Consumers HAVE STOPPED PAYING Their CAR LOANS | Episode 949

Happy Holidays! Want to give your host a gift? Consider subscribing, rating, and reviewing the show this holiday season. It really helps the show grow. From all of us at Believe, have a Merry Christmas everyone, and a Happy Holiday!

It's noon here in Ventner City, New Jersey on our nation's capital, Washington D.C., and this is Car Edge Live for Thursday, October 23rd with your hosts, me, Ray, here in, well, Chile, Ventner City, New Jersey, and Zach hanging out in Washington D.C. today.

And you know what I've heard, Zach? Let me hear it. And people aren't paying their damn car loans!

Hey, we're going to share the data with you folks, but before we do, today's show is brought to you by CarEdge.com. Dad, want to take a moment and thank Catarina.

She just left the most wonderful review about her experience using our concierge car buying service, and I'm going to read this out for our community.

Working with Jerry was an amazing experience. From start to finish, he helped me sell my car and buy a new one, guiding me step by step through every part of the process.

He found a company I never even heard of that ended up offering me the best deal for my old car, and the wholesale went smoothly and quickly.

When it came to buying my new vehicle, Jerry truly went above and beyond. He handled everything, reaching out to multiple dealerships, comparing offers, negotiating both the price and finance rates, and saved me so much time, stress, and money.

His attention to detail and dedication exceeded my expectations. I am very grateful for his help and extremely satisfied with my new car. Jerry's service is worth every penny, and I 100% recommended that anyone looking to sell or buy a vehicle with confidence and peace of mind.

As a friendly reminder, folks, you can book a free consultation call to see if we can help you back at CarEdge.com. Click on Car Buying Service, then get free consultation, and you can meet our team, which includes the wonderful Jerry, who's been doing this for almost half a century, back on the website.

Now, cab out of the way. Let's turn our attention here, dad, to another subprime lender going into bankruptcy. This is yet another automotive lender. This time, Primalend Capital Partners filing for bankruptcy, coming on the heels of other automotive lenders going bankrupt recently as well.

Cracks are forming in the finance market for retail automotive. Dad, customers have stopped paying for their auto loans as well. We've got record high subprime delinquent loans right now. Give us a lay of the land. What's going on here, and should we be concerned?

Let's answer the last question first. Should we be concerned? Absolutely. We as a society, especially the good folks on Wall Street, have done their best to ignore all the warning signals that a large swath of Americans are in financial difficulty.

We have kind of whitewashed it. Oh, the economy's doing great. The stock market keeps going up. It reminds me of something that Alan Greenspan once said, and he said, it's irrational exuberance.

Yeah, there could be sectors of the economy that are doing well. There could be sectors of the American population that are doing well. The wealthy come to mind.

But there is a growing swath of Americans that are not doing well and are in a desperate financial situation.

68% of the population could not come up with $2,000 in cash in case of an emergency. 68%. That's more than the majority.

So when we see things like what happened with tricolor, when we see things that happen with primal lend, and we see loan loss provisions being increased dramatically by many lending institutions out there,

these are signals that for the most part, most people in Wall Street are willing to overlook until the whole house of cards comes tumbling down, and then they'll say, Derek, we should have seen that coming.

Now, it's interesting, Dad, because I want to take the angle here of what this means for people who are in the market today.

I think we are going to see an even greater surge in used vehicle inventory become available on the market. We know right now we have the highest level of used vehicle inventory that we've seen for the entirety of 2025.

And that's a good thing for prospective car buyers because the more inventory there is, the more supply means the prices will go down. The more supply there is in any market, not enough demand.

Ultimately, what we have here, Dad, is we have multiple, we had tricolor like you mentioned a moment ago. We also have here another one, which was, excuse me, primal lend, going bankrupt.

These organizations, Dad, they have assets. They got these existing loans. They have customers whose vehicles are already delinquent.

They're about to be even more used cars showing up on dealer lots because these companies that are going bankrupt, the customers who are going delinquent, those cars make it back.

Those cars end up getting repossessed. So that's one angle to this that I think is actually really interesting is used car shoppers might see even more inventory in the foreseeable future as there's more repossessed vehicles,

repossessed at both levels, the dealership level, the consumer level, showing back up as inventory.

I would tend to agree with you, however, and there's a however attack.

When you dig into the data, when you read these articles, repossessions, even though delinquencies are higher and have remained higher than they've been for quite some time,

repossessions have not gone up in relation to the amount of delinquencies there are.

Banks are trying to work with their customers to extend loan terms, abatement programs.

Why is that? Because they can't afford to admit that they made all of these bad loans and repossessed those vehicles all at the same time.

Because if they were to do that, that would signal the crash that many of us think is about to happen.

So they are in a nice way covering it up.

If delinquencies were four and a half percent instead of six and a half percent, then they'd probably be repossessing those vehicles.

At six and a half percent, this will not look good on our bottom line.

We need to figure out ways to not have to repossess the vehicle.

So I think it's part of a broader cover-up.

And not that I'm a conspiracy theorist at all, but I think they realize that if they were to repossess all these vehicles,

that is a signal to both Wall Street and Main Street that we have a dilemma here.

Houston, we've got a problem, and I don't think that Wall Street wants them to admit that yet.

I think that's super fair.

However, Dad, from the lanes you see here from Igor, last Wednesday at the car auctions, they have 11 lanes.

Four of them were nothing but repossessed vehicles.

That's one lane more than ever before, and I think it's really important for our community to understand.

Vehicles get repossessed from multiple parties.

Vehicles get repossessed from consumers.

That's what we talk about most frequently.

That would be you go default on your auto loan, you stop paying it, and the repo man or woman comes in knocking and takes your car.

Vehicles get repossessed from dealerships.

Vehicles get repossessed by the floor plant company.

This is also obviously an instance where the floor plant companies are occasionally going under as well.

We are seeing repossessed vehicles of all shapes and forms making their way to the dealer auctions.

I think it brings up a really good point here from Joe.

If you are in the used car market right now and you're listening to us and you're hearing about how there is more inventory,

so there's more negotiability than ever before, pre-purchase inspection.

Dad, I would like to spend a couple minutes on this.

Would you buy a previously repossessed vehicle?

What are the things you're looking out for?

Because as we see more and more consumers and financial institutions stop paying or dealerships stop paying their auto loads,

we're going to continue to see more repossessed vehicles to your point.

But we ever see as many as there actually are, maybe not because of those reasons that you described a moment ago,

but for those that are in the market that watch this and think about buying a used car, how does this influence my shopping experience?

Is there a way for me to know if a vehicle is repossessed?

If I do know it was repossessed, do I not consider it?

Do I look beyond the car facts or the auto check?

Help us understand how you would approach this, Dad.

Well, I think as a consumer, you have to do everything in your power to protect yourself.

What do I mean when I say that?

You know, we often talk about how you need to get pre-approved for an automobile loan before you go to a dealership.

That you need to get an insurance quote on the type of vehicle that you're thinking of purchasing before you do it

so you'll have a greater understanding as to what your insurance costs are going to be on a monthly basis.

If you are looking at a pre-owned car and we know that more repos, not as many repos as there should be,

but more repos are making it to the auctions than before.

And if it makes it to the auction, it makes it to a dealers lot?

Eventually, yes.

And we know for a fact from collecting data points that the age of the fleet of vehicles on the road today are older than they've ever been.

We know that the average transaction prices are almost $26,000

and that the average miles on these cars that are being sold is 72,000 miles.

As a consumer, you need to make sure that you get a pre-purchase inspection done.

You need to make sure that there aren't any issues that are visible or easily detected by that third-party private mechanic or shop that you take it to.

I will not sit here and say that dealerships will try to hide deficiencies in an automobile.

You know, you can lie through omission or comission.

You just don't mention it.

So it is incumbent upon you, the buyer, to make sure to get that third party, that third set of eyes, the second set of eyes, to look at this vehicle.

If the dealership says, we don't allow that, then you know that's a dealership that you do not want to do business with.

They are basically telling you in a nice way, you are about to buy a piece of poop and we don't want you to roll out a piece of poop until after you bought it and after you driven off a lot.

So it's your responsibility as the customer to protect yourself.

But yes, it might show on car facts that it was repossessed, it might not.

But if you get an independent mechanic to look at it or you take it to a different dealership and have a mechanic look at it, they might discover things where perhaps it needs an oil change.

Or oil is like sludge because it hadn't been changed.

There are things that they can discover that would indicate the health of the vehicle.

Not necessarily whether or not it was repossessed, but if they ever took care of the vehicle.

Exactly. The big takeaway here is be prudent before you buy a used car in today's market.

Just because inventory is up doesn't mean you let your guard down.

Regardless of a vehicle is repossessed or not, you want to make sure you know what you're getting into.

And here is the data folks.

Auction check-ins.

This shows you where vehicles that are making it to the dealer auctions, the commercial auctions, where they're coming from.

And what's interesting about this is the repo check-in index.

What this is showing you is imagine that in all of 2019, 100 vehicles made it to the dealer auctions that were repossessed vehicles.

Then in 2022, it's telling you that only 73 repowed vehicles made it to the dealer auctions.

Then in 2023, it went back up to 93 vehicles and 111 in 2024.

Look at the trend. We're up to 124% in 2025.

That means we're seeing 24% more repossessed vehicles at the used car auctions than we were back in 2019.

It's the highest level of repo check-ins we've seen in the past, at least for this time scale, six years.

Look at the other segments. Rental cars are only, I mean, they're not even back to where they were in 2019.

And lease vehicles, which I'll scroll up to here, are down significantly from where they were in 2019.

So the mixed shift of used cars for sale at dealer auctions, which are the vehicles that ultimately end up making their way to being sold to retail customers,

are trending more and more as repossessed vehicles.

And what's interesting about the news today is not only do we have the link with C's at record highs,

we also have yet another subprime lender actually going under.

And so you can see the, I keep calling it cracks in the foundation, but the whole thing's starting to break down a little bit,

which is great. We can have the conversation about macroeconomics and what that means for this country and whatnot.

There's a practical application for this as car shoppers, which is inventory is going to go up even more.

The quality of that inventory potentially is worse.

And it does not change. If anything, it doubles down on the importance of doing all of your due diligence before you buy a used car in today's market.

If you look at that chart, and we know that repos are up 24%, and that number should be higher and probably much higher,

but the banks are trying to figure out ways not to actually repossess the vehicles.

So it just, that number is a staggering number because we know it's really more than that or should be much more than that.

And you know, cracks in a foundation are one thing.

Cracks when it's built on a house of cards is another thing, okay?

At a certain point, we can watch it all come tumbling down.

And it was only 17 years ago that we saw that.

And at that time we saw it because of what was going on primarily with mortgage lending.

But we're seeing it today.

We're in the summer reruns and we're not even 20 years past when all hell broke loose worldwide.

Not just in the United States, it was a global phenomenon.

Yeah, but, Dad, I want to be very clear.

The amount of debt tied up in auto loans is not even comparable to mortgages.

And so I just want to comment that we could go full doom and gloom here and this is going to be something like that.

Is it maybe time for a correction and we're starting to see some of the opportunities for that?

Yeah, but auto is so much smaller.

I get that, but I think at this point auto is more representative of what the overall condition of the economy is than most want to accept or admit.

For sure.

But we are starting to see some ramifications on dealership groups, which again, keeping this focused on its Q4.

This is car buying time.

This is like, if you've been following us every year in and out, if you are actually in the market, Q4 is your time to make a move.

And the reason I bring that up is we have yet another dealership group reporting earnings.

This time yesterday we spoke about Lithium, who saw an 11% decline in their gross profit per new vehicle sold.

Well, look at the headline today, Dad, over at AutoNation, the second largest dealership group in the United States.

They saw a 19% decline in their gross profit per vehicle sold and a 6.3% decline in their gross profit per used vehicle sold.

So look at this data, Dad, we're talking about, you know, obviously the repo crisis, the delinquent loan crisis, consumers stopping to pay their auto loans, how it signals all of this challenge in the market.

Then you also look at dealership groups and they are starting to feel the pressure of average transaction price for a new car being 50 grand.

They can't sell $50,000 cars like they used to.

They're making less money on each vehicle sold, yet another bright spot for customers, prospective customers.

Look at their average gross profit per used car sold.

It's less than $1,500, okay?

At Lithium, it was, what, $1,800, something like that?

And the new car gross profit at $2,281, that's about $600 less per car than what Lithium was doing, but it's still going down.

So yes, those are some indications that perhaps it can get easier for some customers who were in the market for cars,

that the cost of buying, the initial cost of buying the car could be less than what it had been.

The overall cost to do it could end up being higher because of the longer loan terms that people find themselves going into.

But yeah.

The negotiability is higher today than it has been at any point in 2025.

And you can look at just on the used car side, another data point, retail sales actually went down 5.2% in September.

So again, just to frame it up here, look at all the data points.

You've got more supply coming into the market because of all the repos, because of these bankruptcies.

Whether that supply is as much as it should be because of the reasons you stated earlier, no one wants to actually turn the lights on and see what's going on in the room.

But you have more supply, which we can see demonstrably in the data set.

You have less demand on both the new car side and the used car side because you're seeing retail sales go down.

And then you look at the dealer group earnings, they're making less per new vehicle and used vehicle sold.

This is every indication points to buyer's market, which we have not been in.

And it's happening at the exact time where the manufacturers feel the most pressure to also juice their numbers before they head into the new model year.

I mean, it's bad news, but it's good news if you're in the market, it's good news.

It's good news for the people who can actually afford to buy a car because those cars that they can afford to buy are now suddenly more negotiable than they had been.

But I think we have to pay a certain amount of attention to what Jamie Dimon from what is it Chase said.

And yeah, and that is that when we see things going on like tricolor and the parts.

First brands.

Yeah.

He said, you know, that indicates that there's some cockroaches out there and typically where there's one, there's many more.

And so he said that last week or a week and a half ago, today we're hearing about Primal Land.

And that's an organization that finances many cars for buy here, pay here dealerships.

So this is just another example of the cockroaches that Jamie Dimon thinks are out there in the economy.

So when he says it, and he's in charge of, I believe, the largest bank in the country.

In the world.

Okay.

Maybe, just maybe, he's trying to send a signal to everybody that things aren't quite as good as what we'd like to think they are.

Now, what's interesting about this is Florida Man says, so that would mean this is good news.

If you have cash, then the interesting thing about this is, yes, if you have cash, Q4 is going to be a great time to buy a car because you have all the leverage in the world for all the reasons we've talked about in today's show.

But the other unfortunate reality to this is it is easier today, depending on what you're not even depending on what your credit scores is easier today to get approved for a long term auto loan than ever before because there are banks out there.

And it's interesting.

We're starting to see some pressures on like regional banks, for example, Wall Street is starting to get a little bit sour here.

Dad, we talked about it on this show recently.

General Motors financial sold $2 billion in auto loan, not on the public markets, but on the private markets, which is so atypical.

All the asset-backed security deals typically go on the public markets.

They did one on the private markets due to Goldman Sachs.

Why?

Probably because the risk appetite wasn't there on the public markets, but it was there on the private markets.

Like, there are indicators that things are bad.

Yes.

You know what?

There are other lenders out there, for those of you who do want to buy a car, that will get you an approval.

This is Wells Fargo, for example, right now doing insane loan-to-value percentages, but they're approving them.

And so I think it's a scary moment.

But again, if you have been pragmatic, if you have been waiting for the time to strike for a quote, unquote, good deal, negotiability,

you can get approved for an auto loan today.

If you have cash, you have a ton of leverage.

Again, obviously, when you're negotiating, you don't tell them you have cash because that will ruin some of the negotiability there.

But it's like, someone needs to flip the lights on.

But you know what?

There's another room with other banks that don't keep the lights off.

Well, yeah, but...

I'm not saying there's no...

I'm not being judgmental there if that's good or bad.

It's just the reality.

If you find someone else who will give you an approval on an auto loan now, if push came to shove.

And that, when you see Wells Fargo agreeing to do what they're doing,

where a $5.50 and above credit score, you can get approved for 150% of loan-to-value.

That is just another example of trying to prop up the house of cards, in my opinion.

Because they know that's really not the legitimate way to go.

They know from past experience that people with $5.50 credit scores normally have shown that they have great difficulty in handling their credit obligations.

And so, to take those people and say to them,

well, we know you've had problems, but we've got great faith in you.

And we have so much faith in you that we will approve 50% more than the value of the vehicle that you're buying.

If that's not a house of cards, I don't know what is, at least in my opinion.

Yeah, let's start here from Rich.

Thank you, Rich, for the kind contribution.

Found your retirement home.

Jeff Stray, the 2026 Ford Mustang Motorhome.

All right, 2026 Ford Mustang.

Give me a second.

Oh, God, what are we about to look at all together?

Stand by, folks.

All right, Rich, what are you got us looking at?

What the heck is that thing, Dad?

You're not.

No.

Oh, that, that.

You know what, I think before I would do that,

I would figure out how to live in the Oscar Mayer Wiener Mobile.

He's got choices, folks.

Oscar Mayer Wiener Mobile.

Yeah, which is a very narrow bed, you know, they have in the Oscar Mayer Wiener Mobile.

Dad, we also had from earlier, freedom anchor.

Thank you, freedom anchor.

Zach, I heard you talking about the AI negotiator on WTOP this morning.

Yes, had a really awesome opportunity to be on WTOP,

one of the regional news affiliates out there.

So that was a fun moment.

I'm grateful to hear that more people are learning about what we're up to.

Dad, I want to remind everyone that if we can help out with buying a car,

selling a car, doing all that fun stuff, check out caredge.com.

We're up to year six here.

Spend some time on the website, learn a little bit about how car edge is built

to help you buy a car, not to help the dealer sell one

and how we work for you to get you the best outcome.

Please, folks, spend some time back on the website

and learn more about all that we're up to.

And like I said at the outset of the show, we talked about Jerry's success story.

You can book your free consultation call with our team

to learn more if we are able to help you.

And in general, just how we can point you in the right direction

and meet our team of concierges who are here ready and willing

to work on your behalf to assist you right now.

Dad, let's call it a show for today.

Yes, that's to meet our bat, our big ass team.

Real quick, wrist watch check.

Today is a Trafford Crossroads.

Trafford is a small niche watchmaker out of Austin, Texas.

This is an automatic watch with a display back

so that you can see the movement itself.

And it's the only watch that I have that has a red dial

to go well with this particular sweatshirt

because who doesn't want their watch to match their sweatshirt?

So that's today's wrist check.

Love that. Absolutely love that.

Dad, we might have a show tomorrow.

I have to fly out to Los Angeles

for a lung cancer foundation of American board meeting on Saturday.

So I got to figure out, I haven't booked my flights.

I got to figure that out.

So we'll probably...

Have you booked your flight?

Dude, I don't know what to...

I'm busy, man.

I got to figure that out.

So yeah, maybe a show tomorrow, maybe not,

but I think so.

I think we'll be able to make it happen.

Well, you've got to fly on net jets or something

that has Wi-Fi so we can do the show from the air

when you're in the air.

Maybe not. Okay.

If I could afford it, I would do it.

All right, folks, we're back most likely tomorrow.

Dad, I love you.

I'll catch you later on.

I love you too.

Thanks for doing this today.

Absolutely.

Yeah.

Happy Holidays.

Want to give your host a gift?

Consider subscribing, rating,

and reviewing the show this holiday season.

It really helps the show grow.

From all of us at Believe,

have a merry Christmas, everyone,

and a happy holiday.

Consumers HAVE STOPPED PAYING Their CAR LOANS | Episode 949

About this episode

used vehicle inventory

repossession

repossessed vehicles

car facts

pre-approved for an automobile loan

pre-owned car

average transaction price

mileage

pre-purchase inspection

third-party mechanic

Carfax

oil change

vehicle health

used car market

dealer auctions

AutoNation

gross profit

repo crisis

delinquent loan crisis

retail sales

buyer's market

new model year

Ford Mustang

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