94% Of April Consumer Credit Goes To Student And Car Loans

Tyler Durden's picture


Remember when, many years ago, the inflection thesis was that once a pick up in consumer lending is seen for discretionary purchases (i.e., revolving credit) that would be the sign that normality is coming back. Explaining why some may have forgotten this is that for the past 4 years it never actually happened for two simple reasons: i) consumers are still very unsure about the centrally-planned economy and thus still deleveraging (and defaulting) on their existing debt obligations, and what little savings they have are the preferred source of purchasing power, and ii) banks still have to open up the lending spigots which they won't as they have better returns investing in the stock market rather than taking on NPL risk in exchange for a record low NIM. However, while revolving credit is still dead, non-revolving credit - funded by a very generous Uncle Sam - and whose proceeds go to car purchases and to pay tuition (and all associated other goods and services) has never been stronger.

Sure enough in the latest month of data, April, the Fed just disclosed that of the $11.1 billion in crease in total consumer credit, only 6% was in revolving credit. The balance, or $10.4 billion, was non-revolving, and thus was used to pay for that new Chevy Impala and/or "Keynesian Shamanomics 101 for Dummies." And of course, all was funded by the US government.

Revolving vs Non-revolving:

LTM consumer debt by Revolving vs Non-revolving:

And sources of credit:

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Fri, 06/07/2013 - 15:22 | 3634897 francis_sawyer
francis_sawyer's picture

Is there a college course on how to get a car loan?... Could crack the TOP 20 on the other thread...

Fri, 06/07/2013 - 15:49 | 3634999 otto skorzeny
otto skorzeny's picture

How fucking stupid does a person have to be to spend $45k on a 2014 Chevy Impala Shitbox and take out a 72 month loan to buy it with? Evidently even the most basic of economics is not taught.

Fri, 06/07/2013 - 15:52 | 3635022 NotApplicable
NotApplicable's picture

Poor, poor Visa. If it weren't for the fact that all credit cards are now variable rate, they wouldn't have a leg to stand on.

I'm just trying to figure out the mechanism that will allow the prime rate to climb within a ZIRP environment. (well, other than outright fraud, that is)

Fri, 06/07/2013 - 15:54 | 3635026 francis_sawyer
francis_sawyer's picture

For $45K I could start my own garage & start pumping out "Classic Impalas" with enough switches to toss backseat hoes around like flapjacks...

Fri, 06/07/2013 - 16:00 | 3635037 Divided States ...
Divided States of America's picture

The 'smart' way NOWADAYS to utilize 45k is to plow it into 450 shares of TSLA at 100 bux a pop....let it ride VROOOOM VROOOOOOM...and then wait 3 months and dump at 300 bux a pop and use the proceeds to buy one.

Fri, 06/07/2013 - 16:03 | 3635061 Stuck on Zero
Stuck on Zero's picture

You take out a loan to buy a fast car so you can get to school faster (for which you borrowed the tuition).


Fri, 06/07/2013 - 15:23 | 3634903 Divided States ...
Divided States of America's picture

There is a silver lining that the Algos would love in this headline...at least its not CAR LOANS taken out by JOBLESS STUDENTS!  = BULLISH! BUY BUY BUY

Fri, 06/07/2013 - 15:27 | 3634920 101 years and c...
101 years and counting's picture

"CAR LOANS taken out by JOBLESS STUDENTS"  oh great. im sure some genius will pick up on this and start offering car loans and no pay until after you grauate with that degree in watching midget porn, aka SEC qualifying school.

Fri, 06/07/2013 - 15:23 | 3634910 tarsubil
tarsubil's picture

Degrees to qualify for jobs that don't exist; transportation to get you there. This is the craziest shit ever.

Fri, 06/07/2013 - 15:30 | 3634928 noob
noob's picture

so far... (but wait, there's more) :)

Fri, 06/07/2013 - 16:41 | 3635194 Doubleguns
Doubleguns's picture

Look for the white rabbit.



Fri, 06/07/2013 - 15:31 | 3634923 ZerOhead
ZerOhead's picture

94% Of April Consumer Credit Goes To Student And Car Loans

Hmmm... Hot co-eds and sports cars!

Makes sense actually... if everything is going to go into the shitter anyway might as well enjoy the remaining golden moments while they last...

Fri, 06/07/2013 - 15:54 | 3635027 NotApplicable
NotApplicable's picture

The other 6% went for gas and insurance payments.

Fri, 06/07/2013 - 15:29 | 3634925 jubber
jubber's picture

Gold & especially Silver absolutely destroyed ...

Fri, 06/07/2013 - 15:31 | 3634930 Rainman
Rainman's picture

Subprime flashback.....nobody learnt nuthin'.

Fri, 06/07/2013 - 15:33 | 3634935 Richard Whitney
Richard Whitney's picture

What should the percentages be? If your only debt is a car loan which you carry comfortably, your percentage is 100% car loan, but what does that mean?

Fri, 06/07/2013 - 16:43 | 3635205 Hohum
Hohum's picture


A new car loan is borrowing money to buy a rapidly depreciating asset.  It's stupid from the get go.

Fri, 06/07/2013 - 18:51 | 3635586 lotsoffun
lotsoffun's picture

not when it's zero percent financing - and you know you are NEVER going to pay back a cent of it!

and you will still be able to go and borrow again, as soon as they finally reposess the car.


Fri, 06/07/2013 - 15:41 | 3634968 pods
pods's picture

Our war on FIAT is working.  Sallie is cracking so the student loan bubble is gonna pop.

Now if we can work on car loans we can surely end this debt-ponzi nightmare!

Stay positive folks, we are winning.


Fri, 06/07/2013 - 15:45 | 3634984 ebworthen
ebworthen's picture

Another debt bubble?

Nah!  Couldn't be!  It's fun-duh-mentals.

Fri, 06/07/2013 - 15:52 | 3635016 q99x2
q99x2's picture

See the economy is improving. Now if they would just let buy my house with student loans everything would be back to normal

Fri, 06/07/2013 - 15:53 | 3635023 sunnyside
sunnyside's picture

So if I took out a student loan and used the money to buy a Chevy Volt do I qualify to get a job at the Fed?

Fri, 06/07/2013 - 15:56 | 3635033 NotApplicable
NotApplicable's picture

Only if you crash it in order to demonstrate that you understand the concept of "sopping up liquidity."

Fri, 06/07/2013 - 15:58 | 3635043 francis_sawyer
francis_sawyer's picture

only if you can type 'Ctrl+P' at 120 words per millisecond...

Fri, 06/07/2013 - 16:22 | 3635131 wisehiney
wisehiney's picture

Which ZHer said that he bought either coke or silver on Fridays. I'm guessing today is good for both?

Fri, 06/07/2013 - 16:46 | 3635214 MFLTucson
MFLTucson's picture

Car companies have loans for recent graduates even if not working.  This is growth?  I can't believe what I am reading!

Fri, 06/07/2013 - 17:46 | 3635415 Oldwood
Oldwood's picture

I'm opening an advanced driving school. Maybe something that specializes in texting while driving or such. Then I can take advantage of school loan and auto loan trends. It a win-win!

Fri, 06/07/2013 - 21:32 | 3636045 DriveByLurker
DriveByLurker's picture

I am in awe of your genius.  You, sir, are going to be at the helm of this fall's hottest IPO.



Fri, 06/07/2013 - 23:06 | 3636302 Peter Pan
Peter Pan's picture

The whole process could have been so much more efficient if they gave every student a combined education/car loan.

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