Looks like repo guys are going to hit the lottery since if the loans are made longer because the buyers cannot afford (bad credit,too low down,etc.) the price of the car to begin with they are not going to make payments when 
hits the roof.
I can smell miles away where the next finance crisis is going to come from. (Previous smellsā¦high vacancies in commercial RE, retail burnouts, infrastructure crumbling etc.)
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It smells an awful lot like student loans in here. I think people are much more likely to forego their student loan payment in order to keep the repo man away. Regardless, default rates are creeping up.
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I agree with this entirely
Someone whose economic foresight I respect recently told me to watch the full size truck repo market as a good auto based economic barometer. These vehicles are much more expensive than your average car but are not, on average, bought by people that have significantly above average earnings.
This makes sense when you go to Fordās website and every F-150 finance quote is based off a 84 mk the loan.
It really is a genius move by the industry in a lot of ways. You have a large swath of the population that would never consider themselves āluxuryā buyers for a variety of reasons. Culturally they are ātruck peopleā, and possibly need them for work, etc. The industry tried HARD to steer them all towards luxury trucks like the Blackwood, Mark LT and Escalade EXT, but they flopped. Too pretentious. The badge mattered. So what did they do? They just optioned up their āregularā trucks with regular truck branding into luxury vehicles and these same people ate them up! They take out 84 month or longer loans to get an F150 optioned to the gills in excess of 70 grandā¦ Thatās a luxury vehicle!
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Everything you said makes sense. Iād love to see the industryās demographic data but it seems to me they have done a genius job convincing suburban men to buy these really expensive trucks. Somehow owning a truck became de rigueur for a certain social set.
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Exactly. Having a Limited, King Ranch, Big Horn, High Country, Denali, etc has become as big of a status symbol as a Range Rover or an S Class in a lot of parts of the country. But the āTruckā badge needs to be there in order to give it cred. Plus it probably looks a little better on the tax return taking the deductions for your business or ābusinessā with a Chevy, Ford or Ram badge. Iād be curious to see how many of these trucks get some kind of business write offs.
Depending on the model, it could be 900 to like 1400. Considering the length of the extension (from originally 3/36 to 7/100 or even 8/125 sometimes) it is very reasonable.
Every forum dedicated to a major Japanese make or model has at least one dealer that sells nationwide for a small markup above cost.
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Do you have a WSJ subscription? Dan Neil wrote about the appreciated tax depreciation schedule for trucks, especially heavy trucks with a GVWR of 6,000+ lbs, during a review of a F250 or similar truck.
Iām sure others have written about it as well.
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Itās not just marketing. Itās also the tax code.
I donāt have a subscription, but this totally makes sense. The SUV craze in this country really has its beginnings in the early 2000ās with the changes in the tax code that encouraged people to take advantage of the tax breaks on them.
Itās the hummer tax credit. Correct me if I am wrong, doesnāt it only allow you to deduct the car in year 1 instead of spreading it over 5 years?
Actually, interest rates supposed to go down, because of global and local economy - less mortgages and less loans.
But, you can never know. Tomorrow maybe the mood will shift to the other direction.
Most of the relatively new brands are up and most of the existing brands are down.
Fed has placed itself in a tricky situation. For 8 years it kept rates at 0 and kept expanding its balance sheet. Shows how shaky the economy was for the past 8 years (before 2017 i mean) that it could not allow for any small rise or quantitative tightening. Now the Fed tries the whole cold turkey stop and starts winding down balance sheet and rising rates. Well hold on a second, you messed up Mr. Fed. You set up a scenario of a 2008 but even worse now you have no room to move. Rates might go down or they might stabilize. Given our current debt load I am not certain how low we can go on rates or if the Fed can expand its balance sheet even further. Only hope the next recession is worldwide to keep our safe heaven status. I dont see much movement in rates for 2019.
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Do you mean āmodelsā and not ābrands?ā All of the ābrandsā are well established and old except for Tesla. Those ābrandsā have new āmodelsā though.
Certainly there are huge tax advantages to businesses buying 6k+ pound trucks (which makes no sense for services like real estate). But the F-150 has been the best selling vehicle in America since before this tax break existed. Certainly some people use this truck and other full size trucks for business while (I believe) an equal or greater amount commit some degree of tax fraud about the actual use of truck.
But to write off the truck you need a business with real income. The sheer number of truck sales means most are almost certainly to people without w2 or 1099 income.
I own a business and have been looking into buying one of these 6,000+ gross vehicle weight vehicles to take advantage of the Section 179 tax break. You can write off 100% of the cost against your business income. Technically you can only write off the percentage of use that is business related but I think a lot of people cheat.
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Mortgage interest rates went down according to my loan broker, in anticipation of no increases in the near future. So auto companies sort of jumped the gun on that.
Itās a bit more complex than that. The Fed is trying to stop inflation (cars are getting pricier as well for the last 3 years) by raising interest rates.
Unfortunately, It looks like (my opinion only) a world wide recession is unavoidable.