Car loan defaults rise with gas prices

[powayseller]

The NY Times writes that car loans made by banks have default rates up 3%, while the subprime borrower (loans made by dealer) default rate is up 9%. The problem: dealers made loans several years ago in which they rolled the money owed on the traded-in car, into the new loan, and extended the payments for 6 years. Loans were too long, had too much debt, and were made to subprime borrowers, and now gas costs are up.

QUOTE
Before the new round of gas pump gouging ahead, motorists during the July 4 holiday week were already shelling out an extra $386 million a day on gasoline that they didn’t have to spend in 2003, said energy analyst Peter Beutel of Cameron Hanover.

“I don’t know where this extra $386 million a day is coming from,” he said. “It’ll have to start showing up somewhere in the economy.”

Market watchers think it will start showing up in defaults on credit, particularly car loans. END QUOTE

[VCJIM]

I’m waiting a bit to buy my new car 🙂 Used, of course! The listings for the car I want to buy (Audi A6) on cars.com and autotrader are increasing, just like houses. I just hope my old car can hold up a little longer…’91 Lexus LS400 with 213K miles!

[novice1027]

213K? Better get a bike for back-up, lol!

[VCJIM]

I know it’s nuts…I’m just so picky. The funny thing is I have all the money from my house sale where I had almost 100% equity. But I want to be smart with it, not waste it on a rapidly depreciating asset like a new car (or currently priced house). So I’m waiting for a bit more desperation in the marketplace. I drive a whopping 1 mile to work, so my mtn. bike can get me through in a pinch!

[novice1027]

Good thinking! Instead of being like me and fullfilling my midlife crisis and buying the GT mustang right before gas prices went throught the roof. Now I drive with my windows down tying to conserve gas!!
Can I borrow your bike?

[VCJIM]

No but you can have my Lexus when I’m done with it! My bike is worth more than my car.

[speedingpullet]

If you can hang on until next year, Daimler-Chrysler are planning to import these into the US:
http://tinyurl.com/a73k8

They’re already huge in Europe, where gas is typically $5+ a gallon.
Cute, and well over 30mpg too.

[yooklid]

well over 50….

[speedingpullet]

Woopsie, my bad 🙂

Still, even better, then.
I’ve actually heard up to 100mpg, but I believe that’s with the UK gallon, rather than the US one.

Once my 1997 70K miles Nissan Sentra has finally gone to the Great Scrapheap In The Sky, I’m definately looking into buying one myself. I’d even consider importing one from the UK if it wasn’t too ridiculously expensive.

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