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I'm not concerned. Auto loans are inherently secured - they just repo your car. And unlike houses, auto prices are not drastically over valued.

heisenbit 9y ago
The underlying assumptions of the value of the used cars may well be too optimistic particularly during a crisis period. That is not counting the systemic risk from regulation e.g. my diesel car is has lost considerable value and there is a non zero risk that I may not be allowed to drive to the city center in two years. The used car market for diesel cars tanked in Germany. The widespread adoption of electric vehicles makes calculating the remaining value of a car difficult for any period beyond 5 years. When the buyers fully understand that and factor that into discounting future values the regional used car markets will move a step down.
EvilGrin 9y ago
So when they repo lots of cars due to a downturn the second hand market will crash. Which means the book value for all cars goes down the toilet.
- sigstoat 9y ago
  > Which means the book value for all cars goes down the toilet. which isn't that big a deal, because average people aren't buying their cars as investments (or repeatedly refinancing them). your car still gets you to work just fine even if it is worth less than you owe. and that state of affairs would resolve itself in <5 years, even if you just bought it. > So when they repo lots of cars due to a downturn the second hand market will crash. that would only happen if folks could no longer service the debt on their vehicles. the amount of auto loan debt isn't evidence that will happen any time soon. folks were able to "suddenly" develop problems servicing their mortgage debt because they'd gotten adjustable rate mortgages. adjustable rate loans for automobiles are much less of a thing.
  - mcguire 9y ago
    I'm not entirely sure leases aren't the ARMs of the car world.
yuhong 9y ago
Which also reminds me of Harvey destroying cars and insurance companies.

heisenbit 9y ago

The underlying assumptions of the value of the used cars may well be too optimistic particularly during a crisis period. That is not counting the systemic risk from regulation e.g. my diesel car is has lost considerable value and there is a non zero risk that I may not be allowed to drive to the city center in two years. The used car market for diesel cars tanked in Germany. The widespread adoption of electric vehicles makes calculating the remaining value of a car difficult for any period beyond 5 years. When the buyers fully understand that and factor that into discounting future values the regional used car markets will move a step down.

EvilGrin 9y ago

So when they repo lots of cars due to a downturn the second hand market will crash. Which means the book value for all cars goes down the toilet.

sigstoat 9y ago
> Which means the book value for all cars goes down the toilet. which isn't that big a deal, because average people aren't buying their cars as investments (or repeatedly refinancing them). your car still gets you to work just fine even if it is worth less than you owe. and that state of affairs would resolve itself in <5 years, even if you just bought it. > So when they repo lots of cars due to a downturn the second hand market will crash. that would only happen if folks could no longer service the debt on their vehicles. the amount of auto loan debt isn't evidence that will happen any time soon. folks were able to "suddenly" develop problems servicing their mortgage debt because they'd gotten adjustable rate mortgages. adjustable rate loans for automobiles are much less of a thing.
- mcguire 9y ago
  I'm not entirely sure leases aren't the ARMs of the car world.

yuhong 9y ago

Which also reminds me of Harvey destroying cars and insurance companies.