
Americans fell behind on 18M credit-card / auto-loan payments last month - finphil
https://www.businessinsider.com/debt-credit-card-auto-loan-payments-missed-april-coronavirus-economy-2020-5
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nojito
The auto loan industry is an incredible bubble about ready to explode.

[https://fred.stlouisfed.org/series/MVLOAS](https://fred.stlouisfed.org/series/MVLOAS)

[https://fred.stlouisfed.org/series/DTCTLVENANM](https://fred.stlouisfed.org/series/DTCTLVENANM)

[https://fred.stlouisfed.org/series/STDSOTHCONS](https://fred.stlouisfed.org/series/STDSOTHCONS)

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ipnon
How would a person short such a position?

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dnadler
Buy CDS against the securitized loans.

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toomuchtodo
It’s too small of a market for significant risk adjusted returns.

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kop316
Seeing that reminded me of a quote I saw in a Reuters Article [1]: “A lot of
people that have two-year-old trucks can get into a new one for the same
(monthly) payment or lower,” said Noah Wolter, general manager of Charles
Gabus Ford in Des Moines, who sold around 1,500 new vehicles last year.
“That’s the easiest swap ever.”

I see that and think that a lot of money was just lost if you trade in a two
year old car for a new one. Is this a common thing?

[1] [https://www.reuters.com/article/us-health-coronavirus-
autos-...](https://www.reuters.com/article/us-health-coronavirus-autos-
trucks/while-u-s-economy-slides-heartland-auto-dealers-cry-out-for-more-
trucks-idUSKBN22X15M)

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csharptwdec19
Yes and no...

Lots of people in the US wind up leasing new vehicles for 2-3 years. Trucks
especially so since a well equipped one will run you upwards of 40-50k USD
depending on the brand.

In a lease, you're paying for the value hit of taking the car and driving it
for X/Y years/miles. So if we're talking lease tradeups, of course it's going
to be a near equal amount.

As far as just flat out 'used' trade-ins; because of their cost and
utilitarian nature, trucks do typically hold their value better than many
cars.

On the other hand, let's look at that quote again:

> "A lot of people that have two-year-old trucks can get into a new one for
> the same (monthly) payment or lower"

There's nothing in that statement that indicates the customer is actually
paying less overall. There's a lot of 'psychology' behind monthly payments vs
overall amount paid on a loan.

In other words, there's no guarantee that this sales manager wasn't convincing
folks to, say take their car with a 500$/mo payment with 3 years left and
switch them out to a 400$/mo payment with 5 years left. Sure, you have a new
car again, but is your total cost of vehicle ownership really going down?

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kop316
The whole "psychology" part is what I was thinking of too. I do NOT want a car
payment, as I feel like these sorts of games hide how much you really are
paying. And car dealerships are a business, so they encourage this sort of
behavior for a reason (likely to get as much money as they can out of you).

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glofish
If they would have called it what it actually is, a 3% increase, people would
not click the link.

>The proportion of credit-card accounts entering "financial hardship" programs
surged in April by 3.2%, to 14.7 million, credit-reporting agency TransUnion
said Wednesday.

Just another journalist calling a 3% increase a "surge"...

If anything the increase is surprisingly low.

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nojito
How is an increase from last month of .01% to this month at 3.2%
_surprisingly_ low?

[https://newsroom.transunion.com/as-covid-19-impacts-the-
cons...](https://newsroom.transunion.com/as-covid-19-impacts-the-consumer-
wallet--federal-programs-and-lenders-provide-temporary-relief/)

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jonnypotty
Is auto dept repackaged with other dept into complex products like mortgage
dept was in the 2000s (and prob still is)

