A Doomsday scenario unfolds for Detroit.

[Ming]

People will be forced buy what they can afford. It's a novel concept. It's a correction that's needed to some degree, in my opinion. It's why I've scaled back on the kinds of cars I lust after. I focus now on the virtues of $15K hatches and wagons. What I could afford on credit and what I can afford to easily pay off are two vastly different things.

That means no "new rich" getting loans they can't afford for tricked out SUVs. and fewer 'Necks around me that buy fancy shiny princess quad cab "family sedan" pickups with the unused cargo area and shiny tonneau covers next to their run down mobile homes...

[A Bum In A Bus]

Unless something is done quickly, you can throw your credit cards away, they will be worthless. No more Friday night dinner and movie, instead stay at home, pop some popcorn and watch re-runs of "I Love Lucy". Oh yesterday, where have you gone.

[zete]

Originally Posted by pinch a loaf

Maybe for the first time in a long time people that don't qualify for credit won't get it. I don't buy all of this. Has anyone personally come to you because they can't get money? Not me. There is still plent of money out there for loan. It is just a matter of weeding out unqualified people that are trying to get the loans. Don't believe everyting you hear and read.

The problem isn't that loans aren't out there but that some of the loan rates are getting very high. And those that "budgeted" for cheap credit are now seriously hurting and can't afford a new car at the new rates. This "living at the edge" is doing a lot of folks in.

Unfortunately, a lot of sales were dependent upon this cheap credit and that's why this is going to hurt. The contraction from 17M to 12M in auto sales is HUGE. And that type of contraction will have huge spillover in terms of jobs within the economy.

And folks have to remember that not everyone looks for a car at the same time. What we're seeing is that 20 - 30% of folks coming off lease or who normally would have traded in their vehicles either buying out the lease or keeping their vehicles for longer. Eventually those folks will buy again, but when is the question. We know the answer: "Not just yet."

[Caleb02]

i say we need to ban cars above midsize and to only have cars like the tata air car called nano. All cars must run on air and only have 10 horsepower or so.

[D C]

"the sky is falling, the sky is falling!!!!"

[prowlerjc]

Originally Posted by zete

The problem isn't that loans aren't out there but that some of the loan rates are getting very high. And those that "budgeted" for cheap credit are now seriously hurting and can't afford a new car at the new rates. This "living at the edge" is doing a lot of folks in.

When I bought my first new car in 1989, the best rate I could get, through a credit union no less, was 11%. I don't think we're near that point, yet.

But you're right, many people living on the edge, or just over, are gonna be SOL when the lease ends and they have to get a new ride.

[Bravada]

Of course I know this is bravado speaking

Nope, it wasn't me!

Seriously, though, Paul is right on the money. Besides, the market will soon be saturated with slightly used cars, and those who previously exceeded their means and took out mortgages and loans, or leased new cars they cannot afford will turn to used, the usual market for the less well-off. The used car is the greatest competitor to any new car, New Europe has seen that very well.

[zete]

Originally Posted by prowlerjc

When I bought my first new car in 1989, the best rate I could get, through a credit union no less, was 11%. I don't think we're near that point, yet.

But you're right, many people living on the edge, or just over, are gonna be SOL when the lease ends and they have to get a new ride.

I know some people for whom a 1 point increase is catastrophic. These same people -- some of which drive big ass SUVs -- started panicking when the price of fuel went up. If they panic over spending an extra $20 or $30 a month for fuel, a larger increase in loan payments is going to send them right over the edge.

[zete]

Originally Posted by Ming

People will be forced buy what they can afford. It's a novel concept. It's a correction that's needed to some degree, in my opinion. It's why I've scaled back on the kinds of cars I lust after. I focus now on the virtues of $15K hatches and wagons. What I could afford on credit and what I can afford to easily pay off are two vastly different things.

That means no "new rich" getting loans they can't afford for tricked out SUVs. and fewer 'Necks around me that buy fancy shiny princess quad cab "family sedan" pickups with the unused cargo area and shiny tonneau covers next to their run down mobile homes...

I still lust after the same cars. But I've always purchased what I need and can afford. Dreams are free, reality is a different story altogether. Too many folks tried to "live their dream" and I think they're starting to think it's actually a nightmare.

[tgunnd39]

Originally Posted by Bokl

in one way this is good. Do you know how many people purchased suvs and tucks that can not afford? Just look at this. when price of fuel went up most of those suv and pick up trucks drivers complained and traded for more fuel efficient vehicles. If they could afford to spend 30-50k on their truck and suv they should be able to afford gas. Most of those people that purchased these vehicles did not qualify for them. They would qualify for maybe 15-20k car. SO this is good. Finaly people will start buying what they can afford not what they wish they could afford.

Quite frankly, I am sick and tired of this attitude. Not one person on this forum can truly project, myself included, what dire consequences will happen if the economy of this country melts down. We can say, however, that what we are seeing right now tells us that this situation is NOT GOOD for anyone, because what those that believe this is good for the country do not understand, is that our economy does not operate as it did fifty years ago, when very little was bought on credit. A major contraction of credit availability will have serious ramifications for every, and I mean EVERY, industry in this country; just look at what is happening now!

It is truly ignorance that drives this type of opinion; no one is going to benefit from this. Why do you think the rest of the world's economies are suffering right along with the good ol' USofA? The answer is simple: we owe them money! Virtually every economy in the world is tied into ours and vice versa. If we fail, so does everyone else. The dominoes are already starting to fall in other parts of the globe.

So, no, this is not good and the sooner we get this mess taken care of and stop selling homes to borrowers with poor credit, (thanks to Jimmy and Billy and the short-sighted congresses that passed these "noble" but seriously flawed plans to guarantee sub-prime home buyers!), then the sooner this nation can get back on its feet. And that WILL be good for everybody!

My .02

[zete]

Originally Posted by tgunnd39

Quite frankly, I am sick and tired of this attitude. Not one person on this forum can truly project, myself included, what dire consequences will happen if the economy of this country melts down. We can say, however, that what we are seeing right now tells us that this situation is NOT GOOD for anyone, because what those that believe this is good for the country do not understand, is that our economy does not operate as it did fifty years ago, when very little was bought on credit. A major contraction of credit availability will have serious ramifications for every, and I mean EVERY, industry in this country; just look at what is happening now!

It is truly ignorance that drives this type of opinion; no one is going to benefit from this. Why do you think the rest of the world's economies are suffering right along with the good ol' USofA? The answer is simple: we owe them money! Virtually every economy in the world is tied into ours and vice versa. If we fail, so does everyone else. The dominoes are already starting to fall in other parts of the globe.

So, no, this is not good and the sooner we get this mess taken care of and stop selling homes to borrowers with poor credit, (thanks to Jimmy and Billy and the short-sighted congresses that passed these "noble" but seriously flawed plans to guarantee sub-prime home buyers!), then the sooner this nation can get back on its feet. And that WILL be good for everybody!

My .02

I believe what the original poster was saying was that overextending yourself is stupid. Too many folks bought into the "cheap credit", "house prices will rise forever", "life is never going to hurt again" idiocy.

Yes, our economies revolve on credit. But cheap credit to those that didn't deserve it has done a disservice to all of us and needs to be rectified. The solution isn't to provide more credit to bad risks but to fix the credit problem so that we can right the ship. To do that requires wiping out a lot of bad debt, which will require wiping out a lot of people, unfortunately.

Living too close to the edge is suicidal. If you get sick or lose your job, everything goes south fast. A lot of folks abandoned common sense and replaced it with a giddy belief that things would be rosy forever.

The original poster's comment that a small increase in fuel prices -- to, relatively speaking, 1980 level! -- caused many to bail out of their trucks and SUVs. To me that shows that the people who purchased those vehicles were too close to the edge for their own good. They should never have purchased a vehicle that a small increase in fuel costs would drive them scrambling to sell their vehicle.

And if you think fuel prices are truly high, it's just high from an absolute perspective. In relation to the 1980s, it's about the same and yet vehicles today are more fuel efficient. We all got sucked in by cheap fuel, some of us more so than others, it seems.

For some Cheap Credit + Cheap Fuel was a recipe for disaster.

[Bokl]

Originally Posted by zete

I still lust after the same cars. But I've always purchased what I need and can afford. Dreams are free, reality is a different story altogether. Too many folks tried to "live their dream" and I think they're starting to think it's actually a nightmare.

well said. Now they are paying for it. Most people that know how to spend their money have no problems now. They are not complaining. Only people that are complaining are the once that try to live their dream like you said and finally they wake up and realized it is a big nightmare.

[zete]

Originally Posted by Bokl

well said. Now they are paying for it. Most people that know how to spend their money have no problems now. They are not complaining. Only people that are complaining are the once that try to live their dream like you said and finally they wake up and realized it is a big nightmare.

I've been lusting after a Corvette for twenty years. However, it's impractical and so I've purchased practical vehicles.

I really don't comprehend folks who don't get this "living within your means" mentality. I'm not the most frugal person, but it's not hard to be reasonable about what you buy. I do think credit cards make people into purchase monsters, unable to comprehend what they're doing ... or what they've done ... until the bill arrives.

I was raised with a simple motto: "Skimp on everything except food." It's worked well for me these past few decades.

[gardnet1]

What will be scary is when credit card companies start reducing credit lines. I have already had this happen on a home equity line of credit, right in the middle of a remodeling.

[JeffInDFW]

Two weeks ago I bought 2 new cars within 5 days. 4.9% interest, one thru a teachers credit union, the other thru a local bank.