Americans falling behind on auto loan payments at record pace | Hacker News Reader

Americans falling behind on auto loan payments at record pace

foxbusiness.com

34 pointssbmthakur43 comments

Lots of discussion over here a few days ago:

https://news.ycombinator.com/item?id=38000106

I can understand that amount if it’s justified for a family vehicle or a work vehicle but I have a sense that a lot of these loans being defaulted on are for BMW/Mercedes basic sedans which don’t serve much of a practical purpose beyond the logo on the hood.

> For many Americans, rising interest rates and high car prices have pushed their monthly payments above $1,000.

This is insane. I have never bought a new vehicle and thought having payments like this was the exception, not the norm.

Over the past decade "status" has become much more important for a lot of people, and what better way to show it than with an expensive car? Clothes don't shout "hey I'm expensive", if anything luxury brands are less loud. Property, meh, other than your neighbors nobody sees your house. Everyone has an iPhone and Apple Watch, and real expensive watches like Rolex are for old business men. So all that's left is cars.

I live in a post-Soviet country where minimum wage is something like €600/mo, yet the amount of luxury cars I see on the road is honestly staggering. I have no doubt these are on lease, but the payments and insurance must be thousands per month.

The funny thing is the tagline for Porsche here is "standout from the crowds while others dissapear". Sometimes it feels like I'm being a rebel by not having a Porsche, BMW, Audi, Mercedes or Range Rover.

(I drive a 18 year old MPV I bought for €3k earlier this year. It works amazingly well at getting me from point A to point B)

The norm is defined by what everyone else around you seems to be doing, and will expect you to do the same so as not to provoke introspection about why their comfort zone is the way it is. So this depends quite a bit on who the "everyone around you" is and what their influences are.

Article says 17%, which is surprising to me, but I’m not sure what it means exactly. You can construct a loan that has basically any monthly payment. Hard to tell if rising monthly payments is a bad sign. Could be shorter terms due to higher rates?

I don't have a handy article to link, but US vehicle loan terms have been steadily increasing for a while now. Many people end up rolling negative equity into their next loan, which can push them into choosing something more expensive for their next vehicle because the lender has a limit on what percentage of the new loan can be rolled-over negative equity.

My suspicion is that this trend is driven by long loan terms, high interest rates, and loans being larger than the cost of the vehicle.

> For many Americans, rising interest rates and high car prices have pushed their monthly payments above $1,000.

This is insane. I have never bought a new vehicle and never imagined this was the normal.

Edit: Finished a partial comment

I bet we see 10 year auto loans sooner than later.

I can't say I'm surprised? The amount of new > $60,000 cars I see on the road seems to be a lot. I'm earning a decent wage and even to me that's excessive.

Same thing I noticed (US). Even in not so well to do areas I see a lot of new, expensive cars, thinking how can people afford those. The answer I guess is they can’t, but they can get a loan?

At some point with all the EVs I was expecting to see lots cheap EVs by now. They were touted for their incredible simplicity after al. But it turns out those are not nearly as cheap and have higher insurance premiums too.

Interesting if this will propulse bike infra development

Probably not because large majorities of Americans cannot grasp the concept of using bikes for anything other than recreation.

Consider that the legislature pulled out a small ebike credit in a bill which provided a tax credit to buy an EV that was large enough that it would pay for 2 extremely high quality e-bikes entirely.

I would have to ride 20 miles a day just to go to work and back... Its a bit much even on an ebike. From what i understand, i have a much shorter than normal commute in my area. Americans dont typically commute on bikes not because they dont want to but because the size of our country and history has made it impractical or nearly impossible. Im not even sure i could find a legally bikable path to my job tbh. Too many highways in the way that need to be crossed or used. There is in fact, nuance. Its not as simple as Americans are fat and lazy.

That's not fair. More like "cannot afford" as in can't afford to live anywhere close enough to anything paying enough to afford to live near enough to work for it. Add to that XXXL trucks and giant SUV's that can't see crap and irrational hatred for bikes on the road and you've got a double whammy of being both too scared even if you're close or too far to be practical. Add on top the insane weather most of the country has, and total complete lack of path maintenance for bikes even when you've got bike paths. This ain't like some country like finland where I've seen videos where they plow and prepare roads for bikes half the time sidewalks and bike lanes are just impassable mounds of ice and sludge if you're up north.

Now course everyone and their mother may wanna chime in and go off about some anecdote in their city for them but you really gotta ask yourself how normal is your personal experience really? Just lookin it up various averages say 41 mile commute, 16 mile commute, 20-30 minute commutes, don't matter what estimate I pull up the average is way too high to make biking feasible.

So no it ain't "americans dumb ha ha" it's "most people can't do it" and redesigning the whole country to be able to is gon take a hot minute

The South Bay Area has nice weather for cycling and decent bike paths along the major rivers/creeks. But local governments have allowed some of those paths to be taken over as homeless encampments. Now some women I know are afraid to ride through there.

A very large majority of Americans cannot use bicycles period. Don't act like it's some kind of personal shortcoming. The entire idea is simply not realistic for most people, and I don't understand why that's so hard for some people to understand

I see so many new $80k trucks in my area that people can’t possibly afford. They’re the last people that would ride a bike or vote to improve infrastructure like that, unfortunately.

As if by magic, right around 2 years ago almost everywhere up and down the residential area where I live a bunch of brand new F-150s and the like all showed up almoat simultaneously in the driveways of every two-bit small trade business that could possibly somehow qualify as supporting "critical infrastructure" , like... junk hauling and muffler repair and driveway paving contractors, always LLCs and typically operated by Guy in a Punisher Shirt and his sole employee/cousin/wife/son.

How many of these PPP loans got forgiven is apparently close to 100%, as it is evident a lot of these clowns had plenty of spare money to modify whats supposed to be their work truck into a lane swallowing, coal rolling, baby-on-board family car crushing, eye-level LED light bar festooned rolling death threat / mid life crisis costume accessory.

Reminds me of people in housing projects maxing out their AC all year because electricity was free (and having big screen tvs and shit).

Humans will take advantage.

I know of at least one operation that happened in SW DC where some small-time Bitcoin mining hucksters managed to set up a bunch of rigs in a handful of low-income-area apartment blocks (Syphax Gardens area). not sure if the units rhemselves were low income or not but the entire building group was set up to meter electricity and cooling as a whole rather than by unit. So they paid (possibly subsidized) rent for a cheap, fire hazard "data center" space and got free electricity and cooling out of it for at least a year before people figured out what they were up to.

How on earth the neighbors ignored the maddening fan noise of those things ( there are a couple in the data center space I lease from, and you can hear the single rack that they occupy from several aisles away, far louder than all of the industrial grade servers and hardware installed all around them) I cannot imagine, but the miners probably couldn't run that many rigs given the perhaps 50A or 100A total available to each unit.

> I cannot imagine, but the miners probably couldn't run that many rigs given the perhaps 50A or 100A total available to each unit.

60A @ 240v is a common residential load center size, 14.4kW is max load it’s a main lug only panel fed by a disconnect fused at 60A, and 11.5kW if the panel has a 60A main circuit breaker. Upping that to 100A yields 24kW and 19.2kW, respectively.

I’m not sure what a miner uses for energy, but assuming 500w, you could get 13 on a 60A panel without any other loads present.

How long until people drive semi trucks and are too lazy to not bring the trailer to work?

In fairness, they do live in that trailer. Unlike houses, roads are free.

As much as I think it's futile to argue with people willing to make such sweeping generalizations, I exist, and I drive a large, relatively new, high trim half-ton truck and I LOVE well thought-out bike infrastructure.

I am however frequently opposed to the sort of half-assed, dangerous, bikes-as-an-afterthought band-aid ideas that I've seen coming out of my city. (The ideas from the county and surrounding cities are much better.) They're almost worse than nothing because they let the people in charge pat themselves on the back for being so pro-bike while doing almost nothing to improve bike safety.

Seconding this. My truck isn't half ton, it's a Tacoma, but I live in the PNW where having a truck is pretty invaluable.

I also ride my bike around my city, ride the bus, and ride the train. In fact, not that long ago I did a two week train ride to Chicago; somewhat ironically most of the people willing to make pithy statements about trucks won't ride a long haul train. They fly in planes.

Long haul trains in the U.S. are awful.

If you’re riding it it’s for an experience. Not as a practical realistic alternative to traveling instead of flying.

So yeah, people who believe train infrastructure should be high quality enough that they’re a real alternative to flying for the right distances will not be keen on traveling on the terrible sight seeing focused (I’m being generous here) long haul trains in the U.S.

I agree that train infrastructure isn't good, much less good enough. I was merely making some commentary along the lines of "put your money where your mouth is."

> a two week train ride to Chicago

That about sums up the utility of long-distance train travel in the US.

Taco buyers tend to be a much more balanced and pragmatic sort of truck owner, and I seldom find anything obnoxious about them. Not sure why this is but it doesn't generalize to Tundra owners unfortunately, who are more in the first category. I'm just stating (in another thread branch post - I'm not OP) what I see on the ground in my own environment; an area which was somewhat notorious for attracting these types of desperately attention-seeking characters long before the PPP scamming became widespread.

> Taco buyers tend to be a much more balanced and pragmatic sort of truck owner, and I seldom find anything obnoxious about them. Not sure why this is

I can tell you exactly why, in middle America at least. Buying a Toyota means you prioritize reliability and getting work done. Buying a Ford or Chevy (invariably a large cabin, premium leather comfort model wearing a pickup truck as a costume) means you prioritize image. Sure you might get work done with it - though I know way too many who don't - but it wasn't what you set out to purchase. It has to be American, it has to be big and have a fancy grille silhouette, and it has to be nice and cushy to sit in.

This is such annoying generalization that is mostly not true. It's just a smug attitude. Tacos get horrible gas mileage and they're every bit as bad for the environment and are not actually any more reliable than an American full size truck.

Tacos get the same if not worse mileage than full size trucks most of the time. Then they all put huge tires on them, load them up with $20k in overlanding gear that they never use and hurts gas mileage even worse. Maybe they think they are superior to big trucks but the fact is that they're not. It's just a smug attitude that people carry. It's shitty generalization to be honest.

I’m seeing the same thing in my area. I’m a software engineer. I make good money. Well above my areas income.

I’m considering buying a truck (to put a small truck camper in), but cannot get over the price. Dozens and dozens of used trucks that cost obscene amounts of money. Lift kits, custom rims, tints, etc. I just cannot imagine how people are affording these things.

I thought about upgrading my farm truck and the sticker shock got me too. I'll stick with my old truck for a while longer.

On the other hand, the amortized yearly cost of the truck I have is basically nothing. It is not surprising that there was room for the price to go up.

> Lift kits, custom rims, tints, etc. I just cannot imagine how people are affording these things.

Much of this crap is what also makes them completely unsuitable if not outright useless for genuine truck utility purposes, which reveals that the motivation of those buying these trucks was never to do anything practical with them in the first place, but just to project large menacing presence to other people who have to share the road with rhem.

None of that listed makes them somehow "useless" and many are useful upgrades

In this case, he’s correct. These are often excessive lift kits paired with low profile tires. You lose a good portion of your towing capacity, while basically killing all of your offloading ability.

These aren’t people improving capabilities. They’re only going for a look.

Part of the 2018 Tax cuts were for "work trucks" with a depreciation bonus

> For tax purposes, heavy SUVs, pickup trucks and vans are treated as transportation equipment, meaning they qualify for 100% first year bonus depreciation. Note that they must have a manufacturer’s gross vehicle weight rating (GVWR) above 6,000 lbs.

My boss/company owner, who is relatively frugal (he tends to prefer putting his money into property and his business rather than things like vehicles and the new tech etc), relayed being quoted $70k for a relatively basic pickup (F150 4x4 with a V8).

So out of touch. 99% cities in US simply can not use bike as main transportation just because how it is built.

Yeah, i know, parking req, zoning, public transport etc... It's a complex problem

Or, you know, they live 20 miles away and it's 20 degrees outside...

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