By Michael Lodge, The Business Advisor, Greenville, SC www.lodge-co.com: During the pandemic Joe Biden sent you a lot of stimulus and unemployment money and you got greedy. You were encouraged by banks to go into debt. You took out car loans on over priced cars, with huge markups, with high interest rates that you could not afford.
19 - 29 year old consumers are now 90 plus days late in paying their car loans. They are now in default and walking away. Cars are now at auction with prices still too high.
Banks who were this greedy and stupid have hurt consumers. The consumer was also stupid for taking on cars and loan debt they could not afford. Now they are in a position where can't can't refinance it, they are upside down. They can't buy a lower cost car, their credit score is screwed up. They don't have money to put down on a different car, they have used up all of their cash.
There will be no soft landing for consumer auto debt, just a big thump. And quite frankly, both consumers and banks will suffer as more and more cars become repossessed by the banks. Banks are now trying to get rid of their defaulted inventory of cars. These late payments will build and it will have to addressed in the financial reports submitted by banks. It has to be addressed, it is a big red flag.
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Michael Lodge is a Nationally Certified Professional Mediator specializing in business disputes, as well as family conflicts. He has written three books and hosts an international podcast on IHeartRadio and other podcast media stations.