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|Thank for the comments and link.|
|It could be quite interesting if the car trade has a crunch. The concept of renting money in order to contract rent a car presumably draws in people who previously could not afford car loans? I wonder how many car users as a % of the general population are skating on very thin ice?|
|And don't forget historically the car trade usually leads the market up and down. Watch out for a plethora of great deals as they try to keep volumes high to shift stock. Too much buoyancy for now but . . .|
|Thanks for the articles Aleman, some friends here in the motor trade have been telling me of their rising concerns over the past 12 months. I doubt it will be as bad as a housing bust, but it's going to hurt.|
|Re the state of uk car loans
|I've reported on here about US car market troubles with falling loan advances, increasing delinquencies on loans and leses and falling second-hand prices hitting new margins. Ford just confirmed the growing problems by issuing earnings guidance for Q1 30% below consensus and only half last year's Q1.
I know it is the US succumbing to these recessionary-type problems but the UK has been following a similar trend, if a few months behind and not quite so strong. It does not bode well.|
|That article doesn't mention that Next reiterated its 2017 guidance of LfL sales at -7%.
|US bank card default rates taking off.
|Several US auto stocks fell today after used car prices fell unexpectedly in February, taking the annual NADA index change to -7.1%. Lots of new cars are leased. The average negative equity on lease expiry recently has been over $4k. This news will make matters much worse. More motorists will owe more at the end of their lease. They will have less money/more debt for their next car. Leases will get more expensive as more depreciation will need to be allowed for in future. New car sales will fall as leases get more expensive, motorist have less money, car loans and leases are seeing delinquencies rise rapidly, and the supply of cars onto the market increases as more leases expire from the bumper years of 2011 on, aggravated by increasing repossessions. Thanks to more loans and more leases, the US auto market is more cyclcial than ever and it is going into recession.
In a reversal of what typically occurs in February, wholesale prices of used vehicles up to eight years old fell substantially last month, dropping 1.6% compared to January. The drop was counter to the 1% increase expected for the month and marked just the second time in the past 20 years prices fell in February|
|See AltFi article to see explosion of arrears to highest since 2010 (This looks to include non-US platforms like Zopa):
Scroll Down to explosing delinquncies at Lending Club and Prosper online platforms:
|CPI 2.3% versus 2.1% expected. RPI 3.2% versus 2.9% expected. Core RPI 3.5%.
Tough times ahead for retailers with costs rising more quickly last month and wages only up 2.2% (and apparently slowing?) as of January. Small suppliers are the ones suffering so far, apparently, but the big retailers can only squeeze so much and then they start to suffer, too.|
|The banking cycle looks to have turned. Net charge-offs are rising again. Although still low, note that they were still low in 2000 and 2007 before shooting up. By the time the peaks were in, in 2002 and 2010, stockmarkets had long since tumbled.
In the market at large, the uncertain economic outlook has put at risk some major engineering, procurement and construction contracts. As contract owners have delayed payments to contractors, insolvencies in the supply chain have increased, leading to more disputes.|
|Online lending platforms getting deeper into defaults trouble problems.
|UK retail footfall continues to decline in February - high street flat, retail parks -2.6%.
|Hi, topvest. The deterioration in most credit markets seems to have accelerated sharply in the last couple of months. I doubt the recession will be as late as 2018.|
|Very interesting indeed Aleman. Next recession is definitely closer..that's for certain. Maybe another year or two off in my view.|
|They are doing 8 year loans on cars now in the US. Should we be surprised that a record 31% of trade-ins were in negative equity in 2016? And that is as used prices start to turn down and are expected to fall faster in 2017. The average shortfall is now a record $4914. What do they do with that - roll it over onto another car, probably? What could possibly go wrong? The more people borrow and lease for car ownership, the more cyclical this market becomes. The fact it has started to turn down and increase defaults on car loans increases the chances of turning the Q1 US slowdown into recession. GDP growth in 2014 to 2016 was bought with some dodgy credit. Chickens are now coming home to roost.
You'll be pleased to know there seems to be a similar pattern developing in the UK market.
|US subprime auto loan delinquencies spike above the January 2009 high of the last financial crisis.
|Atlanta Fed's GDP forecast for Q1 drops to only 0.9%. In only 6 weeks, it has fallen from 3.4% to 0.9%. The US deficit was already forecasted to jump next year on better numbers than this
|The namss in trouble are getting bigger - American Apparel, Banana Republic, Brantano, Jones Bootmaker, Blue Inc - and now 800 jobs threatened as Brantano enters second admininstration
|4.2m (10%) of US student loans in default by at least 9 months - up 600k in a year. $130bn and rising of write-downs is going to be painful for some lenders when they get booked.
March 10, 2017 Posted by kingcade
Americans are getting more behind on their timeshare rental payments, according to Fitch Ratings. Approximately 3.75 percent of timeshare borrowers were behind on their bills in the fourth quarter, up from 3.37 percent in the same period a year earlier, and the highest level since the end of 2011, according to the report.
According to Fitch, the defaults are evidence that loan companies are becoming less strict when financing to customers. These companies are also writing off more loans. The default rate rose to 0.70 percent in the fourth quarter from 0.61 percent in the same period a year earlier.|