topic Re: Repossessions On Cars Are Exploding in Credit in the News

Repossessions On Cars Are Exploding

MarkintheHV — Sun, 18 Dec 2022 14:02:08 GMT

https://www.carscoops.com/2022/07/repossessions-on-cars-are-exploding-and-thats-bad-news-for-everyone/

Wow!

"That’s a huge red flag, reports Barron's, who spoke to dealer Lucky Lopez. He says that most of the repossessed vehicles he is seeing go to auction had loans that originated in 2020 and 2021. "

Re: Repossessions On Cars Are Exploding

CreditCuriosity — Sun, 18 Dec 2022 14:33:26 GMT

Yes they are and loans for cars are getting harder to qualify for or higher rates to cover these things. In a recession or a recession is coming take your poison along with inflation whether food, housing, rent and gotta pay one bill or another if one is on the edge financially. Many factors playing a role in this many more than listed above. IMO next year it will get alot worse whether repo, foreclosure on houses, etc. before it gets better. 2023 is going to be an ugly year for alot of people just my humble opinion as the fed continue to raise rates and ppl continue to charge up their CC and deplete their savings. Would like to see the trend of BK's from two years ago to now I speculate those are in a sharp upward pattern as well

Re: Repossessions On Cars Are Exploding

Horseshoez — Sun, 18 Dec 2022 14:42:08 GMT

Not mentioned in that article are the huge number of loans from the last year or two which had borrowers with new loans which started off many thousands under water due to "market adjustment" price bumps. I have to agree with @CreditCuriosity, 2023 and possibly 2024 is going to be fugly.

Re: Repossessions On Cars Are Exploding

tricie17 — Sun, 18 Dec 2022 18:02:44 GMT

Not to mention people living way above their means and purchasing cars tha they have no business getting. This is my opinion. If you show a good credit score because you cleaned up your records, people tend to fall into the same trap and these companies only look out for their bottom line. Stay strong my fellow Ficoers.

Re: Repossessions On Cars Are Exploding

Jnbmom — Sun, 18 Dec 2022 18:29:53 GMT

I agree with all the above . I think people do spend beyond their means . I stay FAR away away from the auto loan approval section while some approvals are great in terms others are just down right crazy compared to their income and auto loans they are acquiring 🙄

Re: Repossessions On Cars Are Exploding

tricie17 — Sun, 18 Dec 2022 18:39:00 GMT

@Jnbmom It just floors me everytime I read someone on this forum ask if their credit is good enough for a 200000 dollar car. Well! maybe 140000.

Re: Repossessions On Cars Are Exploding

MarkintheHV — Sun, 18 Dec 2022 22:13:55 GMT

I was shocked to read in another article (same subject) at the percentage of people that have car payments >$1k a month.......that is insane

Re: Repossessions On Cars Are Exploding

Legally_Speaking2512 — Tue, 20 Dec 2022 23:16:57 GMT

Most definitely trending upwards. Hope this helps as this seemed to be the most current info I could find.

November 2022 Year-Over-Year Highlights

Bankruptcy filings including all chapters totaled 31,178, a 6% increase from the November 2021 total of 29,335.
Individual filings increased 6%, totaling 29,330 compared to the 27,749 filed in November 2021

Re: Repossessions On Cars Are Exploding

Legally_Speaking2512 — Mon, 19 Dec 2022 23:55:13 GMT

I completely agree with you on the during the pandemic when such a large portion of the country was out of work bankruptcy situation getting worse before it'll get better. I consistently wonder how these people got loans during the pandemic when such a large portion of the country was out of work.

I get that there were probably a lot of people who thought their jobs were safe but you wouldn't have caught me near a bank applying for anything during the pandemic - and I'm a nurse. I would think with such a high unemployment rate at the time, that Banks would have been looking at sectors where people were more likely to lose their jobs before lending out any money but I also know that Banks sometimes loosen those prerequisites when business is bad. Just a bad situation all the way around.

Re: Repossessions On Cars Are Exploding

Horseshoez — Tue, 20 Dec 2022 01:45:58 GMT

@MarkintheHV wrote:
I was shocked to read in another article (same subject) at the percentage of people that have car payments >$1k a month.......that is insane

I agree; back when I was working for one of the luxury German car manufacturers in the late 1990s I was stunned to see seven year loans with payments over $1,000 per month. Fast forward 25 years and I just signed up for my most expensive monthly note ever (and I've had car loans off and on since 1976); prior to October this year my most expensive payment was about $500 per month, now I have a loan for roughly 70% more than that. Unsaid is, the only reason why I signed up for the loan instead of paying cash for the vehicle was I managed to get financing at 2.49% for 48 months. What concerns me is the number of folks I know who finance vehicles worth their annual income or more; how is that sustainable? Live with Mom and Dad for the next decade?

Re: Repossessions On Cars Are Exploding

Legally_Speaking2512 — Tue, 20 Dec 2022 16:46:49 GMT

I could not have said words any more true than what you said about people financing cars that exceeds their annual income. I truly don't understand how people are comfortable doing that sort of thing.

Re: Repossessions On Cars Are Exploding

sarge12 — Tue, 20 Dec 2022 17:37:29 GMT

I am a bit confused by this. With the chip shortage, I thought car values had increased. Last year, I bought a new 2022 Camry LE with some nice options at MSRP, and paid nothing down. It is, and has been worth more than I owe, but that might be because my interest rate is 1.99%. The only thing I can figure, is people do not research which cars best maintain their value, or buy at too high interest rates. I could easily sell my car, and pay off the loan to prevent repo.....if I was struggeling. I am not, and could have paid cash for the car if I had been willing to take the hit that withdrawing that much from my 401k would have on taxes. I drove a very cheap, used crap car for years when I knew my finances were not very healthy. Why did I choose a Camry? It maintains a decent resell value if properly maintained. It is known for reliability. Finally, at just under 30k with the options mine had, it was a reasonable price, and would not break the bank. Now it does not have 6000 dollar rims, but they are still round. It also has a very high safety rating, and low insurance rates. The options include blind spot monitoring, keyless push button start, sunroof, paint protection package, and even remote start. At the time of purchase, a two year old Camry with similar options was only about 2500 dollars less. Used car prices were insane last year.

Re: Repossessions On Cars Are Exploding

Horseshoez — Tue, 20 Dec 2022 19:21:37 GMT

@sarge12, while your Camry may well be above water today and will likely to continue to be so for the next year or so, the chip shortage will ease and my guess is, with the glut of repossessed cars which will be hitting the market as well as the easing of new car supplies, it is conceivable used car prices could tank. That said, you, me (I just bought a new Tacoma), and everyone else who did a little research before buying, will probably be okay. The flip side is early 20-something son of my neighbor, who just bought a $70,000 pickup truck, may well have a rude awakening in the next year or so.

Re: Repossessions On Cars Are Exploding

RSX — Tue, 20 Dec 2022 19:37:30 GMT

to me it is simple math

buy a car that is less than 50% of your Annual Income - as you make more money, (200k+) this % should keep dropping lower

a car/truck that is equal to or more than your Annual Income will hurt you every day -regardless if you ultimately make all the payments and own it at the end

Re: Repossessions On Cars Are Exploding

Horseshoez — Tue, 20 Dec 2022 19:57:20 GMT

@RSX wrote:
to me it is simple math
buy a car that is less than 50% of your Annual Income - as you make more money, (200k+) this % should keep dropping lower

a car/truck that is equal to or more than your Annual Income will hurt you every day -regardless if you ultimately make all the payments and own it at the end

While I tend to agree, there are folks who feel the need to advertise their wealth, hence folks up in the $200,000+ category buying some seriously expensive hardware.

Re: Repossessions On Cars Are Exploding

CreditCuriosity — Tue, 20 Dec 2022 20:07:14 GMT

My payment > 1k a month, not by much but is.. With that said it certainly isn't near my income alot less than 50% of annual income. Cars/Trucks are not cheap these days at all. Avg. car is what 40k I believe? Some below and obviously some higher to average out around that $ amt.. Crazy times we live in. Not happy with 1k+ payment, but little impact to me personally. Just sad it is that much in todays market

Re: Repossessions On Cars Are Exploding

Legally_Speaking2512 — Wed, 21 Dec 2022 16:26:18 GMT

I just bought a car last week - your post reminded me about my pre-qualification with Chrysler Capital LOL. It came back and said I was pre-qualified for up to $140,000. Apparently Chrysler Capital received a memo that must have mistakenly identified me as a full-fledged license attorney - which would be great were that true. While it is true that I plan on practicing law, the problem is that I have yet to start law school and am nowhere close to being at a salary or I can afford a car loan like that lol.

Re: Repossessions On Cars Are Exploding

Legally_Speaking2512 — Wed, 21 Dec 2022 16:34:55 GMT

I just bought my car last week and I have to say that I'm with you - I got a great deal and not only did I buy my car but I cosigned on my wife's car the very next day at the same dealership. I bought a fully loaded 2020 Chevy Trax redline edition and my wife got a 2022 Chevy Trax that only had 6 miles on it and we got a great deal on that as well. Nothing down on both cars and more than reasonable payments. My car only had 15,000 miles on it as well.

I agree with you completely on Toyota Camrys holding their resale value. They are extremely dependable and relatively cheap to fix should something go wrong down the road. Much like you, we drove our cars, which were both almost 10 years old, until they started having major engine problems. Both of ours had upwards of 150,000 miles on them. I was actually really nervous about buying a car because of the current state of the economy in terms of the Auto World but was pleasantly surprised in the end.

Re: Repossessions On Cars Are Exploding

iced — Thu, 22 Dec 2022 21:33:05 GMT

@Horseshoez wrote:
@RSX wrote:
to me it is simple math
buy a car that is less than 50% of your Annual Income - as you make more money, (200k+) this % should keep dropping lower

a car/truck that is equal to or more than your Annual Income will hurt you every day -regardless if you ultimately make all the payments and own it at the end
While I tend to agree, there are folks who feel the need to advertise their wealth, hence folks up in the $200,000+ category buying some seriously expensive hardware.

All the 8-9 figure net worth people I know drive <$100k cars (and several are less than $50k); it's the salespeople and realtor type personalities who think they have to show success to succeed who drop the insane money on more expensive offerings.

I'm well above the $200k income threshold and my car would trade-in for ... *checks KBB* ... $4,800. In this market.

Re: Repossessions On Cars Are Exploding

Horseshoez — Thu, 22 Dec 2022 21:45:12 GMT

@iced wrote:
I'm well above the $200k income threshold and my car would trade-in for ... *checks KBB* ... $4,800. In this market.

Agreed, I'm somewhere north of $200K as well; I just bought my first nice new vehicle in 20 years, and even still the MSRP was under $50,000.