BANKS are SCREWED | CAR REPO CRISIS

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CarEdge Podcast: Daily News You Can Use
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Today on the Daily News You Can Use, Ray and Zach discuss the latest data on auto loan delinquencies from the NY Fed. Subprime lending is a mess. Tune in to learn more!

[@user-sp7kt7vw7w]

I remember about 20 years ago I wanted to buy a used truck. I figured I could make payments of 250 dollars a month. I went to the bank and told the loan officer I can make $250 dollars a month, what max price truck should I look for to keep my payment 250 or under and can you approve me to borrow that amount. I got approved for 12,000 but interest would take it over my payment. I never found the truck I wanted, or they wanted too much for what they were selling. It was about 3 years later I was able to find a 2007 Silverado Crew Cab WT for 19,900 new with 27 miles on it. I had gotten a pay raise and was so glad I waited, and I am still driving that same truck today, one of the best decisions I have made on a vehicle.

[@Spaethon]

In 2015, I paid $1,150 cash for a '99 Mitsubishi Mirage DE coupe, 5-speed, 184k miles. Today she's at 233K miles, very solid engine (no metal shavings in the oil pan), great condition, FL car. I replaced just about everything besides the engine and gearbox (mostly preventative maintenance), and not only am I getting that antique plate in a few years, I'm driving this car for the next 20 years if all possible. Live below your means! Life with no car payments is truly nice.

[@Shakashack2022]

Purely curious, not making any point… what was your transportation during the 3 years you waited until you got your truck? Proud of your patience, yet that’s a long time for most ppl needing/wanting a car. Thanks.

[@user-sp7kt7vw7w]

@@Shakashack2022 My wife and I had one car, I wanted the truck, she would take me to and from work when she could. I would walk to work in about 50 minutes, for the most part I would only have to walk one, at most two days a week.

[@emiliog.4432]

Banks never lose unless they fail, which so far has been rare. Banks pass on their losses to consumers. They don’t lose.

[@catsspat]

Not just to consumers, but to general public, through (direct) tax payer bailouts or through overall inflation (indirect tax on everyone).

[@Sky_Buttons]

Smells like the auto equivalent of the 08 crash to me

[@colynpips]

I’m 22 my dads 79 In 1967 he was 22 working for the union in construction making $500 a week or about $24,000 a year. He tells me he bought a 67 Corvette Convertible which was $7000. It took him about 3 1/2 months to have it paid in full. He also tell me how he bought his first used home for $30,000. Hearing things like this makes me really question if the older generations can even perceive how bad we have it now compared to how good they had it then.

[@1alayzzia]

Ask your dad how much money he spent per week. The part that you kids don't get is that we didn't buy coffee every day. We didn't buy new clothes all the time. Hell, eating out was a treat. Most people spent basically no money outside of groceries.

[@black6977]

Having worked in the auto industry for over 17 years 14 at one dealership I found that it was an insult to my intellegence when we was car shopping 2years ago and the dealerships was trying to gt me to pay 10k to 15k over MSRP. 🤣🤣🤣

[@2148aa]

only thing worse then dealing with a car dealer. Buying tickets on Ticketmaster.

[@ayyyejesterdazed]

I miss the days of never going over $50 for a ticket from a big act

[@Benjamin-David]

There should never be an 8 year loan for a vehicle

[@Daniel-ty2ke]

My boss is friends with the family that owns local Jeep dealership. He asked how they were able to sell so many $80K-$100k Wagoners in a city with $40k median income. They replied "0 down and 8 year loans!" We did the math with interest it was $150k for a JEEP!

[@nancy92792]

My uncle just bought a used truck at 27% interest. I'm not sure what the purchase price or his monthly payment are as I blacked out when I heard 27 % interest rate lol

[@wexysexy6942]

JFC 27% is insane. What is wrong with people these days.

[@RichieRich7339]

I just blacked out too

[@Papolucho702]

What… why…?

[@charles-fq2dw]

Buy here pay here dealer?

[@laser31415]

Damn did he use a credit card for it?

[@TomLangenstein]

Ray's reasoning that it's the lender who is at fault for this mess is great, except for the fact is that those of us who act responsibly are affected by higher prices, interest and insurance costs as a result of this behavior.

[@wadedavis7449]

Earlier in this post someone said they can get a home equity rate of 1.9% what bank is offering that?. I don't think that's possible

[@DarkHorseParatrooper]

Nobody. That's lower than the banks buy rate 😂

[@billyoh1966]

10k down on the average 48k car is still 633 a month for 60 months, that's crazy

[@jrtaylor2288]

Ni shit for real! I rarely comment on a comment, but the common sense ones get my attention. When I was younger 20's & early 30's, I always had to have the latest thing. You do get wiser as you get older. My aunt had an 04 Toyota Matrix, she bought new. I lost count how many & often she gets a new vehicle. Anyways she hung on to that Matrix & it sit for over 3 years. She used it as a decoy to make people think someone was home. Your comment on $633 a month just got my attention, that is so crazy! I bought that Matrix almost 3 years ago now. I put new tires & brakes on it, changed all the fluids, I put just over $1,100 in it & alot of time, and I've come to really love it. Have a great day. Edit: oh yeah, I offered her $800 & she would only take $500. There's so many good car's out there just sitting around, people give up on them, when alot of them only need one major thing done or just some TLC, bc people just get tired of them. It can be fun going vehicle hunting with a good mechanic & I've myself have always just enjoyed working on vehicles.

[@trulyhappy8855]

“It’s noon here!” Favorite part of the day

[@margar1983]

Ray is on fire and on point in this Episode. Thanks Zach for letting him speak and finish

[@1Springloaded]

In 1961. A Ford galaxie cost $2,500. Minimum wage was $1. Even at twice the minimum wage, that is half a year's salary. In today's world someone earning $100,000 would be purchasing a $50,000 vehicle. But in today's world we have many more expenses associated with vehicle ownership.

[@laser31415]

The ads from that era brag about their 24 month loans. People would consider an 8 year loan insane, but here we are.

[@caryanderson6747]

Easily the best post you have made! Its called a realty check! So you do not get yourself in quick sand! Knowing ypur affordability! Great point!!

[@jfscotch]

Happy 73rd, Ray! You certainly brought a little extra energy today! Wishing you many more, Mr. Shefska!

[@charleswtuggle]

The cost of insurance is another factor you need to figure in. Insurance cost has sky rocketed. with some people having to pay as much as $3000.00 a year and that is with a good driving record. Insurance companies is the new organized crime.

[@herbwheeler4470]

I blame the consumer also. I would love to buy a new truck but i refuse to spend what they want for them. Even at msrp or less they're overpriced.

[@hattrick2219]

Never tell a dealer what you can afford. They will use that info against you by putting you into a much longer loan.

[@davedave2941]

It’s not any kind of sale while interest rates are above 8% and low mileage used vehicles are give WAY below trade value. No one should buy at this time - the market has not adjusted / banks are not approving loans Those banks - nope I do not blame inflation- I blame removal of banking and loan regulations. The banks do not have liquidity to cover loans on their books - buyer is not always stupid - greed and deceptive loan lending share this mess.

[@CodenameDuchess1984]

As much as I agree with Ray on the self responsibility, but then the same logic should be applied to the lenders who end up over leveraged because of high defaults. We should not bail them out for their failures

[@djblame8954]

My family household is nearly 300K....I only drive 20K USED cars... no way I AK overspending on a depreciating liability

[@user-nr2ch9pp2g]

In the not to distant future cars(used or new) are only going to be affordable to the top highest net worth folks, or people which have a high enough income or cash flow. At least it will cut down on pollution and traffic congestion.

[@jerrylundegaard2592]

How does a liability depreciate?

[@frbyrd-tg5co]

Amazing how the buying public accepts 84 month loans on a car that the maker only warrantees for 36 months. Wanna change the system? make it mandatory that the manufacturer warrantees the car for as long as the loan payments. Abhorrent how the quality of the car has no bearing on the price of the car - value has only to do with amenities and not on durability or maintenance/repair economy. Still amazed at how Lee Iacocca could warrantee a K-Car for 100K miles and today's manufacturers, with all the latest tech, can't cover 50K.

[@Rusty_Shackleford099]

While I would love to see a world where the loan doesn't extend past the warranty period, it could never happen. The majority of car loans aren't issued by the car manufacturers so they have no control over the loan terms. Even if they were, you would basically be ending all loans for most used cars. It would completely collapse the car market.

[@enokradfonos8686]

So, I agree and disagree with Ray. I am also old, and some of the philosophies of the old days don't work well with the economy today. In the 80's and 90's I could get a road safe car for $500 - 800 cash, rent could be as low as $150 - 400 /mo. Gas was cheaper and you could afford to live further from your job for cheaper housing, food was cheaper. Sure wages were lower but it seemed a lot easier to get by with less. Today, that is not the case. That same car now is $2,000 - 5000, if they are honest with it not being a ticking time bomb. You would be lucky to get rent for a studio apartment for under $1,000 depending on where you live. Thanks to greed prices on necessary things have gone up, gas to get to work if you don't work down the street, rent, food. All greed driven price increases you can't necessarily say "no" to. The other part of the cars in our days was you could work on them easily and shop charges were affordable when you couldn't. Old cars were also far more durable and forgiving. If you fart in a new car today something will break, you get some sort warning light and have to take it in for service. Now, it is a numbers game of do you buy a new $30,000 car with a factory warranty and pay that out over 6 years with low maintenance costs or roll the dice on a high mileage car for $15,000 that over the same 6 year span could end up costing you more in lump sum repair costs out of pocket that you don't have, which means using your higher % credit card rate that just keeps compounding interest to pay for it if you even have one. This starts to matter more for people who have longer commutes. I mean, it is a lose/lose for long commuters but anyways, you have to weigh it all out. And the greed in the new car market is driving up the prices in the used car market, which that is funny because that is greed driven also because trade-in values have plummeted for many models and the dealers are raising the prices on the other end. So, yeah greed does come into play. You can say no to an upfront higher costing vehicle, but you may end up costing yourself more down the road buying an unsustainable car. Life is just more complex today.

[@cljerjr31]

i agree with pops on this one

[@johnrose3169]

Very informative video. It reminded me of a conversation I had with my father many years ago. My father offered me some advice that was mentioned in the video. Don’t be afraid to say “no” to a car deal and get up and walk away. Don’t feel pressured to buy a car that very day. And last of all, there will always be another car. I am very grateful for the things my father taught me. I miss/think about him more and more with every passing day.

[@rager1969]

Well said, Ray. I made some dumb financial choices in my early 20's. Thankfully it wasn't that huge to hurt for years, but enough that I never wanted it to happen again. A lot of people (I know some) get some money from a bonus or tax refund and can't wait to spend it. Or worse, just put everything on a card and make minimum payments. As my brother says, it's easy to procrastinate on things you don't want to do, try doing it on things you want to do or buy. Just killing that impulse or delaying helps a lot.

[@brentlorrilliere6057]

just wait until everyone stops paying for insurance. Got hit by someone who didn't have collision....my deductible was $1000. What do you think the repair estimate was? $1041

[@oreotookie]

People need to be educated on this. I had no money management experience from my parents. Luckily, my husband was taught by his parents and he taught me. We are working hard to teach my kids. This needs to be taught in schools by having the kids make a budget with pretend money and have to “live” with that budget over the semester. Simply telling about it won’t teach kids. They have to experience it.

[@JR-N-TX]

This was taught in most high schools up through the end of the 1970s. I don't know when it disappeared.

[@oreotookie]

@@JR-N-TX I was in high school in the 90’s. It DEFINITELY was not taught then.

[@luism8130]

@@oreotookie maybe you weren’t paying attention? This was taught in the late 2000s. I’m sure it’s being taught now but people always look for a scapegoat instead of taking personal responsibility.

[@oreotookie]

@@luism8130 I got straight A’s throughout high school. It wasn’t that I wasn’t paying attention. Also, not sure if you are aware, but different schools teach different things.

[@653j521]

@@oreotookie You went to a bad school. That's sad.

[@jamesclapp6940]

The downside of leasing is that insurance can be higher than the same coverage for a purchase and you also have to cover the leasing company

[@Butler_Buck]

I was out of work for 16 months in 2009-2010. The one bad decision we made was buying a car we couldn't afford. After I went back to work. We ended up refinancing the house and using equity to pay the car off. 30k. I wish I had taken it to a dealer and seen how much it would've 22:38 cost to trade down to a sedan.

[@Gavin_b3ns0n]

Banks are never screwed. They'll get bailed out.

[@d_all_in]

bailouts are loans, they arent free money

[@Gavin_b3ns0n]

@@d_all_in I am aware.

[@DarkHorseParatrooper]

Pretty sure the manufacturers that got bailed out last time never paid back those "loans."

[@geoffreykeating8172]

Banks did it to themselves raising % rates , just like auto did it to themselves jacking up all their prices

[@YOUneedJESUS1]

​@@d_all_in wrong bailouts are a free loan that they only have to pay back 75% of.

[@jamesstewart7212]

You guys, father and son are doing a great service, only available in free societies. Thank you

[@jeremypottersr5839]

I love every bit of the show. Start to finish. Great job every time.

[@Madison-ew9kb]

Around the time of COVID, I was suffering with debilitating depression. Not due to COVID but that did not help. I have always loved cars and this was the only place I found happiness during bad times. I make good money but ended up with 4 Car loans during that time. It has caused me a lot of financial stress and I take responsibility for it. I don't feel that I am stupid but someone that was trying to get through a painful time the only way I knew how. I still pay for my car loans although it has been tough. Sometimes people do dumb things to get through life the best they can.

[@jeffnordin108]

Loved this episode, Ray's vibe is matching mine these days

[@kwilliams1958]

Never paid on a car loan more than 30 months.... kept them until they have a minimum of 250,000 miles...and have everyone around me smiling at my "jalopy" from another decade or millennium. Happy Birthday, Ray. Keep rockin' way past 73!

[@privacylock855]

It is hard to be smart and say No, when the last used car you bought was wrecked. and the hospital keeps calling about your medical bills. and your spouse just got laid off. etc. etc.

[@dentman67]

Damn, Zach looks all grown up and professional.

[@motorcitymadman146]

If you drive 30000 miles a year, leasing is not an option

[@henrymatthews9365]

My first car when I started driving in the 90,s was a 1986 Nissan Maxima manual save it from a junk yard . Needed some cleaning and some repairs which I did myself . All in all car cost me about 2000 including mag rims from that same junk yard. Drove it for 10 years and had over 250k miles on it . Finally traded it in because the body and frame rust was considerable. So I bought a 99 Nissan Maxima gle.

[@promagnuman]

Subprime loans can be very predatory. Today its called subprime, it used to be called load sharking.

[@williammorris3815]

Exactly

[@johnny8531]

Thanks for the amazing show today, you both rule.

[@Norm8179]

Very on point this video ray.

[@Sandra-Renea]

I love spending my lunch break watching Ray rant. 🤣

[@laser31415]

Ray needs a primetime TV show.

[@JDew79]

Dad was golden today! 💯

[@peterkwok9608]

Good advice Ray!!!!! 😎😎👍👍

[@DamascusHarris]

Ray, some people were not in a position to say "no". If you had a planned car purchase in 2019, and thought you'd find a good used car in 2020, and then, because of the pandemic, they waited until their current car was truly on it's last leg, then they had very few options in 2021 or 2022. Many simply lost on hobson's choice - take a bad deal and get to work, or have no car and lose their job.

[@markpashia7067]

Even worse was getting in a wreck in the middle of 2021 and insurance totaled your car. Had no choice but to buy as they took away the rental as soon as the offer was made. Got lucky and found a deal on a used Toyota with 24k miles but yeah it was very scary to be forced in that market. A few months later would have been even worse.

[@iAMtheYELLOWrose]

When Ray goes in, I laugh. Hard. 😅

[@Lets-do-this-]

Great show guys

[@David-qj1po]

Ray everything you are saying is so true, it is important that we as consumers know our limits especially when buying cars

[@billbarton5806]

I had a guy I knew who owned a buy here pay here used car lot. The down payment was what he had in the car, he sold the same car 5 -6 times before it stayed gone. He lived to repop the car.....

[@Lets-do-this-]

You are right Ray

[@alexkleine9737]

In 2017 when shopping for a car I stopped by Carmax. Local bank had already quoted me 4-6% based on age and type of used car (credit score >720 at the time). Walked into Carmax bc I liked a car on the lot, and then walked right out the door when I was quoted 20% for a loan.

[@MR3DDev]

In case I can't make it Friday, happy birthday to the best internet car dad.

[@kaiserc2471]

Those 2 are so adorable when they joke around.

[@mikefleissner4415]

Yes I sold cars in early nineties .we said the 5 year car loan would ruin the industry. Thanks Ray

[@imaslob6168]

Happy Birthday Ray!!!

[@Gmac_Greg_M]

My current car’s purchase price was 10% of my income at the time back in 2018. Still driving strong with no car payment for 6 years. If I would have bought my dream car for 80k instead my net worth would be 250k less than it is now.

[@swlancaster1964]

New 2024 Corolla XLE HYBRID is 29,500. Add $2500 for misc crap, $3,500 for extended warranty, $900 doc fee, and sales tax you could hit $35,000. It's a nice car but Toyota dealers are still FOMO mode.

[@markazinker3212]

and all those people that spent all that extra money to show off with their new cool car and now can’t afford the 1000 a month payment must really feel bad watching it get towed away , that hurts , would have been better to never have had it in the first place

[@marklytle7829]

I love your words Ray.

[@BC_CARS]

Homeboy got robbed on that titan😂😂😂😂😂

[@sass1420]

"Inflation" in the form of dealers overcharging people has been the problem. The fees, the mark ups over MSRP, etc are what did it. Inflation, in the real sense, rates have been in the very low 3% range. Last month was 3.4%, but the 7% or 8% rates coming out of covid screw-ups due to shortages have been 2 years past. They were still on the high side last year, but beyond car dealers lining their pockets, were not terrible... more in the 4-5% range. Still high, but not crushing like 2021 into 2022 where we had a true soft landing from the 2020 recession

[@miggys7]

I don’t think stupidity is a fair statement…buyers historically have not been savvy buyers when car shopping. Secrets have been held for years. If it wasn’t for social media, we would never know of the tips and tricks dealerships use.

[@Alex-dd3oy]

Agreed, most buyers are not sophisticated consumers and make car buying decision by only evaluating the montly payment. Finance people at car dealerships and loan approvers at the financing banks know what they're doing. Dealers know how to trick buyers into a car loans they would normally not qualify for

[@NVRAMboi]

I think "stupid" is accurate at this point.

[@JMoroccoMisterBoy]

Tks. much.

[@user-rh6xl8zh1k]

Live within your means was easier when corporations werent stealing and gouging for us left and right.

[@imaslob6168]

I’m joining car edge today!!!

[@rasserfrasser]

One of Warren Buffett's major rules of his success has been saying 'no'.

[@Shakashack2022]

🎉 Happy 73rd Ray!!! Been enjoying your car knowledge & honest expressions abt the current auto industry. Your life wisdom & experience are greatly appreciated. Zach, don’t invest your time & wealth in the haters. Keep up the great work! 👍🏽

[@karachaffee3343]

My newest car (bought 4 yrs ago) was a 2003 Mazda for $4500. The Mazda was the most expensive car I have bought in 30 years. I don't know how people buy a $90,000 pickup truck unless they are a millionaire.

[@robinschaeffer6252]

The person who buys a cheap used car and lets the new car they overpaid for fly back to the bank may have learned a valuable lesson - Salesmen and Banks are not your friend. Just because they tell you, you can buy something doesn't mean you should buy something. The Banks may learn something from this as well.

[@mikemyers1721]

Right on

[@mikefleissner4415]

That's the Ray rant I have always wanted to hear

[@WorldSuperMoms]

Best show ever. Don't change a thing. LG can go FO in a dark corner.

[@silkemueller1391]

@caredge so you im the past would have adjust your used car prices to KBB prices out the door?

[@Lets-do-this-]

Happy birthday Ray

[@stanmarcusgtv]

Zack is smart but Ray adds wisdom gained from decades of experience

[@ayyyejesterdazed]

Some of us were misled though. I had an idiot hit me and total my car at the height of gas prices in June ‘22 and had no choice. I needed to get to and from work ASAP. I got a used EV knowing that it’s major depreciation was done with😒 My EVs trade in value dropped 50% in 2 years. I have a $25k loan(interest included) on a $3-6k car🤬🤬 I’m going for Unfair Business Practices under the Consumer Protection Act with an Attorney General. Surrendering the car after holiday weekend. They used the oil market as a means to inflate the listed price of a first Gen EV in summer ‘22.

[@David-qj1po]

The key thing to affording cars is knowing how to budget your finances and cut out things you do not need

[@standard74521]

Ty

[@DavidTorres-xl2jl]

How is GM Financial doing with repos or delinquencies?

[@susanbeever5708]

Excellent points however the purchase of a cheaper used car comes with greater repair costs and high interest on those costs when charged. This is a problem for workers who have no access to transportation to work. Consider the history against mass transit in the U.S. starting from the rubber companies wanting to sell car tires that destroyed the mass transit Red Car in Los Angeles to the current lobbying against mass transit of bus route stops in neighborhoods that vote against public transportation because they do not want transients in their neighborhoods.

[@richardc755]

At least an MDX can last the length of a home equity loan.

[@GIUL7301]

Still driving 2- 20+ year old vehicles. Pruchased new, no payments since 2007. Insurance is cheap. This allowed us to pay of our mortgage in 2016. Our savings for purchasing is huge. We just had to replace our home air and heat pump . We had cash. Vehicles are a waste of wealth. Stop buying. No, you don't need it.

[@myusrn]

At 3:48 mark why do people use bps [ basis points ] to communicate how much a given metric has changed since last reported, why not just communicate the percentage of change or bps x 0.01 = % change?

[@peterkwok9608]

Happy 73 birthday Ray 🎂🎂🎈🎈

[@DashaTheDivineDivah]

I usually agree with ray, but in this regard. I think she's a little off base. Because most cars that would give you a very cheap payment. These days, a start at 30000 please tell me a car that you can go and get it right now. That is going to give you great mileage on gas and Be reliable. It is under $17000. Civics are now starting at twenty eight thousand. This theory, about 10% works before. Inflation, it definitely worked in the nineties, but does not apply now

[@yuriboguslavsky8868]

Ray is 100% right.

[@boricua4052]

Ray Ray Ray 4 president🎉

[@jennifergray41]

Ray for President! I hope someone hears your rant and it stops them from making a bad decision.

[@josephszot5545]

Ray, you may have educated some buyers, dealers not so much, they will still make the screw job sale! Driving the AMC Hornet you'did alright dealing with it not turning left. I would have left turn, press on the brake bring the RPM's up to 2,000 and make the left or 3,000 whatever was needed!

[@CJ3228]

I will never see low prices again.

[@dennislippert8875]

Sorry. 15 years ago, I was grossing $3000 a month, and spending $300 a month JUST ON GAS to drive to my job! That 10% simply doesn't work on the low end!

[@laser31415]

"Indecency" fits and rhymes

[@peterkwok9608]

I like your shirt Zach 👍👍

[@1Springloaded]

Did you get a discount at clothes edge? Sometimes I get 30% at Kohl's.

[@YOUneedJESUS1]

When a $1 is only worth $.50 of a 2019 dollar. And vehicals cost 75% more. In 2014 you could buy a new cruze mid trim and a new equinox mid trim, for the same price as a 2024 base trim equinox.

[@skyflyer4231]

Do dealers finance people get a higher setup from subprime lenders as a rule?

[@michaelcostin2384]

Love it. So happy these banks, auto manufactures, eat it. More layoffs are closing and dealers will be closing. I see must less new cars on the road.