spwolf

no need to try, reason falls to deaf ears.

geko29

Of course not. It will be a long time before housing gets worked up into a mess like that again. But the auto financing market is there right now. A quarter of all auto loans (20% of new car loans) are subprime. Those loans are being repackaged into ABS (Asset-Backed Securities), and have an annual net loss rate of 9.8%--right at the 10% level where the housing bubble popped. 60+ day delinquency rate is 5.8%, which is actually higher than during the financial crisis. And eight-year car loans have finally passed the 1% mark.

Now, the auto financing market is only about a quarter the size of the mortgage market. So when it does all come crashing down, it probably won't throw us all the way back into the depths of 2008-9. But in a few ways, it will be worse. When people are delinquent on their mortgage, it can take years before eviction happens. Car repossession happens comparatively quickly, and can often result in almost immediate job loss along with other consequences.

The single most dangerous statement in finance and investing is "This time it's different".

Source: Auto loan delinquency rates are worse now than during the financial crisis

SW17LS

It just doesn't have the same impact on the economy.

COOLIS

There are differences between now and then, yes, but people are still living well beyond their means. People are still using their houses as ATM's. If there's any hiccup in the economy, we could see a nasty crisis. Maybe not to the levels of before, but it's going to happen again.

ArmyofOne

Nothing wrong with taking equity out of your home, so long as one is set up correctly to do so.

Stroock639

everyone knows this is all because buick killed off the lucerne

Kira X

iTrader: (24)

SW17LS

People are actually living less beyond their means than they have over the past 25 years.

There will be hiccups in the economy, there always are, and everything will be fine.

plex

iTrader: (11)

mmarshall

......which means having a reasonably secure job. Several of the people I've gone car-shopping with have asked me about that option, but, while a viable option, perhaps, if there is little prospect of losing one's job, I still feel uneasy recommending it. It would have worked for me, because my job was super-secure (I had that position for well over 30 years, and it still exists)...but my income was high enough, and my debts low enough, that I never actually needed a loan for anything after my house was paid off, which I accomplished in my 20s.

EZZ

Financing a car is a great way to build wealth as interest rates are low and investment returns have been high. I would never pay off a car as I've paid an average of 1% for the last 10 years on my car notes and my 10 year investment return has been north of 10%.

mmarshall

Yes, that does work for some people...and I'm glad it worked for you. Not everyone feels comfortable doing it, though. Not just me, but many people I know don't like to be in debt any more than they have to, particularly those with iffy job security. Repo can't come and take a vehicle that is paid off.

geko29

This is not accurate. It was close to accurate five years ago, as consumer debt bottomed out in 2013. Today it's at $13.2T, or 68% of GDP.

Furthermore, the makeup of household debt has shifted away from mortgages and to more auto and student loans, as well as credit card debt:



Previously, you've claimed that savings was at an all-time high, and this is also not correct:



The household savings rate is currently at 2.4%, the lowest it's been since before the financial crisis. It peaked at 12% in 2012. Prior to 1984, this figure was never below 8%, and was typically 10-12%.

Source: https://www.americanbanker.com/news/...nks-be-worried

EXE46

Why all the pointless preaching to an audience that might not be here on CL. All I care about is stockpiling as much cash as possible to buy a property or two when the market crashes and people are low on capital. I hope to use it to my advantage.....

The people who really needs the advice will never receive it so this is all pointless diatribe. Too many of these threads exist on CL, trying to convince strangers to invest or not to lease or only buy used cars etc.

geko29

I could be wrong (my crystal ball is pretty dirty), but I don't expect another housing crash to accompany whatever the next major economic downturn happens to be. I think we've learned our lesson (for now) in that specific market, and the next collapse will be somewhere else.