Replies to post #67950 on Mohacsy's Safe Portfolio Member Forum

[Elroy Jetson]

It's amazing people borrow money to buy a car rather than lease. The interest is tax-deductible to the leasing company, but not for the consumer and there are there are additional tax credits leasing companies collect. Last I heard, it was cheaper even for companies to lease cars for their employees than buy - and interest is deductible for businesses.

When I bought my car at a pre-negotiated price through AAA, the salesman told me he had never seen anyone ever pay cash (check) for a car before. I had thought he was joking - perhaps not.


What sort of person would be buying a car with an auto loan? Obviously a person without a good enough credit-score to qualify for an auto-lease.

In Los Angeles we're suddenly seeing lots and lots of Maserati's, previously a fairly rare sight, because FIAT, Chrysler's parent, is offering very attractive lease terms to move output from their Italian Maserati factory. Why, even a waitress could afford the $600 a month needed to lease a flash Maserati.

[santafe2]

Auto loans in default are still well under 1% of total auto loans so the jump may be large but the consequence is still quite small. Auto loans over 90 days are at 3.3%. Home mortgages over 90 days are at 3.4%, credit cards 7.8% and student loans over 90 days late are at 10.9%...now that might be a crisis and the student loan market is about 1/3 larger than the auto loan market. That is, there is $30B in auto loans over 90 days and there is $130B in student loans over 90 days. Auto loans are non-recourse debt meaning the borrower is not personally responsible for the debt, student loans are full recourse, like owing money to the IRS. Debt slavery type debt...tick, tick, tick.