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U.S. Auto Market News and Reviews

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Comments

  • henrynhenryn Houston, TXPosts: 2,575
    A very short article, and not really very informative. I remember reading, maybe a couple of years ago, about an upswing in subprime car lending and how this could lead to some serious trouble. I expect we all remember the subprime mortgage lending, and what that lead to. Shudder!
    2018 Ford F150 XLT Crew Cab, 2016 Chrysler Town & Country Touring
  • henrynhenryn Houston, TXPosts: 2,575
    https://www.cnn.com/2019/02/13/business/delinquent-car-loans/index.html

    A little more information here, but still not a lot.
    2018 Ford F150 XLT Crew Cab, 2016 Chrysler Town & Country Touring
  • henrynhenryn Houston, TXPosts: 2,575
    Thanks for the link, an interesting read. We all know that many car buyers do not do a good job of shopping for the best deal (think how popular CarMax is). And apparently they also do a poor job of shopping for the loan to buy the car.

    -=-=-=-=- begin quote -=-=-=-=-=

    The bank says more than 50 percent of auto loans go to subprime borrowers with credit scores less than 620. Mark Hamrick, senior economic analyst at Bankrate, notes that these buyers end up paying more to finance their rides.

    “Many borrowers who aren’t well qualified, meaning they have low credit scores, have been paying higher interest rates on their auto loans, making it additionally challenging for them to not only pay off the loan but capture equity in the vehicle,” says Hamrick. “There’s something about the allure of automobiles that prompts too many buyers (and borrowers) to fail to sufficiently shop around for the best loan as well as a better deal on a vehicle.”

    2018 Ford F150 XLT Crew Cab, 2016 Chrysler Town & Country Touring
  • MichaellMichaell ColoradoPosts: 116,982
    henryn said:

    Thanks for the link, an interesting read. We all know that many car buyers do not do a good job of shopping for the best deal (think how popular CarMax is). And apparently they also do a poor job of shopping for the loan to buy the car.

    -=-=-=-=- begin quote -=-=-=-=-=

    The bank says more than 50 percent of auto loans go to subprime borrowers with credit scores less than 620. Mark Hamrick, senior economic analyst at Bankrate, notes that these buyers end up paying more to finance their rides.

    “Many borrowers who aren’t well qualified, meaning they have low credit scores, have been paying higher interest rates on their auto loans, making it additionally challenging for them to not only pay off the loan but capture equity in the vehicle,” says Hamrick. “There’s something about the allure of automobiles that prompts too many buyers (and borrowers) to fail to sufficiently shop around for the best loan as well as a better deal on a vehicle.”

    Choosing a vehicle with better than average depreciation helps, too.

    4 years ago, the wife and I bought a 2015 Subaru Outback 3.6R. We rolled in something like $3500 of negative equity, and we added an extended warranty as well as GAP insurance.

    Because we live in Colorado, the depreciation was not like a rock, but more a feather. I received a buy bid a week or two ago that showed we have close to $6000 in positive equity, were we to sell.

    What has good (read: low) depreciation? I'd say most Toyotas and Hondas, pickup trucks of all brands, Subaru in the Mountain West, Pacific NW and New England. There may be others (Lexus and Acura?), but finding the right vehicle with the right loan should help minimize the possibility of being upside down.

    As far as budget goes, folks want to have the newest, flashiest, most loaded version. A $22,000 Accord will be just as reliable as a $32,000 Accord, and is likely to depreciate slower.

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    2016 VW Jetta 1.4T SE / 2015 Subaru Outback 3.6R / 2014 MINI Countryman S ALL4

  • fintailfintail Posts: 47,899
    So you're saying the Rolls-Royce Dawn convertible might not be the right car for me?

    Stagnant wages and lack of economic mobility, rising new car prices, lack of financial education all can align for a storm. But a small storm compared to the mortgage fiasco.
  • MichaellMichaell ColoradoPosts: 116,982
    fintail said:

    So you're saying the Rolls-Royce Dawn convertible might not be the right car for me?

    Stagnant wages and lack of economic mobility, rising new car prices, lack of financial education all can align for a storm. But a small storm compared to the mortgage fiasco.

    Only if you can't afford the $5000/mo lease payment. Since you're renting and don't have a mortgage, perhaps you can.

    The wage thing I completely agree with. Lack of financial education depends on the individual. My son, who barely was able to graduate HS, has managed to keep himself out of serious debt as he approaches his 30th birthday. Just bought his first car with payments attached to them last year, but is only spending $350/mo.

    I've seen signs that the lessons learned a decade ago may not have completely sunk in; exotic mortgage products are making a comeback.

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    2016 VW Jetta 1.4T SE / 2015 Subaru Outback 3.6R / 2014 MINI Countryman S ALL4

  • fintailfintail Posts: 47,899
    Well I'd have to live in it, and stop funding retirement and savings, and live on bread and water, but I might be able to eke it out.

    I think financial education in reality comes from parents. Schools don't teach it. My parents weren't spendthrifts when I was a kid, and I saw the drama when bills were due. Because of this, I live below my means in some ways so I can enjoy other things. Some may cringe at even what I spend on a sweetheart lease, but the way I see it, these are the good old days. However, some may not be aware enough to learn financial lessons from family. Schools should be doing a lot more to teach basic financial literacy, but with the test-based system now, teachers haven't the time, and not to be a conspiracy theorist, but I think the banking and finance industries approve.

    I haven't seen any data that we are close to 2006, yet anyway. There are some zero down programs out there, but not the general malfeasance, nor the bubbles in some areas where local jobs don't support it (Atlanta, Vegas, inland CA, etc). Anbd if it does happen again, maybe this time the FIRE sector will have to actually pay a price. Yeah right.
    Michaell said:



    Only if you can't afford the $5000/mo lease payment. Since you're renting and don't have a mortgage, perhaps you can.

    The wage thing I completely agree with. Lack of financial education depends on the individual. My son, who barely was able to graduate HS, has managed to keep himself out of serious debt as he approaches his 30th birthday. Just bought his first car with payments attached to them last year, but is only spending $350/mo.

    I've seen signs that the lessons learned a decade ago may not have completely sunk in; exotic mortgage products are making a comeback.

  • kyfdxkyfdx Everywhere, USAPosts: 126,124
    It is a lot harder to qualify for a mortgage, now.
    Also, cashing out equity by refinancing is difficult. And, HELOC interest is no longer deductible.

    We are nowhere near a financial crisis. Even so, not a big fan of rolling back regulations on the banks.

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  • stickguystickguy Posts: 32,857
    Heloc interest isn't deductible now? Darn. Now I really don't think I will be itemizing this year.

    doing the taxes this weekend. Can't wait to see what other surprises I uncover.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • suydamsuydam Posts: 4,080
    Lots of stuff isn’t.
    '14 Buick Encore Convenience
    '17 Chevy Volt Premiere
  • stickguystickguy Posts: 32,857
    I really just had the basics. State income tax, property tax on the house, and mortgage (and heloc) interest. Plus a little bit of charitable deductions. Nothing exotic.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • suydamsuydam Posts: 4,080
    All of those got much more limited.
    '14 Buick Encore Convenience
    '17 Chevy Volt Premiere
  • stickguystickguy Posts: 32,857
    oh, I already expected to be using the new higher standard deduction. I should be OK, because in the past few years, my itemized deductions came out to be right about that anyway.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • kyfdxkyfdx Everywhere, USAPosts: 126,124
    stickguy said:

    oh, I already expected to be using the new higher standard deduction. I should be OK, because in the past few years, my itemized deductions came out to be right about that anyway.

    It's kind of a bummer, in some respects. I have a big capital gain for 2018 (taxes paid in 2019). So, a big chunk of state tax paid this year, that I won't be able to deduct off my federal taxes for 2019. (because of the $10K SALT limit).

    On balance, less overall tax paid with the new tax cuts. Not itemizing is okay, but I still have the same record keeping, because the standard deduction for our state is around $3000. So, I itemize there.

    I won't get into the macro-economic impact, due to our forum rules. ;)

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  • thebeanthebean Parts UnknownPosts: 1,086
    fintail said:


    I think financial education in reality comes from parents. Schools don't teach it... However, some may not be aware enough to learn financial lessons from family. Schools should be doing a lot more to teach basic financial literacy, but with the test-based system now, teachers haven't the time...

    ^^^ This X 1000. As long as the “teach to the test” method is used in our schools, we will continue to turn out “common sense-less” kids. I don’t blame the teachers, as they are being directed by their leaders. Besides, teachers are paid diddly squat, and we expect them to be superheroes.
    2015 Honda Accord EX, 2017 Honda Civic EX-T
  • Mr_ShiftrightMr_Shiftright Sonoma, CaliforniaPosts: 64,490
    Teachers are as mad as hell and not going to take it anymore. 2019 will be verrryyy interesting in the education field.
  • stickguystickguy Posts: 32,857
    well, I made the mistake of firing up the tax software.

    Anyone want to buy a slightly used TLX? A kidney? Sadly the kids are no longer minors so I can't sell them...

    I could have sworn I went in and had extra taken out last year to make sure. Guess not.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • MichaellMichaell ColoradoPosts: 116,982
    stickguy said:

    well, I made the mistake of firing up the tax software.

    Anyone want to buy a slightly used TLX? A kidney? Sadly the kids are no longer minors so I can't sell them...

    I could have sworn I went in and had extra taken out last year to make sure. Guess not.

    Oh, bother.

    We'll be using a CPA this year, due to the new LLC and the expenses associated with it we incurred in 2018.

    Did you get a good deal? Be sure to come back and let us know! Post a pic of your new purchase or lease!


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    2016 VW Jetta 1.4T SE / 2015 Subaru Outback 3.6R / 2014 MINI Countryman S ALL4

  • stickguystickguy Posts: 32,857
    If I had a business I would too. With the new deductions rules, it was practically like doing an EZ form.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • fushigifushigi Chicago suburbsPosts: 1,459
    Pretty sure HELOC interest is still deductible BUT it has to be tied to actual expenditures on the home. You can't deduct the interest if you use it for a vacation or to pay off other debt.

    We were screwed by the new tax law as it caps property tax + state income tax at $10K .. That lost me around $6-8K in deductions. We owe about $2K more than we would in an average year. Which also triggers an underpayment penalty. :@
    2017 Infiniti QX60 (me), 2012 Hyundai Elantra (wife)
  • stickguystickguy Posts: 32,857
    I feel your pain brother. I also lost my last college kid deduction, so double whammy.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • kyfdxkyfdx Everywhere, USAPosts: 126,124
    If you take the $24K standard deduction, HELOC deductibility won’t matter

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    Edmunds Moderator

  • berriberri Posts: 10,047
    They did broaden the underpayment penalty to not apply if you withheld 85% instead of 90% for 2018 taxes only. The penalty also does not apply if you withheld your previous year tax liability amount. The whole tax thing just seemed rushed and not thought out to me
  • stickguystickguy Posts: 32,857
    I withheld more than last year, and was just about break even in 2017, so no penalty should apply based on that. The wife and I will both be reviewing our withholding elections tonight, and adjusting accordingly. I'll probably end up overcompensating and get a big refund, but at least I won't have to see the software tell me "you ain't going on a late winter vacation to someplace warm this year, buddy".

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • suydamsuydam Posts: 4,080
    I’m pretty concerned about our taxes this year too. I think a lot of middle class folks are in for unpleasant surprises.
    '14 Buick Encore Convenience
    '17 Chevy Volt Premiere
  • stickguystickguy Posts: 32,857
    especially if you had high itemized deductions in the past.

    though as much as I complain about getting whapped with a tax bill, it is still way less than the 2 tuition bills I did not have to pay in 2018! So still ahead of the game.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • kyfdxkyfdx Everywhere, USAPosts: 126,124
    For most people, the total tax bill will have come down. But, that doesn't mean you will get a big refund. Those that no longer itemize (most of us) will likely have a smaller refund. If you count on that as forced savings, then you were doing it wrong. ;)

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • berriberri Posts: 10,047
    The deficit is already ballooning from it like in the past. Since the 80's these things tend to blow up down the road. Personally, I think the tax changes were drawn up to penalize people who live in blue states, while rewarding those in red states. That kind of political stuff usually doesn't work out or last long.
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