For future dentists planning on getting a "new" car...

[Cold Front]

For those of you who are about to graduate (or still in school), who keep wondering what your student loan payments will be like... you might also be secretly planning to reward yourself with a new car after all these years of hard work when you graduate. Yes, that will be another loan - and IF so, you might just want to start thinking about the current state of the auto loan industry before you start calling or stopping by the dealership. Another bubble event awaits.

http://www.usatoday.com/story/money...p-1-trillion-delinquency-rates-rise/89911210/

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[Cello]

The American consumer has gotten far too comfortable with buying things on credit.

 

[Cold Front]

In 2015, the auto loan rejection rate was about 11-12%. That number significantly went down to 4-5% this year. Why?

Auto lending industry is very competitive. Car sales are slowing down for 2015 v 2016, so lenders are getting creative; providing longer terms (it used to be 48-60 months, now there is 96 payments option), and they are targeting people with bad credit scores (sub-prime loans) - the fastest growing segment in loans. With new and inexperienced lenders entering the market, delinquencies on the loans are rising. So you have about $100 billion of those loans in default status.

Combined with whatever else those customers could be defaulting on (credit cards, students loans, etc), you have a recipe for even a bigger problem on the overall economy. To offset the roof from falling down, lenders will offer more band-aid products and options to help keep their doors open further into a high risk territory, all in the name of competition and margins. Consumers see these requirements getting easier and easier through lender marketing on TV, online and radio, they now want that "big ticket" purchase more than ever.

 

[Cello]

In 2015, the auto loan rejection rate was about 11-12%. That number significantly went down to 4-5% this year. Why?

Auto lending industry is very competitive. Car sales are slowing down for 2015 v 2016, so lenders are getting creative; providing longer terms (it used to be 48-60 months, now there is 96 payments option), and they are targeting people with bad credit scores (sub-prime loans) - the fastest growing segment in loans. With new and inexperienced lenders entering the market, delinquencies on the loans are rising. So you have about $100 billion of those loans in default status.

Combined with whatever else those customers could be defaulting on (credit cards, students loans, etc), you have a recipe for even a bigger problem on the overall economy. To offset the roof from falling down, lenders will offer more band-aid products and options to help keep their doors open further into a high risk territory, all in the name of competition and margins. Consumers see these requirements getting easier and easier through lender marketing on TV, online and radio, they now want that "big ticket" purchase more than ever.

Next they'll bundle the loans and sell them off to foreign investors, if they aren't doing that (again) already.

 

[oralcare123]

Buy a loaner, they are just like new cars used for only 8-9 months, 5 000-8 000 miles on them, still have warranties and at least 10K cheaper. For the car loan go to the credit unions. My car loan rate was 1.45%

 

[candyland1]

Excellent advice! I graduated last year. Still driving my 1998 Corolla with 99,000 miles. No car note and my liability insurance is $30/month! Save that money, honey!

 

[Scumbag_Steve]

.

 

[Franklo]

I will literally drive my piece of **** car till it stops running. Then I'll buy another basic car (no automatic windows, no beepy thingy that closes the doors you get the picture) and run that thing to the ground. Never could understand for the life of me why anyone would buy something that literally loses value the second you sign on the dotted line at a price that is the equivalence of a semester of dental school SMH 'merica.

 

[Cold Front]

I'm all for people saving money, but also hoping people don't drive old old cars to justify their frugal lifestyle. In the end, if that's what makes you happy, by all means do it. If you are a serious auto enthusiast and into fine machines that you can afford, do it too.

Drive and spend responsibly.

 

[TthDec]

I will literally drive my piece of **** car till it stops running. Then I'll buy another basic car (no automatic windows, no beepy thingy that closes the doors you get the picture) and run that thing to the ground. Never could understand for the life of me why anyone would buy something that literally loses value the second you sign on the dotted line at a price that is the equivalence of a semester of dental school SMH 'merica.

I'm with you on that one brother. I'm not really sure why anyone would buy a 'new' car. You could find any car used and let the other guy take the initial depreciation hits. If I ever get a big boy car, its definitely going to be used.

 

[Cold Front]

I'm with you on that one brother. I'm not really sure why anyone would buy a 'new' car. You could find any car used and let the other guy take the initial depreciation hits. If I ever get a big boy car, its definitely going to be used.

There are many benefits to buying a car new; from warranty to safety standards. A used car can be expensive to maintain. Without knowing the exact car model and year, it's a mute decision.