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.

In Liberty,
Mike

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4 Comments

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  1. 97m loan on RV meth labs. sounds tasty

  2. OMG !

    It’s been 5 years now, the American people should have noticed by now things are not getting any better anytime soon, their costs of living have been rising.

    They should be following the no debt king, Dave Ramsey; like a pied piper.

    Instead, more people are looking to buy cars with greater negative equity in addition to new housing loans being sold to more people who shouldn’t be buying them if the government wasn’t pushing them.

    I sure hope I can get in really great physical shape before the hard times really hit because I’m going to want to drink until I passout rather than watch some of what’s happening on the nightly news.

  3. Similar was done in Thailand, curtesy of Tax-In Shinwatra. The populist way to self-destruction and enslavement, promoting a globalist agenda.

  4. I’ve been looking for a car to replace my 20 year old Ford Exp Sport, which has been quickly diagnosed with a terminal case of engine problems (although I will be getting a second opinion).

    Super depressing to look for a car. Even if you buy a car used with 50K miles on it and 6 years old, you will pay close to 10K or MORE (for regular brands). That’s a terrible price for a car with no guarantee it will not have a major problem (no warantees)..such as engine, transmission…A few years ago you could buy a car for 2K or less and chances were just as good as today that it would be reliable.

    It’s a BUBBLE!! Both new and used are WAY over priced.

    I’m going to wait for the prices to come down, which I believe they will. If they car goes, I will have to go on bus, even though it lets me off a mile from work. Too bad….I refuse to participate in the rip off going on right now.

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