Car Repos Are About To CRASH The Market | 26.7% INCREASE

[cstreit]

The flags remind me of this clip:

[Cairo94507]

If there is a repo-crash coming, they get what they deserve. Kind of like the Mortgage crash of '08 when they were falsifying loan info to qualify people who really could not afford a home. They are likely doing the same for new car loans. I see a whole lot of "sketchy" people driving new expensive cars/trucks....

[Chocaholic]

Originally Posted by MBAtarga

One of their other recent videos - they show a tic-toc posting of a car salesman reporting that he had a customer come in to trade in a 2022 vehicle for a 2023 vehicle (a different mfr/make.)
She was something like $30k under water. Seems not only did she pay a market adjustment when she purchased the vehicle, she also likely rolled negative equity over from her trade in on that purchase. She owed $7x,000 on a 2022 vehicle with a current market value of $4x,000.

A fool and her money…(or something like that).

[Bob Kontak]

Originally Posted by Cairo94507

If there is a repo-crash coming, they get what they deserve. Kind of like the Mortgage crash of '08 when they were falsifying loan info to qualify people who really could not afford a home. They are likely doing the same for new car loans. I see a whole lot of "sketchy" people driving new expensive cars/trucks....

Similar, but the comparative order of magnitude is microscopic and not nearly as far reaching as the sub-prime sales and associated crappy mortgage bundling that millions got burned on.

Edit: By far reaching I'm talking about pension funds that invested in sub-prime bundled mortgage securities....... as well as being in the recession mix.

[jyl]

Originally Posted by Bob Kontak

Similar, but the comparative order of magnitude is microscopic and not nearly as far reaching as the sub-prime sales and associated crappy mortgage bundling that millions got burned on.

Yeah, the auto loan market is around $400BN while the mortgage market is about $11TR (trillion). And I think mainstream banks have little exposure to auto lending. Bad auto loans can, of course, impact the auto OEMs and suppliers, but I don't see the kind of risk to the economy that bad mortgages pose.

[The Synergizer]

Trailer parks with $90,000 pickups parked outside....

Originally Posted by Cairo94507

If there is a repo-crash coming, they get what they deserve. Kind of like the Mortgage crash of '08 when they were falsifying loan info to qualify people who really could not afford a home. They are likely doing the same for new car loans. I see a whole lot of "sketchy" people driving new expensive cars/trucks....

[Shaun @ Tru6]

Since there aren't car loan backed securities and collateralized debt obligations based on the auto loan market, this is just a big yawn and a gift to dealerships nationwide scooping up defaulted cars cheap.

And yeah, any time you see a YT splash screen like the one in the OP, you know it's garbage just to make money off you with clicks.

[john70t]

Inflation is transitory.

Don't worry about disinformation on the internet spread by foreign adversaries.
(do you want to be able to fly tomorrow?)

[john70t]

With every setback is opportunity.
-Bail out the (cough gasoline) auto lease crowd. $400 should do it.
-A huge supply of cheap repo vehicles now available. You get a car. And you get a car.
-Or the government buys up all that crap which doesn't sell for service fleet use again. The scrap yard is only blocks away and waiting for all that plastic trash.

[Paul T]

Originally Posted by Shaun @ Tru6

Since there aren't car loan backed securities and collateralized debt obligations based on the auto loan market, this is just a big yawn and a gift to dealerships nationwide scooping up defaulted cars cheap.

And yeah, any time you see a YT splash screen like the one in the OP, you know it's garbage just to make money off you with clicks.

That's not true Shaun, there are indeed plenty of Auto ABS bonds (both prime and subprime) out there. Structured very similarly to MBS securities.

[GH85Carrera]

Originally Posted by jyl

I spoke to someone who does subprime auto lending and, for that class of borrower at least, delinquency rates have moved from very low to above pre-pandemic levels. Not far above, but the change has been fast and sizeable.

One of my "friends of a friend" owned a used car lot, and specialized in bad credit car loans on the cars on his lot. They all had a disabler and a GPS. If the loan payment was late, he activated the module, and the car was not going to start. He sent out his repo man, and it was back on his lot. The person late on the payment lost any equity, and he sold the car again and again. He would not sell a car for cash, only his loans. Total sleazeball, but he did sell cars to people with horrid credit.

[Shaun @ Tru6]

Originally Posted by Paul T

That's not true Shaun, there are indeed plenty of Auto ABS bonds (both prime and subprime) out there. Structured very similarly to MBS securities.

Seriously? Finance hyper-capitalism is off the charts if people are betting on auto loans. That's sort of sick IMHO. I guess if there's a bright spot the volume has to be small compared to MBS's that it can't really damage the economy as a whole.

[jyl]

Finance hyper-everything has been off the charts for too long now . . .

When investors can lever up at absurdly low rates, all kinds of low return bets become attractive.

I like rates up here. Helps suppress some of the hyper-capitalism.

[jyl]

Consumer credit is starting to deteriorate generally. The big banks are raising their loss reserves. Up until recently, they’ve claimed to be seeing no deterioration, which makes sense because subprime consumers don’t bank at JP Morgan or Goldman Sachs, not really much even at B of A. But now their not-subprime customers are showing wobbly signs.

The online banks and fintech companies that have made their business on smartphone banking for the previously unbanked or on Buy Now Pay Later are going to get whacked.

[MBAtarga]

The latest update - worst situation in 30 years.

https://www.bankrate.com/loans/auto-loans/subprime-auto-loan-delinquencies-surge/

The last time this many drivers were delinquent on their auto loans was when the first mobile flip phone entered the market — in October of 1996. That’s according to new data from Fitch Ratings examining the percentage of borrowers at least 60 days past due on their loans in 2023’s third quarter.

More info on the link above - I chose not to paste entirety of the article.

[Zeke]

Originally Posted by cockerpunk

used car prices need to come down in general. market needs to correct.

Hear, hear! I will need one in a year or so. I bet my 1/2T PU holds value though.

[Rick Lee]

Originally Posted by Chocaholic

A fool and her money…(or something like that).

.... were lucky to get together in the first place.

[speeder]

I need *new to me* appliance car right now and prices seem normal on CL, which is where I'm looking. I'm hunting for a ~2020 "medium nice" car like an Accord or a Ford Fusion. The biggest problem is that they all have a lot of miles for the age.

The problem is that people being way upside down in late model cars doesn't lead to good deals on the street; if anything, they need MORE for them in order to walk away.

[Pazuzu]

Originally Posted by MBAtarga

The latest update - worst situation in 30 years.

https://www.bankrate.com/loans/auto-loans/subprime-auto-loan-delinquencies-surge/

The last time this many drivers were delinquent on their auto loans was when the first mobile flip phone entered the market — in October of 1996. That’s according to new data from Fitch Ratings examining the percentage of borrowers at least 60 days past due on their loans in 2023’s third quarter.

More info on the link above - I chose not to paste entirety of the article.

Again, using bad numbers to say bad things. Heck, what does Finch mean when they same "subprime" and "prime"? What about superprime, deep subprime, etc?


Factual numbers: 14% of auto loans in the US are deep subprime and subprime. Basically 1 in 7.
According to their data, the subprime number *is* the highest since 1996, but it's basically been linearly trending there since sometime early 2011, with the exception of the pandemic, when no economic data is trustworthy. So, just continuing a 12 year trend.
PRIME loan 60+ day delinquency is basically at the lowest it's ever been since they started tracking.

Total delinquency stats is 6% of subprime loans and 0.28% of prime loans in Oct 2023. But, remembering the 1:7 ratio, that's a total rate of:

(6*0.14)+(0.28*0.86)=1.1%. End of the world numbers there!

With some sleuthing, I found actual TOTAL 60+ day delinquency stats for all auto loans.
last 7 years, TOTAL percentage of 60+ day payment delinquency:
0.76% 0.78% 0.79% 0.54% 0.54% 0.80% 0.91%
That's 2017 through 2023.

Two low years were the pandemic. Another website pointed out a good point...2 large stimulus checks in that period, which helped people recover before the 60+ day delinquency point. So, basically flat over the 7 years listed.

Another interesting factoid from the report I found was the 60+ day delinquency numbers based on the type of vehicle for 2023.

Cars, the cheapest type of loans? 1.43%
SUVs, more expensive types of loans? 0.79%
Trucks, some of the most expensive types of loans? 0.67%

So, the MORE expensive the loan, the LESS likely to be delinquent.


Overall, I spent an hour finding some facts, but no one will really care because OMG the economy is ESPLODING!! BOOOMMM!!11!!!11!

[Shaun @ Tru6]

Originally Posted by Pazuzu

Again, using bad numbers to say bad things. Heck, what does Finch mean when they same "subprime" and "prime"? What about superprime, deep subprime, etc?

...


Overall, I spent an hour finding some facts, but no one will really care because OMG the economy is ESPLODING!! BOOOMMM!!11!!!11!

You have done what virtually no one ever does, google for a few minutes to check a story out. Fox News is right now running a 7 month old story again about an $18 Big Mac as an inflation is out of control we're all going to die story. Inflation is coming down so counterfactuals are critical to keeping the inflation story alive. They leave out that it's one rest stop in CT and that the story is 7 months old and that rest stop prices are pretty much double local restaurant prices.