By AnnaMaria Andriotis and Ben Eisen Nov. 9, 2019 5:30 am ET John Schricker took out a loan to buy a car in 2017. Then he took out another. And then another.
Rising car prices have exacerbated an affordability gap that is increasingly getting filled with auto debt. Easy lending standards are perpetuating the cycle, with lenders routinely making car loans with low or no down payments that can last seven years or longer. Mr. Schricker would like to get a new car because the Jeep Cherokee started having mechanical problems this year. He recently discovered the vehicle was in an accident before he bought it, a fact he said the dealership didn’t disclose. The dealership, Rotolo Motors, didn’t return requests for comment.
Underwater car loans are more prevalent among subprime borrowers, according to ratings firms. That is in part because consumers with lower credit scores often don’t have the means to pay off the remaining balance on one car loan before buying their next vehicle. The Chevy broke down in 2017 shortly after Ms. Finley took it for an oil change and she couldn’t afford the repairs. She says that Valvoline installed a faulty oil filter and she is suing the company. Valvoline said it was aware of her allegations and had no comment.
Hey Wall St Journal, stick to exacerbating our military responses. You do it so well. Have you ever met a conflict wall st didnt like? Fuck no ya havnt. Theres to much money to be made.
The only thing worse than talking to a car dealer about a loan is telling the dealer “I only want to pay $xxx a month in payments.”
This is the next financial disaster. Low and middle income families obsessed with an A Class or other 'premium' car and ignoring the fact it is depreciating at an alarming rate or paying silly money on a lease deal.
If you can’t write the check for the purchase price, you can’t afford the car. A 20 year old low mileage compact car still runs fine.
If you finance, your car is worth less than you owe the minute you drive it off the lot. Next?
I fail to see a victim here. I see a mountain of bad decisions, but no victims.
People should buy cars they can afford. Welcome to the real world.
smokebutcher
240,000 miles on my 2009 Saab 9-3 Turbo ✊🏾 Hopefully 100k more to go
This seems to happen on a regular 10-year cycle.
PERSONAL CARS NEEDS TO BE FINANCED BY BORROWERS OWN SOURCES BUT NOT WITH BORROWED MONEY. EXPENDITURE ON FUEL, INTEREST, INSTALLMENTS MAY EFFECT THEIR FINANCIAL COMMITMENTS. VEHICLES CAN BE PURCHASED WITH BORROWED MONEY ONLY TO EARN INCOME. BANKS, LENDERS TO FINANCE TO TAXIS ONLY.
why not? those home owners got off scot free
A correction is coming!
You can’t fix stupid
If they live in California they'd better buy a car they can live in because the cost of housing (especially rentals) is skyrocketing.
This is a two way street. Yes these consumers are financially ignorant AF, but there’s some pro level exploiting going on here
Can you do a story about the geniuses on Wallstreet who took $12 Trillion out of the world's economy and how Obama tripled the DOW?
Lease cars if you often want/need new cars. Otherwise buy cars used and drive them for 10 years. Serial trader-inners are the biggest financial losers.
Tragic. Also please do an article about how treasury sec'y Mnuchin is injecting $$ into the stock market, and any potential issues that can cause. (And since it may have been done secretly, could the 'legal' manipulation still be construed as insider trading)? CREWcrew
Recipe for catastrophe. Never do this.
The bank charged me more because “I have not bought a car in 10 years”. I told them to go to hell.
Disruption on diesel & petrol cars, towards electric cars, will reduce value by 70+% and taxes over the next ten years. Who would buy a new diesel/petrol car these days? 🤔
This occurs when people lack financial discipline. There are people out there who are living beyond their means. They move high interest credit card debt to lower interest fixed loans. The problem occurs when the people repeat this, in aggregate, and they can’t borrow more.
This is the borrowers responsibility, not the banks, not government and it better not be mine. This is irresponsible and living above ones means. No one is taking advantage of these adults. They make there own decisions.
cry
Maybe if they made a ....oh I don't know....living wage or something like that?
'How racist!' in 3, 2, 1...
Car loans/banks & dealerships take advantage of people who aren’t educated on these types of loans & how they can negatively affect their lives. This is how they do business. Looking for suckers to sign on the dotted line.
I appreciate these people .. I’ll be able to get the cars & homes they lose much cheaper . I need someone to lose their Porsche
That’s crazy. Now do negative interest rates.
Deregulation strikes again.
news - this isn't. past prediction.
The headline references a guy who took out four auto loans in two years, trading in cars and rolling over the balances...Play stupid games, win stupid prizes.
It’s almost like...there are larger issues here.
.DaveRamsey followers don't do car loans.
I don’t disagree. Cars values plummet after driving off the lot. I drive around 30,000 miles a year, so my value is always way less than what I owe. I may start buying CPO or high mileage leases. Oh- and Trump stopped salespeople writing off expenses.😢🤔
So... They saw everyone around them falling into debt... and joined in?
And again, both lender and borrower are in the wrong.
Banks need to start saying no to these immature people who can’t differentiate between wants and needs.
The tyranny of compound interest Why the “Miracle of Compound Interest” leads to Financial Crises
I owe nothing on my car. My car is worth nothing. Even Steven.
CC: RadioFreeTom
Carprime
“More consumers are treating cars a lot like houses during the last financial crisis” Editor have the weekend off?
Eventually this tactic will turn & bite you folks🏴🇨🇦
Only buy affordable cars. Just like buying a home that one couldn't afford, back in the late 1990's ~ early 2000's. Living below one's means, is one way to remain debt free and have peace in the day to day grind. Also, use credit unions, as they use fair lending practices. ☮️
Some People are buying those cars knowing from the beginning that they can’t afford those cars .. only to impress friends and family
asharma I drive a 2006 that hasn’t even hit 50,000 miles. Sure I’d love a great infotainment system. I could afford a new vehicle. But what’s the point. It gets me from point A to point B just fine.
Translation: Americans are really dumb. A 4-door sedan worked perfectly fine for me and my siblings growing up. Hatchbacks worked before that. I ask family and friends why they chose a pricey suv or pickup, and watch them stumble to justify it. Gas-guzzling money traps.
My wife keeps saying how we need to get a new car, I keep telling her that I don’t want to spend 15-18 thousand dollars on a vehicle. And that’s used!! Hell I just bought a truck a month ago for $800. Not the best looking, but gets me from A-B.
among friends/ neighbors there are at least five or six who know how to build a car. go through neighborhoods/junk yards, get body, draw straws build the car. be sure you have relevant papers. why buy when you can build?
Sounds like there a just a bunch of financially illiterate people to me. Dont feel sorry at for someone owing $20,000 more than there car is worth. Somehow the lender gets blamed as it is NEVER the borrowers fault
Base prices for cars in America are higher than Mexico or Canada to begin with, WTF
The decline of an empire. I hipe im around when the millenials get to see the results of what their silliness causes.
Instead of finance being taught in high school, kids are taught about forced diversity, non-existent genders and failed cultures. Go get them, tiger!
Why do you chose a black woman for this headline? DoBetter
Total insanity: expensive social media photos for prestige, nothing more.
Not unlike the sub-prime mortgage disaster, granting loans that exceed recommended debt-to-income ratio is irresponsible lending. And, every American should have a Personal Finance course by their junior year in high school; well before they’re old enough to sign for a loan.
Vehicles got much more expensive concurrent with the 'cash for clunkers' program decimating the pool of cheap vehicles, necessitating the rise of subprime auto loans for people that would otherwise be buying used cars. 1/2
'I can't afford a car repair but I'll borrow money for a car I can't afford.' These people need to read Dave Ramsey. I dont feel sorry for them in the least. I never buy a new car and save up and pay cash for a used car when I buy a car every 12 years.
In 2003, a wrangler rubicon cost about 22k, today, that vehicle will cost you around 60k. It’s price gauging. And the govt supports it by offering tax rebates to donate cars; they junk them, raising the cost of all remaining new and used vehicles. It’s a scam.
Cars are always talked about like necessary commodities when people talk about finances. Cars to many people are a lifestyle or hobby. Some drive a 13 year old Toyota and spend $300 a month going clothes shopping. Others drive a $50k car paying $700/month but are otherwise frugal
They must be stupid.
There are quite different feeling of different people when facing the rise and fall.
And they chose this Black woman for the pic. Unbelievable.
...and the Zionist bankers rub their grubby, greedy, hands with glee...
Telling photo. Congrats to the editor for not cucking.
That’s just plain stupid
Cars should NOT, NOT cost that much! And for a family SUV to be close to six figures is ridiculous.
In my eyes, I think $20k or below is a good price for a vehicle. You can find great used cars with under 20k miles for that or less that would cost you $30k brand new.
It's only when the tide goes out that you learn who's been swimming naked. The lady is broke. She should be driving a 2k beater. Although to be fair the situation in the US is very bad. Let's see what happens when the economy dips.
That is NOT the sign of a strong economy. You guys know that? Right? Over at dismally conservative, horribly boring and outdated, WSJ?
Big mistakes being made!
Dealerships are banks and insurance companies partners.. Crooks club that will make your life miserable while telling u congrats for the new ride yet technically they s own it.. U are just a temp user and a gold mine to them
Car dépréciation kicks in the second u leave the dealership gate.. Just that moment it drops by a large margin.. If u drive back in to trade it.. A 30k car will be 5k cheaper just a min after. Bad investment.
Hard to stop people from being greedy and stupid.... then they’ll blame everything else except themselves
Allah destroys interest (usuary) and gives increase for charities. And Allah does not like every sinning disbeliever. [Quran 2 : 276 ]
Good Article. I refuse to buy a Vehicle I cannot afford. If you cannot afford the maintenance and Insurance on the Vehicle. You cannot afford the Vehicle. Period.
Oh, Americans who buy shit they can’t afford? The next Cleansing is coming post election. I don’t feel bad for people that buy shit they can’t afford. Maybe work harder and set yourself up in life.
But I need to look good? Hint - Save, pay in cash 'No collusion ins needed' Live within your means...
Why does anyone buy a $25k car, when they can’t afford to pay a repair bill when it breaks down.
and many live in them
I should look into how Tesla cars depreciate. How many cars go into repo? Car loan bubble? Tesla loan bubble? Luxury car loan bubble? Hmm. 🤔
Are they leasing or buying? Whatever they're doing, they're overspending on models they can't afford. They want to treat themselves, and it's hard to blame them for that.
Everywhere I see people are going bankrupt..car, house, insurance.. In the supposedly richest nation in the world.. Now you see why bernie is surging
It’s called buy here, pay here. Been going on for a decade. There kill switches in the vehicles, so if a payment isn’t made the car doesn’t start. Once a consumers in this loop it’s hard to get out. It’s not the lenders or dealers fault either. They are filling a “need”
DaveRamsey
If people could pull cash out their cars, it’d be a big difference.
if you live in a major city then your🚗 is an absolute liability!
Only a minor private problem.
But has that debt been bundled many times over into MBSes of practically indeterminate risk, yet ? Have those MBSes started trading, yet ? Under a different name, maybe .. to escape scrutiny ?
Interns write your articles now? How is that similar to housing? You can trade in a house and roll over debt to new one? Cars appreciate? Dipshits
What you mean to say WSJ is: People making nonsensical financial decisions are getting punished by the market. As they should be.
My 2004 Honda Accord has 287,000 miles and looks like hell with the paint all messed up, but I haven’t had a car payment since 2012 and I’m holding on to her until she simply stops working. I’d rather put $ into the duplex I just purchased. Buy assets not liabilities 👍🏾
If you can’t pay cash for your car it’s too expensive.
Never buy new!
Every suburbabnite has to purchase that over priced Acura or Audi SUV I know they cannot afford it & drive with the face covering sunglasses. They feel they have to impress..here's my problem, when everyone buys same, it's not impressive, buy a Fisker and stick out from the crowd
A Trabant makes more sense...
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