https://nighthawkrottweilers.com/

https://www.chance-encounter.org/

Business

Rising old used car prices are helping to push poor Americans over the edge




FREEPORT, Ill. (Reuters) – For the United States poor, having a rare expensive ingredient to get and keep a job – having a car – rarely cost more, and millions of people find it impossible to keep track of payments to despite long-term economic growth and low unemployment.

Hollis Heyward shows off the Pontiac Grand Prix in 2005 which he purchased for $ 1,300 cash in Freeport, Illinois, USA, August 12, 2019. REUTERS / Nick Carey

More than 7 million Americans are already 90 or more days behind their car loans, according to the New York Federal Reserve, and serious criminal rates among borrowers with the lowest credit score have by far seen the fastest acceleration.

The seeds of the problem are buried deep in the financial crisis, as automakers cut production amid the worst economic downturn since the Great Depression. A decade later, it has made a relative rarity of used 10-year-old vehicles that are usually less expensive for low-wage workers.

According to data provided by Reuters by industry consultant and car dealership Edmunds, the average price of that vintage of the vehicle is $ 8,657, still nearly 75% higher than in 2010 despite some upturn in prices over the past year. The average new car, on the other hand, has seen a price increase of 25% over the same time period.

"This squeezes people into the worst possible point," said Ivan Drury, Edmunds & # 39; senior manager of industry analysis. "If you need basic transportation to A, you need to get an older car that needs more repairs and has more wear and tear issues."

Monthly automatic payments for Americans earning under $ 40,000 have remained flat since 2017, while those in higher pay brackets have seen their payments increase, according to a Cox Automotive Inc analysis for Reuters.

In light of this, this may seem like good news. But to Cox chief economist Jonathan Smoke, it indicates that poorer Americans are stretched so thin they can't afford to pay more.

"They just have no flexibility to increase payment," Smoke said.

Weak lending standards in recent years are partly to blame for rising crime rates, as Warren Kornfeld, senior vice president of Moody's financial institution team, said is approaching record highs despite a solid economy.

Auto lenders are late in tightening lending standards, but it may already be too late, he said.

"The economy masks the true performance of car loans," Kornfeld said. "If we hit a downturn today, car loan lending wouldn't look very good."

Research from the New York Fed earlier this year showed that although criminal conditions among borrowers with high credit scores have remained steady and low, for subprime borrowers they have increased, the overall criminal rate is pushing up. About 8% of loans that come from buyers with a lower score with a credit score below 620 were categorized as seriously late, "a development that is surprisingly under a strong economy and labor market," Fed researchers wrote.

"HARD TO MAKE ENDS MEET"

Like many Americans, no car for Hollis Heyward means no job. The 30-year-old father of two earns $ 10 an hour to work at a warehouse in Freeport, a village of 25,000 (185.07 km) northwest of Chicago.

Heyward can only get to work by car.

In the midst of a divorce, all he could afford was a 2005 gray Pontiac Grand Prix with nearly 200,000 miles, which he bought for $ 1,300 cash – a fraction of the average price of a new car.

Suddenly, the loan also stuck on his future ex-wife's car, Heyward had to rework the loan with local used car dealer Gordy Tormohlen of Good People Automotive. During his "training session", Heyward pays only the principal and Tormohlen has waived interest payments. Heyward's monthly payment is now around $ 120 per month, down from around $ 350 before training.

"Right now it's hard to make ends meet," Heyward said. "But I'm not the kind of guy who goes away from my obligations."

Tormohlen, 59, a second-generation dealer, said business is up 10% this year as car finance companies tighten to lending standards. He said the market feels like it did before the financial crisis hit in 2008, when consumers became too dilated with debt.

"Americans have grown too comfortable with debt, and the time has come to pay off," he said.

Tormohlen is a "buy here, pay here" dealer, offering subprime loans that he finances himself at 19%, which is higher than a bank, but lower than many financing companies.

He said he can work directly with abusive clients like Heyward, whom he has known for a decade, but worries that large finance companies with tens or hundreds of thousands of borrowers will be in deep trouble when a downturn hits.

According to the New York Fed, more than 1 million more Americans are behind on their car loans now than at the peak of criminal conditions in 2010 after the financial crisis.

"The big lenders who don't know their customers are going to have a problem when the economy turns," Tormohlen says.

“LIVE YOUR MEANS”

Expensive older used cars exacerbate the problem, and it may take years before they return to less expensive levels.

George Augustaitis, Director of Automotive Industry Analysis at CarGurus Inc ( CARG.O ), an online marketplace for new and used cars, said late this spring that his team began to notice an "accelerating decline" in numbers Available cars under $ 10,000, which will usually include cars between eight and 12 years old.

In an analysis for Reuters, CarGurus data shows a declining share of inventory of cars in the Great Recession, while the number of online "leads" from consumers searching for these vehicles has remained steady.

Slideshow (2 Images)

In fact, the average American car is the oldest on record, according to IHS Markit, and CarGurus & # 39; Augustaitis said that the available inventory of vehicles costing under $ 10,000 does not will return to more normal levels until 2022, reflecting increasing car production following the Great Recession.

Ken Shilson, President of the National Alliance of Buy Here, Pay Here Dealers (NABD), said that American consumers have become too comfortable with debt, and that subprime customers have been "poisoned" by easy access to capital for much of the long economic expansion. But he added that customers will be forced by tighter insurance to search even older cars.

"The American way is to always live beyond your means, and Americans are not good at making life adjustments," Shilson said. "But there is a reality check, and many subprime buyers will be forced to find cheaper transportation."

Reporting by Nick Carey; Editing by Dan Burns and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.



Source link

Back to top button

mahjong slot

https://covecasualrestaurant.com/

sbobet

https://mascotasipasa.com/

https://americanturfgrass.com/

https://www.revivalpedia.com/

https://clubarribamidland.com/

https://fishkinggrill.com/