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Will We Never Learn? Subprime Auto Loans Accelerating (Again)

Tyler Durden's picture


It is remarkable that we greedy ignorant short-term-focused human beings never seem to learn that driving forward and looking in the rear-view mirror can only end in disaster. Forget 'dancing while the music plays' or other such 'defenses' of herd ignorance, the most recent data regarding Auto Loans is simply mind-blowing:

  • Subprime borrowers received 56.46 percent of loans on used cars in the quarter, up from 52.70 percent a year earlier.
  • The average loan-to-value on new cars was 109.55%
  • The average used car loan-to-value ratio rose to 126.62%
  • 77% of Subprime Auto Loans are for a period greater than five years

As Yahoo notes, citing some monkey, "Despite the rise in subprime loans overall, there is still a strong sense of managing risk. Because the overall lending environment has improved, lenders are making loans available to a wider range of customers."


Via S&P Auto Loan ABS report:

So not only are the auto manufacturers stuffing the dealer channels full of inventory (and choking off supply - a la Chevy Volt), they are so desperate once again to get consumers spending that they will give credit to anyone - with the defense that defaults HAVE BEEN low. I hope the reader can sense our incredulity that once again this complete and utter lack of understanding of the loan business cycle by supposedly intelligent individuals who are more than willing to offer credit (and on the other side - accept huge debts for short-term living standard improvements). </rant>


Perhaps not so surprising - sure enough - (h/t Andrew P) - Auto ABS are weakening already... As Santander and Honda's Auto ABS see annualized losses rising...


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Wed, 09/05/2012 - 12:11 | 2764700 Haager
Haager's picture

Why learn? There will be a bailout If TSHTF.

Wed, 09/05/2012 - 12:29 | 2764748 TruthInSunshine
TruthInSunshine's picture



"Hi Folks, this is Timmay 'The Runt' Franz at Geithner Motors, inviting you to come on down and lease this beeeeautiful new 2013 Chevrolet Volt for $0 down and just $199 a month.


Or how about this 2013 Silverado Crew Cab 4x4, for $0 down and just $189 a month?


No credit? Bad credit?

A string of multiple recent bankruptcies?

Just did a long stretch for felonies involving passing bad checks & other bearer instruments?

FICO score of 412 or less?



Our helpful lender, Ally Financial, will have representatives on site to service all of your financing needs!


But act quickly, because these hot deals for deadbeats will only be good through November 6th!!!"


[Cheesy Jingle]  

We know you'll be blown away...

   By the everyday savings you get... Timmay Geithner Chevrolet!


[voiceover] Next to the Piggly Wiggly on Route 4

Wed, 09/05/2012 - 12:30 | 2764780 Precious
Precious's picture

Do junkies ever learn anything from their addiction?

Wed, 09/05/2012 - 12:50 | 2764799 Manthong
Manthong's picture

Going out and getting a nice $ 30,000.00 no-interest loan and shiny new GM car can enhance one’s esteem and feeling of self worth. Additionally, it serves to improve the economy and community by increasing business.

And even if you are a slug and default, you are contributing the debt balloon Ponzi and creating opportunity for Repo men of both of the financial and vehicular towing varieties.

It’s a Win-Win proposition that is downright patriotic.

Wed, 09/05/2012 - 13:09 | 2764870 ZerOhead
ZerOhead's picture

My self esteem has been in the crapper for years now but a $30K GM car isn't going to help with the ladies too much.

A 100% financed $300K Ferrarri on the other hand will make me feel 10X as good, get me laid 10X as much and more importantly help the economy 10X more...

Being Patriotic has never been so easy...


Wed, 09/05/2012 - 13:11 | 2764930 ParkAveFlasher
ParkAveFlasher's picture

Don't worry that's coming soon. 

Wed, 09/05/2012 - 12:58 | 2764876 aint no fortuna...
aint no fortunate son's picture

And most importantly, it brings the Great Reset one step closer, one car at a time

Wed, 09/05/2012 - 14:41 | 2765363 slewie the pi-rat
slewie the pi-rat's picture

 <--< YES

 <--< NO

slewie opinion poll:  should US Mint-produced gold and silver coinage be restored as LEGAL TENDER in the US as per the US Constitution and not subject to the fuking "collectibles" and OTHER TAXES?

yes or no? VOTE!

...please...  L0L!!!

Wed, 09/05/2012 - 13:35 | 2765042 slyhill
slyhill's picture

Sounds broken-windowish.

Wed, 09/05/2012 - 14:43 | 2765353 deez nutz
deez nutz's picture

And even if you are a slug and default

.... no no no, defaults are NOT happening!!  Loan re-working is the new NEW!!   Cash flow is never a negative.   Cut the payment "in good faith" -  so what if the muppet is paying for 9.75 years? GM has CASH FLOW. 

Think of it as "perpetually leasing" your own used car!!   

America still has some financial chicanery up it's sleeve.

Wed, 09/05/2012 - 14:47 | 2765380 Hippocratic Oaf
Hippocratic Oaf's picture

Of course they're inteligent. The idiot is the one who signs on the bottom line.

Wed, 09/05/2012 - 12:33 | 2764792 JR
JR's picture

GM Ramps Up Risky Subprime Auto Loans to Drive Sales | Investor’s Business Daily | 07/27/2012

"Is GM taking on more risk than is safe given our uncertain economy?" asks Edward Niedermeyer, editor-at-large. "They may be trying to goose short-term sales with subprime lending to boost its stock price, which is tied to the government getting out of its GM investment."

GM still owes about $26.4 billion in direct aid to the federal government. The Treasury owns 26.5% of the automaker, or 500 million shares. The stock price would need to be 53 to recoup those taxpayer costs.


Wed, 09/05/2012 - 14:05 | 2765196 stormsailor
stormsailor's picture

pigg-wigg?   you must be from south carolina, yah

Thu, 09/06/2012 - 02:26 | 2767172 StychoKiller
StychoKiller's picture


"Despite the rise in subprime loans overall, there is still a strong sense of managing risk. Because the overall lending environment has improved, lenders are making loans available to a wider range of customers." [/quote]


A case can be made that lenders are making loans available precisely because NOT ENOUGH borrowers with good credit exist!   Denile, NOT just a river in Egypt.

Wed, 09/05/2012 - 12:12 | 2764703 Cognitive Dissonance
Cognitive Dissonance's picture

Still waiting for the two-for-one, buy-one-get-one-free auto deals.

Not long now.

Wed, 09/05/2012 - 12:22 | 2764750 ParkAveFlasher
ParkAveFlasher's picture

Personally I'm holding off until hyperinflation makes my used car swell up to the price brand new. 

Wed, 09/05/2012 - 14:48 | 2765379 JuliaS
JuliaS's picture

... a brand new loaf of bread.

Wed, 09/05/2012 - 12:28 | 2764770 drink or die
drink or die's picture

I've seen buy one get one half off ads for cars on TV here locally (Portland, OR).  It was buy an F350 or whatever truck and get an econobox for half off.

Wed, 09/05/2012 - 12:35 | 2764798 Agent P
Agent P's picture

Our local Kia/Hyundai dealer ran one of these a few years ago.  Buy one of their top end models at MSRP and you got the low end model for free...I crap you negative.

Wed, 09/05/2012 - 12:47 | 2764825 Cognitive Dissonance
Cognitive Dissonance's picture

We'll know we're there when you can buy a Ford Focus at full list price and they throw in a F350 with the deluxe floor mats and naked lady rear wheel mud flaps. :)

Mud flaps

Wed, 09/05/2012 - 12:49 | 2764850 hedgeless_horseman
hedgeless_horseman's picture



You cropped out the bumper sticker that says:


Wed, 09/05/2012 - 12:52 | 2764859 Cognitive Dissonance
Cognitive Dissonance's picture

I had to. My mother reads Zero Hedge. :>)

Wed, 09/05/2012 - 20:15 | 2766430 monad
monad's picture

Great idea. If they rename the Chevy Vote maybe they can sell some.

Wed, 09/05/2012 - 12:49 | 2764855 francis_sawyer
francis_sawyer's picture

Gas grass or ass... Nobody rides for free...

Wed, 09/05/2012 - 13:05 | 2764903 DosZap
DosZap's picture

Our local Kia/Hyundai dealer ran one of these a few years ago. Buy one of their top end models at MSRP and you got the low end model for free...I crap you negative.


Not anymore, Hyundai owns 38% of Kia, and the both(esp Hyundai) are taking market share like a bitch,and most from Toyota, and Honda,Acura.(Genesis,and the top dog),Sonata's are every where.

Their quality is rocketing up, and their warranties are far better.

And their CEO said this is just the beginning.

Around here, the top two Hyundais are not dicounted at all and they are flying off the lots.

Salesmans paradise, IF they can get inventory to  sell.

Wed, 09/05/2012 - 12:19 | 2764708 hedgeless_horseman
hedgeless_horseman's picture



“The single message Chevrolet communicated this summer was ‘confidence’ and it rang true with customers when they saw how our product lineup is being transformed,” said Kurt McNeil, vice president of U.S. sales operations. “All four of our brands are building momentum behind new products* so we’re very well positioned as the economy continues to slowly improve.”


*GM's inventory increased from 663,439 on July 31, 2012 to 687,354 on August 31, 2012.






There has never been a better time
to buy or lease a new GM!

Hurry now to your nearest GM dealer
before inventories increase even more!

2013 GM Yukon Denali AWD
403 HP
13 CTY / 18 HWY

Nicely equipped for only


Easy credit available through GMAC Ally Bank!

On*Star tracking and cabin recording included free for 6 months,
then you pay to be tracked and recorded.

Wed, 09/05/2012 - 12:24 | 2764754 ParkAveFlasher
ParkAveFlasher's picture

Does "nicely equipped" mean "comes with a house"?

Wed, 09/05/2012 - 12:32 | 2764785 Precious
Precious's picture

No.  It comes with a domestic partner though.

Wed, 09/05/2012 - 12:38 | 2764809 Agent P
Agent P's picture

As a general rule in life, never pay over $40,000 for anything unless it comes with a doorbell.

Wed, 09/05/2012 - 12:48 | 2764849 Cognitive Dissonance
Cognitive Dissonance's picture

I was supposed to get a door bell with my SUV?

Damn. I'm calling GM now.

Wed, 09/05/2012 - 14:50 | 2765391 JuliaS
JuliaS's picture

It's called OnStar.

Wed, 09/05/2012 - 15:23 | 2765512 Cognitive Dissonance
Cognitive Dissonance's picture

When GM showed how they could remotely turn on and off the vehicle (among other things) I realized we were in BIG trouble.

Ding Dong......Big Brother calling.

Wed, 09/05/2012 - 20:18 | 2766442 monad
monad's picture

Colorado 0A5599, free & clear

Wed, 09/05/2012 - 12:48 | 2764851 ParkAveFlasher
ParkAveFlasher's picture

Nothing like $67,000 that becomes $50,000 when you drive it over the first curb cut.

Wed, 09/05/2012 - 14:25 | 2765294 Big Corked Boots
Big Corked Boots's picture

I'm driving a '97 Lincoln Town Car that I bought for $6k. I discovered the window sticker in the glove box and it was originally $41k. That's like $60k now if Ford bothered to make the Panther platform anymore.

Cost per mile, price per pound, physical size, safety features and even by MPG standards (I get 24 hiway) there is nothing comparable. I don't catch much pussy with it but the silver hoard grows every day. I do get admiring glances from older car-service guys in the city, though.

Used Detroit choomwagons, bitchez.


Wed, 09/05/2012 - 13:44 | 2765071 WillyGroper
WillyGroper's picture

@ $67K it is ur house.

Wed, 09/05/2012 - 16:49 | 2765766 A Nanny Moose
A Nanny Moose's picture

For that kind of money you could pick up a nice used motorhome.

Wed, 09/05/2012 - 14:28 | 2765312 Papasmurf
Papasmurf's picture

Denali spelled correctly is Denial. 

Wed, 09/05/2012 - 15:24 | 2765518 Cognitive Dissonance
Cognitive Dissonance's picture

Nice. Very nice.

Can I steal that from ya? Or would you rather I just owe ya. :>)

Thu, 09/06/2012 - 02:31 | 2767178 StychoKiller
StychoKiller's picture

At this point, I see no difference...

Wed, 09/05/2012 - 12:13 | 2764711 Conrad Murray
Conrad Murray's picture

Tour through any ghetto, you'll see lots of people driving new GMs. Been going hard for about 6 months now around here.

Let's all go to a GM dealership, get some rides, and have a big "accident" on some major highway. The wreckage can spell out "FUCK BERNANKE" when viewed from the news choppers.

Wed, 09/05/2012 - 12:34 | 2764795 CrashisOptimistic
CrashisOptimistic's picture

Bloomberg radio yesterday was interviewing some auto analyst who was celebrating the sales numbers with this kind of thinking:

"Remember, this is a big ticket item.  People may say they are depressed, but they are making big commitments and what they say and what they do are not the same thing.  They clearly have confidence in the future."


Wed, 09/05/2012 - 12:43 | 2764826 Chump
Chump's picture

Yeah I've never heard of anyone making a big-ticket purchase without regard for future commitments because they were depressed and listless.  That's why folks experiencing a mid-life crisis tend to become frugal knitters, right?

Wed, 09/05/2012 - 13:09 | 2764920 LongSoupLine
LongSoupLine's picture



"Yo, Jerome and Kanisha both got new Escalades playa'!!"

Wed, 09/05/2012 - 16:44 | 2765751 4horse
4horse's picture

you have an ugly mouth in any language

which is an even uglier mind

Wed, 09/05/2012 - 12:14 | 2764713 Ancona
Ancona's picture

I seem to remember seeing [on this site] that the dealers are actually backing these loan programs themselves somehow. The banks won't lend you money any more unless you are wealthy and don't need it. I have a credit score of just over 800, and the bank actually cut my access to my credit line by 60%, citing risk as the primary factor. Understand now, that my credit line was less than half of my accrued savings, which by the way the bank is in posession of. WTF? So, now we're going back to handing loans to mirror foggers? Brilliant plan.......absolutely brilliant plan!

Wed, 09/05/2012 - 12:31 | 2764781 Cursive
Cursive's picture



Correct.  The dealership group that I used to work for writes their own loans through an administrative intermediary.  The dealership is the bagholder here if these loans go south.  This program can be a big moneymaker for the dealership, though, because the interest rates are astronomical compared to new car sales (10 to 12% versus 2.99 and 0% programs on new).  Still, if/when the loan goes bad, it's the dealer holding the paper.  Dealers never worry about tomorrow.

Wed, 09/05/2012 - 15:00 | 2765433 Hippocratic Oaf
Hippocratic Oaf's picture

Same happened to me through Bang of Amerika.......fuckers! 

Wed, 09/05/2012 - 17:53 | 2765939 juslen
juslen's picture

They need you to have more money in the banks so they can afford to lend it out to people who can't afford it. Don't ask me why!

Wed, 09/05/2012 - 12:14 | 2764714 Dr. Engali
Dr. Engali's picture

The average is 579? Man they are really financing some crap if the average is 579.

Wed, 09/05/2012 - 21:03 | 2766565 monad
monad's picture

579? Forget the bad loans, they are arming these idiots with cars and pointing them at us. 

Wed, 09/05/2012 - 12:14 | 2764715 vintageyz
vintageyz's picture

Monkeys are back in control

Wed, 09/05/2012 - 12:17 | 2764729 Everybodys All ...
Everybodys All American's picture

It's ok because it helps the unions of Obama's GM. Relax, hope and change takes time.

Wed, 09/05/2012 - 12:18 | 2764730 uncle_vito
uncle_vito's picture

Always buy used and pay cash.

Wed, 09/05/2012 - 12:34 | 2764794 Spastica Rex
Spastica Rex's picture

And drive it 'til it drops.

Wed, 09/05/2012 - 13:06 | 2764906 infinity8
infinity8's picture

several years ago, I had been in the same car for 11 years (had bought used, cash originally). Still ran ok but stuff was just literally falling off and I was sick of it. My local firehouse was also the spot where the regional FD's would practice putting out car fires. I was going to donate it so long as they would let me know when they were gonna burn her and maybe bring a friend and six pack. Was telling a friend of my plan at the bar, dude overhears me and wants to know does it run, he's looking for a POS. Out to the parking lot, he offers me $300. SOLD!

Wed, 09/05/2012 - 13:50 | 2765095 WillyGroper
WillyGroper's picture

Geez, I thot I was tight until a coworker told me that when it rained his truck had water splashing thru the floor board. Guess a can of Mighty Sealer could have fixed that. 

Wed, 09/05/2012 - 12:55 | 2764868 DosZap
DosZap's picture

Buy slightly used,(save that 24% hit drive off lot depreciation) and finance it for 1%, and when the SHTF, they repo it, who cares anymore.


Wed, 09/05/2012 - 12:18 | 2764732 prains
prains's picture

can't wait until oil is $300 barrel these guys will be pushing their cars to work at mickey d's

Wed, 09/05/2012 - 12:26 | 2764763 ParkAveFlasher
ParkAveFlasher's picture

Mobile McDonald's franchises?  Great idea.  Throw a fryer in the vast backseat and get it done.

Wed, 09/05/2012 - 14:28 | 2765314 Big Corked Boots
Big Corked Boots's picture

Collect the grease and turn it into biodiesel.

WVO is actually getting hard to find in my neighborhood.

Wed, 09/05/2012 - 15:17 | 2765488 ParkAveFlasher
ParkAveFlasher's picture

You can drain the grease directly into the fuel tank.  Or, reuse it.

Wed, 09/05/2012 - 15:52 | 2765605 Big Corked Boots
Big Corked Boots's picture

Filtered WVO is only good for low-tech diesel engines. Six liter Navistar turbodiesels, not so much... the repair bills on modern vehicle powerplants, whether highway, ag or construction, make it too risky.

I do know a local farmer who burns WVO in a generator. His place smells like a combination of cow shit and chinese noodles.

Wed, 09/05/2012 - 16:15 | 2765677 ParkAveFlasher
ParkAveFlasher's picture

Thanks for that anecdote.  Made me laugh.

Wed, 09/05/2012 - 12:36 | 2764803 Spastica Rex
Spastica Rex's picture

Pull the drivetrain and hitch up a mule team.

Wed, 09/05/2012 - 13:13 | 2764939 LongSoupLine
LongSoupLine's picture

Those cars will be gone looong before $300/bbl hits.

Wed, 09/05/2012 - 12:20 | 2764738 Cursive
Cursive's picture

Who needs reality when there's the American Dream to pursue.  Yes, you can have it all.  For nothing.

Wed, 09/05/2012 - 14:33 | 2765334 stormsailor
stormsailor's picture

seems like all the section-8 neighborhoods have late model high-end mercedes and bmw's,  seriously.   i can't believe it.   but then if you don't have to pay for food, medical, housing, and have the maximum get-over going.   you can probably afford it,   also escalades and lincoln navigators with 26inch rims, and hummers.


they would turn their noses up at a gm product.

most of these people get multiple benefits, then work on the side for cash, or peddle snacks or drugs, run a backdoor flea market, etc.

Wed, 09/05/2012 - 17:55 | 2765949 juslen
juslen's picture

They need those nice cars so they can travel to more affluent neighbords to sell their stolen goods and drugs. Working for cash is the way to go. Accept anyone with half a brain would convert that cash into something a bit more solid.

Wed, 09/05/2012 - 12:21 | 2764743 hannah
hannah's picture

the us gov is backing these bad loans so there isnt any risk for gm or ford. i have never seen so many temp paper tags on vehicles on the road.

Wed, 09/05/2012 - 12:23 | 2764744 Cult_of_Reason
Cult_of_Reason's picture

-Doesn't Matter, -I Don't Care, -I Forgive you, -We Can Idopt Some, -Well, Nobody's Perfect

Wed, 09/05/2012 - 12:22 | 2764746 LawsofPhysics
LawsofPhysics's picture

Wages matter!  I am sure this will end well.  I mean the government now has onstar tracking in all of it's "investments" right?

Wed, 09/05/2012 - 12:46 | 2764838 mkhs
mkhs's picture

Repomen need to work, too.

Wed, 09/05/2012 - 12:51 | 2764857 LawsofPhysics
LawsofPhysics's picture

I suggest that they start demanding payment in silver after the repo as possession is now the only law that matters.  All that work risking your life for more paper promises.

Wed, 09/05/2012 - 12:43 | 2764747 moonstears
moonstears's picture

"As Yahoo notes, citing some monkey" some Tylers are quite crass, and funny too (I chuckled at the quip, Tyler), just hope the Yahoo author guy's not black, or here come the racees screamers and the racists to fill this thread to fuck.

Wed, 09/05/2012 - 13:57 | 2765139 WillyGroper
WillyGroper's picture

whoa----don't monkeys pick stocks too and aren't they just as good as the pro's?

Wed, 09/05/2012 - 12:23 | 2764751 azzhatter
azzhatter's picture

I haven't financed a car in 20 years, always pay cash. Fuck the banks and Fuck You Bernanke

Wed, 09/05/2012 - 12:31 | 2764767 Agent P
Agent P's picture

What's it going to take to get you into this Cadillac today?

I needs a monthly of $399.

How do you feel about a 13 year auto loan?

Can I rolls my negative equity from my trade into it?

Sure, no problem.

Where do I sign?

Wed, 09/05/2012 - 12:46 | 2764839 Dr. No
Dr. No's picture

I can only get you the 13 year if you sign up for the 100K mile extended for an extra $49 per month.

Wed, 09/05/2012 - 12:27 | 2764768 Meesohaawnee
Meesohaawnee's picture

but but Phil La BLOW told me that everything is great in Detroit?? CNBC doesnt distort the facts do they?

Wed, 09/05/2012 - 15:09 | 2765469 Hippocratic Oaf
Hippocratic Oaf's picture

Only Bob Piss-on-me and Steve Lies-man tell the truth. And don't forget to wait around for the Money Honey (not so much) tell you that we're off our lows.

Kim kardassian coming up now on CNBC (really!) gotta go...........

Wed, 09/05/2012 - 12:28 | 2764772 Jason T
Jason T's picture

someone else once posted this vidoe here on zh before.. but perhaps its applicable to this story..


Wed, 09/05/2012 - 12:29 | 2764777 Vincent Vega
Vincent Vega's picture

These loans are only subprime if looked at individually. Bundle them up in to a single package and look at them again, viola! AAA baby. <sarc>

Wed, 09/05/2012 - 13:52 | 2765106 ncdirtdigger
ncdirtdigger's picture

Can I package a derivative with that?  

Wed, 09/05/2012 - 15:00 | 2765432 JuliaS
JuliaS's picture

Leverage is the new torque.

Wed, 09/05/2012 - 12:32 | 2764784 Zero Govt
Zero Govt's picture

"... lenders are making loans available to a wider range of customers."

lenders are dropping their knickers (standards) ever more desperate to find ever more sub-standard higher-risk customers to keep their commissions rolling in

there, fixed it

er, when i say "fixed" i mean 100% assured trainwreck is yet to come 

Wed, 09/05/2012 - 13:42 | 2765063 Poetic injustice
Poetic injustice's picture

/1 year from now on

Nobody saw it coming!

Wed, 09/05/2012 - 12:33 | 2764788 Peter Pan
Peter Pan's picture

If an out f control government can get funding at ridiculously low rates of interest, then why should sub prime car loans be a surprise.

The rule in the US is that the worse the pay off for the nation the greater the support. For proof of this look at expenditure on war, college education, and housing.

Wed, 09/05/2012 - 12:33 | 2764793 spondoolix
spondoolix's picture
  • The average used car loan-to-value ratio rose to 126.62%
  • 77% of Subprime Auto Loans are for a period greater than five years
  •      This is the kind of crap that frosts my pumpkin.  My son bought a car from one of the vulture dealers outside of Camp Lejeune.  Of course, the price was much too high compared to its value.  But, what really bugs me is that Navy Federal Credit Union gave him a 5 year loan (9% interest) because he had 3 years of guaranteed pay.  Well, he got out of the Marines and hasn't been able to find a job.  So, I have been helping him try to get Navy Fed. to lower the payoff before it goes into repossession.  The car is a '99 Honda Civic (piece of crap) and the outstanding loan balance is $7,800!  The blue book is a fraction of that.

    Wed, 09/05/2012 - 12:45 | 2764808 CrashisOptimistic
    CrashisOptimistic's picture

    Have him go out and run up a CC for some long lasting items of value and then lump it all together and go bankrupt.

    A method I've seen is to take the CC to local casinos and get cash advances.  Walk out of the casino and go buy valuable items like tools or farming items. . . things that have decades of value.  Put them in YOUR (not his) garage.  He must pay cash for these items.

    Then there is no papertrail for the money.  "Lost it at the craps table."  The bankruptcy will go smoother.  

    Do it now, while he's young and before the system unravels, which it will soon.  At least he'll have some tools and farming implements with which to earn food afterwards.

    Wed, 09/05/2012 - 13:18 | 2764960 Vincent Vega
    Vincent Vega's picture

    Not sure what you do for a living but the way you think may quailfy you for a career in investment banking.

    Wed, 09/05/2012 - 13:32 | 2765022 Seasmoke
    Seasmoke's picture

    +21 Black Jack Advice !!!!

    Wed, 09/05/2012 - 14:51 | 2765395 Sparkey
    Sparkey's picture

    It is a tough World for the financially illiterate, They remind me of those Hillbilly Girls getting off the bus in NY, somebody with something shiny catches their attention and it is all down hill from there, many of them spend their lives being slaves to one man or another until death releases them from their burdens.

    The financial illiterate spend their lives making their payments, payments which take priority over the food for the table, a slavery enabled by debt, why don't people teach their children to think?  --- They can't, they don't know how to think themselves, too much thinking...Dangerous, Trust your TV, these are the people you `Know` and love, and who, in turn, like the Greeter at Wally's, love you Too, they've got things figured out so you don't have to! Relax, trust and believe, this is your Dream, enjoy it!

    Wed, 09/05/2012 - 12:35 | 2764797 Fix It Again Timmy
    Fix It Again Timmy's picture

    I arrived in the Atlanta area in 1983 and noticed that there weren't a lot of new cars being driven.  Suddenly, in 1992, new cars were everywhere!  What happened in 1992 to cause this?  Just wondering...

    Wed, 09/05/2012 - 12:39 | 2764812 tahoebumsmith
    tahoebumsmith's picture

    Look at what ZIRP gets you.When Banks and lending institutions can get free money from the FED at .05%, It doesn't matter how bad a persons credit is because the 18% interest rate leaves a 17.5% buffer. The roaches have become the customer of choice and the 800 score Mr. Goodie two shoes becomes the unwanted business. Why you ask? Because when running a financial ponzi scheme with mark to market at whatever you want the 17.5% return of interest on the books looks alot better then the cash buyer producing a 0% return. Their propping up the books on the back end of the deals to make the industry " LOOK" like it's breathing again. Just another way to hoodwink everybody for another today moment, which by the way is the only thing propping this economy up at all. So many today moments are going to turn into tommorows crisis nightmares.Solving a debt crisis with more debt is not going to work however solving a bad debt crisis with more bad debt is simply ludicrous. I suspect the basket of good fico scores holders has become so small now that this will become the only game in town until it isn't.

    Wed, 09/05/2012 - 12:48 | 2764846 LawsofPhysics
    LawsofPhysics's picture

    "I suspect the basket of good fico scores holders has become so small now that this will become the only game in town until it isn't."


    Correct, and discussed by many as simply capital mis-allocation and mal-investment as nothing of real value is being created or innovated.  Such a monetary system will die eventually because in the real world, real innovation and real commodities must be exchanged in order to survive.  Basically, modify your statement as follows;

    "I suspect the basket of good fico scores holders has become so small now that this will become the only game in town until the currency dies and a real war breaks out."

    Wed, 09/05/2012 - 12:48 | 2764815 Zero Govt
    Zero Govt's picture

    - The average loan-to-value on new cars was 109.55%

    - The average used car loan-to-value ratio rose to 126.62%

    these aren't really "car" loans at least in part, sub-primers seem to financing other parts of their lifestyle with the word "car" pasted on top car (fridge/oven/lawnmower/kids schooling/holiday/golf membership) anyone?

    It looks like a new 52" flatscreen TV, but we'll call it 'Cadillac' for the purposes of this very honest and true disclosure banking mandate form!

    Why not, the President calls it a "Green Energy Revolution", you and I call it bailing out your campaign sponsor bum-chums for another one of their stinker gone wrong business deals.

    Wed, 09/05/2012 - 12:41 | 2764821 utgolfer
    utgolfer's picture

    Maybe its just being back from the loing weekend, but the stories on this site today truly seem like they should be on The Onion.  This is great stuff (good work Tyler), scary that its real life but, it certainly has a decline of the Roman Empire feel to it.  Except a lot worse.

    Wed, 09/05/2012 - 12:44 | 2764829 Red Heeler
    Red Heeler's picture

    Everything in life is somewhere else; and you get there in a car. - James Thurber

    Wed, 09/05/2012 - 12:45 | 2764833 bobola
    bobola's picture

    I ride a bike to work.

    Poor lonely truck sits in the garage all week long, hoping I will use it on the weekends.

    What do I care about new car loans...??

    Wed, 09/05/2012 - 12:46 | 2764835 SheepDog-One
    SheepDog-One's picture

    'Monkey cited' lol.

    Wed, 09/05/2012 - 12:46 | 2764836 linrom
    linrom's picture

    You built that, now sell it? What's the problem job creator. I see you want more tax cuts?

    Wed, 09/05/2012 - 13:04 | 2764891 potlatch
    potlatch's picture

    that made me crack up.  I envisioned some CEO standing in a parking lot the size of a dozen football fields, filled with identical vehicles, saying, but, but, I built these!


    They can build all they want, eh?  I ain;t buyin.  Done with debt.  Crash the system.  Refuse debt.  Cash only, or walk/eat cold cereal/live out of a car.


    We'll see who blinks first.

    Wed, 09/05/2012 - 12:46 | 2764840 Boom_Bust_Babe
    Boom_Bust_Babe's picture

    I think you meant to say that "lenders are making loans available to a WILDER range of customers"

    Wed, 09/05/2012 - 12:47 | 2764841 lizzy36
    lizzy36's picture

    Rhetorical Question.

    Music never stopped in 2008-2009. Just slowed down a bit.

    Fourth anniversary of Lehman......and TBTF is the LAW of the land.

    Mission Accomplished.

    Wed, 09/05/2012 - 12:49 | 2764854 LawsofPhysics
    LawsofPhysics's picture

    Correct, if you can't physically touch or defend that asset or investment you don't fucking own it.

    Wed, 09/05/2012 - 12:51 | 2764858 NEOSERF
    NEOSERF's picture

    Gotta to pick up my SNAP beer...err groceries in something bitchez!

    Wed, 09/05/2012 - 12:54 | 2764865 NEOSERF
    NEOSERF's picture

    Seriously, this is not any surprise...FHA loans with nothing down for houses is the only trace of life in that market and this confirms suspicions on the auto market...between channel stuffing and subprime car loans there is no remarkable return there either.  Really is frightening that after 4 years there has BEEN NO RECOVERY.  I am not blaming Obama as lord knows he has played the free money for banks, free loans for homes and cars better than any Republican but the reality is scary...

    Wed, 09/05/2012 - 12:57 | 2764871 buzzsaw99
    buzzsaw99's picture

    bundle the crap loans and sell them to fidelity and calpers. problem solved.

    Wed, 09/05/2012 - 12:56 | 2764872 pragmatic hobo
    pragmatic hobo's picture

    if you are a lender you can always repossess the car and not worry about crash in auto-market. Heck you can even export the car is needed.

    Wed, 09/05/2012 - 13:00 | 2764883 potlatch
    potlatch's picture

    we are ruled by underpants gnomes.  that is the only rational answer I can come up with as to what kind of "plan" these people have

    Wed, 09/05/2012 - 13:00 | 2764885 grapeape
    grapeape's picture

    selling cars to people who can't pay for them is just good business. they pay sticker price. give you a trade in you rape them on. make a few payments. all profit for you. then you rerpo the car, which you then garnish there wages for the non payment. resale the car again to another sucker and the whole economic miracle starts anew.

    Wed, 09/05/2012 - 13:04 | 2764890 JR
    JR's picture


    By and large, it has been shown that more affluent households have a good understanding of financial management and contain their average debt burden. In contrast, the debt service burdens of lower income families continue to worsen. These folks are the ones the greedy merchants and bankers are targeting, it now appears. Why?

    According to Peter Warburton in Debt and Delusion, "Research undertaken at the Federal Reserve Bank of New York suggests that consumers worry about the burden of their debts only when they suffer a loss of income or are starved of access to additional credit. This helps to explain why personal consumer spending seems to be relatively unaffected by the rise in the debt service burdens of so many households. Personal credit quality can deteriorate for a long period before latent problems reach the surface"

    And the debt delinquencies roll on and on…

    Wed, 09/05/2012 - 13:10 | 2764923 yogibear
    yogibear's picture

    Free money can be free. 

    An enormous amount of Fannie-Mae  money was/is given out for loans with little down. Many are upside down from 2009 and the government's cash for buying houses program. 

    Know of people buying homes when their upside-down on their present home. They plan on renting out the upside-down home.

    Lot's of opportunity for fraud here people. Need banks to appraise non-existing properties for Fannie-Mae jumbo loans and send the $$$ to overseas  accounts.

    It's become a huge game of fraud and deception now! Nobody big is going to jail.

    Wed, 09/05/2012 - 13:10 | 2764926 fonzannoon
    fonzannoon's picture

    "As yahoo notes, citing some monkey"

    Holy shit that was under the radar funny.

    Wed, 09/05/2012 - 13:15 | 2764949 yogibear
    yogibear's picture

    I smell a TBTF bailout coming again. Rinse and repeat.

    The same people that created the housing fraud are up to new schemes. It's what happens when nobody goes to jail and fraud is allowed to continue.

    On to auto and the biggie student loans.

    Wed, 09/05/2012 - 13:20 | 2764974 Hal n back
    Hal n back's picture

    typically, the interest rate on subprime car loans is 25% on used cars--I know as I know someone who is in the business and is proud they charge 25% becasue without them people could not buy cars..he also said if they miss a second payment they repossess the car.


    Sinc eso much is interest, teh debt usually is not paid down until near the end.



    Wed, 09/05/2012 - 13:26 | 2764995 Gringo Viejo
    Gringo Viejo's picture

    We've got a guy named Paul Blanco (not from the Bronx) working subprimes in the SF Bay Area. People drive around with their "Paul Blanco Fresh Start Program" licence plate holders  insistent on telling the world they're deadbeats.

    It's really comical.

    Wed, 09/05/2012 - 14:36 | 2765344 edifice
    edifice's picture

    Heh. A friend of mine sells used cars. He's been killing it, the last year or so. I think he grossed $8k this month (in Colorado). The used market is the place to be, if you're a salesman.

    Wed, 09/05/2012 - 13:26 | 2764996 Frastric
    Frastric's picture

    GM, you are going to be so fucked in a few years time, so fucked up that you will have to suck the government's teets again for bailout monies...

    Wed, 09/05/2012 - 13:46 | 2765082 SmittyinLA
    SmittyinLA's picture

    Obamaamnesty opportunity loans, figure 1 million instant hungry customers that want to buy the family their first big SUV, and they got $5000 cash saved up, they can put that down on a used Suburban or Armada. 

    %100 of the cash is instantly skimmed as "fees", the rest of the risk is passed unto other investors.


    Easy money, Obama style

    Wed, 09/05/2012 - 13:56 | 2765131 ncdirtdigger
    ncdirtdigger's picture

    Will they take FaceBook stock as a down payment?

    Wed, 09/05/2012 - 14:29 | 2765321 TonyCoitus
    TonyCoitus's picture

    Man, I feel like such a "looser" paying cash for a car every ten years.  I could really look super cool in a new pimped out SUV, but no, my fucking conservative parents had to pound this shit in my head about living within my means.  Fuck, shit, hell.

    Wed, 09/05/2012 - 14:30 | 2765326 Papasmurf
    Papasmurf's picture

    Hoopti backed securities.

    Wed, 09/05/2012 - 15:11 | 2765473 Lore
    Lore's picture




    Wed, 09/05/2012 - 15:18 | 2765492 negative rates
    negative rates's picture

    You mean if its smokin, that ain't good?

    Wed, 09/05/2012 - 15:43 | 2765569 Poetic injustice
    Poetic injustice's picture

    It's other way around, you give subprime loans with subprime money.

    Wed, 09/05/2012 - 17:41 | 2765903 fresno dan
    fresno dan's picture

    Loans to people who will not be able to pay it back eventually....

    very profitable...for a little while.

    I don't know why you guys are so upset.

    Wed, 09/05/2012 - 18:39 | 2766094 ThisIsBob
    ThisIsBob's picture

    Can I assume that these loans are being tranched and sold to mayors of small Norwegan towns?

    Wed, 09/05/2012 - 20:12 | 2766426 lostcause
    lostcause's picture

     With all the inflation over the last 4 years, the pool of credit quality buyers will continue to dwindle. This will continue for all large purchases. There also doing this in housing. Let's face it, the middle class is doomed!


    Wed, 09/05/2012 - 22:49 | 2766830 CJHames
    CJHames's picture

    "Cause here at Dream Act Motors, we cheat the other guy and pass the savings on ... TO YOU!"

    Thu, 09/06/2012 - 01:28 | 2767086 agagshoes
    agagshoes's picture

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