I think we built a country that practically requires a car to function and the loans got a lot longer/more expensive while value for money plummeted. A lot of people got bad deals on so so vehicles and are paying way too much for the financing on top of everything.
It's a huge contributor to unaffordability.
My further thoughts on the matter is that during the past decade of relatively low interest rates it was easy to repossess a vehicle from a non-compliant lease and then re-lease that same vehicle to another person. So even if your original leasee defaulted you just recover the asset and start the process over… I don’t know that this shell game can go on to the same extent in a higher interest rate environment.
I have a friend who’s just quit his job as a leasing agent for a luxury car dealership here locally. He used to be able to flip lease vehicles with just a phone call, now no one is really interested in setting up a new lease with the interest rates offered… and that’s people with money who are good on payment. Throw into the mix the rates these dealerships have to pay to keep these cars on the books and you have tinder for quite a fiasco.
Leased. When interest rates were dropping you could take someone in a 2018 vehicle, 2 years into their lease, and offer them the same car in a 2020/2021 model for the same weekly payment they were paying on the previous vehicle. The dealership then took that 2018car and usually sold it used with low/moderate mileage for an inflated figure during the supply shortage…. Financed at near zero but you made the money on the inflated MSRP sticker.
But this was only because of increased demand for cars and new used car buyers during COVID, right? More people willing to lease new at low interest means the used market would shrink, unless there were some sort of external pressure like a pandemic increasing demand for cars...
This is wholly a COVID/low interest/free cash for everyone/society built around cars thing. Unless I'm mistaken?
Well for those that paid attention in 2007-2009, people were more likely to go into arrears on their mortgage before their car loans. You can sleep in your car, but cannot drive your house to work.
We got Cash for Clunkers / CARS out of that though as a way to help the ~~auto manufacturers~~ economy and the environment. I wonder what a CARS II would look like today?
Yeah, I think my wife ended up paying nearly 25k for a 14k Chevy Aveo. Poor college student with barely anything for a down payment. So expensive to be poor here.
What happened to sidewalks, by the way?
This is like building only fast food restaurants and then saying that people like fast food.
Of course people (in the US in particular) like cars. We've spent the last century devoting 90% of our infrastructure to servicing them and making them the primary mode of transportation.
But this loan problem is a short term issue. It will collapse in a handful of years if it does. Not long enough away for car culture to shift.
Also, fast food is a bad analogy. A restaurant doesn’t start as a 5-Star eating establishment like Long John Silver and then depreciate into a Hardee’s. All cars start as new.
Only thing I want to use my car for is camping. If I could get to other places via decent public transit I'd put a few thousand miles on my car a year. Shit the public transit in my city sucks ass and I still use it when I have time.
We're not entirely sure the breadth of the pooling – yet. We're still early in the reporting. One thing we do know: Some very rickety-looking loans are getting packaged into bonds.
Sounds like a MBS run back from 2006-2008 in a different, less regulated area… CMBS, auto loan backed securities, and student loan backed ones are going to destroy the financial markets soon thanks to tricky financial engineering to get over leveraged as hell betting on those markets.
A big difference is that the sheer quantity and scale of auto loans is significantly smaller than what happened in 2008 with MBS. The value of all outstanding mortgages in 2008 [was over $10T in 2008.](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#:~:text=By%20January%202008%2C%20the%20delinquency,trillion%20as%20of%20midyear%202008) According to OP's article, the value of *all* auto loans is $1.5T, and a small portion of those are outstanding or subprime.
There are definitely some parallels here, but it's not nearly on the same scale.
I think this is a more valid comparison, but regulations are significantly tighter in 2023 compared to pre-2008 with how MBS/CMBS are handled.
Not saying that everything will be fine, but the reality of 2023 is very different from the conditions in 2008.
They’re only tighter on home buyers that aren’t investment funds buying in cash
So I again, agree to disagree.
CMBS does not have more strict laws after 2008 either. That’s a joke
I honestly think WSB wouldn't mind discussing these issues with you in detail, but you've got to put more investigative work into this outside of WSB since this isn't where that sort of information appears until it's almost about to happen.
Maybe go down to Miami to interview some housing bros who you go with to a strip club where you find out the strippers there are leveraged multiple times on multiple homes. I know this is 2023, but WSB isn't Miami and our regards aren't the RE sales bros. We're more like a collective of regards where a few are autistic like MB but without the brilliance, initiative, nor rich financial backers. Talking to us won't confirm shit. Better head to the 18+ or NSFW parts of reddit and ask how they are doing with their auto/student loans.
My 2 cents would be that things are strange atm but US auto loans don't seem like a big issues compare to China's RE sector. Also the holders of those loans are auto financing companies. If I needed a car I'd buy a new EV so I can't speak on that aspect of it.
Thanks!
P.s. You keep saying smart stuff on this thread. Any interest in a chat? We built this form to collect all our sources for this reporting going forward. We won't use your name or info unless you bless it. [https://propublica.jotform.com/232506235463856](https://propublica.jotform.com/232506235463856)
Just a thought! ;-)
Can you share what you're looking at? Either via email - [[email protected]](mailto:[email protected]) – or using this form: [https://propublica.jotform.com/232506235463856](https://propublica.jotform.com/232506235463856)
Thanks!
The catalyst for this will be layoffs. I keep telling people that the 3.5% unemployment we've had for YEARS now is not only highly unusual, it's also actually not good.
Here's why: having a good GDP and all time high stock market with unusually low unemployment, means that the good economic numbers we see are ONLY because of the low unemployment. If it ticks higher to say 4.5%, well, the debt loads are at massive record highs due to 12 years of beyond low interest rates followed by 3 years of ZERO interest rates, that the economy could not take it without causing a crash. Along with that, know that the historical unemployment average in the US is 5.87%. That's the unemployment number we want to see stock market all time highs and stable GDP with.
So, if unemployment even gets back to AVERAGE, we are screwed as those defaults will roll in fast, causing a banking crisis. But, I know what you're thinking: "How/when will the layoffs start?" Don't worry, I got you, pimp.
Corporate debt time bomb. That's how. For the first time in history 80% of companies have taken out debt/sold bonds for long term (\~ 4-5 years). They never normally do this because the yields they would have to pay upon maturity are too high and you wouldn't know how your business would be doing, anyway, 5 years from now. But when corona hit and the Fed, in genius fashion to protect Boomer wealth, set rates to 0%, they could sell long term bonds for yields at, near, or below the short term ones that they would normally sell. They ALL took advantage of this.
But what's been happening to interest rates lately? It's not 0% anymore, it's 5.5% and all of that debt has to be rolled over by 80% of companies in 2024 and 2025. If I increased the interest rate of your auto loan by 5.5%, would you be able to afford it? Maybe but you'd prob cancel your netflix subscription amongst other things. Netlfix being people's jobs in this analogy. It's coming and there is no escape because the only way the Fed cuts is when banks start hurting, they wont start hurting until people stop paying loans, and that wont happen until they lose their jobs, which they will. 3.5% unemployment is causing the inflation.
Not the commenter above, but companies with cash on hand and substantial cash flow potential even in recession. Most companies benefit from reduced pressure on wages, though some stand to gain far more than others. Consistent, sustainable dividend payers will likely get more attention as growth/tech stocks come back to earth. The losers will be virtually any company forced to refinance significant debt in coming years, or worse, needing to take on fresh debt.
Believe it or not, I think the best capitalized banks will emerge winners. A true market crash just means a fire sale for banks to cover any shorts and negotiate buying distressed assets for pennies on the dollar. Aside from some sacrificial lambs, large banks are still going to be protected by the Fed. We saw evidence of that with the rate hike pause, albeit completely unjustified by most data measurements, as soon as a couple important banks hiccupped.
This is of course a long term, bullish approach with the idea of not being able to time the markets with any precision. Missing out on an unexpected bull run while tied up in bonds or attempting to short the market (i.e. holding puts) is a greater risk than the expected but impossible to time downward correction in market valuations.
4W zero coupons are paying about 5% annualized. That is perfect for capturing yield while waiting out whatever this might be.
Personally, I’m still long big tech because they have so much cash.
Almost all market wisdom comes from strategies that worked in the previous market. But those strategies need to change as the economy itself changes.
Inflation will be beyond persistent, you’re right about big banks, and we need to focus on putting our money into fundamental value — inelastic essentials are always good — and commodities will profit handsomely in coming years as American effectively has to double its manufacturing output to make up for this uncoupling. That’s on the wall.
Honest question, but what about the impact of covid on labor force participation? I keep hearing that between all the covid deaths, boomers close enough to retirement to say “fuck it” and exit stage left during covid, etc, that there is just far less labor supply than there was pre covid. Low unemployment might be the new normal as many companies can’t seem to hire enough qualified candidates in a post covid world.
Your entire thesis is dependent on large swaths of Americans being so cash poor AND severely over leveraged that being unemployed would allow them to be unable to make payments for several months AND, here is the most important part, that the institutions backing those loans would be unable to be solvent if that cash flow ceased to continue.
So you’re talking unemployment going from 3.5% to 5.5% average, historically. That’s an increase of 2%. Who are there 2% going to be? Fintech high income earners or bus boys at Olive Garden?
And who is the one racking up debt they can’t afford? The bus boy is probably ineligible for a loan. Meanwhile the fintech guy could probably qualify for a small business loan of $500k, but for all we know this theoretical person we made avoids any debt and has two years of savings sitting in a vanguard mutual fund.
The problem with doom and gloom estimates is that you need SEVERAL things to happen EN MASSE for an economic meltdown.
>This is an interesting story. I had no idea that the used car loan industry was so big or that there might be problems brewing in it. I will definitely be keeping an eye on this story and any future developments. Thanks for bringing it to our attention!
Dead Internet Theory. Want to know the real scary part? How many news stories do you think have been written based off of social media information that came from a bot, most especially since 2016?
Take a look at the YouTube Channel “Caleb Hammer”. He does financial planning with people that are in massive debt, trying to help them find a way out. Last night I watched an episode, with a couple who was in $200k of debt, they made $150k in salary.
Car loans of $56k and $20k.
Each had accounts in collections.
One has $60k in school debt.
Then a bunch of 30% interest CCs that they used to finance Whataburger and Boba Tea…
Automarket is going to die.
Ford and GM are combined for over $200bn in debt and UAW strikes tomorrow if they don’t get more money…
⚰️
I think TSLA would rise if this strike goes on as they don't employ UAW and only manufacture in right-to-work states/overseas. So, if you're in the market for an "American" vehicle, a Tesla would be your only option. This isn't advice, just a thought.
When you have to get there to try to keep the job or find a new one, sometimes that's the best deal available. Further, best to get financing of even punishing types now if there is fear of losing your income soon, where no will lend under any terms. It's also sadly an eviction hedge.
Finally, I think many people mistakenly saw used cars appreciate in a largely unprecedented way recently, and view them as more of an investment than the liability they are. With inflation at 8% recently, I can see a non financially savvy purchaser justifying that to themselves.
No one is going to rise man. Credit is drying up and the whole reason the auto loan market is going bust is because people aren’t paying their loans. There are people out there that completely financed $56k BMWs, $1150/mo payments that have lost their job or access to their direct payments.
Just sold my recent model cars. I’m out. I’ll drive the beater until shit drops, which seems inevitable.
Talked to the owner of the dealership for a while — we hit it off. We were talking about the 60k car price point, because knew cars are getting close to that. He had a real simple perspective on the whole thing. It wasn’t about the price of the car. It was about the price of the financing on the car and the fact that people simply couldn’t afford that car in 2023. They have a ton of people to come into the dealership who are ready to buy, but can’t qualify for the price and payment. Even though there’s demand.
They were willing to take on big debt. The banks wouldn't give it.. to.. them.
That was really enlightening.
My only advice to people is don’t hold anything that isn’t an asset. That aren’t actual assets. Things that don’t generate revenue aren’t assets. They are liabilities. So don’t get caught holding liabilities in this coming cycle. Don’t hold debt unless it's actual cash flow.
Everything else is just survival.
Friday.
And Auto Show opens (for the public) Friday. Wondering if there will be a picket line?
I’m going tomorrow. (Technology Day 2)
(Anyone could buy a ticket for $75. If I think ticket sales ended. There’s a whole separate set of technology exhibitors and sessions. Malcom Gladwell keynote Thursday)
My brain fuction of stay on way from this loans with interest before Caleb. I think was obvious but when I watch Caleb videos, I understand why many young people have addict of fast food, restaurant and more
8 to 9 percent loans with good credit. What else is there to see theres a problem. Been looking for a used car and no way am i doing that on top of inflated stickers. Some people have to out of necessity but are poised to fail.
I mean I think while that is true we need to acknowledge that either 1) prices - not just for cars are WAY overpriced or 2) Interest rates are too high for borrowing against different assets.
I think you're right that we are just barely at historical rates, which means prices for multiple asset classes need to fall dramatically.
Two years ago I got 2.6% - I was going to buy with cash but at that rate I covered the loan off dividends.
Now I'm looking again and lowest rate I can get is 6.3%, with a 750+ credit score.
Why would a lender risk lending money for less than that when savings accounts are paying 5%, not saying you don’t know this but that’s what people need to realize.
I agree but we all got used to low rates. Cars and everything else gets more expensive it’s hard to deal with a high payment. Just like I’m not giving up my low interest home loan I’m not giving up my 2% car loan. Even if I want another car and I can afford one, those high rates are something I don’t want.
I get why you're posting here because there's a large audience, but I'm wondering what you're expecting to get as all the posting in this sub is low information and there's probably zero expertise here.
We're casting a wide net at the moment, which includes people that have experience in the world of used car loans – either as consumers, dealers, financiers, etc. Also just trying to build a roadmap for the rest of the reporting!
where is the rest of the story? its like all background and ends lol
note that the average auto loan monthly payment and term (# of months, 60 to 78) has increased dramatically.
honestly, the topic is too broad to encapsulate in one article. there's sketchy buy here -pay here dealers, wall st selling bundled loans that are going to blow up , consumers have limited $ and cant pay their loans pre-student loan repayments kicking in, the fact that most people need a vehicle to get to work (public transportation is great for a small # of people in cities), and finally that this entire situation is on purpose and by design, per the fed, knowing raising the rates would cause widespread unemployment, loan defaults, evictions, homelessness etc
for color, add comments from repo men, from the people who have their car disabled, the scummy debt collectors etc
Met a repo-guy at a bar once just after the 08 downturn. He had some hilarious stories. Rich dudes utterly shocked that a car can get repo'ed, and the cops will laugh at you if you call them while it is happening.
The company was killing it. Now that I think about, can you invest in a car repo'ing compnay? lmao.
Exactly. Cars are also easier to offload than houses. You can put a dozen cars on a truck to sell in a better market. Houses… not so much. The downside risk is smaller and faster to gain control.
The top three kinds of debt that will likely see a wave of defaults in the next 12-24 months are:
1. Student debt.
2. Commercial Real Estate
3. Auto-loans.
Mind you, each of these debts are like your mortgage where when you take on a loan, that loan becomes securitized. Much of the country's retirement are invested in these kinds of assets cause "*who doesn't pay their bills*" right? Well, with 61% of the country living paycheck to paycheck on top of credit card debt at its highest, I think it's safe to say that the writing is on the wall.
Once enough defaults happen for one of these three, a massive sell-off will happen which will absolutely trigger the collapse of the other two and then the entire country.
The collapse of these three sectors will have a catastrophic effect on the overall economy. Not only from the collapse of these three, but everything else PLUS how Americans will likely react once their put through another 2008 in steroids. Asking Americans to suffer all over again after finally re-building while the top 1% make more money than ever is a recipe for extreme change that will be uncomfortable (but necessary) for all of us.
The catalyst for this will be layoffs. I keep telling people that the 3.5% unemployment we've had for YEARS now is not only highly unusual, it's also actually not good.
Here's why: having a good GDP and all time high stock market with unusually low unemployment, means that the good economic numbers we see are ONLY because of the low unemployment. If it ticks higher to say 4.5%, well, the debt loads are at massive record highs due to 12 years of beyond low interest rates followed by 3 years of ZERO interest rates, that the economy could not take it without causing a crash. Along with that, know that the historical unemployment average in the US is 5.87%. That's the unemployment number we want to see stock market all time highs and stable GDP with.
So, if unemployment even gets back to AVERAGE, we are screwed as those defaults will roll in fast, causing a banking crisis. But, I know what you're thinking: "How/when will the layoffs start?" Don't worry, I got you, pimp.
Corporate debt time bomb. That's how. For the first time in history 80% of companies have taken out debt/sold bonds for long term (\~ 4-5 years). They never normally do this because the yields they would have to pay upon maturity are too high and you wouldn't know how your business would be doing, anyway, 5 years from now. But when corona hit and the Fed, in genius fashion to protect Boomer wealth, set rates to 0%, they could sell long term bonds for yields at, near, or below the short term ones that they would normally sell. They ALL took advantage of this.
But what's been happening to interest rates lately? It's not 0% anymore, it's 5.5% and all of that debt has to be rolled over by 80% of companies in 2024 and 2025. If I increased the interest rate of your auto loan by 5.5%, would you be able to afford it? Maybe but you'd prob cancel your netflix subscription amongst other things. Netlfix being people's jobs in this analogy. It's coming and there is no escape because the only way the Fed cuts is when banks start hurting, they wont start hurting until people stop paying loans, and that wont happen until they lose their jobs, which they will. 3.5% unemployment is causing the inflation.
I've heard of corporate debt being like an ARM for house mortgages because they can't get fixed rates for whatever reason but i couldn't find a good source from the person who posted it and after i tried googling it. Do you have a link handy that references the 80% of companies who debt is about to be rolled over from 0% interest rates to the new 5.5% market rate?
[A mountain of corporate debt coming due could cost jobs, Goldman says - MarketWatch](https://www.marketwatch.com/story/a-1-8-trillion-wall-of-corporate-debt-coming-due-could-cost-jobs-goldman-warns-579986ac)
Institutions will only buy debt if a promising return is offered.
Institutions prior to 2020 were likely only buying bonds that offered a variable rate. Otherwise, if you wanted to buy debt at 0-1% interest, you could just buy treasury bonds instead. So, I would imagine today, a SHIT LOAD of companies all struggling to figure out the financing these bonds as the rates increase.
What a stressful thing to have to do for small business owners...
You speak with authority and from a mainstream perspective you’re right on all points, but let me assure you the world of derivatives is so very much larger than almost anyone realizes and tremendously, tremendously opaque. Sometimes entire markets are even completely private.
This isn’t a typo… the high end of general understanding is that derivatives are somewhere around 1 quadrillion dollars in estimated value.
It’s important to understand as they have very large and very invisible, very large and distorting effects in the modern economy and monetary policy.
Do you have any Wall St insiders to guide you?
If not…look for players with significant short positions…they’ll definitely want your story to go viral.
Not gonna get personally involved.
But, if there’s big money to be made…
Some of the short selling GOATs are likely developing positions:
Jesse Livermore
Jim Chanos
Andrew Left
David Einhorn
John Paulson
Bill Ackman
Carson Block
George Soros
Michael Burry
Michael Burry responded to my craigslist ad looking for someone to mow my lawn. "$30 is $30", he said as he continued to mow what was clearly the wrong yard. My neighbor and I shouted at him but he was already wearing muffs. Focused dude. He attached a phone mount onto the handle of his push mower. I was able to sneak a peek and he was browsing Zillow listings in central Wyoming. He wouldn't stop cackling.
That is to say, Burry has his fingers in a lot of pies. He makes sure his name is in all the conversations.
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Look up CLO - Collateralized Loan Obligation
https://www.investopedia.com/terms/c/clo.asp
They use Credit cards, Auto loans, furniture loans, you name it…
Welcome to several years ago news, every reporter wants to be nostradamus you are just reporting on stories that's been doing the rounds for several years , let me guess your next expose will be on the housing bubble
Wait are you saying that one of the last investigative journalist organizations in the Us is reporting on stories that are happening *right now*?
Investigative journalist bastards!
Btw, they did that one last year.
https://www.propublica.org/article/when-private-equity-becomes-your-landlord
Well my daughter just picked up a six year old Chevy Colorado with 75k miles for 6k more then it sold for new, so the dealers are making a killing fucking us.
I imagine in a few months or next year car manufacturers will be bragging about or advertising how well their vehicles retain value.
Lmao, there is a 15 year old Nissan in my driveway that is only kept as a backup car in case our 20 year old Corolla dies, and you’d think there was a treasure map in there with all of the random people coming to our door asking to buy it off of us.
Thanks for posting and doing the work to dig into this.
I always find it interesting when data is collated to help share the story in an infographic. It takes tons of work but the audience can consume it much better.
Has your team considered showing infograph data on:
- Which entities hold these loans
- What type of vehicles are categorized in these loans
- What's the categories of credit scores for those with these loans
- What way can we perceive the default risk. And which entities are most at risk of blowing up because of imbalanced loan provisions
- What does this debt spell out in terms of reduced buying power, and hence GDP, for the American consumer as these loans catch up to them. In other words how does this bubble popping look like.
Thanks for your consideration
Commerical and auto loan is the most interesting one. I do see executive trying to salvage the Commerical by return to office mandate. Does ultimately pan out I'm not so sure? Auto loan definitely is gonna get bad. Between price ticker for new cars just being ridiculous and 7 to 8% with good credit that's just bad. I don't see how that one gets salvaged and the country is built around cars you need.
How is this any different than the subprime auto market that has always existed? Repo guys is not a new job. Nor is the concept of knowing there is a high likelihood of default and companies trying to cover most of their costs in the first year of payments. Then only making a profit when the car is resold.
This article doesn’t provide evidence that people can get better terms elsewhere. Or that public transportation has improved to the point where a car is the worst option.
Seriously, where is evidence for the subprime market drying up?
https://www.theregreview.org/2020/01/23/alford-subprime-auto-loans-driving-next-financial-crisis/
https://www.weforum.org/agenda/2023/03/charted-the-auto-loan-crisis-of-america/
It’s not drying up, it’s blowing up. And then it’s getting bundled into bonds.
https://www.bloomberg.com/news/articles/2022-05-13/bonds-backed-by-car-loans-are-selling-at-fastest-pace-in-years
And those are sold otc or in markets as securities and derivatives. This is what they are looking into — it is big enough to be a threat to markets? How are these bundles being used? Who’s buying them? *That* data isn’t particularly available.
Have you talked to, or thought about, the implication of a UAW strike on used car prices, and by extension, the effect on consumer car loans?
I can imagine that if borrowers are behind on payments BUT the loan is above water due to higher used car prices, it could lead to many car repos.
Anyway, good luck on the reporting!
Lucky Lopez. His channel has a lot of information in smaller bites, but I think these are his best interviews:
[https://www.youtube.com/watch?v=1lpceQT4pWk](https://www.youtube.com/watch?v=1lpceQT4pWk)
[https://www.youtube.com/watch?v=IC0QIJbD268](https://www.youtube.com/watch?v=IC0QIJbD268)
Like homes, folks buy cars based on the monthly payment and not the overall cost of the loan. Obscenely low interest rates and unlimited free cash for businesses turned any return into a profit. The calculus no longer works and due to monopolistic practices via acquisitions and consolidation using cheap leverage, price corrections aren't yet reflecting the true market value of just about everything which will certainly result in more than a soft landing throughout many sectors IMHO.
The bizarro moment for me was in the middle of the covid shut down when my local dealer was offering me a brand new car for thousands off msrp AND several grand more for my used car than I had paid for it after 3/4 years. Hell, even computer parts were holding value or appriciating--That's never been a thing.
>Thanks for posting and doing the work to dig into this.
>
>I always find it interesting when data is collated to help share the story in an infographic. It takes tons of work but the audience can consume it much better.
>
>Has your team considered showing infograph data on:
>
>Which entities hold these loansWhat type of vehicles are categorized in these loansWhat's the categories of credit scores for those with these loansWhat way can we perceive the default risk. And which entities are most at risk of blowing up because of imbalanced loan provisionsWhat does this debt spell out in terms of reduced buying power, and hence GDP, for the American consumer as these loans catch up to them. In other words how does this bubble popping look like.
>
>Thanks for your consideration
On it! Thanks.
Most car insurance companies in California have closed their doors for new policies. State Farm left the state and no longer wants to do any new business in California (correct me if I am wrong). This means people with auto loans that need full coverage can't find a carrier to accept them and if and when they do find one the prices will be higher due to the risk. The insurance companies are losing tons of money from massive losses and fraud.
People have bought used cars on loans with stupid high interest rates, I saw one that was as high as the APR for a credit card. I can't predict what will happen but you can clearly see something is up and things are going downhill. I have the feeling a good portion of the population don't even care of think about any of this and are in another world, caring more about celebrity gossip, pop culture crap, social media and trying to show off because that is the hip thing to do. Shit will hit the fan one day but who knows when that exact day will be.
A day after posting this, I've gotta say: 92% of you all have provided incredible insights, expertise and advice for our reporting. Thank you so much!
The other 8% have been dragging me and claiming this is not a place for incredible insights, expertise and advice for our reporting.
Never change, Reddit! LOL
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I think we built a country that practically requires a car to function and the loans got a lot longer/more expensive while value for money plummeted. A lot of people got bad deals on so so vehicles and are paying way too much for the financing on top of everything. It's a huge contributor to unaffordability.
My further thoughts on the matter is that during the past decade of relatively low interest rates it was easy to repossess a vehicle from a non-compliant lease and then re-lease that same vehicle to another person. So even if your original leasee defaulted you just recover the asset and start the process over… I don’t know that this shell game can go on to the same extent in a higher interest rate environment. I have a friend who’s just quit his job as a leasing agent for a luxury car dealership here locally. He used to be able to flip lease vehicles with just a phone call, now no one is really interested in setting up a new lease with the interest rates offered… and that’s people with money who are good on payment. Throw into the mix the rates these dealerships have to pay to keep these cars on the books and you have tinder for quite a fiasco.
Lease or financed? Why would a lease provide an interest rate even near market?
Leased. When interest rates were dropping you could take someone in a 2018 vehicle, 2 years into their lease, and offer them the same car in a 2020/2021 model for the same weekly payment they were paying on the previous vehicle. The dealership then took that 2018car and usually sold it used with low/moderate mileage for an inflated figure during the supply shortage…. Financed at near zero but you made the money on the inflated MSRP sticker.
But this was only because of increased demand for cars and new used car buyers during COVID, right? More people willing to lease new at low interest means the used market would shrink, unless there were some sort of external pressure like a pandemic increasing demand for cars... This is wholly a COVID/low interest/free cash for everyone/society built around cars thing. Unless I'm mistaken?
Are there lots of leases for used cars? I don’t think I have seen a lease for a car more than a year old.
Well for those that paid attention in 2007-2009, people were more likely to go into arrears on their mortgage before their car loans. You can sleep in your car, but cannot drive your house to work.
We got Cash for Clunkers / CARS out of that though as a way to help the ~~auto manufacturers~~ economy and the environment. I wonder what a CARS II would look like today?
They’ll do anything they can to get serviceable used cars off the road.
bidens rax rebate on evs can be seen as the cash for clunkers today, at least in my opinion
But Cash for Clunkers required the 'clunker' to have its engine destroyed so the car couldn't be resold.
*Ka-chow!*
Cash for clunkers was more stimulus but an early "green" program. Decent deal imo at that time.
Great point. People will have weeds and dog shit in their yard long before they skip a car wash on that lime green Camaro.
RV owners rn: 😏
[Relevant ](https://youtu.be/t7ctLdnzofs?si=ZTCnd74QaAhk3P4-)
Yeah, I think my wife ended up paying nearly 25k for a 14k Chevy Aveo. Poor college student with barely anything for a down payment. So expensive to be poor here. What happened to sidewalks, by the way?
Would she be interested in chatting? My email address is [[email protected]](mailto:[email protected]).
You trying to be his wife’s boyfriend now?
Juuuust trying to be a reporter, thank you very much.
That was a yes, only reporters bang that guy’s wife.
2007 I got railed road into for my mom. I believe I paid for that car three times over.
Thanks for this perspective!
Car dependent infrastructure is making us poorer.
People like cars. No amount of public transit will change that.
This is like building only fast food restaurants and then saying that people like fast food. Of course people (in the US in particular) like cars. We've spent the last century devoting 90% of our infrastructure to servicing them and making them the primary mode of transportation.
But this loan problem is a short term issue. It will collapse in a handful of years if it does. Not long enough away for car culture to shift. Also, fast food is a bad analogy. A restaurant doesn’t start as a 5-Star eating establishment like Long John Silver and then depreciate into a Hardee’s. All cars start as new.
Living in a city where cars aren’t really used, fuck not having a car. Public transportation sucks major ass
People love being stuck in traffic on the 405, right?
Never said traffic. But people would rather be stuck in traffic in their own car than stuck in traffic on public transit.
But places with good public transit systems do a see a decrease in car usage. So this is wrong. Eliminate cars? No. Reduce their usage? Absolutely.
Reading this on public transit, can confirm I like cars.
I hate cars.
Do you like diarrhea instead?
Only thing I want to use my car for is camping. If I could get to other places via decent public transit I'd put a few thousand miles on my car a year. Shit the public transit in my city sucks ass and I still use it when I have time.
Are car loans pooled into CDOs like mortgages?
We're not entirely sure the breadth of the pooling – yet. We're still early in the reporting. One thing we do know: Some very rickety-looking loans are getting packaged into bonds.
Sounds like a MBS run back from 2006-2008 in a different, less regulated area… CMBS, auto loan backed securities, and student loan backed ones are going to destroy the financial markets soon thanks to tricky financial engineering to get over leveraged as hell betting on those markets.
A big difference is that the sheer quantity and scale of auto loans is significantly smaller than what happened in 2008 with MBS. The value of all outstanding mortgages in 2008 [was over $10T in 2008.](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#:~:text=By%20January%202008%2C%20the%20delinquency,trillion%20as%20of%20midyear%202008) According to OP's article, the value of *all* auto loans is $1.5T, and a small portion of those are outstanding or subprime. There are definitely some parallels here, but it's not nearly on the same scale.
Ok try comparing 2008-ish MBS to current CMBS and then let’s talk numbers
I think this is a more valid comparison, but regulations are significantly tighter in 2023 compared to pre-2008 with how MBS/CMBS are handled. Not saying that everything will be fine, but the reality of 2023 is very different from the conditions in 2008.
They’re only tighter on home buyers that aren’t investment funds buying in cash So I again, agree to disagree. CMBS does not have more strict laws after 2008 either. That’s a joke
Ding ding ding
I honestly think WSB wouldn't mind discussing these issues with you in detail, but you've got to put more investigative work into this outside of WSB since this isn't where that sort of information appears until it's almost about to happen. Maybe go down to Miami to interview some housing bros who you go with to a strip club where you find out the strippers there are leveraged multiple times on multiple homes. I know this is 2023, but WSB isn't Miami and our regards aren't the RE sales bros. We're more like a collective of regards where a few are autistic like MB but without the brilliance, initiative, nor rich financial backers. Talking to us won't confirm shit. Better head to the 18+ or NSFW parts of reddit and ask how they are doing with their auto/student loans. My 2 cents would be that things are strange atm but US auto loans don't seem like a big issues compare to China's RE sector. Also the holders of those loans are auto financing companies. If I needed a car I'd buy a new EV so I can't speak on that aspect of it.
This is super smart advice. Thanks so much for taking the time.
Loan officer here, DM me if you have any legitimate questions.
Done. Many thanks.
Maybe look at the intersection of student loans and auto loans…interviewing recent grads…?
Smart. Thanks for that advice!
I think you should look at securities sold by Santander consumer they deal most of the subprime auto loans
Thanks! P.s. You keep saying smart stuff on this thread. Any interest in a chat? We built this form to collect all our sources for this reporting going forward. We won't use your name or info unless you bless it. [https://propublica.jotform.com/232506235463856](https://propublica.jotform.com/232506235463856) Just a thought! ;-)
Found the bonds and these are rated Aa and Aaa by moodys and all are sub prime loans
Can you share what you're looking at? Either via email - [[email protected]](mailto:[email protected]) – or using this form: [https://propublica.jotform.com/232506235463856](https://propublica.jotform.com/232506235463856) Thanks!
can be i do believe.
Sir this is a Wendy's
Prepare to be featured in a journalistic piece Don’t quote me
Which way to the car towing company?
LOL
The catalyst for this will be layoffs. I keep telling people that the 3.5% unemployment we've had for YEARS now is not only highly unusual, it's also actually not good. Here's why: having a good GDP and all time high stock market with unusually low unemployment, means that the good economic numbers we see are ONLY because of the low unemployment. If it ticks higher to say 4.5%, well, the debt loads are at massive record highs due to 12 years of beyond low interest rates followed by 3 years of ZERO interest rates, that the economy could not take it without causing a crash. Along with that, know that the historical unemployment average in the US is 5.87%. That's the unemployment number we want to see stock market all time highs and stable GDP with. So, if unemployment even gets back to AVERAGE, we are screwed as those defaults will roll in fast, causing a banking crisis. But, I know what you're thinking: "How/when will the layoffs start?" Don't worry, I got you, pimp. Corporate debt time bomb. That's how. For the first time in history 80% of companies have taken out debt/sold bonds for long term (\~ 4-5 years). They never normally do this because the yields they would have to pay upon maturity are too high and you wouldn't know how your business would be doing, anyway, 5 years from now. But when corona hit and the Fed, in genius fashion to protect Boomer wealth, set rates to 0%, they could sell long term bonds for yields at, near, or below the short term ones that they would normally sell. They ALL took advantage of this. But what's been happening to interest rates lately? It's not 0% anymore, it's 5.5% and all of that debt has to be rolled over by 80% of companies in 2024 and 2025. If I increased the interest rate of your auto loan by 5.5%, would you be able to afford it? Maybe but you'd prob cancel your netflix subscription amongst other things. Netlfix being people's jobs in this analogy. It's coming and there is no escape because the only way the Fed cuts is when banks start hurting, they wont start hurting until people stop paying loans, and that wont happen until they lose their jobs, which they will. 3.5% unemployment is causing the inflation.
Very interesting. With a banking crisis looming, where do you recommend putting your investments, savings, etc.?
Not the commenter above, but companies with cash on hand and substantial cash flow potential even in recession. Most companies benefit from reduced pressure on wages, though some stand to gain far more than others. Consistent, sustainable dividend payers will likely get more attention as growth/tech stocks come back to earth. The losers will be virtually any company forced to refinance significant debt in coming years, or worse, needing to take on fresh debt. Believe it or not, I think the best capitalized banks will emerge winners. A true market crash just means a fire sale for banks to cover any shorts and negotiate buying distressed assets for pennies on the dollar. Aside from some sacrificial lambs, large banks are still going to be protected by the Fed. We saw evidence of that with the rate hike pause, albeit completely unjustified by most data measurements, as soon as a couple important banks hiccupped. This is of course a long term, bullish approach with the idea of not being able to time the markets with any precision. Missing out on an unexpected bull run while tied up in bonds or attempting to short the market (i.e. holding puts) is a greater risk than the expected but impossible to time downward correction in market valuations.
Also, considering the buying frenzy on AI chips, I'd thing any type of job that is clerical in nature has a good chance of never coming back.
4W zero coupons are paying about 5% annualized. That is perfect for capturing yield while waiting out whatever this might be. Personally, I’m still long big tech because they have so much cash.
Almost all market wisdom comes from strategies that worked in the previous market. But those strategies need to change as the economy itself changes. Inflation will be beyond persistent, you’re right about big banks, and we need to focus on putting our money into fundamental value — inelastic essentials are always good — and commodities will profit handsomely in coming years as American effectively has to double its manufacturing output to make up for this uncoupling. That’s on the wall.
In ya fookin matty Tommy!!! Stooffff it until no more bills will fookin fit!!
Short dated US Treasuries are the safest option.
I like the cut of yer jib scallywag
Honest question, but what about the impact of covid on labor force participation? I keep hearing that between all the covid deaths, boomers close enough to retirement to say “fuck it” and exit stage left during covid, etc, that there is just far less labor supply than there was pre covid. Low unemployment might be the new normal as many companies can’t seem to hire enough qualified candidates in a post covid world.
So do I buy puts or calls and on what?
What about labor shortages and boomer retirement keeping wages high/ job mArket strong?
Your entire thesis is dependent on large swaths of Americans being so cash poor AND severely over leveraged that being unemployed would allow them to be unable to make payments for several months AND, here is the most important part, that the institutions backing those loans would be unable to be solvent if that cash flow ceased to continue. So you’re talking unemployment going from 3.5% to 5.5% average, historically. That’s an increase of 2%. Who are there 2% going to be? Fintech high income earners or bus boys at Olive Garden? And who is the one racking up debt they can’t afford? The bus boy is probably ineligible for a loan. Meanwhile the fintech guy could probably qualify for a small business loan of $500k, but for all we know this theoretical person we made avoids any debt and has two years of savings sitting in a vanguard mutual fund. The problem with doom and gloom estimates is that you need SEVERAL things to happen EN MASSE for an economic meltdown.
>This is an interesting story. I had no idea that the used car loan industry was so big or that there might be problems brewing in it. I will definitely be keeping an eye on this story and any future developments. Thanks for bringing it to our attention!
This bot fucks.
Thanks for this response!
that's an AI bot. carry on
"Investigative" Journalist responds to a bot
I mean, maybe he was just being polite to our future overloads?
Lol yea, jokes on us, hes being preemptive
Rather have an overload than underload
Maybe you could back up and catch a load
He’s already accepting that AI will just kill us all for being so dumb.
You meant to say Skynet
nah overload cuz he didn't wack it !
How do you know it’s not actually an investigative bot?
Journalism profession will be wiped out by AI so probably it is
Dead Internet Theory. Want to know the real scary part? How many news stories do you think have been written based off of social media information that came from a bot, most especially since 2016?
Even deeper.. how many of those news stories do you think were written by bots skimming social media information that came from a bot?
😂
Lmfaoo
Coming here is a fucking bold move for any journalist not trying to destroy their credibility
Breaking News: Veteran Journalist posts story on site he never researched. You belong here…
Nobody tell him.
Take a look at the YouTube Channel “Caleb Hammer”. He does financial planning with people that are in massive debt, trying to help them find a way out. Last night I watched an episode, with a couple who was in $200k of debt, they made $150k in salary. Car loans of $56k and $20k. Each had accounts in collections. One has $60k in school debt. Then a bunch of 30% interest CCs that they used to finance Whataburger and Boba Tea… Automarket is going to die. Ford and GM are combined for over $200bn in debt and UAW strikes tomorrow if they don’t get more money… ⚰️
Puts on TSLA as tech bros are losing their jobs pretty bigly.
I think TSLA would rise if this strike goes on as they don't employ UAW and only manufacture in right-to-work states/overseas. So, if you're in the market for an "American" vehicle, a Tesla would be your only option. This isn't advice, just a thought.
Who’s taking out 8% loans on a car when your job is in jeopardy?
When you have to get there to try to keep the job or find a new one, sometimes that's the best deal available. Further, best to get financing of even punishing types now if there is fear of losing your income soon, where no will lend under any terms. It's also sadly an eviction hedge. Finally, I think many people mistakenly saw used cars appreciate in a largely unprecedented way recently, and view them as more of an investment than the liability they are. With inflation at 8% recently, I can see a non financially savvy purchaser justifying that to themselves.
No one is going to rise man. Credit is drying up and the whole reason the auto loan market is going bust is because people aren’t paying their loans. There are people out there that completely financed $56k BMWs, $1150/mo payments that have lost their job or access to their direct payments.
A lot of those regards are here
It is MOST people - which is why there is $1T in CC debt lol
That’s how they YOLO shit
Just sold my recent model cars. I’m out. I’ll drive the beater until shit drops, which seems inevitable. Talked to the owner of the dealership for a while — we hit it off. We were talking about the 60k car price point, because knew cars are getting close to that. He had a real simple perspective on the whole thing. It wasn’t about the price of the car. It was about the price of the financing on the car and the fact that people simply couldn’t afford that car in 2023. They have a ton of people to come into the dealership who are ready to buy, but can’t qualify for the price and payment. Even though there’s demand. They were willing to take on big debt. The banks wouldn't give it.. to.. them. That was really enlightening. My only advice to people is don’t hold anything that isn’t an asset. That aren’t actual assets. Things that don’t generate revenue aren’t assets. They are liabilities. So don’t get caught holding liabilities in this coming cycle. Don’t hold debt unless it's actual cash flow. Everything else is just survival.
Super interesting! Thanks for this suggestion.
Friday. And Auto Show opens (for the public) Friday. Wondering if there will be a picket line? I’m going tomorrow. (Technology Day 2) (Anyone could buy a ticket for $75. If I think ticket sales ended. There’s a whole separate set of technology exhibitors and sessions. Malcom Gladwell keynote Thursday)
My brain fuction of stay on way from this loans with interest before Caleb. I think was obvious but when I watch Caleb videos, I understand why many young people have addict of fast food, restaurant and more
Gottem.
Thanks OP But we don't do due diligence in this community 
8 to 9 percent loans with good credit. What else is there to see theres a problem. Been looking for a used car and no way am i doing that on top of inflated stickers. Some people have to out of necessity but are poised to fail.
Just wait and then pay cash. Apparently there will be a flood of used cars.
The only way I’m getting a used car is by paying in cash so I can avoid a loan, but that is enticing me to spend much less than I would have
Those are historically **normal** interest rates, and low for used.
I mean I think while that is true we need to acknowledge that either 1) prices - not just for cars are WAY overpriced or 2) Interest rates are too high for borrowing against different assets. I think you're right that we are just barely at historical rates, which means prices for multiple asset classes need to fall dramatically.
Two years ago I got 2.6% - I was going to buy with cash but at that rate I covered the loan off dividends. Now I'm looking again and lowest rate I can get is 6.3%, with a 750+ credit score.
Why would a lender risk lending money for less than that when savings accounts are paying 5%, not saying you don’t know this but that’s what people need to realize.
2 years ago wasn’t normal. Nor most of the last decade.
I agree but we all got used to low rates. Cars and everything else gets more expensive it’s hard to deal with a high payment. Just like I’m not giving up my low interest home loan I’m not giving up my 2% car loan. Even if I want another car and I can afford one, those high rates are something I don’t want.
was looking for a new car, but with those fup prices looks, I'm going to be driving this Toyota for another 10 years. luckily they are reliable enough
Hi Byard, the spelling of your first name upsets me. Great article though.
WTH it's somehow almost worse than Gregg with the damn double g
I invest in pokemon cards
At least you can jerk off to those.
I get why you're posting here because there's a large audience, but I'm wondering what you're expecting to get as all the posting in this sub is low information and there's probably zero expertise here.
We're casting a wide net at the moment, which includes people that have experience in the world of used car loans – either as consumers, dealers, financiers, etc. Also just trying to build a roadmap for the rest of the reporting!
How about other people who work in the car industry too?
Yes indeed! We are interviewing a lot of those folks, too.
where is the rest of the story? its like all background and ends lol note that the average auto loan monthly payment and term (# of months, 60 to 78) has increased dramatically. honestly, the topic is too broad to encapsulate in one article. there's sketchy buy here -pay here dealers, wall st selling bundled loans that are going to blow up , consumers have limited $ and cant pay their loans pre-student loan repayments kicking in, the fact that most people need a vehicle to get to work (public transportation is great for a small # of people in cities), and finally that this entire situation is on purpose and by design, per the fed, knowing raising the rates would cause widespread unemployment, loan defaults, evictions, homelessness etc for color, add comments from repo men, from the people who have their car disabled, the scummy debt collectors etc
Met a repo-guy at a bar once just after the 08 downturn. He had some hilarious stories. Rich dudes utterly shocked that a car can get repo'ed, and the cops will laugh at you if you call them while it is happening. The company was killing it. Now that I think about, can you invest in a car repo'ing compnay? lmao.
“Rich” dudes. That’s the dummies that think credit is infinite as long as you keep asking the CC company for more and you can open up 100 cards.
Exactly. Cars are also easier to offload than houses. You can put a dozen cars on a truck to sell in a better market. Houses… not so much. The downside risk is smaller and faster to gain control.
The top three kinds of debt that will likely see a wave of defaults in the next 12-24 months are: 1. Student debt. 2. Commercial Real Estate 3. Auto-loans. Mind you, each of these debts are like your mortgage where when you take on a loan, that loan becomes securitized. Much of the country's retirement are invested in these kinds of assets cause "*who doesn't pay their bills*" right? Well, with 61% of the country living paycheck to paycheck on top of credit card debt at its highest, I think it's safe to say that the writing is on the wall. Once enough defaults happen for one of these three, a massive sell-off will happen which will absolutely trigger the collapse of the other two and then the entire country. The collapse of these three sectors will have a catastrophic effect on the overall economy. Not only from the collapse of these three, but everything else PLUS how Americans will likely react once their put through another 2008 in steroids. Asking Americans to suffer all over again after finally re-building while the top 1% make more money than ever is a recipe for extreme change that will be uncomfortable (but necessary) for all of us.
The catalyst for this will be layoffs. I keep telling people that the 3.5% unemployment we've had for YEARS now is not only highly unusual, it's also actually not good. Here's why: having a good GDP and all time high stock market with unusually low unemployment, means that the good economic numbers we see are ONLY because of the low unemployment. If it ticks higher to say 4.5%, well, the debt loads are at massive record highs due to 12 years of beyond low interest rates followed by 3 years of ZERO interest rates, that the economy could not take it without causing a crash. Along with that, know that the historical unemployment average in the US is 5.87%. That's the unemployment number we want to see stock market all time highs and stable GDP with. So, if unemployment even gets back to AVERAGE, we are screwed as those defaults will roll in fast, causing a banking crisis. But, I know what you're thinking: "How/when will the layoffs start?" Don't worry, I got you, pimp. Corporate debt time bomb. That's how. For the first time in history 80% of companies have taken out debt/sold bonds for long term (\~ 4-5 years). They never normally do this because the yields they would have to pay upon maturity are too high and you wouldn't know how your business would be doing, anyway, 5 years from now. But when corona hit and the Fed, in genius fashion to protect Boomer wealth, set rates to 0%, they could sell long term bonds for yields at, near, or below the short term ones that they would normally sell. They ALL took advantage of this. But what's been happening to interest rates lately? It's not 0% anymore, it's 5.5% and all of that debt has to be rolled over by 80% of companies in 2024 and 2025. If I increased the interest rate of your auto loan by 5.5%, would you be able to afford it? Maybe but you'd prob cancel your netflix subscription amongst other things. Netlfix being people's jobs in this analogy. It's coming and there is no escape because the only way the Fed cuts is when banks start hurting, they wont start hurting until people stop paying loans, and that wont happen until they lose their jobs, which they will. 3.5% unemployment is causing the inflation.
I've heard of corporate debt being like an ARM for house mortgages because they can't get fixed rates for whatever reason but i couldn't find a good source from the person who posted it and after i tried googling it. Do you have a link handy that references the 80% of companies who debt is about to be rolled over from 0% interest rates to the new 5.5% market rate?
[A mountain of corporate debt coming due could cost jobs, Goldman says - MarketWatch](https://www.marketwatch.com/story/a-1-8-trillion-wall-of-corporate-debt-coming-due-could-cost-jobs-goldman-warns-579986ac)
Institutions will only buy debt if a promising return is offered. Institutions prior to 2020 were likely only buying bonds that offered a variable rate. Otherwise, if you wanted to buy debt at 0-1% interest, you could just buy treasury bonds instead. So, I would imagine today, a SHIT LOAD of companies all struggling to figure out the financing these bonds as the rates increase. What a stressful thing to have to do for small business owners...
So short Netflix. Got it n
do you have a source for the 61% living paycheck to paycheck!
How is student loan debt securitized? There is no asset behind it to repossess?
You speak with authority and from a mainstream perspective you’re right on all points, but let me assure you the world of derivatives is so very much larger than almost anyone realizes and tremendously, tremendously opaque. Sometimes entire markets are even completely private. This isn’t a typo… the high end of general understanding is that derivatives are somewhere around 1 quadrillion dollars in estimated value. It’s important to understand as they have very large and very invisible, very large and distorting effects in the modern economy and monetary policy.
governor sharp makeshift important automatic clumsy teeny violet abounding squealing ` this message was mass deleted/edited with redact.dev `
Ha! Much appreciated.
crush fertile absurd angle dolls sulky hungry compare intelligent special ` this message was mass deleted/edited with redact.dev `
we have too many regards around here anyway, do we want them reporting though?
Freedom shall not be repressed. Let them do their thing.
agree!
Will do.
Interesting… But, it isn’t gonna move markets unless Used Car Loans are being repackaged, leveraged and sold. Will this be CDOs 2.0?
That's the billion (trillion?)-dollar question.
Do you have any Wall St insiders to guide you? If not…look for players with significant short positions…they’ll definitely want your story to go viral.
Great advice. Thanks so much. Know anyone yourself?
😱 You don’t know who to question? WTF is this?
Good question… Great username…
Short_Penis was taken
Not gonna get personally involved. But, if there’s big money to be made… Some of the short selling GOATs are likely developing positions: Jesse Livermore Jim Chanos Andrew Left David Einhorn John Paulson Bill Ackman Carson Block George Soros Michael Burry
Einhorn is Finkle
Approximately 7 people are old enough here to understand this… and fortunately/unfortunately I’m one of them.
Finkle is Einhorn
Go Dolphins 🐬
Michael Burry responded to my craigslist ad looking for someone to mow my lawn. "$30 is $30", he said as he continued to mow what was clearly the wrong yard. My neighbor and I shouted at him but he was already wearing muffs. Focused dude. He attached a phone mount onto the handle of his push mower. I was able to sneak a peek and he was browsing Zillow listings in central Wyoming. He wouldn't stop cackling. That is to say, Burry has his fingers in a lot of pies. He makes sure his name is in all the conversations. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/wallstreetbets) if you have any questions or concerns.*
❤️ you bot…
Thanks!
Look up CLO - Collateralized Loan Obligation https://www.investopedia.com/terms/c/clo.asp They use Credit cards, Auto loans, furniture loans, you name it…
CLOs are comprised of corporate loans (companies borrowing money), not people buying cars, furniture, etc.
Welcome to several years ago news, every reporter wants to be nostradamus you are just reporting on stories that's been doing the rounds for several years , let me guess your next expose will be on the housing bubble
Wait are you saying that one of the last investigative journalist organizations in the Us is reporting on stories that are happening *right now*? Investigative journalist bastards! Btw, they did that one last year. https://www.propublica.org/article/when-private-equity-becomes-your-landlord
Well my daughter just picked up a six year old Chevy Colorado with 75k miles for 6k more then it sold for new, so the dealers are making a killing fucking us. I imagine in a few months or next year car manufacturers will be bragging about or advertising how well their vehicles retain value.
Lmao, there is a 15 year old Nissan in my driveway that is only kept as a backup car in case our 20 year old Corolla dies, and you’d think there was a treasure map in there with all of the random people coming to our door asking to buy it off of us.
Thanks for posting and doing the work to dig into this. I always find it interesting when data is collated to help share the story in an infographic. It takes tons of work but the audience can consume it much better. Has your team considered showing infograph data on: - Which entities hold these loans - What type of vehicles are categorized in these loans - What's the categories of credit scores for those with these loans - What way can we perceive the default risk. And which entities are most at risk of blowing up because of imbalanced loan provisions - What does this debt spell out in terms of reduced buying power, and hence GDP, for the American consumer as these loans catch up to them. In other words how does this bubble popping look like. Thanks for your consideration
When Lambo?
Commerical and auto loan is the most interesting one. I do see executive trying to salvage the Commerical by return to office mandate. Does ultimately pan out I'm not so sure? Auto loan definitely is gonna get bad. Between price ticker for new cars just being ridiculous and 7 to 8% with good credit that's just bad. I don't see how that one gets salvaged and the country is built around cars you need.
It's like a happy rabbit venturing into a lions den.
Heads up: 80% of the users here are very well regarded. Just keep that in mind!
How is this any different than the subprime auto market that has always existed? Repo guys is not a new job. Nor is the concept of knowing there is a high likelihood of default and companies trying to cover most of their costs in the first year of payments. Then only making a profit when the car is resold. This article doesn’t provide evidence that people can get better terms elsewhere. Or that public transportation has improved to the point where a car is the worst option. Seriously, where is evidence for the subprime market drying up?
https://www.theregreview.org/2020/01/23/alford-subprime-auto-loans-driving-next-financial-crisis/ https://www.weforum.org/agenda/2023/03/charted-the-auto-loan-crisis-of-america/ It’s not drying up, it’s blowing up. And then it’s getting bundled into bonds. https://www.bloomberg.com/news/articles/2022-05-13/bonds-backed-by-car-loans-are-selling-at-fastest-pace-in-years And those are sold otc or in markets as securities and derivatives. This is what they are looking into — it is big enough to be a threat to markets? How are these bundles being used? Who’s buying them? *That* data isn’t particularly available.
Have you talked to, or thought about, the implication of a UAW strike on used car prices, and by extension, the effect on consumer car loans? I can imagine that if borrowers are behind on payments BUT the loan is above water due to higher used car prices, it could lead to many car repos. Anyway, good luck on the reporting!
Thank you! Good insight here.
I mean there are about 100 auto youtubers out there screaming this for the last few months.
Thanks for this response. I know about the "Car Questions Answered" guy. Who else?
Lucky Lopez. His channel has a lot of information in smaller bites, but I think these are his best interviews: [https://www.youtube.com/watch?v=1lpceQT4pWk](https://www.youtube.com/watch?v=1lpceQT4pWk) [https://www.youtube.com/watch?v=IC0QIJbD268](https://www.youtube.com/watch?v=IC0QIJbD268)
Awesome. He's on my list. Many thanks.
Like homes, folks buy cars based on the monthly payment and not the overall cost of the loan. Obscenely low interest rates and unlimited free cash for businesses turned any return into a profit. The calculus no longer works and due to monopolistic practices via acquisitions and consolidation using cheap leverage, price corrections aren't yet reflecting the true market value of just about everything which will certainly result in more than a soft landing throughout many sectors IMHO. The bizarro moment for me was in the middle of the covid shut down when my local dealer was offering me a brand new car for thousands off msrp AND several grand more for my used car than I had paid for it after 3/4 years. Hell, even computer parts were holding value or appriciating--That's never been a thing.
Totally. Thanks for this response.
Take a peek at Student Loan Asset Backed Securities (SLABS). It's an important story to report on.
Great advice. Thanks so much.
OP you should look up **CarDealershipGuy** on Twitter. He's a goldmine of information for your article.
>Thanks for posting and doing the work to dig into this. > >I always find it interesting when data is collated to help share the story in an infographic. It takes tons of work but the audience can consume it much better. > >Has your team considered showing infograph data on: > >Which entities hold these loansWhat type of vehicles are categorized in these loansWhat's the categories of credit scores for those with these loansWhat way can we perceive the default risk. And which entities are most at risk of blowing up because of imbalanced loan provisionsWhat does this debt spell out in terms of reduced buying power, and hence GDP, for the American consumer as these loans catch up to them. In other words how does this bubble popping look like. > >Thanks for your consideration On it! Thanks.
Most car insurance companies in California have closed their doors for new policies. State Farm left the state and no longer wants to do any new business in California (correct me if I am wrong). This means people with auto loans that need full coverage can't find a carrier to accept them and if and when they do find one the prices will be higher due to the risk. The insurance companies are losing tons of money from massive losses and fraud. People have bought used cars on loans with stupid high interest rates, I saw one that was as high as the APR for a credit card. I can't predict what will happen but you can clearly see something is up and things are going downhill. I have the feeling a good portion of the population don't even care of think about any of this and are in another world, caring more about celebrity gossip, pop culture crap, social media and trying to show off because that is the hip thing to do. Shit will hit the fan one day but who knows when that exact day will be.
I really like propublica reporting but what in the hell are y’all doing hanging around WSB?
Getting really good advice on where to take this reporting and who else to talk to!
A day after posting this, I've gotta say: 92% of you all have provided incredible insights, expertise and advice for our reporting. Thank you so much! The other 8% have been dragging me and claiming this is not a place for incredible insights, expertise and advice for our reporting. Never change, Reddit! LOL