"Are auto loans the next subprime market to worry about?"

[714562]

Probably not...yet. But it's still a fascinating read. Saw this on Wonkblog and then heard there was a 3 part story done in the LA times.

The Wonkblog post:

Are auto loans the next subprime market to worry about?

Part 1 of the LA Times story:

A vicious cycle in the used-car business - Los Angeles Times

 

[Economics]

Ehh, maybe. There's pent up demand (Pent-Up Demand Fuels Auto Sales Past Sluggish Jobs - Yahoo! Finance) still being met domestically with autos and the credit is flowing little cheaper/easier to help satisfy that demand with many getting them at low rates. The average car age is old as it's been in a while (Average age of U.S. vehicles is now 10.8 years) and since the majority of americans live in auto dependent areas they'll need to upgrade one way or another like that L.A. Times article was saying with that lady who rode 2 hrs for work on that bus and also alluding to how the auto loans during the recession perform better than others. Folks just need their cars in many places to get around. I can see where they are going with the article though.

I haven't read the whole thing will try later. If its subprime, it won't be to the extent it was in housing. It's just a different market. I'd worry about other markets like bonds and labor before cars right now. Props on the links knew you had it in you to not all the time (fukking with you)

 

[714562]

Ehh, maybe. There's pent up demand (Pent-Up Demand Fuels Auto Sales Past Sluggish Jobs - Yahoo! Finance) still being met domestically with autos and the credit is flowing little cheaper/easier to help satisfy that demand with many getting them at low rates. The average car age is old as it's been in a while (Average age of U.S. vehicles is now 10.8 years) and since the majority of americans live in auto dependent areas they'll need to upgrade one way or another like that L.A. Times article was saying with that lady who rode 2 hrs for work on that bus and also alluding to how the auto loans during the recession perform better than others. Folks just need their cars in many places to get around. I can see where they are going with the article though.

I haven't read the whole thing will try later. If its subprime, it won't be to the extent it was in housing. It's just a different market. I'd worry about other markets like bonds and labor before cars right now. Props on the links knew you had it in you to not all the time (fukking with you)

I mean, I don't think there are any time bombs to worry about -- the market is not big enough and the ease of repo/resale is so the feedback loop is very quick.

The age-of-vehicle and the pent up demand have been recurring themes for a while now, so that's all true

I'm just shocked at how big some of these home-spun pseudo lending institutions have gotten with absolutely minimal oversight. Some of them have gotten straight up Industrial Bank classification from the FDIC. That's weird as fukk. I mean ABS was, to the best of my knowledge, the second most common type of asset backed security in '07 before the world ended...but they really didn't touch that market at all.

The bond market is...well it's the bond market. Corporate, MBS, and government bonds are still the lion's share -- there shouldn't be any trouble in the near future for any of those, despite what the doom and gloom boys say.

Labor has the potential to be a HUGE problem if the government feels confident enough to raise rates before unemployment fixes itself but..we're not there yet.