4 ms·

“Sub-prime credit rating” ≠ “guaranteed to default”. If you look at the graph next to the article, the number of sub-prime auto loans being issued is not up to

by sethg 16y ago

“Sub-prime credit rating” ≠ “guaranteed to default”. If you look at the graph next to the article, the number of sub-prime auto loans being issued is not up to the level it was during 2005–2009. (Unfortunately the graph doesn’t go any farther to the left, so I can’t tell if 2005–2009 was a bubble in the auto-loan market or just business as usual.) And defaulting on a $20K car loan is not nearly as disastrous (for the borrower or the lender) as defaulting on a $200K mortgage.

ck2 16y ago
defaulting on a $20K car loan is not nearly as disastrous Unless of course there are 100 times the number of housing defaults, because the car is not worth the price it was bought at a month later after it's used. Unlike land, cars never increase in value, they only plummet. I've never owned a car newer than 10 years old, I don't know why people have to drive brand new cars, they certainly don't get better gas milage (and apparently many people are using the credit to buy SUVs anyway).
- sethg 16y ago
  Among the reasons why the sub-prime mortgage crisis has been Bad For America are: ¶ People who live in depressed areas who are underwater on their mortgages can’t move to someplace with better job prospects unless they abandon hope of recovering the equity in their current house. ¶ In neighborhoods where a significant number of houses have been foreclosed on (or where there is a lot of excess capacity because it was built up right before the bubble burst), all property values suffer, even the value of houses where the owners have good credit and have been making their payments. ¶ It’s a PITA for a bank to sell a foreclosed house, especially in a neighborhood where there have been a lot of other foreclosures (see above). None of these factors apply to car loans.

4 ms·

“Sub-prime credit rating” ≠ “guaranteed to default”. If you look at the graph next to the article, the number of sub-prime auto loans being issued is not up to

by sethg 16y ago

ck2 16y ago
defaulting on a $20K car loan is not nearly as disastrous Unless of course there are 100 times the number of housing defaults, because the car is not worth the price it was bought at a month later after it's used. Unlike land, cars never increase in value, they only plummet. I've never owned a car newer than 10 years old, I don't know why people have to drive brand new cars, they certainly don't get better gas milage (and apparently many people are using the credit to buy SUVs anyway).
- sethg 16y ago
  Among the reasons why the sub-prime mortgage crisis has been Bad For America are: ¶ People who live in depressed areas who are underwater on their mortgages can’t move to someplace with better job prospects unless they abandon hope of recovering the equity in their current house. ¶ In neighborhoods where a significant number of houses have been foreclosed on (or where there is a lot of excess capacity because it was built up right before the bubble burst), all property values suffer, even the value of houses where the owners have good credit and have been making their payments. ¶ It’s a PITA for a bank to sell a foreclosed house, especially in a neighborhood where there have been a lot of other foreclosures (see above). None of these factors apply to car loans.