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Some time ago automakers decided the most lucrative pivot was into finance lending. The average auto loan is over 60 months because automakers have decided to
by nimbius 3y ago
Some time ago automakers decided the most lucrative pivot was into finance lending. The average auto loan is over 60 months because automakers have decided to embrace nothing short of a rental economy where affordable cars are eschewed in favour ofa captive market of perpetual debtors.
The us auto lending bubble is in the trillions and among the most threatening thing anyone can imagine during a recession.
- xnx 3y agoThis automaker behavior is enabled by low financial literacy consumers. Here's a pretty dramatic chart of how things have been trending: https://fred.stlouisfed.org/series/MVLOAS https://fred.stlouisfed.org/series/MVLOAS
- pc86 3y agoIt actually took me a bit to break out of the lease cycle; I leased a nice-but-not-ostentatious Volkswagen right out of school that was quite a bit more than 10% of my take-home. Hedonic treadmilling what it is I wanted to buy something but didn't want to "downgrade" and ended up going through another 3 or 4 leases before I had finally saved up enough to buy something used outright at the end of a lease. And what would you know, because I wasn't leasing something I had all these termination fees I had never had before, pushing $1500. It's easy to see how if you don't have the income to save and a cheap car lease is already pushing your budget you would get locked into not only leasing, but basically leasing from the same manufacturer or close competitors time and again.