There were two posts over in Edmunds Answers the last day or two where people who were underwater on their car loans both had interest rates higher than 21% - one was 29%!
Indeed. FIRE cabal people once again getting the laws they paid for. One won't be in the black on such a loan until the end. And if made on a used car, the risk is huge.
How else are the high risk/poor credit score people going to be able to afford a car so they can get to work though? (And don't say take the bus - this ain't Seattle).
In response to both your statements. One, usury laws should be in place. If the person is a poor risk don't loan them money. I am tired of picking up the tab when the banks make bad loans.
Second, the high risk borrowers need to lower their standards on car purchases. This gets back to the usury laws. Buy a $5000 whooper at 12% interest for 3 years and keep your payments under $200 a month. If you cannot afford that at minimum wage better get a bike and a job close to where you live.
The 29% guy is trying to pay off a '99 Suburban. It probably was $5,000 before the $5,000 in interest got rolled in.
Bloomberg is trying to put a different spin on VW's numbers.
"The Volkswagen Group further strengthened its position in the global markets in the first three months of fiscal year 2013, despite the challenging conditions and intense competition. Including China, deliveries increased by 4.8 percent to 2.3 million vehicles worldwide. The Group's share of the global passenger car market rose year-on-year to 12.6 percent (12.2 percent)."
If those risky rates were under 20%, there would likely be less problem, yes. The whole bike/job thing isn't really possible for most, especially in a nation where residential development/public transit practices have been bought off by special interests.
I'd be more concerned with a student loan collapse than car loans.
Every state has their own usury law (and don't ask me how the feds get involved - I think they regulate student loan rates though). South Dakota has no maximum interest rate - that was a scheme to attract banks there, since bank usury rates depend on the law of their home office. (usurylaw.com)
The whole bike/job thing isn't really possible for most, especially in a nation where residential development/public transit practices have been bought off by special interests.
My sister has lived gone to college and worked in Seattle since the late 1960s. She has never owned a car. Rides her bike everywhere she goes. I would imagine she takes it on the bus as well.
The student loan issue is big as well. The difference you cannot get rid of a student loan with foreclosure, repossesion or bankruptcy. Dying is the only way to get rid of a student loan provided you are not married and pass it onto a spouse.
My brother-in-law doesn't drive either. And he's in Seattle.
Try getting to work in your part of San Diego County. :shades:
Now go get a job waiting tables in Seattle and try finding affordable housing without a two hour bus ride. Maybe in a VW Bus, shared with a half dozen co-workers.
Try getting to work in your part of San Diego County.
As a matter of fact the owner of a snowboard and skateboard factory lives near me. He rides his skate board to the bus then transfers to the trolley and makes it all the way 35 miles to his San Diego Harbor factory every day. Fact is we are spoiled having cars. Last I checked we are still free to live where ever we can afford to live. Get close enough to walk if you don't want a two hour bus ride or a 3000 mile airplane ride that I had every 3 weeks for 25 years. Don't make excuses for people that feel entitled to more than they have.
If you feel you have to have a car, buy an old VW Bug.
Sadly, race to the bottom wage pressures and inflated every day living costs kind of limit that freedom. Seems quite a few of those entitled people are in the upper ranks and relied on a lot of luck to get there.
"Volkswagen, by contrast, saw sales fall 10% to 33,644 units. The company reported a 16% decrease in sales of its most popular model, the Jetta, and a 10% decrease in sales of its second-most popular vehicle, the Passat.
“While it was a challenging month, particularly in the compact and midsize sedan segments, we remain solidly focused on our long-term growth strategy,” said Jonathan Browning, CEO of Volkswagen Group of America, in a statement."
Sadly, race to the bottom wage pressures and inflated every day living costs kind of limit that freedom. Seems quite a few of those entitled people are in the upper ranks and relied on a lot of luck to get there.
Reality is what it is. Lamenting will not change it. The folks running the show feel they need to flood our country with more cheap laborers and while regulating the jobs out of the country. The Elephants and jackasses agree that making citizens out of anyone that crosses the border is a win win for both of them. The working man on the bottom of the pile is screwed.
It is only the lucky few that get jobs in the VW auto factory.
You don't need to lecture me about reality, I live it every day. Either way, having an affordable place to live within a reasonable distance from work simply isn't reality for many people - our infrastructure has failed that too. Hell, I can't afford to buy anything but a dinky condo within a reasonable distance from my workplace, and I make ok money.
I won't disagree about your basic slant regarding those workers. They'll end up taking those high interest high risk loans that keep some GM models moving, and most of them will pay the note, too.
You don't need to lecture me about reality, I live it every day.
Are you sure? I see more and more people living in tents and their cars. Just announced that we are at the lowest home ownership in 18 years. You can afford a condo. That puts you in a higher bracket than most.
With the banks borrowing from the Fed at near Zero and lending at very high rates, emphazises this Federal Government is not interested in the American people. Consumer interest should be capped at 5% over prime.
I'm sure, reality might not be what some imagine. I have been able to survive (maybe with less sanity) in arguably the most competitive work environment in modern history, and I generally spend less than I make. If only our esteemed leadership could do likewise.
Lower home ownership might not be all bad. The very unstable work climate today demands it - I know quite a few people who have moved many states for jobs. Hard to do with a mortgage looming over you, especially if you aren't old enough to have any real equity. It might make for a more flexible workforce, like can be seen in the competition we are supposed to mimic, right? Also more money for other things if the situation is like it is here, and rents are often far lower than the carrying costs of a mortgage.
I would have been dumb to buy that condo when I moved here, and I still see it as a bad investment.
Maybe interest other than mortgages should be tax deductible, too. No reason realtors and contractors should receive defacto subsidies.
I agree with you. You can rent in CA far cheaper than owning. I am sure Seattle is the same way. Out here in small town midwest you pay $1100 to $1200 rent on an $80k home. Makes buying a much better option.
I would have been dumb to buy that condo when I moved here, and I still see it as a bad investment.
Again I agree with you. I don't think Seattle has felt the pain of CA, AZ, NV or FL homeowners. With our dollars shrinking in value how much longer will the rest of the USA maintain higher prices?
I wandered through the Toyota, Lexus, Chrysler & Jeep showrooms this morning. They were all dead here in So Indiana. I think the only thing keeping US going is the Fed printing more money.
PS all consumer interest was deductible at one time. Not sure who took it away.
80% of Mexicans own their own home. "Big" subsidy by the government but you really only get one shot at one house making it hard to move, unless you can work out a swap deal.
So most all the working stiffs at the Volkswagen factories down in Toluca and Veracruz State own their own spots. Great bus system down there too. :shades:
Not to mention, condos don't appreciate like some houses, even though maintenance and taxes are the same. And as I can't afford something detached here, oh well. I don't feel like I am missing anything but a probably undeserved tax deduction, and that doesn't make me lose sleep either. The money I save gives me a couple investment accounts, my choice of cars, vacations, etc.
The economy and property values aren't dead everywhere. Seems PNW, Bay Area, Austin, NYC metro etc are slowly coming back, and I've read Phoenix and some parts of FL are stable now too.
Last Sunday, Honda, Toyota, and Lexus here were packed, and even the MB dealer had people coming in. I bet the domestics had customers too, with their improved lineups. The economy is now as regionally divided as politics itself.
"...all consumer interest was deductible at one time."
I think this is the way it should be, and mortgage interest should also not be deductible, in my opinion. Why? Deductions distort markets, for homes and consumer goods alike, and were motivated by political motives. That's not a good thing. We don't need these two types of social engineering measures. For a reality check, look at Canada's housing market. It's very viable and serves that country's needs well. Also, our car and truck markets seem to be doing just fine without interest deductions on auto loans.
Since homes are often peoples' biggest asset, I believe that the elimination of the mortgage interest deduction should be done gradually, over a period of, say, 12-15 years, to give consumers and investors adequate time to adjust.
The revenue gains from eliminating these deductions should be used to balance the budget, to pay down our national debt, if possible, to reduce tax rates, or some combination of these. Better minds than mine could determine how the revenue from closing the mortgage deduction loophole should be allocated. This would benefit all Americans, in the long run.
The average working stiff does NOT benefit from the mortgage interest deduction. I have worked hard all of my life, I have been a home owner for the last 35 years (4 different houses), and I have never once claimed that deduction.
I agree. Government intervention in markets, be it tax deductions or the federal reserve distorting interest rates and currency valuation, tends to end up at a minimum screwing up market balance and often ends up ugly. Unfortunately, "moderation" is a term that has been lost in both Washington and on Wall Street.
Another issue is that I think we just don't do a very good job teaching people about incremental math or marginal analysis. Too many seem to have trouble understanding that if they get a 28% tax write off on a big mortgage, they are still paying compound interest on 72% of the balance. Then they forget about maintenance, insurance and taxes that are incurred each year. Not just individuals, I've seen many businesses like local restaurants fall for this realtor "tax" propaganda and end up out of business. They did fine in rented storefronts, but once they built I don't think they thought out the total cash outlays involved each year.
Canada is argued by many credible sources to be in the biggest real estate bubble in the developed world. It might not have the deductions, but still plenty of shenanigans - nothing down, artificially low rates, foreign blood money playing in the market, etc. BC has already seen a slow but steady deflation, and it will be everywhere in time. Mortgage deductions just subsidize certain sectors that no doubt lobby for the deductions. Corporate welfare under another name.
End 'em, use the proceeds to lower corporate taxes, and see if the squawkers who support that can put up.
I'm not up on the details of the Canadian real estate market, but your comments are consistent with my perception of what's going on in BC. Mortgage interest deductions would only exacerbate the bubble.
Rank: 14 Country: Germany Industry: Consumer Durables The world’s largest automaker is also the only one to make the top 25 this year. Volkswagen sold 9.3 million cars in 2012, up 12.2% from the prior year.
Who sold more than 9.3 million vehicles? Looking at CNN and others it seems there are different numbers depending on who is reporting. For example does Toyota count Subaru being a small stockholder. It did surprise me that Toyota fell out of the top corporations.
It also looks like VW had $28 Billion profit while Toyota had less than $12 billion. Based on Profit VW was 6th largest Corp in the World. And that after all is the most important number. You can sell a billion cars at a loss like GM does and go broke. To me Number ONE means profit. Not how many widgets you can give away.
This is from an earlier Forbes article: "Toyota sold 9.7 million cars and trucks last year, compared to GM’s 9.29 million and VW’s 9.1 million."
Per Warranty Week, the warranty accrual on a Volkswagen Golf or a Mercedes-Benz C 200 is still four to five times as large as it is on a Honda Accord.
If I were a shareholder, that would concern me because those warranty costs hurt the bottom line. If I were a car buyer, that would concern me because I'd worry about being in the shop too much. At least the trend for VW is down, even if the numbers are still higher than the other big manufacturers.
It must not have hurt VW's bottom line too much. If they had net profit of $28 billion on fewer cars than GM or Toyota. I think VW's dominance in the EU, Brazil and China are the major reasons. Those countries are used to paying top dollar. The real emerging market is China and India to a lessor extent. Look for VW to dominate those two.
I have a question concerning those warranty costs. When I had my Passat TDI in for a new gas cover. They gave me a free loaner car. I understand MB and BMW do that as well. I know Toyota does NOT do that. Not sure about Lexus. It was hit and miss with my wife and her Lexus warranty work.
Wanna guess if GM spends anywhere near $11 billion in the USA on new factories or even opening old ones? They are cutting back US content for their main vehicles, the Silverado and Sierra PU trucks. More Mexico jobs.
VW was not bailed out by the tax payers with a promise of creating USA jobs. I realize the little profits GM is making are from the China operations. Still they have an obligation to create jobs here Not in Mexico and elsewhere. Looking at the 2014 AALA report all the GM vehicles are losing USA content. It is a steady decline in the US content by GM and Ford.
And VW has actually increased US production with the new VW plant.
No, but VW is (partially) owned by the taxpayers. That sounds a bit familiar. :shades:
GM's obligations are to the shareholders and the taxpayer/shareholders are bailing out.
Don't forget about all the incentives VW got from various city, state and federal entities down in Chattanooga. I bet the payback period will be a couple of decades, assuming they ever dry up. Something tells me Chattanooga State will be teaching "how to work at VW" for a long time.
One of my nephew recently got a degree there in "how to work for an auto supplier" not long ago. Got a job right away making plastic interior bits for cars, among other things.
I think you are concluding that VW getting tax incentives etc to build a factory in TN, gives the tax payers a piece of the company. Bribes, incentives, cheap energy, land etc etc etc have been used forever to seduce companies to locate in a given state, county, city.
I am sure all the domestics have benefited from that sort of corruption as well. That is far different than taking Federal dollars and bailing out an automaker or a bank or whatever. Not only bailing out the auto maker, but bailing out the Union Pension plans that were way underfunded.
Then GM shows their gratitude by slowly moving their factories out of the USA. Spending OUR Tax dollars to screw US workers. Biggest GM seller Silverado PU truck. 2007 model 90% US/Canada content. 2014 Silverado 40% US/Canada content. You be the judge.
Hardly a fine distinction. TN offers VW incentives to build a factory and create jobs. VW lives up to their part. Jobs created, cars built, and economy improved for those tax payers in TN.
GM gets massive pile of tax dollars to keep jobs and expand in USA. Instead they expand elsewhere protecting a few union jobs and pensions in the USA. How have I the CA tax payer benefited in any way? If the states with GM/Chrysler plants had ponied up the tax dollars that would be different. Not only did they use a disproportionate amount of CA tax dollars. They closed the only domestic auto factory in CA. Putting 4700 UAW folks onto our welfare roles and breadline. CA is broke, with the highest poverty in the nation. We cannot afford to keep Michigan afloat.
We share the same feelings. The GM loyals will say we got paid back. They leave out the $29 billion that bailed out the GM/UAW pension fund. Money down the toilet for sure. Every time the Feds sell more GM stock we lose more money. And we did not get screwed nearly as bad as the poor schmucks that had GM bonds. I am sure a lot of that loss hurt people's IRAs and pension funds.
Comments
Too bad usury laws went away.
One, usury laws should be in place. If the person is a poor risk don't loan them money. I am tired of picking up the tab when the banks make bad loans.
Second, the high risk borrowers need to lower their standards on car purchases. This gets back to the usury laws. Buy a $5000 whooper at 12% interest for 3 years and keep your payments under $200 a month. If you cannot afford that at minimum wage better get a bike and a job close to where you live.
10 year Old GM cars can be great buys.
Bloomberg is trying to put a different spin on VW's numbers.
"The Volkswagen Group further strengthened its position in the global markets in the first three months of fiscal year 2013, despite the challenging conditions and intense competition. Including China, deliveries increased by 4.8 percent to 2.3 million vehicles worldwide. The Group's share of the global passenger car market rose year-on-year to 12.6 percent (12.2 percent)."
I'd be more concerned with a student loan collapse than car loans.
My sister has lived gone to college and worked in Seattle since the late 1960s. She has never owned a car. Rides her bike everywhere she goes. I would imagine she takes it on the bus as well.
The student loan issue is big as well. The difference you cannot get rid of a student loan with foreclosure, repossesion or bankruptcy. Dying is the only way to get rid of a student loan provided you are not married and pass it onto a spouse.
Student loans also have zero collateral. At least with a car or cardboard house, it can be sold off.
Try getting to work in your part of San Diego County. :shades:
Now go get a job waiting tables in Seattle and try finding affordable housing without a two hour bus ride. Maybe in a VW Bus, shared with a half dozen co-workers.
(like the way I slipped VW in there? )
As a matter of fact the owner of a snowboard and skateboard factory lives near me. He rides his skate board to the bus then transfers to the trolley and makes it all the way 35 miles to his San Diego Harbor factory every day. Fact is we are spoiled having cars. Last I checked we are still free to live where ever we can afford to live. Get close enough to walk if you don't want a two hour bus ride or a 3000 mile airplane ride that I had every 3 weeks for 25 years. Don't make excuses for people that feel entitled to more than they have.
If you feel you have to have a car, buy an old VW Bug.
“While it was a challenging month, particularly in the compact and midsize sedan segments, we remain solidly focused on our long-term growth strategy,” said Jonathan Browning, CEO of Volkswagen Group of America, in a statement."
Detroit 3 gain market share in April on strength of pickups, crossovers and luxury cars (Detroit Free Press)
Reality is what it is. Lamenting will not change it. The folks running the show feel they need to flood our country with more cheap laborers and while regulating the jobs out of the country. The Elephants and jackasses agree that making citizens out of anyone that crosses the border is a win win for both of them. The working man on the bottom of the pile is screwed.
It is only the lucky few that get jobs in the VW auto factory.
I won't disagree about your basic slant regarding those workers. They'll end up taking those high interest high risk loans that keep some GM models moving, and most of them will pay the note, too.
Are you sure? I see more and more people living in tents and their cars. Just announced that we are at the lowest home ownership in 18 years. You can afford a condo. That puts you in a higher bracket than most.
With the banks borrowing from the Fed at near Zero and lending at very high rates, emphazises this Federal Government is not interested in the American people. Consumer interest should be capped at 5% over prime.
Lower home ownership might not be all bad. The very unstable work climate today demands it - I know quite a few people who have moved many states for jobs. Hard to do with a mortgage looming over you, especially if you aren't old enough to have any real equity. It might make for a more flexible workforce, like can be seen in the competition we are supposed to mimic, right? Also more money for other things if the situation is like it is here, and rents are often far lower than the carrying costs of a mortgage.
I would have been dumb to buy that condo when I moved here, and I still see it as a bad investment.
Maybe interest other than mortgages should be tax deductible, too. No reason realtors and contractors should receive defacto subsidies.
I agree with you. You can rent in CA far cheaper than owning. I am sure Seattle is the same way. Out here in small town midwest you pay $1100 to $1200 rent on an $80k home. Makes buying a much better option.
I would have been dumb to buy that condo when I moved here, and I still see it as a bad investment.
Again I agree with you. I don't think Seattle has felt the pain of CA, AZ, NV or FL homeowners. With our dollars shrinking in value how much longer will the rest of the USA maintain higher prices?
I wandered through the Toyota, Lexus, Chrysler & Jeep showrooms this morning. They were all dead here in So Indiana. I think the only thing keeping US going is the Fed printing more money.
PS
all consumer interest was deductible at one time. Not sure who took it away.
So most all the working stiffs at the Volkswagen factories down in Toluca and Veracruz State own their own spots. Great bus system down there too. :shades:
The economy and property values aren't dead everywhere. Seems PNW, Bay Area, Austin, NYC metro etc are slowly coming back, and I've read Phoenix and some parts of FL are stable now too.
Last Sunday, Honda, Toyota, and Lexus here were packed, and even the MB dealer had people coming in. I bet the domestics had customers too, with their improved lineups. The economy is now as regionally divided as politics itself.
We will soon be in this condition in CA.
I think this is the way it should be, and mortgage interest should also not be deductible, in my opinion. Why? Deductions distort markets, for homes and consumer goods alike, and were motivated by political motives. That's not a good thing. We don't need these two types of social engineering measures. For a reality check, look at Canada's housing market. It's very viable and serves that country's needs well. Also, our car and truck markets seem to be doing just fine without interest deductions on auto loans.
Since homes are often peoples' biggest asset, I believe that the elimination of the mortgage interest deduction should be done gradually, over a period of, say, 12-15 years, to give consumers and investors adequate time to adjust.
The revenue gains from eliminating these deductions should be used to balance the budget, to pay down our national debt, if possible, to reduce tax rates, or some combination of these. Better minds than mine could determine how the revenue from closing the mortgage deduction loophole should be allocated. This would benefit all Americans, in the long run.
"mortgage interest deduction who benefits"
The average working stiff does NOT benefit from the mortgage interest deduction. I have worked hard all of my life, I have been a home owner for the last 35 years (4 different houses), and I have never once claimed that deduction.
Another issue is that I think we just don't do a very good job teaching people about incremental math or marginal analysis. Too many seem to have trouble understanding that if they get a 28% tax write off on a big mortgage, they are still paying compound interest on 72% of the balance. Then they forget about maintenance, insurance and taxes that are incurred each year. Not just individuals, I've seen many businesses like local restaurants fall for this realtor "tax" propaganda and end up out of business. They did fine in rented storefronts, but once they built I don't think they thought out the total cash outlays involved each year.
End 'em, use the proceeds to lower corporate taxes, and see if the squawkers who support that can put up.
...and in the US the federal reserve will create and pop financial bubbles for you (seems about every decade)
Country: Germany
Industry: Consumer Durables The world’s largest automaker is also the only one to make the top 25 this year. Volkswagen sold 9.3 million cars in 2012, up 12.2% from the prior year.
http://www.forbes.com/pictures/edjl45efeik/volkswagen-group/
"Toyota sold 9.7 million cars and trucks last year, compared to GM’s 9.29 million and VW’s 9.1 million."
They're all very close, that's for sure.
If I were a shareholder, that would concern me because those warranty costs hurt the bottom line. If I were a car buyer, that would concern me because I'd worry about being in the shop too much. At least the trend for VW is down, even if the numbers are still higher than the other big manufacturers.
I have a question concerning those warranty costs. When I had my Passat TDI in for a new gas cover. They gave me a free loaner car. I understand MB and BMW do that as well. I know Toyota does NOT do that. Not sure about Lexus. It was hit and miss with my wife and her Lexus warranty work.
And VW has actually increased US production with the new VW plant.
GM's obligations are to the shareholders and the taxpayer/shareholders are bailing out.
Don't forget about all the incentives VW got from various city, state and federal entities down in Chattanooga. I bet the payback period will be a couple of decades, assuming they ever dry up. Something tells me Chattanooga State will be teaching "how to work at VW" for a long time.
One of my nephew recently got a degree there in "how to work for an auto supplier" not long ago. Got a job right away making plastic interior bits for cars, among other things.
I am sure all the domestics have benefited from that sort of corruption as well. That is far different than taking Federal dollars and bailing out an automaker or a bank or whatever. Not only bailing out the auto maker, but bailing out the Union Pension plans that were way underfunded.
Then GM shows their gratitude by slowly moving their factories out of the USA. Spending OUR Tax dollars to screw US workers. Biggest GM seller Silverado PU truck. 2007 model 90% US/Canada content. 2014 Silverado 40% US/Canada content. You be the judge.
All the rest is just trying to categorize and justify how the money is spent.
GM gets massive pile of tax dollars to keep jobs and expand in USA. Instead they expand elsewhere protecting a few union jobs and pensions in the USA. How have I the CA tax payer benefited in any way? If the states with GM/Chrysler plants had ponied up the tax dollars that would be different. Not only did they use a disproportionate amount of CA tax dollars. They closed the only domestic auto factory in CA. Putting 4700 UAW folks onto our welfare roles and breadline. CA is broke, with the highest poverty in the nation. We cannot afford to keep Michigan afloat.
Did I get a car, cooler, T-shirt with GM's logo? Nope.
Did I want my money going to this "bailout" NO.
Fiat paid us back.
How long before more clowns from GM fly to DC in corporate jets to try to steal more of our money?
That's just another name for tax dollars.
One example of how bailing out GM helped California - GM has ~225 dealers there (the largest car market in the US).
Meanwhile VW profits go back to the German state of Lower Saxony. I don't know why Upper Saxony got left out in the cold. :P