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Take Out A 7 Year Car Loan To Buy Stocks, CNBC Experts Advise
In what can only be described as a wanton display of absurdity, CNBC dedicated not one, not two, but three segments (and those are just the ones we noticed) to subprime auto lending on Wednesday producing, in the process, three of the most hilarious clips in recent memory.
There was Phil Lebeau with the latest numbers from Experian which show that average monthly payments hit a record high in Q4 at nearly $500 and the average amount being financed is up 4% Y/Y to nearly $24,000. It gets worse. Fully a quarter of new car loans carry terms of at least 73 months. That may sound bad, but Experian’s director of automotive finance Melinda Zabritski — the same Melinda Zabritski who last month said we are looking at a “remarkably stable automotive-loan market” — isn’t ready to pass judgement quite yet. "I haven't quite made up my mind on 84 month loans," she noted, although she did say she is “concerned.”
We also got a classic interview with AutoNation CEO Mike Jackson who notes that if you include leasing (which is of course different from buying, but why quibble over the details), loan terms are actually only 56 months. The rest of the clip can be summed up in three words: “Trucks, trucks, trucks.”
We saved the best for last. Watch below as Bill Griffeth and Kelly Evans host WSJ’s Jonathan Clements and Premier Financial Advisors’ Mark Martiak for a discussion on what we’re calling the car-stock arbitrage wherein you are (literally) encouraged to take out a 7 year loan with a rapidly amortizing asset as collateral in order to buy stocks.
Enjoy.
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Depends on how much he was spending for fuel prior, electricity prior, useful life of solar panels and car life, maintainance costs,replacement costs, interest rates, etc etc... Interest rate/opportunity costs of other investments? Lots of variables...
I can beat that Mark Martiak. Why not have everyone go buy a high end luxury car they can’t afford and finance that, then they can buy even more stocks.
No wonder Ferraris and Bentleys are selling so well.
Self regulating? My ass, the financial industry is going to find a way to blow itself up again no matter what.
The auto business is so great that the Autonation near me closed down. I guess they made so much money they decided to retire early.
30 years ago when I still lived in the Useless Snakes, you could only get a car loan max of 60 months. and the bank or credit union would hold the title until the car was sold and loan paid off.
You couldn't just get a loan and tell them it was for a car. The check had to be made out to the car dealer.
Doesn't it work that way anymore over there?
It does. 72 and 84 month loans are now avalable, though. If you want a motor home or travel trailer you can go to 120 months. Just be prepared to pay more interest. And yes, titles are held by the lien holder.
"How about take out a tripple mortgage and car loan ... go buy gold, move to other country and flip them the bird when they come asking for their money."
Exactly! The bankers end up with crap and you end up with assets.
I know a guy who did that 27 years ago. Applied for lots of credit cards. Bought a few small items, made minimum payments. Ask for a limit raise. did that will all the cards and then one day in one fell swoop maxed them all out and even the airline ticket and left the country.
Of course he had another nationality, so it was no problem.
US banks can't do shit about it.
He gave them all the finger.
dutch how many nigerians do you know?
That's what caused a lot of the problems here. It used to be that companies treated people really fairly. When they opened the flood gates to foreigners from everywhere, particularly students, they would come here and not honor any of their contracts, en masse. Not fair.
We had a guy in my college dorm back in the 70's that did this. The community phone would ring all the time from bill collectors looking for him. Everyone assumed that he scammed back to Thailand...
More more more more more...must have more. More of everything. Buy buy buy buy buy... Whatever.
Auto loans? Considering the used car market is a racket (everyone wants $$$ for junk)...a lot of people I know have just bought new cars...and even those are overpriced. A 4 wheel drive extended cab with just the basic options will run you $40K these days.
stud, buy used- if you look you can get a resonable car at 75% of new. I pay cash - no debt. for better price in usa go to car auctions, look for low milage on cars you know well and you can do better.
China still has CNBC for assholes of the decade - buy Renminbi on billboards.
Car loans to buy stocks - bagholder line of the decade.
these guys are complete fucking morons.
car dealers around the world must be laughing too the bank.
a car is not an asset. It is a consumption item!
not only that, they lose value faster than rotting meat which means on a 7 year loan you are so far upside down on that rig you can probably mistake your asshole for a dark night.
There are only a few cars that are an 'asset' - 1964 Ferrari 275, 1955 Porsche 356 Speedster, 1967 Shelby Fastback, etc. - but those you don't drive. You lock them up in a warehouse and even then you must maintain them to keep them valuable (oil changes, workouts, insurance, climate control, etc)
Now if it were a 0% interest rate for 7 years, then, well hell, why not? but even 3% has an interest cost (and all the dealers make money on finance so real world rate is what 5-7%?) plus when you get bored after 4 years and want to trade it in the car will be worth fuck all at which point the dealer gets to have you roll up your negative equity into the new-new car loan at 10-17%. Worse, what is the warranty period on most cars? it sure as shit isn't 7 years and if you have a motor or transmission go out in year 5,6 or7 you are fucked.
This has to be the dumbest fucking advice I have ever heard of in my life. People who are stupid enough to beleive this shit deserve to get ripped off by a car dealer.
I have purchased only one new car in my life, and that was for tax purposes.
I learned very early on to buy used with cash (the "formula" I used was a non smoked in car ~ 2-3 years old, low mileage, great shape). There are plenty of these in the US.
Now, I drive a two year old Japanese 4WD diesel pickup onto which I installed a nice camper shell (poor man's SUV).
Great vehicle which I plan to drive the wheels off (figure I can get >400K miles).
Agree with all your points, above.
Buy good used for cheap, and invest the rest is better advice!
Good advice. I like smart guys.
I have spent my time with Mercedes and Audis here. Buying second hand (like new). and saving thousands.
But now I am pushing 70 and have new strategy.
Got rid of the luxury crap that nickels and dimes you to death in high insurance , taxes etc.
Last year I bought 1992 Nissan Micra (50 mpg) for 150 euros CASH on Dutch Ebay. fender was rusted but rest of car was mint condition and only 60km on the odometer. I bought a new fender, put it on., sprayed it. and new mag type wheels. it runs like a charm and the insurance is only 14 euros a month and road tax 10 euros a month.
Living LARGE here :-)
If this goes tits up I find another one for 100-200 euros. Plenty around if you look.
Best thing about this little car. It still has points, Plugs I can change myself , plus parts are CHEAP.
Ever try and fix the news cars?
You have good advice there, except, Americans don't drive shitboxes.
Yes they do LOL Did you know the German cars built here and sent to the USA are softly sprung for your shitty roads and de tuned because of your low speed limits?
& here I thought they were softly sprung for the 300+ pound fatasses sitting in them.
When I was younger, I took some money from cashing out during the first Internet bubble, bought a BMW in cash, and have had it ever since.
240,000 miles (~386.000 km) and it still runs perfectly. I do have one particular complaint. Glue, the Germans used cheap glue. I have over the years had to reglue stuff.
It came directly from the factory floor, put into a shipping container, delivered to a Los Angeles port, then delivered to the dealership. This vehicle was not "softly sprung"... But perhaps times were different then.
After that I only bought used. Got my wife one of those Mercedes SLK convertibles, but after she had a stroke while driving and damn near killed herself and totalling the vehicle, we settled on a used Ford truck that I can only describe as a land behemoth. Mainly for her protection. Cars move out of the way when it is on the road.
No Americans buy a new car and turn it into a shitbox (especially inside) within less than 2 years.
I myself go with
only buy used 4-6 years old from winter-free areas, low mileage, great shape
and it's unbelievable how many otherwise great used cars I have to reject because the interior is damaged beyond cleanup possibilities (including leather surfaces!)
A 2001 F250 Diesel with under 100k miles has probably appreciated in value to this day if you can find one.
Ummm, no. I have a 2004 with the 6.0 diesel and 110k miles. Money grubbing piece of rusty shit. As Packard used to say, "ask the man who owns one." You can have mine for 1/4 the original cost.
Billy's talking about the F250's with the 7.3 L T444E series engines, which they switched away from in 2003. My 1999 7.3 L 4x4 has 170k miles and still runs great; extra maintenance over 15 years limited so far to a water pump and a cam position sensor.
Add a very low mileage Mercedes 770K to that list.
Be carefull following the MASSES... sometimes the M is Silent...
yes i stole it...
I still have USA SS number although haven't lived there for 27 years Think I might go back and get 50k for a new ''car''. Get on plane back here and give them the finger and buy that new car CASH .
Just get a 50k car loan. Go to Vegas and put it all on BLACK at the roulette wheel.
Hell, you only live once. Worth a try.
Ford Escapes do not last 84 months. Neither do the Chevy Cruzes’ nor Cadillac. LOL
I have spent my time with Mercedes and Audis here. Buying second hand (like new). and saving thousands.
But now I am pushing 70 and have new strategy.
Got rid of the luxury crap that nickels and dimes you to death in high insurance , taxes etc.
Last year I bought 1992 Nissan Micra (50 mpg) for 150 euros CASH on Dutch Ebay. fender was rusted but rest of car was mint condition and only 60km on the odometer. I bought a new fender, put it on., sprayed it. and new mag type wheels. it runs like a charm and the insurance is only 14 euros a month and road tax 10 euros a month.
Living LARGE here :-)
If this goes tits up I find another one for 100-200 euros. Plenty around if you look.
Best thing about this little car. It still has points, Plugs I can change myself , plus parts are CHEAP.
Ever try and fix the news cars?
I have spent my time with Mercedes and Audis here. Buying second hand (like new). and saving thousands.
But now I am pushing 70 and have new strategy.
Got rid of the luxury crap that nickels and dimes you to death in high insurance , taxes etc.
Last year I bought 1992 Nissan Micra (50 mpg) for 150 euros CASH on Dutch Ebay. fender was rusted but rest of car was mint condition and only 60k km on the odometer. I bought a new fender, put it on., sprayed it. and new mag type wheels. it runs like a charm and the insurance is only 14 euros a month and road tax 10 euros a month.
Living LARGE here :-)
If this goes tits up I find another one for 100-200 euros. Plenty around if you look.
Best thing about this little car. It still has points, Plugs I can change myself , plus parts are CHEAP.
Ever try and fix the news cars?
Those Micras are basically unkillable. Enjoy your purchase my friend, and enjoy laughing at all the fucking idiots out there driving new wagons that cost them the monthly equivalent of renting a second house.
And don't tax it, €10 is basically the same as nothing. So pay nothing. ;)
When I was in the import/export business from to and from Mexico, a Mexican friend of mine, who drove hundreds of thousands of miles each year, would just replace the engine in his van every couple of years. Genius!!
I used to enjoy working on cars. Now you can't. Unless you have your own shop and the hands of a midget to get in all those tight places under the hood.
Listen here, dutch boy: here in AMERICA we drive REALLY BIG vehicles out on the ranch. I get around in a V8 Dodge 2500 crew cab pickup HEMI 5.7 L and FUCK YEAH it gets about 12mpg...I LOVE that truck....
She should have asked these clowns if this was part of THEIR investment strategy.
Haven't heard anything in a while that made me shake my head, but this sure did.
Totally mad advice !
Why do I have to borrow the money?
To prove your loyalty to the State, of course!
As a subversive I buy used cars only. Last one, three months ago, was a 98 Honda Accord, 128 k miles in excellent mechanical shape but scuffed up as owner was little old (87) lady who drove by braile it seems. Paid 1600.00. It had new everything, or near new. Struts, tires, brakes, etc. Replaced the passenger mirror as she broke it hitting "something". Figure it is good for another ten years? Umm...yes.
I remember when 60 month loans came out. I was F&I guy and was concerned at first but sheeple just ask "what is the payment"? New car prices are just plain crazy!
Keep on chasing that high yield. Like chasing the dragon...hooked!
Drive a 2003 Civic with 45 K miles, it will last forever and drives through anything. Every other house on my street is Merc, BMW, couple Big Porsches. Car is a depreciating asset so unless you have LOTS of money and want to make a statement about how awesome you are...
More sound financial advice from CNBC
The idea of a car loan I thought was that you did not have the amount of cash on hand to buy the car or truck? The loan proceeds go to the dealer who pays off part of a floor plan line?
I guess I missed something...............
A few years back I worked a contract in the Marshall Islands, TAX free cash. A colleague went back to the states with a briefcase full of cash and went to an auto dealer to buy a car, He negotiated a price down on the model of his choice and then the salesman asked him who would be financing it. My friend told me ''ME"' and put his briefcase on the desk and opened it up and said ''Here is your money''. He said the guy went ballistic.
Car dealers don't sell cars, they sell car LOANS>
now you hit on it---they are just in the debt chain--cars are secondary to the process--
Collateralize those car loans, tranche 'em up, unlimited market for all those Fed-fueled yield seekers...where have we seen this before?
the price is always higher for cash. the last 2 new vehicles I've purchased had a three payment minimum clause, before you could pay off the loan, which I did. I saved several hundred dollars, on a $15,000 loan. base model trucks
Dear CNBC,
"If I want any more shit out of you, I'll squeeze your head."
Sincerely,
Fix It Again Timmy
Someone needs a bag holder....STAT!!
It's a good thing nobody's watching.
The anchorbabes are smokin' but the 'experts' look like they were just dug out out of their graves.
Whats up with that?
Women don't watch cnbc or Mario Lopez would be working there.
there's a sucker born every day, as the saying goes. i'm a zero debt lifestyle kind of person anyways so these kinds of things always give me a good chortle. idiots.
So the three people that watch cnbc are going to take out 7 year car loans now.
I was dating a woman in Germany back in 1995. One day we passed the USA base in Heidelberg and a hooker stood outside if the gate everyday. I mentioned it to my GF and she laughed . She said , Watch her, within 6 months she will be driving a new Mercedes.
About 6 months later we happened to go past that base again and sure enough there she was standing by her brand new Mercedes. paid for CASH. We had a good LAUGH.
How you know it was paid in cash?
Oh... I get it.
It sounds like they don't understand how loans and finance work. Buying stuff REDUCES your ability to buy stocks. If you actually wanted to lever up, you would talk to the bank to get a home equity loan. You would also reduce spending to buy more stocks.
That's exactly what I'm doing right now. My spending is extremely low so I can buy stocks when the time is right. Lowering my monthly spending as much as possible means I can maximize the amount of money flowing into my investments. That's how things work when you have a regular job - your income is zero sum. Any money going to pay for a new car is money that can no longer be going to investments.
with a 7 year loan you're not really buying anything. its when you squander precious collateral, or savings that you are wasting your money. its impossible to buy stocks on credit, margin sure, but no VISA/MC, and unless you are a charter bank of the fed no ZIRP, or QE which is a mulitiplier that converts your bad assets into something better. who the hell wouldnt buy stocks with that kind of deal. the problem with the loan as i suggested before, is in the event of deflation, you are obligated to pay the full amount of something which has lost half its value, and your wages are half what they were last year, what's wrong with this picture?
Short Attention Span Theater proudly presents the following:
The Japanese real-estate market was all but dead in the mid-1990s. Deflation was holding personal income down, the stock market was falling, interest rates were already low and could not be lowered any further by the government, and very few people could afford the standard mortgage terms. To address the problems, the 100-year mortgage was introduced.
When the Japanese buy a house, they bulldoze it and build a new one.
CNBC = POVERTY PIMPS
(she was a hot anchor chick)
They should have told them to buy Bitcoin. Last Price $271
CNBC.
Watch it.
Watch it for the perfect reverse barometer of reality.
LOL
"Car is an asset that gets you to work"
Maybe those buffoons standing in line overnight to buy $300 Air Jordans are onto something?
Food is an asset that allows you to live, porn is an asset that allows you relax. Don't buy guns tho.
$300 Jordans are a good investment. They actually appreciate, unlike cars.
Didn't Netanyahu mention this 7 year loan thing at his speech to our congressional "leaders" the other day? Pretty sure he got a 7 minute standing ovation for it too. Then again he would have had the same amount of ovations if he had been speaking about his 7 year long bowel movement. Clap at whatever he says and then bow to him....
The central banksters have to stuff every crevice of society with debt until it all implodes.
Wait, I've seen this movie before...
Here's some advice: always begin from the assumption that people dispensing free advice have a personal agenda that involves taking something from you. If they are on television, then it's even easier -- do the exact opposite of what they're telling you.
Given this example, pay cash for your vehicle, and if you can't afford to do that, then ride your bicycle which will have the secondary effect of keeping you a little healthier and out of the grip of the health care extortion scheme. And instead of buying stocks, sell them. What the hell are you waiting for -- we're at all-time highs.
No Bids?... No Volume?... No Worries!... the PPT has your back. ROFL.
OT: "A knife attack Thursday that injured the U.S. ambassador to South Korea is the latest act of political violence in a deeply divided country where some protesters portray their causes as matters of life and death."
my guess hyundi or kia put a hit on him. too bad in west we still kill the serfs and leave the top people free of harm..at least this attacker got one of THEM.
Unsure how I learned it but I learned this as a kid: "If you have assets, they want them." As a kid I always had some coins in my pocket when everyone else had spent theirs, hence their immediate desire to beguile, steal or cheat me out of them.
Add to that, my internal smoke detector starts SCREAMING when some sales-type (especially financial ones) approaches me with any good or service. Denying those kind their commission is very satisfying.
Had a friend who finally caved and listened to a bank try to sell him their "products." After fluffing out their contract form, all 7 pages of it. He says, "I won't read this, but it probably says how the bank can dig into my profits deeper than usual and how they aren't liable for anything should the prnicipal evaporate....am I right?"
The bank manager just sat there...
Christ have pity! They so need you to be dumb as a bag of sticks.
CNBC expert. Now that is funny!
Fuk yeah!, stocks motor up on the seven year bitch / auto margin.... Get your free money now while the getting is good.
The roaches get active when they sense more money.
Banksters need signatures of living BEings on promissory notes. They have cash value. The notes can be hypothecated and sold, re-hypothecated and re-sold on the secondary market.
Buyer of new car registers their car with their 'STATE OF' thereby transfering lawful title to car to 'STATE OF'. In return buyer get CERTIFICATE OF REGISTRATION. All things registered are CROWN property.
there is enough overcapacity in the market for everyone to have two cars (see Bob Prechters Two Jaguar essay) but they will destroy their stock before they discount it. in the great depression farmers plowed under their crops, while people went hungry. CNBC would have been selling you those groceries on TV. you can't afford them, they're throwing them away, while they give you a sales pitch. the result of that maladjusted policy was W2, (Bernanke studied it well, and his successor is prepared to follow that path straight into hell if need be) we must not let the bankers ruin the global economy the same way they did 100 years ago. dont fool yourselves the soup lines are inside the store, with EBT cards. it all appears very civilized, until millions die for their maladjusted policy
Why screw around with an auto loan? Hell you can go down and get a payday loan every week and load up on stawks right now!
Call 1-800-HFT-SHIT
You muppets, go ahead and stand in the road. I'll get the 18-wheeler up to highway speed.
LoL. Invest the auto loan cash on the "secret" tax tips your door man or shoe shine boy whisper in your ear. Next step is to max out your credit cards an take out a second mortgage and invest that cash in options. It's time for us boring folks to get defensive, folks.
The director of a credit agency isnt sure if extending the loan terms on a depreciating asset is good or bad - statement so stupid a halfwit would blush.
as has been famously stated elsewhere: what could possibly go wrong?
"84 month loans"
Insanity!
I'm calling a top right here...with this very ZH Article
How many years can ZH and other touts cry wolf on auto, Stuudent and mortgage loans. and nothing happens. eventually youll get it right. if not 2015 then 2016 then 2017...... 2025. your message is consistant, but consistantly wrong for over 5 years now.
zh = boy that cried wolf story.
When it will be about to actually happen, noone will belive, becouse they are singing same story for years and nothing happens.
How many times in history have central banks intervened to the scale that they have in the market place to keep the bubbles from popping? How many times in history have we had direct monetary creation and injection into markets along with 0% interest rates.
you know, just when you think you have seen it all, jim cramer takes up bowel movement in public.
does anyone really pay attenttion to those morons on cnbc.
they have not been relevant for at least a decade, if not longer
Cars never go down, you can flip them for a profit in 7 years! What can go wrong?
I’m surprised Crazy Eddie Martiak missed his opportunity to suggest buying stocks on margin to make even more money.
“Just imagine, if you use your borrowed money to buy stocks on margin and the market keeps rising like it did the last seven years, you’ll be able to cash out and end up getting your entire car for free. That’s right, is said FREE!! What the hell, why not buy two cars and make even more? You can’t lose. These deals are insane.”
Well, I guess there will be plenty of product available in a few years when I go shopping for another used car that I pay for in cash...
Thanks, stupid American consumers, for volunteering to take that depreciation for me!
That is what I would like to think too. Then again, Janet Yellin or Congress will come up with a scheme to buy up all these underwater cars above market with printed money and destroy them.
Oh my God you're probably right...We really ARE in some kind of mutant capitalist/socialist Hell, aren't we?
Nationwide, there'll be 843 people working and supporting 200 million welfare recipients and 100 million 'investors'. The median home price will be 950,000 dollars, the DOW will be approaching 40,000, and I'll have to pay 75,000 in cash for that junker...
all of cnbc are ass-clowns
Same as all long only portfolio managers, same as 90% of all people workjing for banks, brokers, and insurance companies. They are all getting paid to be ass clowns whether they lik it or not.
Such is the vile, criminal, immorality hoisted upon the American populace by Wall St and .Gov.
I think I want a second opinion - what's the shoeshine boy have to say about this strategy?
Somebody needs to explain this stock thing to me, with the Fed...everybody says it's different this time except for ZH of course which like a broken clock has to be right one of these times I'd think...but I think it's like a casino, where TPTB wait until everybody has their monry on the table on one bet (up up up) before they bet in the opposite direction. So can anybody explain to me technically what is to stop the Fed or whomever from massively shorting the markets then pulling the rug out? I mean besides it probably being illegal which has obviously not stopped them before?
Go back to sleep.
1. Take on debt to buy a depreciating car asset.
2. Take on more debt to buy stocks at record highs.
3. Run with scissors, swim right after you've overeaten, have unprotected sex with prostitutes.
It's all fun and games until somebody gets hurt.
Robot factories and their owners will annihilate the consumer economy, it's good advice to invest in robot factories (as an owner not consumer).
Robot factory with the cheapest delivered price wins.
They stole this from an SCTV skit in 1979
These people just provided purposely stupid advice. I have to assume all these liars have an interest in keeping the fiat, fake, fraud, fiction, fantasy, fractional-reserve stock market farce going as long as possible.
These people are 100% disingenuous and they know it. Unfortunately, about 99% of the population don't seem to recognize scam artists no matter how many times they get burned.
This 99% should just move to Las Vegas and blow all their money in the casinos, because the odds are bad, but vastly better than the advice given on CNBC.
annie - just think with a 56 month car loan at 3% ... there will not be defaults for another 12 to 24 months... kick that can down the road. This is what the scheme is / has morphed into. They all "know" that it is the largest scam perpetrated in history ... but what are you gonna do? They have debt (mortagge, car, kids tuition) themsleves.
The are not paid to think, they are paid to march and chant the mantra... Obama...Obama... Printing is necessary... printing is necessary... Yellen is "smart" Yellen is smart". Right off of the cliff into the arms of the NWO.
See you in the backcountry.
.