went to college no one got a new car.
Everything is more expensive now and wages have stagnated. Also adjusted for inflation we get a hell of a lot bang for our buck in cars these days. Most base models come with power windows, air, etc... thaf was all expensive options only reserved for top of the line models.
It was funny when consumer reports said our cars were expensive.
First off ordinary Fiesta’s get blown out routinely for 11-12k by dealers all the time.
Second off ya a FiST only seemed expensive because Ford built so many FoST’s that dealers were blowing them out for the price of a FiST with options. I could have bought a FoST for the price of my FiST . Yet when you look at either car amd what you get for the money its a bargain feature wise.
He touches on the cell phone as an example of places where they would rather spend their money but is lost on the fact that they are not even interested in driving. They could care less about a car and would just as soon pile into a Uber or Lyft to get somewhere.
So are cars more expensive ya and so is beef, gasoline, honeownership, college tuitions....etc...
Its not the problem with dropping car sales its lack of interest.
Loans and default well thats because just about anyone can get a new car even with crap credit. Got a job you get a car, will you default on or go upside down due to crappy interest rates? Sure.
They don’t care you signed the papers.
Now you can go blame them for selling the car except if your credit was crap and you signed papers knowing you are liviing pay check to pay check its on you. You could have saved some penny and bought a used vehicles.
Because I happen to like a lot of older cars I bought used for years and always came out ahead.
Now I can buy new with out worry low rates or cash in hand and early payoff.
So interesting vid but he missed the mark in a few spots
Everything is more expensive now and wages have stagnated. Also adjusted for inflation we get a hell of a lot bang for our buck in cars these days. Most base models come with power windows, air, etc... thaf was all expensive options only reserved for top of the line models.
It was funny when consumer reports said our cars were expensive.
First off ordinary Fiesta’s get blown out routinely for 11-12k by dealers all the time.
Second off ya a FiST only seemed expensive because Ford built so many FoST’s that dealers were blowing them out for the price of a FiST with options. I could have bought a FoST for the price of my FiST . Yet when you look at either car amd what you get for the money its a bargain feature wise.
He touches on the cell phone as an example of places where they would rather spend their money but is lost on the fact that they are not even interested in driving. They could care less about a car and would just as soon pile into a Uber or Lyft to get somewhere.
So are cars more expensive ya and so is beef, gasoline, honeownership, college tuitions....etc...
Its not the problem with dropping car sales its lack of interest.
Loans and default well thats because just about anyone can get a new car even with crap credit. Got a job you get a car, will you default on or go upside down due to crappy interest rates? Sure.
They don’t care you signed the papers.
Now you can go blame them for selling the car except if your credit was crap and you signed papers knowing you are liviing pay check to pay check its on you. You could have saved some penny and bought a used vehicles.
Because I happen to like a lot of older cars I bought used for years and always came out ahead.
Now I can buy new with out worry low rates or cash in hand and early payoff.
So interesting vid but he missed the mark in a few spots
OP
Thread Starter
#7
Thread Starter
#7
We all see things differently. I believe you're a little overly optimistic. Bad things happen when people default on loans like a economic collapse. Me and my Wife do pretty well and I have one hell of retirement saved up for my age. This isn't a broke person saying we're in trouble I could buy two brand new Fiesta ST in cash today, and we are on the down slope in my opinion.
I don't believe you understood his cell phone analogy. He was using cell phones as an example of how often people want to replace new cars, due to the constant changing infotainment systems.
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I don't believe you understood his cell phone analogy. He was using cell phones as an example of how often people want to replace new cars, due to the constant changing infotainment systems.
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I can imagine there are many collateralized debt obligation "investments" that package subprime car loans, just as there were mortgage CDOs. I doubt large scale car defaults would have the same apocalyptic effect as the mortgage crisis, but it would be bad; that's for sure. We never learn.
America's problem is a consumption-fueled economy that relies on shaming everyone into believing they're not good enough unless they're conspicuously wearing the right thing, living in the right thing, doing the right thing, or driving the right thing. Social media feeds the self-loathing. Thus, people will bury themselves in debt to take a good picture for Instagram.
America's problem is a consumption-fueled economy that relies on shaming everyone into believing they're not good enough unless they're conspicuously wearing the right thing, living in the right thing, doing the right thing, or driving the right thing. Social media feeds the self-loathing. Thus, people will bury themselves in debt to take a good picture for Instagram.
Not a finance guy.
CDO = Credit Default Options.
Memory serving, basically the creditors win, whether or not you actually pay the loan.
It should be illegal to buy insurance against a credit default.
Enlighten me with any corrections or additions.
I did work at the corporate headquarters for a used car franchise. People would literally pay new car money for a car with 100-150k (sometimes 190k) miles. They'd get'em from auction, literally put $1 of reman, and stick'em out on the lot. Some would be rigged with remote operated kill switches. Didn't make a payment on time? Car then won't start. They would sell a "warranty" along with it that would guarantee major repairs that would cause you default on the loan. But nothing else was covered, and what was "covered" required a substantial up front "deductible" payment. Because junkyard parts were used for "warranty" service, sometimes it took more than a couple of "deductible" payments to get the problem solved. On the event that one is late, car is snatched and everything paid into it can be forfeited and the car or SUV is stuck right back out there on the sales lot. If the creditor decides to take redelivery, more than a thousand in fees can be tacked on to the loan payments.
They obviously target the "subprime" market; a.k.a. people with no credit, low credit or bad credit. But they'll happily accept you if your credit is good too. Just don't expect any breaks.
When informed about this company's treatment of these folks, my Aunt put in a rather amusing way. In reference to those with bad credit, "take people for a ride, sometimes you get taken for a ride."
CDO = Credit Default Options.
Memory serving, basically the creditors win, whether or not you actually pay the loan.
It should be illegal to buy insurance against a credit default.
Enlighten me with any corrections or additions.
I did work at the corporate headquarters for a used car franchise. People would literally pay new car money for a car with 100-150k (sometimes 190k) miles. They'd get'em from auction, literally put $1 of reman, and stick'em out on the lot. Some would be rigged with remote operated kill switches. Didn't make a payment on time? Car then won't start. They would sell a "warranty" along with it that would guarantee major repairs that would cause you default on the loan. But nothing else was covered, and what was "covered" required a substantial up front "deductible" payment. Because junkyard parts were used for "warranty" service, sometimes it took more than a couple of "deductible" payments to get the problem solved. On the event that one is late, car is snatched and everything paid into it can be forfeited and the car or SUV is stuck right back out there on the sales lot. If the creditor decides to take redelivery, more than a thousand in fees can be tacked on to the loan payments.
They obviously target the "subprime" market; a.k.a. people with no credit, low credit or bad credit. But they'll happily accept you if your credit is good too. Just don't expect any breaks.
When informed about this company's treatment of these folks, my Aunt put in a rather amusing way. In reference to those with bad credit, "take people for a ride, sometimes you get taken for a ride."
OP
Thread Starter
#11
Thread Starter
#11
Places like that are the definition of evil and shouldn't be allowed to exist. I'm glad my state bans payday and title loans. It's not the government's job to bail out people from bad financial decisions, but it is the government's job to protect people from getting screwed over.
I don't believe all loans are protected from a creditor defaulting on the loans. If that was the case collection departments wouldn't exist.
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I don't believe all loans are protected from a creditor defaulting on the loans. If that was the case collection departments wouldn't exist.
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I read an article 2 years ago about the auto loan industry starting to look like the housing bubble problem. looks like its continuing on that path. I bought my fiesta st brand new for 16,300.. because the miata and brz brand new were around 28k. since then the fiesta st are selling for a higher price but only by a couple thousand. still an amazing deal for a new car that handles very well.
Yeah my mid-nineties vehicle who's only non-standard feature was power mirrors and dual vanity, got about the same mileage; driving about the same way.
But it was half the HP slower than this one. I believe the only reason average MPG hasn't improved, is because it's being offset with either a larger vehicle, or higher performing engine.
If modern mileage related tech were included without the larger vehicle, without the peak HP advances, without the 100s of lbs in electronics, wiring, safety and feature equipment that is now standard...
Of course, there are the conspiracy theories about the petroleum industry's interference...
But it was half the HP slower than this one. I believe the only reason average MPG hasn't improved, is because it's being offset with either a larger vehicle, or higher performing engine.
If modern mileage related tech were included without the larger vehicle, without the peak HP advances, without the 100s of lbs in electronics, wiring, safety and feature equipment that is now standard...
Of course, there are the conspiracy theories about the petroleum industry's interference...
I am an optimistic person, but I also know quite a bit about financials.
Yes the car loan market is remiscent of the housing market but... there are some big differences.
I got the cell phone analogy , I don’t buy that particular angle you are taking of it. People do not exchange new cars for the sake of infotainment systems. That is a I buy Fords and deall with Fords terrible infotainment systems attitude. Lol
Current generation has a terribly short attention span to speak , so its flavor of the moment. That is why the way he expressed his analogy was poor.
He did hit the mark pointing to the truth that they were more interested in their phones. That had more to do with social media and being addicted to Whats App,Facebook,Snap Chat , Instagram etc...
But its the whole flavor of the moment thing when it comes to cars and the Phone analogy is a very narrow attempt at that.
Though like I said I do not buy that as much either because a lot purely are not interested in cars at all! They would just as happily pile into an Uber or Lyft and don’t think twice because most of the time its on moms or Dad’s account. Mom and Dad have turned into lazy helicopter parents. Take the teen to school pick them etc.. what I can’t make it oh use my uber account. Most parents are clueless to the fact that under 18 aka minors are not even allowed to driven around in an Uber un accompanied by a parental adult.
So lets just get off that whole Iphone bent analogy as it misse the mark he is trying to make. As I pointed out above. Lol
I know a lot about financials because I have too, I do not have a choice in the matter.
Even though the car loan situation is bad its nowhere near the whole subprime repackaging of unknown loan values that played a cause in the housing bubble collapse.
Everything was easy credit in those days not just homes, everyone played the game as well, middle america home town usa played though they would rather not own the part they participated. This country has a big problem of a lot of people not wishing to take responsibility for their own actions. It happened with that and I sighted it. Sure Joe knew he should not take a stated income loan because it meant that he was spending more than he could affford. He did it anyways. Sure John should not take a second mortgage on house to take a vaction or buy an RV . He did it anyways, because they were drunk with the idea that the market would keep going up, houses would just go up in value.
Problem is the bubble , before it happened I was telling people this can’t go on houses are too expensive , people can’t afford.Except people were drunk with thinking they could afford it based off the speculation.
Its like a winning gambler in Vegas he knows he shoudl probably step off, but he is drunk with the idea of winning more and he usually winds up losing for it.
Now in that sense you are extrapolating out the idea that the car loan deal could wind up in a ecnomic collapse like the great recession.
One, there are many things in place from the great recession happening that would not let a recession that deep happen again.
Will we have another recession though yes of course, this stuff goes in cycles what goes up does eventually cyle back down and then back up. Nature of the beast so to speak.
Though it will not cause doom and gloom like you seem to think. It will be belt tightening. Old enough to have been through several recessions. saw double digit inflation as a kid. Things are not that drastic currently lol.
Plus car defaults are not nearly as catastrophic as home defaults. While cars can be deemed expensive at 25k-60-70k with some 100k examples the majority of loans are in the 25-75k range. Whereas home loans were running and do run in the area of $200-750k or more!
So you begin to see that its sligthly over one tenth the valuation size. So while it will not be good , someone defaulting on their car is not going to leave them homeless . Cars will get repossed, end of story.
Nor will there be a wholesale default issue as repossions and resale solve the default for the creditor and the creditee is the one who jist destroys their credit and becomes carless. Lol
In the housing market wholesale values of the houses plummeted to where they put the person underwater causeing default but left the creditor with worthless property they could not sell to even recoup 50%
Car loans and used cara values are different. Reagardless of how much the resale value of a car plummets its a long term known factor in the business. Its factored in for already by the creditors.
They can and do resale the cars for decent money thereby solving the issue. Oh and most people who default on car loans do it in the first few years of ownership. Again insuring the creditor that they will recoup the difference in resale or take a small loss and wholesale. Everyone wants a little loss on the books from time to time to offset profits it does womders for your taxes . Lol
In other words its just not the same and has nothing to do with Optimism its just facts.
Yes the car loan market is remiscent of the housing market but... there are some big differences.
I got the cell phone analogy , I don’t buy that particular angle you are taking of it. People do not exchange new cars for the sake of infotainment systems. That is a I buy Fords and deall with Fords terrible infotainment systems attitude. Lol
Current generation has a terribly short attention span to speak , so its flavor of the moment. That is why the way he expressed his analogy was poor.
He did hit the mark pointing to the truth that they were more interested in their phones. That had more to do with social media and being addicted to Whats App,Facebook,Snap Chat , Instagram etc...
But its the whole flavor of the moment thing when it comes to cars and the Phone analogy is a very narrow attempt at that.
Though like I said I do not buy that as much either because a lot purely are not interested in cars at all! They would just as happily pile into an Uber or Lyft and don’t think twice because most of the time its on moms or Dad’s account. Mom and Dad have turned into lazy helicopter parents. Take the teen to school pick them etc.. what I can’t make it oh use my uber account. Most parents are clueless to the fact that under 18 aka minors are not even allowed to driven around in an Uber un accompanied by a parental adult.
So lets just get off that whole Iphone bent analogy as it misse the mark he is trying to make. As I pointed out above. Lol
I know a lot about financials because I have too, I do not have a choice in the matter.
Even though the car loan situation is bad its nowhere near the whole subprime repackaging of unknown loan values that played a cause in the housing bubble collapse.
Everything was easy credit in those days not just homes, everyone played the game as well, middle america home town usa played though they would rather not own the part they participated. This country has a big problem of a lot of people not wishing to take responsibility for their own actions. It happened with that and I sighted it. Sure Joe knew he should not take a stated income loan because it meant that he was spending more than he could affford. He did it anyways. Sure John should not take a second mortgage on house to take a vaction or buy an RV . He did it anyways, because they were drunk with the idea that the market would keep going up, houses would just go up in value.
Problem is the bubble , before it happened I was telling people this can’t go on houses are too expensive , people can’t afford.Except people were drunk with thinking they could afford it based off the speculation.
Its like a winning gambler in Vegas he knows he shoudl probably step off, but he is drunk with the idea of winning more and he usually winds up losing for it.
Now in that sense you are extrapolating out the idea that the car loan deal could wind up in a ecnomic collapse like the great recession.
One, there are many things in place from the great recession happening that would not let a recession that deep happen again.
Will we have another recession though yes of course, this stuff goes in cycles what goes up does eventually cyle back down and then back up. Nature of the beast so to speak.
Though it will not cause doom and gloom like you seem to think. It will be belt tightening. Old enough to have been through several recessions. saw double digit inflation as a kid. Things are not that drastic currently lol.
Plus car defaults are not nearly as catastrophic as home defaults. While cars can be deemed expensive at 25k-60-70k with some 100k examples the majority of loans are in the 25-75k range. Whereas home loans were running and do run in the area of $200-750k or more!
So you begin to see that its sligthly over one tenth the valuation size. So while it will not be good , someone defaulting on their car is not going to leave them homeless . Cars will get repossed, end of story.
Nor will there be a wholesale default issue as repossions and resale solve the default for the creditor and the creditee is the one who jist destroys their credit and becomes carless. Lol
In the housing market wholesale values of the houses plummeted to where they put the person underwater causeing default but left the creditor with worthless property they could not sell to even recoup 50%
Car loans and used cara values are different. Reagardless of how much the resale value of a car plummets its a long term known factor in the business. Its factored in for already by the creditors.
They can and do resale the cars for decent money thereby solving the issue. Oh and most people who default on car loans do it in the first few years of ownership. Again insuring the creditor that they will recoup the difference in resale or take a small loss and wholesale. Everyone wants a little loss on the books from time to time to offset profits it does womders for your taxes . Lol
In other words its just not the same and has nothing to do with Optimism its just facts.
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I finally watched the video. Great content as always. I hope he's making a living off of it.
With my oldest kid about to turn 15, I am seriously considering NOT allowing driving at 16. First, it's dangerous as hell here in Atlanta. Second, the insurance would be about 250-300 a month (and I have three kids). Last, why not wait under my kid's maturity level is more advanced. At 16 years old, I was a menace to society behind the wheel of a car (and I'm lucky to be alive). Had I waited until after college, the world would have been a better place.
With my oldest kid about to turn 15, I am seriously considering NOT allowing driving at 16. First, it's dangerous as hell here in Atlanta. Second, the insurance would be about 250-300 a month (and I have three kids). Last, why not wait under my kid's maturity level is more advanced. At 16 years old, I was a menace to society behind the wheel of a car (and I'm lucky to be alive). Had I waited until after college, the world would have been a better place.
OP
Thread Starter
#18
Thread Starter
#18
I would teach him if it was me. I fully understand the cost just tell him to get a job. The best times of my entire life were from 15 to 17 the freedom of driving played a huge part in to that. It's what made me the car guy I am, and gave me the ability to learn how to fix them. My Mom worried about me non-stop, and then I joined the military at 18. Protect them now hurts them later. The young kids of today who don't follow the mold that they all seem to be following, will be the successful ones later in life I guarantee it.
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That's probably just liability Collectively, they now leverage power over who can and cannot drive. Ever notice you get pretty much the same price from multiple companies? The LCD panel industry, over a decade ago was sued (and lost) for price fixing/collusion.
Auto Insurance company commercials online, in snail mail, in email, on our phones, all over television on every channel - many destroying perfectly good vehicles, names on stadiums, more than one skyscraper in every major city, ever increasing profit margins and CEO bonuses, many people go their entire lives without a claim and most of those that do are merely getting back some of what was paid in, none are going out of business and likely more money in congress than the oil industry and NRA combined; congress people busted submitting insurance industry written bills verbatim.... It's a gambling business where they get to pick their customers. They have multiple ways of backing out of and/or severely stalling a claim. Back before insurance was mandatory in this state and I was a brand spanking new driver, costs were reasonable. Then the law passed and costs more than doubled. More customers pooling in their funds but it costs more? Now the customers are captive... must have it. Greed, plain and simple. Bend over and take it without the lube. There's zero reason they should be charging people stupid money without an actual history for claim(s). $3,000/yr (250/mth) for the next several years.
Insurance in principal, wasn't designed to make money off of every customer. That's not how it was originally intended to work. But that is the model that they've adopted.
Auto Insurance company commercials online, in snail mail, in email, on our phones, all over television on every channel - many destroying perfectly good vehicles, names on stadiums, more than one skyscraper in every major city, ever increasing profit margins and CEO bonuses, many people go their entire lives without a claim and most of those that do are merely getting back some of what was paid in, none are going out of business and likely more money in congress than the oil industry and NRA combined; congress people busted submitting insurance industry written bills verbatim.... It's a gambling business where they get to pick their customers. They have multiple ways of backing out of and/or severely stalling a claim. Back before insurance was mandatory in this state and I was a brand spanking new driver, costs were reasonable. Then the law passed and costs more than doubled. More customers pooling in their funds but it costs more? Now the customers are captive... must have it. Greed, plain and simple. Bend over and take it without the lube. There's zero reason they should be charging people stupid money without an actual history for claim(s). $3,000/yr (250/mth) for the next several years.
Insurance in principal, wasn't designed to make money off of every customer. That's not how it was originally intended to work. But that is the model that they've adopted.
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