US auto loan trends

Related to surveys that have results like this:
Fed survey shows 40 percent of adults still can't cover $400 emergency expense
https://www.cnbc.com/2018/05/22/fed-survey-40-percent-of-adults-cant-cover-400-emergency-expense.html

Let's discuss or post articles about US auto loan trends.

https://www.marketwatch.com/story/car-buyers-stretch-loan-payments-to-record-lengths-to-get-in-pricier-vehicles-2017-07-03 from July 2017 says

As car buyers’ obsession with bigger, pricier vehicles grows, so does their willingness to take longer to pay for them, says new analysis from Edmunds.com.

The average auto-loan length reached an all-time high of 69.3 months in June. That’s 6.8% longer than five years ago...

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https://www.edmunds.com/car-buying/being-upside-down.html says

Over recent years, we've seen a rise in the number of people underwater, as well as the amount of negative equity they have in their cars. In 2012, for example, only about 23 percent of cars traded in were worth less than what was owed on them. Compare that to the last quarter of 2017 when the 32.5 percent of trade-ins had negative equity. The amount of negative equity has also increased, up from $4,500 in 2015 to $5,100 in 2017.

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Gotta wonder with the all of the above and US auto buyers flocking to SUVs, trucks and crossovers instead of sticking w/more efficient vehicles. :roll:

I may be poor, but at least I don't owe a dime on anything! My Leaf is bought and paid for!

For some reason I feel like the economy is going to go into another recession sometime soon. From years of it going back and forth, that's my guess. I saw in Consumer Reports magazine for April that more women (and people in general) are buying pickup trucks. The pickup is being called the next family car. So now soccer moms drive pickups instead of minivans. What's next?

With Glass-Steagal (sp?) and other similar laws passed to keep financial institutions from destroying economic stability going by the wayside, another bubble - followed by another collapse - seems inevitable.

LeftieBiker said:

With Glass-Steagal (sp?) and other similar laws passed to keep financial institutions from destroying economic stability going by the wayside, another bubble - followed by another collapse - seems inevitable.

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Yup, on top of the last bubble that has not been paid for.

Yeah this is a real problem. And it isn't just people buying more car than they can afford. I've seen lots people who are constantly struggling financially with no cash reserves. But they always have the latest iPhone with large data plans. Our society has a general consumerism problem.

When people trade in a car with negative equity, that suggests they are upgrading within a short period of having bought their existing car. Are these cars falling apart within 5 or so years? Not likely. The transaction wasn't really necessary. There is no discipline and people are hooked on getting nicer stuff now, pay later. And yes, our government is adding fuel to that fire with the banking regulation changes. So short sighted.

IssacZachary said:

I saw in Consumer Reports magazine for April that more women (and people in general) are buying pickup trucks. The pickup is being called the next family car. So now soccer moms drive pickups instead of minivans. What's next?

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And that's helping to drive longer auto loan terms. Pickups are now often priced like luxury (or at least entry-level luxury) cars. People who should be sticking to Camry-level auto prices are able to swing the payments of much more expensive vehicles by extending them out further, or by leasing.

For example, at 6% APR, a $30k loan for 5 years is just shy of $580/month. But a $50k one is now $966 at that same APR and term. Extend that $50k loan out to 8 years and now the payment is $658/month.

If you're wondering how your friends/family/neighbors can afford such vehicles when they don't appear to have the means to afford something that pricey, it's because they extended out the loan terms, or leased, or took out a HELOC (which can lead to its own financial disaster).