It's Not Just Pricing, Auto Loans Are Also Getting Out of Hand

As you’re undoubtedly aware, now isn’t the best time to purchase a new vehicle. While you can currently sell your ride for more than it’s realistically worth, the economy is anything but stable as inflation and supply shortages gum up the works. A lack of semiconductor chips has caused the automotive industry to stutter endlessly throughout 2021, with the issue getting so bad that some manufacturers have been building unfinished vehicles just to give their employees something to do. Ford is even mulling over a strategy to ship those units directly to dealerships so they’ll have something on the lot — effectively making its retail network responsible for final assembly.

But the logistics nightmare is only part of the story. Automotive loans are also becoming untenable as terms stretch out endlessly. Cars continue getting more expensive and the average consumer is losing their buying power. The preferred solution is for financiers to extend agreements so customers can continue making the same monthly payments while accruing more on interest over the duration. While effective in the short term, and bound to make banks money as we’re all driven deeper into debt, one wonders how this plays out on a grander scale.

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Auto Loan Growth Continues, Chamber Of Commerce Calls For Lending Rules
  • Cprescott Yawn. The dinoaur death rattle.
  • Cprescott I'm sorry. There should be zero subsidies for whatever vehicle you want to buy. The automakers are lucky that even this stupid law exists.
  • Cprescott Just what we needed - another one in that segment.
  • MaintenanceCosts They're probably paid a bit more than they're worth, because relationships among boards are a bit incestuous, and the CEO always gets the benefit of the doubt among buddies. But there's no question they can add enough value to justify very high pay.The real problem is that they're not taxed enough. A mere high wage earner can have an effective federal tax rate of over 30% under some circumstances. These guys usually pay more like 10% to 15%, because they are able to structure their finances so that much income is deferred and much of the rest is capital gains. The rules around timing should be stricter, the capital gains rate higher, and they should pay the same effective tax rates as their second- and third-level reports.
  • Cprescott No. Whatever the company wants to pay for Executive help is up to them and their stockholders. Since they are the only ones who live this job 24/7/365, they should be well compensated. I've been a GM for decades and that is my responsibility for the same period; I cannot imagine trying to run an entire company with all of the potential snafus that arise.