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Will We Never Learn?

Tyler Durden's picture




 

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

Just Keep Dancing: Introducing The 97-Month Auto Loan

While many of us have been shouting about this from the rooftops for years now, with each passing day it becomes more clear what a terrifyingly gigantic powder keg we have created.  There is no debate that this will end in a compete financial holocaust, the only question is when and how.  As time progresses, the practices and desperation of the status quo to keep the sheeple in debt and consuming is getting increasingly insane.  We learn from the Wall Street Journal that:

The average price of a new car is now $31,000, up $3,000 in the past four years. But at the same time, the average monthly car payment edged down, to $460 from $465—the result of longer loan terms and lower interest rates.

 

In the final quarter of 2012, the average term of a new car note stretched out to 65 months, the longest ever, according to Experian Information Solutions Inc. Experian said that 17% of all new car loans in the past quarter were between 73 and 84 months and there were even a few as long as 97 months. Four years ago, only 11% of loans fell into this category.

 

Such long term loans can present consumers and lenders with heightened risk. With a six- or seven-year loan, it takes car-buyers longer to reach the point where they owe less on the car than it is worth. Having “negative equity” or being “upside down” in a car makes it harder to trade or sell the vehicle if the owner can’t make payments.

Hmmm, sound familiar?

Car makers have mixed feelings about long-term loans. They allow consumers to buy more expensive—and profitable—cars. But long loans may keep some people from replacing their cars, cutting into future sales.

I love how THAT is what they are concerned about.

Experts say there is an appetite for more risk because banks see limited downside in auto lending. The delinquency rates on car loans are near record lows, and used car values are at record highs. And if a buyer defaults, the bank can repossess and sell cars with limited losses.

Again, sound familiar?

Melinda Zabritski, director of automotive credit for Experian, said the greater availability of credit is helping the surge in new car sales. The percentage of subprime loans isn’t far below the record level of 2007, and the length of loans is growing, she said.

 

The length of loans has come a long way since Lee Iacocca, then a Ford regional manager, helped pioneer auto loans in the 1950s. He became a management star by developing a ’56 for $56 sales pitch. The idea: consumers could buy a 1956 Ford for 20% down and $56 a month. The loans were paid off in just 36 months.

Yep, we’ve come a long way alright.  All the way to a bankrupt Banana Republic run by insane, immoral and extremely dangerous oligarchs and Central Bankers.

Full article here.

 

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Wed, 04/10/2013 - 15:47 | 3433173 Ahmeexnal
Ahmeexnal's picture

Auto loans with BTC. Why not?

Wed, 04/10/2013 - 15:51 | 3433213 Cursive
Cursive's picture

@Ahmeexnal

I like this idea.  At least expressed in BTC, the cars are worth half of what they were yesterday.  Sounds fair.  Assuming you didn't own any BTC yesterday.

Wed, 04/10/2013 - 17:10 | 3433739 MagicHandPuppet
MagicHandPuppet's picture

I just had this wonderful idea.  What if we bundled a bunch of these loans together into a "product" that investors could buy shares of?  This would make even more money available for car buyers since it's everyone's right to own a car.  Then, we could have unregulated companies sell a sort of "insurance" in case those investors lost money due to some almost inconceivable hickup in the economy where more than a handful of "car owners" somehow became unable to continue paying their car loan payments.  And, to make sure nothing bad happens, we'll let the gubmint be a back stop so that, even if those insurance policies need to kick in... knowing that these insurance companies don't really have real funds to pay on all the policies all of our connected "friends" have bought - betting against the "car bubble".  This way, all of those corrupt campaign contributors... eh hem vulnerable investors get paid their due share, putting suckers... eh hem, tax payers on the hook.

Wed, 04/10/2013 - 18:24 | 3434062 Dick Buttkiss
Dick Buttkiss's picture

You mean rinse and repeat?  Great idea!

Wed, 04/10/2013 - 17:48 | 3433927 Stuck on Zero
Stuck on Zero's picture

Soon: Repo jobs openings galore.

 

Thu, 04/11/2013 - 07:50 | 3435627 fajensen
fajensen's picture

Once those bonds have been leveraged to 10^9, the "asset" underlying the bonds can never lose value, be written off or indeed be re-possessed and auctioned off. Price discovery hurts "stability" and "confidence". Right now, the best investment is perhaps to buy a piece of really dry desert where all these cars can be stored for the duration of the bonds ;-)

Wed, 04/10/2013 - 15:50 | 3433214 Groundhog Day
Groundhog Day's picture

What are the borrowing costs of bitcoins?  can i get a 1.9% APR loan

Wed, 04/10/2013 - 16:04 | 3433305 resurger
resurger's picture

It's funny how those MSM flipped on BTC, today in the morning i read that BTC has a long long long way up 

Am just wondering how many widows are there now..

BTC is a true reversal of fortune.

Wed, 04/10/2013 - 17:06 | 3433719 stormsailor
stormsailor's picture

well, it looks to me like the sheep got the shit sheared out of them in bitcoin.  but golly-gee-willikers,  its back up to 198.22 as we speak.

 

i know one thing, its been fun to watch.

Wed, 04/10/2013 - 17:41 | 3433898 TraderTimm
TraderTimm's picture

Those of us sitting in the BTC trading channel had a lot of fun trading the swings. This isn't the first time we've had this happen, and I doubt it will be the last. We're swinging back to the 180 - 190's at the moment.

I guess I could sit here and follow the old-man market, but I gave up on Bernanke and his goons a long time ago. Best of luck this coming May.

Wed, 04/10/2013 - 15:48 | 3433181 SolidSnake961
SolidSnake961's picture

bullish, dow 15000 coming by the end of the month??

Wed, 04/10/2013 - 15:50 | 3433220 Groundhog Day
Groundhog Day's picture

End of the month??  Try the end of tomorrow's trading session

Wed, 04/10/2013 - 17:12 | 3433756 rhinoblitzing
rhinoblitzing's picture

Any moar Government Reports to Leak early?

Wed, 04/10/2013 - 16:07 | 3433306 wee-weed up
wee-weed up's picture

Obama gonna buy me a new car...

and let me put it on my EBT card!

Wed, 04/10/2013 - 15:49 | 3433184 LawsofPhysics
LawsofPhysics's picture

The people of the world have gone from chains of iron to chains of debt - "winning" or as they say on CNN, "leaning forward".

Wed, 04/10/2013 - 16:19 | 3433406 centerline
centerline's picture

Course dialed in and set on autopilot.  We are going right into the event horizon.

 

Wed, 04/10/2013 - 21:32 | 3434734 SokPOTUS
SokPOTUS's picture

"Leaning Forward" = "Assume the Position".

We're all in Barry's Bathhouse now.... 

Wed, 04/10/2013 - 15:47 | 3433188 Ancona
Ancona's picture

If you need 97 months to pay off a fucking car, maybe a bycicle is a better choice for you.

Wed, 04/10/2013 - 15:53 | 3433229 angel_of_joy
angel_of_joy's picture

Bycicle loans ? 36 months maybe, for starters ?

Wed, 04/10/2013 - 16:01 | 3433278 SubjectivObject
SubjectivObject's picture

Even better: bysexcicles, so your wife can ride it too.

Peugoet Mixte.

Wed, 04/10/2013 - 16:08 | 3433330 johnQpublic
johnQpublic's picture

well, its easy enuf to spend 10,000 on a good bike

i'd have that tri bike of my dreams if they would just give me a thousand month loan on the thing

Wed, 04/10/2013 - 18:39 | 3434104 12ToothAssassin
12ToothAssassin's picture

Downvote for triathletes. I dont support competitive excercising.

Wed, 04/10/2013 - 16:01 | 3433286 RafterManFMJ
RafterManFMJ's picture

When I can get a 30 year loan for it, I'll buy a new BMW. Maybe something reaaaaal classy that announces to people I've arrived, like a 1-series.

Wed, 04/10/2013 - 16:23 | 3433425 centerline
centerline's picture

Nah, people are just behind the times.  See, you can't live in a bicycle (down by the river).  But, one of those Suburbans...

Plus, it can't get repo'd if keep moving around. And the taxpayers at large will ultimately get the bill.  The "New" American way!

Wed, 04/10/2013 - 17:28 | 3433843 Osmium
Osmium's picture

I think you are on to something there....

Wed, 04/10/2013 - 16:49 | 3433605 Uber Vandal
Uber Vandal's picture

The cash for clunkers program is looking more and more insidious, isn't it?

Destroy fully functional cars, and thier good parts, to raise the price of used cars, and parts, and/or require people to buy new vehicles.

Wed, 04/10/2013 - 17:05 | 3433710 prains
prains's picture

there's not going to be a planet in 97 months, Dark ages a comin bitchezzzz

Wed, 04/10/2013 - 17:30 | 3433847 Excursionist
Excursionist's picture

But.. but.. what about Tamika, the single mother of five?  She needs an LR4 to commute to and fro work, and to deny her the opportunity of financing one with a 97-month loan would be just plain racist!  Someone get the Rainbow Coalition to dispel the hillbilly notions I've been reading here..

Thu, 04/11/2013 - 08:05 | 3435652 backwaterdogs
backwaterdogs's picture

why? if I can get a 97 month loand at 0 to 1%....damn straight I'd finance it.  

with the anticipate value of the dollar in 97 months....seems like a nice little arbitrage, hecky in 97 months, might be able to sell that 8 yr old car for more 'dollars' than you paid

Thu, 04/11/2013 - 12:00 | 3436750 Ace Ventura
Ace Ventura's picture

They'll never give you the 97 month option at those rates. Or if they do, you're going to pay full MSRP before taxes, titles, fees, etc. Now if we go hyperinflationary you might be on to something. BUT, by now you MUST know that if that happens, you won't be able to afford groceries, much less your now 'cheaper' monthly car payment. The automakers don't care, because they can keep charging insane prices like $40-50k for a fucking 4x4 pickup truck (oooo, but its got nav and iphone gadgetry!.....and sheeple will continue to buy as long as they can eeek out that payment every month. The only way this will change is when J6P stops buying $50k pickups or $30k small/midsize cars, regardless of the loan terms.

Thu, 04/11/2013 - 20:06 | 3438899 backwaterdogs
backwaterdogs's picture

Youre probably right...tho, actually I did just buy a new f250, well under retail for 72 mo. at something less than 2%.  Could have paid cash, but bought a couple monster boxes instead...that was 4 months ago...so far it hasn't worked for me too well, but geeze money is cheap

Wed, 04/10/2013 - 15:49 | 3433196 Cdad
Cdad's picture

Deserate status quo...that pretty much sums up what is happening in equity "markets."

Wed, 04/10/2013 - 15:50 | 3433200 Tinky
Tinky's picture

Hey! I thought that my medical records were private! This is worrisome...

http://mtanga.com/Homer5.gif

Wed, 04/10/2013 - 15:50 | 3433206 Dr. Richard Head
Dr. Richard Head's picture

My regional "bank" here in Ohio is offering Car-Equity Lines of Credit, so we've got that going for us.

Wed, 04/10/2013 - 17:12 | 3433750 BooMushroom
BooMushroom's picture

Can I rehypothicate my car? If I get a used car and take out 6 equity loans on it, can I use that new cash to buy a new car? Then I can default on the equity lines, and walk away with the paid-for car?

Winning!

Wed, 04/10/2013 - 15:49 | 3433207 TumblingDice
TumblingDice's picture

Loans make people richer.

Wed, 04/10/2013 - 15:51 | 3433222 Matt
Matt's picture

Everyone knows debt is wealth. At least, everyone with a PhD in Economics from a reputable school.

Wed, 04/10/2013 - 18:41 | 3434107 12ToothAssassin
12ToothAssassin's picture

Money multiplier bitchez

Wed, 04/10/2013 - 15:49 | 3433209 tbd108
tbd108's picture

I bet Homer has a 97 month loan.

Wed, 04/10/2013 - 16:08 | 3433339 johnQpublic
johnQpublic's picture

a friend of mine who is really bad with money just bought a 2005 ford f150 on an 84 month loan

Wed, 04/10/2013 - 16:32 | 3433470 Blano
Blano's picture

An 8 year old truck with a 7 year loan?  Yeah that should work out well.

Wed, 04/10/2013 - 20:21 | 3434360 DosZap
DosZap's picture

a friend of mine who is really bad with money just bought a 2005 ford f150 on an 84 month loan

He must have been taught in Screwell in NEW MATH.

Thu, 04/11/2013 - 12:23 | 3436881 Ace Ventura
Ace Ventura's picture

LOL! But, but, ya'll don't understand! He got it for a great deal! It's only costing him $59.99 a month!!!

 

Wed, 04/10/2013 - 15:51 | 3433217 ebworthen
ebworthen's picture

Hey, why not a 20 year car loan?

C'mon GM, 20 year loan at 0.5% and the car guaranteed bumper-to-bumper for the life of the loan?

Wed, 04/10/2013 - 15:52 | 3433235 tbd108
tbd108's picture

And we know how the "old" GM warranties worked out.

Wed, 04/10/2013 - 16:01 | 3433291 Dr. Richard Head
Dr. Richard Head's picture

That's nothing.  30 years worth of car loans for all of those that rolled their car debt into their mortgage.

Wed, 04/10/2013 - 16:05 | 3433308 ebworthen
ebworthen's picture

I worked with an old-timer back in the 80's, WWII Vet.

He worked for Cadillac for 30 years after the war.  Told me how the management completely fucked the company and employees over.  Lowered quality, pushed quantity over quality, and the final insult was to raid the worker's pensions.

He said that unfortunately he was too old and in ill-health to kill the mother fuckers or he would.

Wed, 04/10/2013 - 16:10 | 3433353 johnQpublic
johnQpublic's picture

have you seen the financing it a piece at a time ads?

 

http://www.youtube.com/watch?v=sIuo0KIqD_E

Wed, 04/10/2013 - 17:46 | 3433921 Mr. Saxby
Mr. Saxby's picture

I believe it. That truly was the Greatest Generation, particularly when compared to the fucking idiots that currently make up our country. If Wall Street or the 1% had tried 1/20th of the shit they routinely get away with now, in the 50's or 60's, Washington DC would be a smoldering ruin.

 

Wed, 04/10/2013 - 19:11 | 3434214 laomei
laomei's picture

American cars are, on average mediocre with the median being absolute crap.  There are a handful which approach decent, but for the same money you can get much better.  Interiors are garbage and they just feel like a joke to drive, not to mention how fast they die, the number of problems they have almost immediately, and the fact that they maintain no value at all.

 

I actually laugh anytime someone mentions "Cadillac insurance" when trying to refer to something high end.  It's simply not.  No matter how much they blast the term around, it's just hilarious.  The only thing they have going for them is their logo, which is a pathetic attempt to look dignified.  The trucks used to be decent, but if you want a decent truck, you just get a Hilux and be done with it.  But then again, when you're going for a truck, you're not looking for comfort or nice things.  It's all the same little shitbox on wheels, typically with an oversized engine to make it "feel" like a good car, when it's actually anything but.

German cars are nice, but only on the high end.  VW is just as bad as American.  Audi is so-so once you hit the A6.  BMW is good on the 5 series and up, 3 series is fairly decent. Benz used to be pretty good, then turned to crap, and is slowly getting better again, I still see them as overrated though.

The fad-cars (mini, landrover, etc) are all crap.  Porsche is actually pretty damn good for the money.

Still, if you want a nice car that's good for the money, reliable, cheap to fix, safe and has a nice solid interior, you just get a Japanese car and be done with it.

 

Over here, it's pretty obvious where the preferences in cars lie.

Going from low to high end. (w = x10,000 RMB)

<15w (these do NOT maintain any significant value second-hand)

Chinese cars - They have gotten MUCH better, but they are still bottom of the barrel

Domestically made US and VW cars - JVs with Chinese companies, they are the next step up, but still shit.  It's really either or.  You get a shitty Jetta, or a shitty anything US... probably a Chevy or a Buick or a Ford.

Korean/Peugeot/Renault - Kia/Hyundai/Peugeot/etc, it's all the same.  Rather hit or miss for quality, but still all better than US.

15~20w (second-hand value, chop it in half)

Domestically made Japanese - Much better control in manufacture, this is the car of the lower middle class. 

20~40w

Imported Japanese - There's a premium for it, but it has excellent build quality and it keeps value.  300k spent today will still be 250k in 4 or 5 years.  Lexus also fits in here, but they are honestly quite rare on the road.  Middle-middle class.  US is trying to make some headway here, but they fail quite frankly.  Very little in the way of US imports

Imported Korean - There's a market here on the low end, but most will go Japanese.

40w~70w

Imported mid-range and domestic high-end German - Mostly Audi, Benz, BMW. This is what the mid-upper middle class likes.  This is also the sweet spot for most makers in the China market.  A6L, TT, A8, 3~5 series, X-series SUV, etc.  Cadillac and Lincoln want very much to try and win some space here, but are basically failing, because it's still crap.

70w~100w

Imported Italian - Porsche, plain and simple.  Cayenne is becoming popular, the Boxster is rather common.  

100w~200w

Other high end imports - A8L, Upper range for practical Benz, BMW 7, etc.... most of this is dominated by German cars honestly.

>200w

Imported money-pits - Lambo, Maserati, Aston Martin, Bently, Rolls, Ferrari, R8 etc. etc.  This is just pissing money away, at this level you honestly just don't care anymore and it's all about showing off.  Very much "new money" cars for those with too much to spend and not enough to spend it on.  Cars in this class range anywhere from $320k to $1m, and it's all just showing off at this point.

 

The problem for the US car industry is this: US cars are built barely better than Chinese cars and they are attempting to compete with the absolute crappiest part of the market.  By the time to get to anything approaching "good" in terms of US cars, you are relying on oversized engines to compete.  The manufacturing is backwards and focus on producing domestically to avoid the displacement-based import taxes.  However, once they hit that price point, they are competing with more efficient and far better-made Japanese imports.  Domestic vs. Import? It's a no-brainer.  For the handful of US imports that exist, due to the oversized engine displacement, the tax makes it stupid.  Why get a crappy US car, when you can get a quality German one?  The focus continues to be on driving down the price points to attempt to compete in the 20~40w range, however the engine just kills it.  They fail to understand the actual needs of the market and attempt to force the US approach of shitbox on wheels with a big engine onto the Chinese market.  Their gizmos are of low quality and break, only to further complicate matters by failing to make the required investments in storefronts for servicing.  As such, the only field of competition for the US cars in China is honestly in the sub-15w range, where they compete in the 8~15w bracket against some of the better domestics.  This also is not to their benefit.  The cars are overpriced and everyone knows it.  It takes little more than a quick glance to see that the same car overseas costs less than the domestic version (which has had many things cut out of it), and if you can even find an import version, it's non-competitive with a much better car.

Big powerful engine? For what? You won't be installing a hitch, horsepower means pretty much nothing here as long as you can reliably get to your 120km/h on the highways, more realistically 80~100ish for city driving, and with the city traffic, you'll be lucky to break 50.  It's just wasting gas.  So, what's left? Financing possibilities I guess, but Chinese are not stupid.  Chinese pay in cash to buy cars.  Cars go down in value, and financing a depreciating "asset" is absolutely retarded.  If they cannot afford it, they buy sub-10.  If they have aspirations of getting a better car later, it's second-hand or the cheapest car they can get away with while they save for a much better one.

 

As such, US cars in China are not seen all that much, and as the domestic brands increase in quality, they will see their market share gobbled up with nowhere to go.... because hey, if you can snap up a quality car for cheap with good equipment and a decent interior, why pay extra for a shitbox on wheels that's only becoming a worse and worse value?

Wed, 04/10/2013 - 19:10 | 3434203 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

I guess I misread the text initially because I thought it referenced a 97-year auto loan which would seem to make more sense.

Wed, 04/10/2013 - 15:52 | 3433223 rogeliokh
rogeliokh's picture

Barrick GOLD (ABX) down almost 9%, Amazing.. Complete Sector destroyed by Central Bank

f*ckers.!

Wed, 04/10/2013 - 15:52 | 3433236 ParkAveFlasher
ParkAveFlasher's picture

Buck Farrick.

Wed, 04/10/2013 - 16:07 | 3433320 ebworthen
ebworthen's picture

The central bankers are DESPERATE to crush any alternative to their fiat pyramid scheme.

DESPERATE.

Wed, 04/10/2013 - 16:48 | 3433598 Ghordius
Ghordius's picture

soft money often crushes "moneyness" out of hard money

it's a market phenomenon, the softer, the higher the volatility of it's concurrents

Wed, 04/10/2013 - 21:06 | 3434628 SilverSavant
SilverSavant's picture

Oh for the day when one or two, or maybe a 1000 people, with nothing left to lose, start a great new youth in asia program for central bankers and fed gov employees and leaders.

Wed, 04/10/2013 - 15:52 | 3433225 pragmatic hobo
pragmatic hobo's picture

... all these car loans will be spun into AAA securities and bought by helicopter benny for keeps. I see no problem here at all.

Wed, 04/10/2013 - 15:57 | 3433262 Winston Churchill
Winston Churchill's picture

Already are a lot securitized along with CC debt.

Wed, 04/10/2013 - 16:34 | 3433474 oldschool
oldschool's picture

Interesting.  Where is that documented?

Wed, 04/10/2013 - 19:22 | 3434255 Imminent Crucible
Imminent Crucible's picture

"Consider that in 2012, lenders sold $18.5 billion in securities backed by subprime auto loans, compared with $11.75 billion in 2011, according to ratings firm Standard & Poor’s."

http://hotair.com/archives/2013/04/04/great-news-subprime-auto-loans-up-...

Wed, 04/10/2013 - 15:53 | 3433226 Chief_Illiniwek
Chief_Illiniwek's picture
"Will We Never Learn?"

Who is this "we" you speak of?

Wed, 04/10/2013 - 16:00 | 3433274 1100-TACTICAL-12
1100-TACTICAL-12's picture

A new car to me is about 5yrs old with 50,000 mi, paid for in full with Benny Bucks. I will not participate in their game if @ all possible.

Wed, 04/10/2013 - 15:53 | 3433230 put_peter
put_peter's picture

The cars must preserve their value better than before thats the only explonation i can come up to.

Wed, 04/10/2013 - 20:40 | 3434534 Nimby
Nimby's picture

Beause used cars are in short supply (higher demand for used, more people holding onto their cars, cash for clunkers, etc) the prices on them are increasing.  So naturally banks look at the market for used cars today to determine the value of new cars tomorrow.

I can't see anything going wrong there... 

Wed, 04/10/2013 - 15:54 | 3433237 Seasmoke
Seasmoke's picture

Why everyone so negative. For most this will be a 97 mortgage payment.

/Sarc.

Wed, 04/10/2013 - 15:55 | 3433245 ebworthen
ebworthen's picture

Ron Insana and Steve LIESman toking heavily on the hopium hookah together on CNBC.

Maria joining in.  Turn on the fans!  I can't see their faces from all the smoke they're blowing!

Wed, 04/10/2013 - 16:26 | 3433444 RockyRacoon
RockyRacoon's picture

... and don't forget Paul McCulley... retired hippy from PIMPCO.   What a crew!

Wed, 04/10/2013 - 16:53 | 3433633 NotApplicable
NotApplicable's picture

WAT? He's on CNBC now? LOL

I am the walrus, koo-koo catchoo!

Wed, 04/10/2013 - 15:55 | 3433246 rubearish10
rubearish10's picture

Yeah it's screwy but the trouble I have with car loans and student loan debt is that these are not assets or securitized the way housing was/is by any stretch. So, yes, it's insane and sheeple are foolish suckers but IMO this is not where the Black Swan resides. Okay, ready for slaughter.

Wed, 04/10/2013 - 15:55 | 3433251 The Heart
The Heart's picture

The point is, ignorance is a drug many choose, rather than the life giving Light that is available.

People know what to do to stop the insanity. There are those who can make big differences before, and after the collapse. What right-up choices are made is something that burns in each persons heart now. What happens next, is for history to tell.

Wed, 04/10/2013 - 15:56 | 3433254 SubjectivObject
SubjectivObject's picture

My next cars buys (RSX's or Mazda3's) will be for less than 10 k$ cash.  My last new vehicle (2007) was 11.7 k$ cash.  I'm definitely not up with this 31 k$ loan thing. 

But the wife's pissed that I'm not dropping for even a used Juke, so life's not all good.

Wed, 04/10/2013 - 16:47 | 3433570 snakeboat
snakeboat's picture

Stay on target, stay on target!

Wed, 04/10/2013 - 15:59 | 3433269 FiatFapper
FiatFapper's picture

What happens if you sell your new car on Craiglist for cash whilst still owing money? Does the bank have the right to take the car from the new buyer?

Wed, 04/10/2013 - 16:06 | 3433318 BurningFuld
BurningFuld's picture

Yes

Wed, 04/10/2013 - 16:08 | 3433328 Bam_Man
Bam_Man's picture

You don't get the title until the loan is paid off.

You are driving "The Bank's Car" until then. Who's going to pay you for the car when you can't give them a title?

Wed, 04/10/2013 - 16:11 | 3433346 BurningFuld
BurningFuld's picture

You could sell the entire car on ebay for parts. And claim it was stolen.

Wed, 04/10/2013 - 16:20 | 3433396 Bam_Man
Bam_Man's picture

Sure, that is why they call them "Chop Shops". Break the car down into parts and report it stolen.

It is also insurance fraud - a felony - but plenty of people are doing it.

Wed, 04/10/2013 - 19:15 | 3434221 laomei
laomei's picture

If you're gonna do that, why buy? Just get a rental, chop it, sell it off, claim it lost, pay the deductible, then take the profits to buy a decent car in cash.

Wed, 04/10/2013 - 17:46 | 3433923 NotApplicable
NotApplicable's picture

Repeat after me: Dear Joe Sixpack, you will never, ever, ever, ever, EVER own an automobile again.

Wed, 04/10/2013 - 17:57 | 3433961 Diogenes
Diogenes's picture

That's leasing.

Thu, 04/11/2013 - 04:47 | 3435492 Disenchanted
Disenchanted's picture

 

 

 

"Who's going to pay you for the car when you can't give them a title?"

 

Goldman Sachs calls them "muppets."

 

Wed, 04/10/2013 - 16:01 | 3433282 HpDeskjet
HpDeskjet's picture

Nice article! But as stated WHEN does this ponzi end... It's impossible to put a date to it, it all depends on trust. The problem is that very few people really understand how the system works and from the ones that do actually understand it, most have an incentive to keep it alive...

Wed, 04/10/2013 - 16:42 | 3433526 centerline
centerline's picture

Hard to say.  I think it will start as little "fires" here and there.  Breakouts in the hood when EBT gets funny.  Protests here and there as pension funds blow up, unions get bodyslammed.  Etc.  The size, frequency and violence increasing (along with the responses) until something big pops... some sort of polarizing moment.

Wed, 04/10/2013 - 16:11 | 3433284 DutchR
DutchR's picture

NO.

Next question.

 

 

EDIT


YES.

Next question.  

Wed, 04/10/2013 - 16:01 | 3433285 Chupacabra-322
Chupacabra-322's picture

The stage is set for complete, total full spectrum World domination from The Global Elite. Understand the core reason these Criminals continue to rape, pillage and steal wealth is though Illusion/Cover. We are not THE UNITED STATES but we are The United States of America. It is not The Constitution of The United States, it is The Constitution For The United States of America. Notice the difference. Do you see the Cover/Illusion.

These Criminals have been hiding behind the Corportate version of The Constituiton. Get it? That's the Cover and the reason behind their Crimes Against Humanity and The American People. Ask yourselves, why CIA propaganda, misinfomation/disinfomation is so good? Because it works. And the Elite own the media and have it staffed with their CIA agents/Council of Foreign Relation stooges like Andersen Cooper and Dianne Sawyer. The PsyOp runs deep, very deep.

The American people can continue to stay divided and blame the puppets Obama/Bush. Like they have any say in the matter. Both parties are the same sides of the same coin, bought and paid for a long time ago by The Elite Orligarchs. These Criminals sold their souls long ago.


So, continue to follow their lies, cover stories and false narratives such as Osama Bin Laden. A convenient CIA funded and trained Operative, code name Tim Osman. Sorry, But I digress.

Divide and Conquer. That's the Elite's game. That very uncomfortable deep down in the pit of my stomach feeling you feel . I've had that very same feeling since I was a child.

Total Complete Full Spectrum World Domination.  Via The City of London. The financial location of The Banksters, which Wall Street is just an extension. They own the Military, Media and have put forth hundreds of years worth of planning to complete their goals of the aforementioned.

It began with The Fascist Patriot Act which morphed into The Military Commissions Act, John Warner Defense Act, NDAA, PD51, Torture, Illegal Wire Tapping etc..etc... You get the picture? We're dealing with pure Evil, which cannot be reasoned or negotiated with. Their goal was to break the sovereignty of The United States along with our good men and women of the Military while simultaneously ushering in their NWO protective force of Their Global Military/Police Force to protect their Corrupt system/Crimes Against Humanity. We're just their Debt Slaves. Divided and Conquered.

-Miggy

Wed, 04/10/2013 - 18:49 | 3434135 The Heart
The Heart's picture

"So, continue to follow their lies, cover stories and false narratives such as Osama Bin Laden. A convenient CIA funded and trained Operative, code name Tim Osman. Sorry, But I digress.

Divide and Conquer. That's the Elite's game. That very uncomfortable deep down in the pit of my stomach feeling you feel . I've had that very same feeling since I was a child"

Funny thing about the spins of illusions and lies; they take lots of words to cover up what is the basic truth. The heart knows truth in all languages.

The one saving graceful thing about truth is, it takes little to express what is well said in the Polished Stones of Time Immortal. They could be as simple as:

United We Stand...

Divided We fall...

Family and Community...will save us ALL!

 

Thu, 04/11/2013 - 04:52 | 3435495 Disenchanted
Disenchanted's picture

 

 

 

"That very uncomfortable deep down in the pit of my stomach feeling you feel . I've had that very same feeling since I was a child""

 

Took me about 35 years to get to that point. I guess I'm a little slow...

Wed, 04/10/2013 - 16:00 | 3433288 Richard Head
Richard Head's picture

I might have to spring for that fully-loaded, 2013 Chevy Impala, now that I can afford it under a 97-month loan!  Dealer said he'd give it to me for sticker price.

Wed, 04/10/2013 - 16:10 | 3433349 Winston Churchill
Winston Churchill's picture

Maybe you can get a Japanese bank to give you a multi generational car loan.

They did it for realty.

That way you can give your kids a bag of rust, and a Note.

Call it an ObozoLoan.

Wed, 04/10/2013 - 18:58 | 3434168 The Heart
The Heart's picture

Hello WC,

The problem with that is the banks do not loan money anymore and only hoard it as part of the plan to slowly choke America, thus weakening her and then going for the final solution of more world-war to kill off many many souls on board the planet. All for the bankster profits of course.

Why did the rockefellers move to Fiji?

"Maybe you can get a Japanese bank to give you a multi generational car loan."

No body wants the radioactive japanese cars anywhere in the world. Dock workers refuse to see them contaminate the docks in home ports.

Prolly why the riocketfellers are down in Fiji and others are jumping out of the country in mass now. They are seeking the nuklear free zones that they actually think they can escape the fallout from. Lol...stupid is...as stupid does.

Wed, 04/10/2013 - 16:01 | 3433292 Bearwagon
Bearwagon's picture

"There's garbage on the sidewalk

Highways in the backyard

Police on the corner

Mortgage on the car

Mortgage on the car"

Creedence Clearwater Revival  "Ramble Tamble"

Wed, 04/10/2013 - 16:05 | 3433311 The Abstraction...
The Abstraction of Justice's picture

Sell cars, buy silver.

Wed, 04/10/2013 - 16:11 | 3433348 Bearwagon
Bearwagon's picture

If I had any, I would consider that.

Wed, 04/10/2013 - 16:06 | 3433316 Sudden Debt
Sudden Debt's picture

FROM RUST TO cradle....

DOWNPAYMENTS UNTILL... your car hits zero resellvalue...

That's fucked up. really...

you need to sell your car at least every 4 years to get anything for it...

Wed, 04/10/2013 - 16:07 | 3433331 DutchR
DutchR's picture

But didn't you buy a €3200 bumper recently....

Wed, 04/10/2013 - 16:06 | 3433317 SmittyinLA
SmittyinLA's picture

They didn't disclose the % of ITIN* loans either

*ITIN is a SS# for illegal aliens

 

Its a great way to clear the books of old upsidedown unrecoverable car loans and pass off the new debt to the Japs to boot (You know they're financing Toyota sales) her pension fund is also investing in her car & debt rollover loan 

Wed, 04/10/2013 - 16:06 | 3433327 Frank N. Beans
Frank N. Beans's picture

what's her name now robo-signing car loans

extend and pretend baby

Wed, 04/10/2013 - 16:11 | 3433359 Bearwagon
Bearwagon's picture

Maybe Linda Green?

Wed, 04/10/2013 - 16:08 | 3433329 debtor of last ...
debtor of last resort's picture

After too much debt, debt becomes like a wage, or a foodstamp. A right to own a car, a right to consume. The rights have overthrown the duties by far, the outcome is obvious. Thatcher was a bitch, but that god damn mummie only took 30% of the supposed rights.

The world has a long way to go down bitchez. In consumables.

Wed, 04/10/2013 - 16:08 | 3433342 css1971
css1971's picture

This has to be the dumbest thing I've ever heard.

Experts say there is an appetite for more risk because banks see limited downside in auto lending. The delinquency rates on car loans are near record lows, and used car values are at record highs. And if a buyer defaults, the bank can repossess and sell cars with limited losses.

So delinquencies are at record lows and used car values are at record highs, so therefore they want to take more risks...

Can we have the death penalty for stupidity back please? All this safety campaigning has to stop. No seatbelt legislation, no safety at work legislation, no gun legislation, no drink driving legislation.

Wed, 04/10/2013 - 16:19 | 3433400 DutchR
DutchR's picture

"This has to be the dumbest thing I've ever heard."

 

Look Ma No Hands

Wed, 04/10/2013 - 16:09 | 3433344 johngaltfla
johngaltfla's picture

Still better than the 100 year mortgages. Coming here soon to keep this bubble going.

Wed, 04/10/2013 - 17:00 | 3433672 rhinoblitzing
rhinoblitzing's picture

I'll take two!

Wed, 04/10/2013 - 16:11 | 3433347 wisefool
wisefool's picture

In my area, the bankers are making good money financing land for the car dealers to display more inventory on. We live in a brave new world.

Wed, 04/10/2013 - 16:12 | 3433361 resurger
resurger's picture

Why can't we pay $1 per day for the next 100 years.

Wed, 04/10/2013 - 16:13 | 3433364 marcusfenix
marcusfenix's picture

why would you even consider a loan that long?

you end up paying 50k for a 30k car who's blue book value by the end of loan is only 5k,which means you might get 1k trade in value...that's all if you survive to the end of the loan, which is not a certainty if your being offered such terms in the first place. 2 years in you get repo'd and now you've not only got no ride, but you also still owe the bank a shitload of money.

why in the hell would you do that?

I think I'll just keep rolling around in my beater, the idiots who sing on to this type of stupidity are welcome to there status symbols.

Wed, 04/10/2013 - 16:28 | 3433448 wisefool
wisefool's picture

<sarc> The answer to "why in the hell would you do that" is because you can write the $60k off your taxes, drive it to work and claim it as a business expense.

Wed, 04/10/2013 - 16:31 | 3433457 RockyRacoon
RockyRacoon's picture

There are 0% and 1% loans out there.   At any rate, don't get caught in a Rule of 78s loan.

Wed, 04/10/2013 - 16:42 | 3433530 Bobportlandor
Bobportlandor's picture

And add in maintenance and Insurance.

What I see is a hell of a lot of cars, that just so happens runs off a cliff while parked.

 

Wed, 04/10/2013 - 16:13 | 3433368 ebworthen
ebworthen's picture

Classic.

Sam Zell on CNBC making Maria Bartiromo blink.

Zell:  "The stock market now is like the housing market was in 2006."

Bartiromo:  <blink-blink> "That scares me what you are saying."

Zell:  "Well, all you hear and what you talk about each day is the market going up and up, all time highs, which is what the housing market did back in 2006."

Bartiromo:  <blink-blink>

Wed, 04/10/2013 - 16:14 | 3433375 Smuckers
Smuckers's picture

It's all about cash flow....the lower the cash on hand, the longer the flow needs to run.
It's so nice that they are accommodating our poverty situation.

/sarc

 

Wed, 04/10/2013 - 16:14 | 3433377 Debt Slave
Debt Slave's picture

I own 2 cars, both of them running in good shape and paid for. Never had a car loan, never will.

Wed, 04/10/2013 - 16:14 | 3433380 Silversinner
Silversinner's picture

If your car is your home,this isn't such a bad deal right.

<s>

 

Wed, 04/10/2013 - 16:21 | 3433411 Frank N. Beans
Frank N. Beans's picture

not until they foreclose

Wed, 04/10/2013 - 16:58 | 3433636 rhinoblitzing
rhinoblitzing's picture

What if you drive the car to Mexico and points south and don't come back? (while your spending your SSI in Costa), Or  just get your Path to Citizenship papers for all your family to get a new car and sell it back "home".

Wed, 04/10/2013 - 16:20 | 3433408 BinAround
BinAround's picture

More credit is fuel for a bull market.  Enjoy it while it lasts.  Try to make some money.  This is another cycle, and we are not near the end of it.  Play ball.  For those that have missed the point of investing, it is to not be poor.  If you are poor but proved correct in 20 years you have still lost the game.  But I'm sure your dog will still love you.     

Wed, 04/10/2013 - 17:35 | 3433869 Tenshin Headache
Tenshin Headache's picture

That works for as long as credit is created faster than it is destroyed. There comes a point where this is no longer possible, when the amount to be created first strains and then completely breaks all credulity, and that is the end.

Wed, 04/10/2013 - 16:23 | 3433424 Yen Cross
Yen Cross's picture

     8 year auto loans.  I wonder when they're going to start doing reverse mortgages on payed off used cars? We're officially in the matrix.

Wed, 04/10/2013 - 20:31 | 3434498 Nimby
Wed, 04/10/2013 - 16:25 | 3433441 just_askin
just_askin's picture

Historical perspective from Uncle FRED: http://tinyurl.com/btzs7xz

Wed, 04/10/2013 - 16:27 | 3433453 adr
adr's picture

You guys don't understand, IT'S CALLED THE RENT-A-CENTER PRICING MODEL!!!

Sell a $600 TV for $25 a month for 72 months.

Damn, bitch, I just gots me a fitty inch flatscreen for $25 a month, for $35 a month they threw in a laptop. Fuck, they gots some damn fine home theeter seats wit cupholders. Only $15 a month mo. Fo fitty bucks I gots me a whole home theeter. Jamal gonna be jealous.

Signed dat contract fo $50 a month fo 72 months, shit, I can affo'd $50 a month with my EBT. Shit, I can affo'd $250 a month easy, maybe I gets dat hot tub too, damn fine BBQ grill.

Wed, 04/10/2013 - 16:31 | 3433460 Bearwagon
Bearwagon's picture

And some iCrap!

Wed, 04/10/2013 - 16:38 | 3433510 ncdirtdigger
ncdirtdigger's picture

And some Sudafed and a two liter Dr Pepper. Shake and Bake brother!

Wed, 04/10/2013 - 16:36 | 3433490 sbenard
sbenard's picture

Calamity is certainty. Plan and prepare accordingly!

Wed, 04/10/2013 - 16:36 | 3433494 misnomer
misnomer's picture

You know, it gets harder and harder to teach your kids fiscal responsibility when debt peddlers are throwing loans out like a groupie throws her panties to the band (not like I know anything about that...really)

I bought my last car for cash at an auction.  Meanwhile, my kids ask why we drive a 97 Toyota Camry, while his friend gets driven around in a brand new Chevy Camero.  I just tell him, I own this car, and the bank owns his friend's parents car.

I can tell he still wants the Camero tho.  It's a battle to keep my kids grounded in reality, while everyone else is signing their lives away and driving shiny new cars, and living in over-mortgaged houses.  Sigh....

Wed, 04/10/2013 - 16:45 | 3433553 1100-TACTICAL-12
1100-TACTICAL-12's picture

@ misnomer.. I feel you brother same thing here.. We prevail in the end .

Wed, 04/10/2013 - 18:26 | 3434072 chubbar
chubbar's picture

Not completely sure that "misnomer" is a "brother", given some knowledge about throwing "panties" to a band. Just sayin.

Wed, 04/10/2013 - 16:42 | 3433533 hannah
hannah's picture

does everyone understand the real reason we have 97mth loans....?........when the illegal aliens we gave the loan to go back to mexico and sell the new car and never pay the loan, the banks have 97 months before they have to book a loss.

 

this isnt about the poor...it is about the banks.

Wed, 04/10/2013 - 16:54 | 3433629 tbd108
tbd108's picture

And to keep the car manufacturers from shutting down (channel stuffing with an interesting twist).

Wed, 04/10/2013 - 16:51 | 3433568 rhinoblitzing
rhinoblitzing's picture

No Problem... Sounds great! - Buy moar GM (and AIG while your at it) We can print more money and... it won't cost the (taxpayer)  buyer "a single dime".

Semantics; it's not what you pay or say, It's all a matter of context. Notice... no dimes involved...

And I can't begin to tell you how much confidence and trust I have in _______________

Wed, 04/10/2013 - 16:50 | 3433611 Miffed Microbio...
Miffed Microbiologist's picture

We've run the numbers time and time again and it has always been cheaper for us to drop a new motor or new transmission in a car than buy new. Around 250,000 and 300,000 miles and we consider buying new. If people would consider the cost of ownership rather than just the car loan they'd open there eyes. Insurance, license, taxes ( at least in Cali) are astronomical on a new car. In the past we saved every year some money to buy our next car in cash. Thanks to Bernank's inflationary policies, we are unable to do this any more. I'm sure he would like us to join the debt club and stimulate the economy but we chose making our cars last longer instead. Sorry Ben.

Miffed;-)

Wed, 04/10/2013 - 17:00 | 3433687 rpboxster
rpboxster's picture

A financial reporter on the radio yesterday talking about 8yr car loans said this is a sign that the economy is improving.  CBS radio, WSJ reporter.  wtf?!

Wed, 04/10/2013 - 17:08 | 3433727 Mototard at Large
Mototard at Large's picture

Hey ZHers,

 

As a former risk manager for a certain large financial entity (of a central orientation) , I am going to be writing a book about savers and takers.  Please don’t be shocked if I say it will be critical of certain aspects of our current financial system. 

 

The general outline of the book will be that an upcoming struggle is emerging in civil society.  It will be between those who have money but lack the political and financial power to defend it, and those who have the political clout to take it. 

 

The savers and the takers.

 

This will happen because the capitalist system has been turned into a financialist system. The economy is no longer served by the banks and financial institutions.  We are now at a point where the banks force the economy to serve them.  Those who benefit are the financial class, their servants in the political class and the large international organizations such as the EU, the IMF and the World Bank.  Those who suffer are the rest who are trapped in the system and cannot find the means to escape it – but they do have small amounts of saved money or equity.

 

Who are the savers? In short, it is those people who look to their own future and have taken decisions to set aside “value” from today and hold it for use tomorrow.  This includes those with savings deposits, pension funds (401K, RRSP, ISA etc) and those who have equity in their homes. It also includes those who hold small physical amounts of precious commodities such as silver, gold and palladium.

 

The takers are those governments with unsustainably high debt levels and high levels of unfunded future liabilities. In cooperation with them are the major international banks that have over leveraged themselves as well as supra-international institutions such as the EU.

 

This meme – savers and takers – will shape much of the political and economic discourse over the next few years.  The existing examples of where this has occurred have been Greece, Spain, Ireland and Portugal.  How this all plays out is not clear, but there are lessons to be learned about the limits of the individual and potential social unrest. 

 

You can see the rest of an article which describes the outline of the book at: http://tinyurl.com/dxsqjbe

 

or at

 

http://economicsfortherestofus1.blogspot.ca/2013/04/savers-and-takers-new-fault-lines-and.html 

 

If you have any comments, ideas or whatever, feel free to leave comments and I will try and answer them.  Send the URL to friends if you think this is a worthy project.

 

The Honest Ex-Banker

Wed, 04/10/2013 - 20:27 | 3434490 Nimby
Nimby's picture

The bankers can steal my money by printing more (literally or digitally), but how can they steal the value of precious metals held in physical possession?

Wed, 04/10/2013 - 17:16 | 3433780 Pseudo Anonym
Pseudo Anonym's picture

i have a name for these characters

a bankrupt Banana Republic run by insane, immoral and extremely dangerous oligarchs and Central Bankers.

hofjuden and shtadlans

Wed, 04/10/2013 - 17:21 | 3433795 nqs_alpha
nqs_alpha's picture

This is how it sounds like if we just replace 'car'with 'home' (auto with housing, ...):

(...)

Such long term loans can present consumers and lenders with heightened risk. With a six- or seven-year loan, it takes home-buyers longer to reach the point where they owe less on the home than it is worth. Having “negative equity” or being “upside down” in a home makes it harder to trade or sell the home if the owner can’t make payments.

 

Hmmm, sound familiar?

 

home builders have mixed feelings about long-term loans. They allow consumers to buy more expensive—and profitablehomes . But long loans may keep some people from replacing their homes, cutting into future sales.

I love how THAT is what they are concerned about.

 

Experts say there is an appetite for more risk because banks see limited downside in auto lending. The delinquency rates on home loans are near record lows, and used home values are at record highs. And if a buyer defaults, the bank can repossess and sell homes with limited losses.

Again, sound familiar?

 

Melinda Zabritski, director of housingcredit for Experian, said the greater availability of credit is helping the surge in new home sales. The percentage of subprime loans isn’t far below the record level of 2007, and the length of loans is growing, she said.

(...)

SCAARY

Wed, 04/10/2013 - 17:44 | 3433912 thisandthat
thisandthat's picture

We have 50 year home loans, if you're interested...

Wed, 04/10/2013 - 20:21 | 3434474 Nimby
Nimby's picture

People live longer, cars last longer.  What's the problem?
It gives people greater opportunity to consume more today, and banks to get a greater spread.
Happy days indeed!
So long as gas doesn't skyrocket and Obamacare cause the average life expetancy to drop 20 years, we're good. 

Thu, 04/11/2013 - 13:36 | 3437033 thisandthat
thisandthat's picture

The problem? If you start paying at 18, you'll finish at 68, past retirement age... at the same time, house is guaranteed only for 5 years... in the mean time you have to pay for all the repairs past that time, compliance with whatever regulations, taxes, insurance, if you don't want to risk ending up paying for rubble - you name it... and you'll end up paying god knows how much more than the asking price. To top it all off, you likely won't be able sell it, even if you could, because everyone else will also still be stuck with paying their own; and because of that you won't be able to take a job across the country, even if unemployed, because you just can't afford nor to "commute" every day nor relocate (not to mention your family) and pay the two locations; which is why there may be (there are) unfilled open jobs at one place, while at the same time there's rampant unemployment in the same line of work. That's pretty much it, but don't take my word for it...

Wed, 04/10/2013 - 17:45 | 3433918 exartizo
exartizo's picture

Not sure why anyone is surprised at this Tyler(s).

The only way the homey who lives on the street can get into a new Mercedes or BMW is with a 97 month loan.

He doesn't have a place to live, but he has no trouble getting a sleeping bag for the back of his 328i.

No worries as long as he makes his payments.

Wed, 04/10/2013 - 18:31 | 3434086 lotsoffun
lotsoffun's picture

i'm a star in the nba.  i'm not a homey no mo'

 

Wed, 04/10/2013 - 17:48 | 3433931 Handful of Dust
Handful of Dust's picture

The 100-year zero down, zero interest house loan is around the corner. No joke.

Wed, 04/10/2013 - 19:40 | 3434302 Miffed Microbio...
Miffed Microbiologist's picture

I think they had multigenerational mortgages in Japan. Sure worked out well for them

Miffed;-)

Wed, 04/10/2013 - 17:56 | 3433951 Hobbleknee
Hobbleknee's picture

In Sweden they have infinite mortgages.  In fact, the average mortgage term is 200 years.

Wed, 04/10/2013 - 19:02 | 3434187 GubbermintWorker
GubbermintWorker's picture

Wow! Really? At what interest rates?

Wed, 04/10/2013 - 18:03 | 3433985 q99x2
q99x2's picture

House boats. I wanna houseboat with a 30 year fixed rate in Marina Del Rey.

Wed, 04/10/2013 - 18:06 | 3433999 DonGenaro
DonGenaro's picture

we've come a long way, baby !:

http://www.youtube.com/watch?v=cQZAGL2M_Us

Wed, 04/10/2013 - 18:06 | 3434001 Diogenes
Diogenes's picture

I like interest only mortgages. I'm collecting payments on a few now. When the balloon payment becomes due I renew them, if the borrower has been good, and if they pay the renewal fees.

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