no. they won’t. not under the present system. unlike student loans, auto loans can be discharged during bankruptcy (it is difficult to do with student loans) and you can easily sell the asset to pay off all or part of the balance (can’t sell your transcript or degree, just yourself to an employer).
Right? This is the stupidest fucking article. Like you can even have the car repossessed and the loan terminated.
Auto loans may legit be one of the safest type of loans available to students.
Where it gets spicy is:
Buying (financing) a new car, and then having it repossessed at half the purchased value (still 50%) debt to pay
If people have cars repossessed en mass, the second hand car market will be affected, prices for used cars go down (because the supply goes up). This makes repossessions not cover the whole loan, see above point
Finally, as more and more Americans no longer have access to cars, they also lose access to… A lot of society (work, education, healthcare). If this affects a large enough percent of the population, there will be macro effects.
Banks suddenly getting burned when a bunch of bad loans stop getting paid at around the same time? What could possibly go wrong?
Getting some 2008 vibes. Thats what we need.
Meanwhile housing market is nuts. Nobody wants to sell because they’ll just have to buy and loose their sweet 2.75 refi. So now homes are still at jacked up prices because supply is low, but average 30yr mortgages are still at 7.8. So buyers, especially first time buyers, get stuck with an overinflated principle and a higher interest, getting the worst of both ends, and hoping either values hold or rates fall and they can refi in a few years.
If it’s getting repossessed at 50 percent value, that means it’s getting repossessed in the first year, and probably shouldn’t have been financed in the first place. BUT, let’s say they did, gap insurance is a thing that exists, for cheap, to cover that exact situation. Regardless, that debt can be cleared via bankruptcy, and is peanuts compared to most student loan debt. Smaller plans, multiple outs and protections available from the get go.
On top of that, student loan debt already prevents people from buying cars due to high debt to income, and already low post-grad income tied up paying loans, which are often as high as a new car payment, not to mention insurance and registration. On top of that, it makes them higher risk, raises their interest rates, and makes financing even more challenging.
There is no sane argument between the two.
To play devil’s advocate, used car prices do not follow supply and demand. They follow perceived supply and demand by a conflict of interest. If you try to buy a used car, your salesman gives you info to push you to pay more. They have other lots to make it seem like there’s low supply.
Carvana and CarMax operate similarly.
And if you feel like knowledge is power, Manheim/Cox numbers don’t matter when you’re purchasing through a greedy middleman.
Federal student loans are not just difficult to discharge, they’re practically impossible to discharge. There are so little valid cases for it, you could count them on one hand. And that does not even take into account the fact that the sitting President and their cabinet can just say, “No, **** you.” Even after you qualify and a court agrees with you.
Edit: Just gonna point out that the only guaranteed way to discharge student loans without the federal government possibly overturning the ruling is to simply die. Its an excellent system perfectly designed to ensure that both the public sector and private sector can continue reaping the benefits of social mobility while preying on the most vulnerable segments of the population.
Discharging student debt in bankruptcy is so hard, it made the national news, https://www.forbes.com/sites/adamminsky/2020/01/22/a-judge-just-wiped-out-this-mans-221000-in-student-debt/amp/
But don’t cars depreciate a lot? I get that this article is clickbaity. But I think with the elevated cost of cars the autoloan debt is still something to take seriously. Even the response of “its not a big deal, you can always go bankrupt” is pretty wild.
You don’t even have to go bankrupt you can just give the car to the bank that has your loan. You’ll be fine. Just without a car lol
Not if you owe more than the car is worth, you’re on the hook for the difference.
Our expenses are a little less but my wife and I have two kids. Although if we had bought a house around now instead of 7 years ago, it would easily be much more. If we had decided to buy a new car, add that on top.
But one thing to note is that is the average so that is anywhere from a single person to someone with six kids.
Good god, according to census.gov:
Real median household income was $74,580 in 2022
Which works out to $6,215/month. Less than $200/month for emergencies, nobody is saving money with these figures. Our economic system is broken.
For the first time? Go back a generation and student loans didn’t exist.
Damn, it’s almost as if making a country almost entirely car dependent is a terrible fucking idea.
To be fair, the automobile centric city has worked for about 70 years.
The cost of cars is being driven higher by demand for more features. The car companies can make a really cheap car, but consumer’s want air conditioning, power everything, fancy infotainment systems, heated seats and quick 0-60mph times. Then additionally the government mandate for safety and emissions increase the cost further.
You can buy a new car in India for under $5,000 USD.
To be fair, the automobile centric city has worked for about 70 years.
I’m not sure I buy this. Countless communities have been obliterated by overpasses/freeways paved through their neighborhoods. We have horrible suburban layouts we’ve embraced that are completely defined by parking lots that cause water management and housing issues. We’ve completely ripped up the little public transit we had and made few gains in that time.
Cars have created tons of problems over the 20th and 21st centuries.
but consumer’s want air conditioning, power everything, fancy infotainment systems, heated seats and quick 0-60mph times.
This is the same lies that the big three have been trying for decades. I want a normal boring fucking car. I want to spend as little money as I can on repair maintenance and fuel. I don’t want some garbage bullshit infotainment system.
And no I can’t buy a new car in India. Go ahead and sell me one.
So I looked up the specs for the first 5K-ish India car I found.
https://www.cardekho.com/maruti/alto-k10/specs
As far as I can tell, it has every feature you’re saying is responsible for western automakers charging around 6 times the cost of this car… sans heated seats and purported safety standards.
Chevy charges an additional $1K for the package that adds heated seats to their Bolt EV.
So, am I to take you at face value that you’re inferring that safety concerns and standards are responsible for the remainder of the price gouging?
You can get a golf kart with tye same accessories. Safety, reliability, and quality are a big part of the cost. So is profit.
A 5k car is a golf cart with doors.
At least you can declare bankruptcy on an auto loan…
