Auto loans could pose a bigger threat to young Americans than student loans. For the first time, the outstanding volume of auto loan debt just surpassed student loan debt.
Just a moment...
Rent or mortgage plus daycare will easily take up 3/4 of that.
Study: Median American's Savings Account Balance Is $1,200
That seems high
Good god, according to census.gov:
Real median household income was $74,580 in 2022
Which works out to $6,215/month. Less than $200/month for emergencies, nobody is saving money with these figures. Our economic system is broken.
Add it to the pile of broken systems.
Our expenses are a little less but my wife and I have two kids. Although if we had bought a house around now instead of 7 years ago, it would easily be much more. If we had decided to buy a new car, add that on top.
But one thing to note is that is the average so that is anywhere from a single person to someone with six kids.
For the first time? Go back a generation and student loans didn’t exist.
Not to mention auto loans can be discharged in bankruptcy. Try doing that with student loans and you'll quickly find out it isn't possible.
Damn, it’s almost as if making a country almost entirely car dependent is a terrible fucking idea.
To be fair, the automobile centric city has worked for about 70 years.
The cost of cars is being driven higher by demand for more features. The car companies can make a really cheap car, but consumer's want air conditioning, power everything, fancy infotainment systems, heated seats and quick 0-60mph times. Then additionally the government mandate for safety and emissions increase the cost further.
You can buy a new car in India for under $5,000 USD.
To be fair, the automobile centric city has worked for about 70 years.
I’m not sure I buy this. Countless communities have been obliterated by overpasses/freeways paved through their neighborhoods. We have horrible suburban layouts we’ve embraced that are completely defined by parking lots that cause water management and housing issues. We’ve completely ripped up the little public transit we had and made few gains in that time.
Cars have created tons of problems over the 20th and 21st centuries.
Has it really worked, though?
but consumer’s want air conditioning, power everything, fancy infotainment systems, heated seats and quick 0-60mph times.
This is the same lies that the big three have been trying for decades. I want a normal boring fucking car. I want to spend as little money as I can on repair maintenance and fuel. I don't want some garbage bullshit infotainment system.
And no I can't buy a new car in India. Go ahead and sell me one.
So I looked up the specs for the first 5K-ish India car I found.
https://www.cardekho.com/maruti/alto-k10/specs
As far as I can tell, it has every feature you’re saying is responsible for western automakers charging around 6 times the cost of this car… sans heated seats and purported safety standards.
Chevy charges an additional $1K for the package that adds heated seats to their Bolt EV.
So, am I to take you at face value that you’re inferring that safety concerns and standards are responsible for the remainder of the price gouging?
I grew up believing all loans is money banks lend you from their own money they have on hand. But that is a lie. That money is created by the fed reserve when the paperwork is signed. And all the bank has to do is follow rules their lobbyists write.
Why do we even need private banks? I bet people could handle their own fianaces a lot better if we had direct access to fed money creation and we didn't let bank lobbyists write the rules.
asdfasf
Rich people are rich because they use other peoples money. Banks do the same.
60% of known species are parasites. However, the animal most well known (human) has 110 species of parasites hinting very very strongly that the 60% is a huge undercount.
The CEO of the corporation I work at took a one month vacation this year and everything was fine. One of our service techs took last week off and every order was late.
At least you can declare bankruptcy on an auto loan...
At least auto loan debt isn't enshrined into law as "life debt" like student loans are.
What, thats crazy. I bought my car certified pre-owned, fully paid it off, and have been driving it for 8 years with hopefully another 8 more to go. I know car prices have been going out of control though, whats going on?
Harder and harder to do that. My goal was to buy a used car then finally a new electric car.
My 2012 pre-owned car was paid in cash for $7k about five years ago. And my goal was to save $25k cash, and trade this one in for a newish car.
My 2012 exact car can now be bought for $9k. And newer cars are now in the $40k range. AND they have shitty subscriptions for features.
Near the start of the pandemic, all the car rental agencies sold off a bunch of their cars because the cars weren't making money. And with the pandemic in swing, car companies were making less cars, because of health restrictions as well as supply chain issues. As the pandemic slowed down, car manufacturers weren't able to keep up with demand for new cars, and prices on used cars soared. Now manufacturers have decided they like the money flowing in like that and they've hiked their prices and are making fewer of the entry-level cars many people bought.
Auto loans are terrible and I always pay them off as soon as I can, but they will never really be that big a threat because you CAN sell your car and buy a substantially cheaper one, in most cases. Sometimes you can sell your car and just use public transit or bike/walk.
Used cars literally cost more now than the 3/2 townhome I bought in 2012. I don't understand how most people survive in this economy.
When I was a kid auto loans would be for 2 years or 4 years maybe, now. They'll give you a 10-year loan on a car.
Interesting. But if everyone sells their car soon as the economy brings the pain then they won’t be able to sell their cars right?
I wish automakers were able to/would actually import some of their cheaper electric vehicles from east asian markets.
The Honda N-Van e would suit the needs of the vast majority of people. 124mi of range and only ~$8,000.
Can I say I love that derpy little thing and I hope they sell it here?
i would love them here, too.. but kei cars would not fair well on u.s. roads vs all the heavy, oversized pickups and suv.
they would also not be nearly as economical, in terms of purchase cost or efficiency, when built for the u.s. market.
True, not to mention the road conditions as well.
It wouldn't meet the safety standards. A substantial portion of the cost in a modern vehicle is the safety systems and then the emissions systems.
It wouldn’t meet the safety standards.
This may partly be because basically all of them are legal for highway use, so even if all you need is a car that is safe to drive a couple of miles to the grocery store at 35MPH, the safety features and engines (and thus emissions system capabilities) have to be designed with the expectation that the vehicle will be used at 80MPH beside all the other vehicles out there.
It might help to have a wider variety of vehicle licensing options to allow for low-speed, lower-spec 'city cars'. Though enforcement would probably be an issue, and the safety standards would still need to be robust enough that people in small cars wouldn't be too badly killed by the gigantic pickup trucks they have to share the road with.
then the emissions systems
It's an EV.
I wouldn't mind a Tuk Tuk. Could use about half the year without issue. My daily commute doesn't involve highways and for repairs any motorcycle shop could handle it.
This is probably by design. The “system” keeps cities designed and built in a way that they are impossible to traverse without cars, which forces people to buy cars. Youngsters are earning shit wages but can’t get to work without a vehicle so they get into debt. It’s all fucked. I live in the Netherlands and can do everything I need to do with just my cargo bike. It rocks.
Certainly car loans can be predatory, and it is worth improving oversight, limiting what loan providers are allowed to offer. While I’ve seen plenty of people in trouble with car loans, it was always predictable/likely and my first thought had been how could a loan provider have approved that. I’m sorry if people are desperate for transportation and short of options but it’s not helpful to offer rates like credit cards, nor roll over previous loans, nor offer loans at high percentages of people’s incomes
There's a reason my car is old enough to drink 👍
Mine’s almost old enough to vote!
I just looked up, the median commute distance in the US is 10 miles and time is ~25 minutes. You can get a vehicle that will get you 10 miles away in about that time for ~$600. Ebikes are great. Regular bikes can be found for the cost of a fast food meal, if not free. As much as people say "cars are mandatory", that might be an untrue assumption to start from. However, the car-focused layout of American cities has made it less safe to use bikes, which would be great to push back against.
Just gonna hop on my ebike to make the 10 mile journey in -40° weather... brb
Ah yes, the one theoretical counter-example that completely nullifies my argument. You're right, all hail Cars. What percent of Americans experience -40 degree weather again?
no. they won't. not under the present system. unlike student loans, auto loans can be discharged during bankruptcy (it is difficult to do with student loans) and you can easily sell the asset to pay off all or part of the balance (can't sell your transcript or degree, just yourself to an employer).
Right? This is the stupidest fucking article. Like you can even have the car repossessed and the loan terminated.
Auto loans may legit be one of the safest type of loans available to students.
Where it gets spicy is:
Buying (financing) a new car, and then having it repossessed at half the purchased value (still 50%) debt to pay
If people have cars repossessed en mass, the second hand car market will be affected, prices for used cars go down (because the supply goes up). This makes repossessions not cover the whole loan, see above point
Finally, as more and more Americans no longer have access to cars, they also lose access to... A lot of society (work, education, healthcare). If this affects a large enough percent of the population, there will be macro effects.
Federal student loans are not just difficult to discharge, they're practically impossible to discharge. There are so little valid cases for it, you could count them on one hand. And that does not even take into account the fact that the sitting President and their cabinet can just say, "No, **** you." Even after you qualify and a court agrees with you.
Edit: Just gonna point out that the only guaranteed way to discharge student loans without the federal government possibly overturning the ruling is to simply die. Its an excellent system perfectly designed to ensure that both the public sector and private sector can continue reaping the benefits of social mobility while preying on the most vulnerable segments of the population.
Discharging student debt in bankruptcy is so hard, it made the national news, https://www.forbes.com/sites/adamminsky/2020/01/22/a-judge-just-wiped-out-this-mans-221000-in-student-debt/amp/
Im about to get crushed this month. No email yet but i Don’t see how this will not crash the exonomy.
But don't cars depreciate a lot? I get that this article is clickbaity. But I think with the elevated cost of cars the autoloan debt is still something to take seriously. Even the response of "its not a big deal, you can always go bankrupt" is pretty wild.
You don't even have to go bankrupt you can just give the car to the bank that has your loan. You'll be fine. Just without a car lol