U.S. auto sales have hovered well north of replacement rates for several years now on the back of an improving labor environment and more importantly an extremely accommodating financing market characterized by $0 down, 0% interest loans to subprime borrowers, with perpetually longer maturities to help manage monthly payments...because if your monthly payment is $515 you should be able to afford it.
But, according to data presented in Experian's Q4 2017 auto financing market update slides, the auto market may finally be on the brink of running right off the other side of Ford's proverbial "Plateau."
First, as we've warned numerous times, inflated auto sales continue to come solely from an unprecedented expansion in consumer credit...
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Those pesty bankers.
ReplyDeleteCan't afford these over-priced vehicles?
No problem. We will give you 6 or 7 years (8 years?) to pay for it!
No problem.
ReplyDeleteThe auto makers will just buy even more TV advertising.
They are very good at making people want what they cannot afford.
Then, the bankers will join in cohoots to provide loans for 7 years.
Your neighbor gets to "keep up with the Jones" and everybody is happy.
Until your neighbor loses his / her job.
Ugh
Most new cars and trucks out there exceed my total yearly income! With the depreciation in the first year, only a fool would purchase a new car or truck because of this.
ReplyDeleteI had to start looking last year for a new car for my wife. We settled on a Certified used ( former lease ) Honda Accord for 21000 fully equipped. This was two years old. A new Accord with the same options was over 32000!!! The payments on were bad enough for a 5 year loan.
It's no wonder so many decide to lease if they want to have a new car or truck. My wife and I work and even with two incomes, it would be really tough to make those payments. God help you if you had major financial crisis or lost a job. Because of this, I hold on to what I have and keep it maintained until it totally falls apart.