Insanity prevails: As defaults Rise, Ford wants to offer long-term loans
Ford has decided to do something incredibly foolish: auto loan defaults are surging, and their answer is to offer longer-term loans. Is this what they pay their CEO millions of dollars a year for? a person from Ward 12 would probably offer you better advice.
The “Ford Freedom” sales event requires buyers to use Ford Credit APR financing. Ford Credit is part of Ford. That means it takes on either the benefits or problems with the loans.
To put the loans in perspective, they will be paid through 2022. According to Carfax: Don’t be fooled into thinking depreciation slows much after the first year. New cars continue to lose value for four more years, averaging a decline of 15-25 per cent per year. On average, a new car will lose 60 per cent of its total value over the first five years of its life.
For some buyers, the final year or two of six years of financing are ones when the sale of the car likely will not cover the balance of the car loan. While not a perfect comparison, the problem is not unlike an underwater mortgage. Full Story
Individuals are defaulting on their vehicle loans, and so the solution is to offer them more time; yup, it makes perfect sense if you are on crack.
Pay very close to attention to what’s happening now. Shortly after the banks tightened up on Credit after the 2008 crisis, we stated they would find a way to lend again. Once again, the average person is buying stuff he does not need with money. He does not have to impress people he does not even like. Remember, every con needs two elements: the conman and the victim. These people are choosing to be victims, and they will be bled mercilessly by the soulless bankers. Until Fiat is ended, banks will never lose.
Despite all the noise they made during the financial crisis of 2008 (that they created, by the way), all the leading players are still here today. The solution was simple: print more money and solve the problem for the masses to believe this toilet paper is accurate. Bankers do not care about losing a trillion or three trillion dollars and will eventually lend money to anyone with a pulse. Because as we stated, all, they need to do is print as much money as they need to fix the old problem. The fraud that is going on is all their doing; they purposely create an environment that fosters fraud. Their end goal is to get people to embrace Fiat and forget about real money.
“Give me control of a nation’s money, and I care not who makes its laws” -Mayer B Rothschild.
When people talk about fraud and try to fight it, it’s part of the game plan, as no one is talking about the actual copy. The real scam is paper (FIAT) that was fraudulently created in the 1st place, yet their focus is on how this fraudulently made money is stolen again. See the point; hence, they will continue to foster an environment of greed and fraud until the system collapses or the masses resist; when that happens, your guess is as good as ours. Our trend indicator is showing no indication that change is in the air. They are already giving cash back when you buy a car; in some cases, the sums are as large as $10K.
Central bankers are going to find a way to put amounts ranging from $100-$400K into the hands of the average person. The subprime auto loan market was a test to see if the lemmings would bite again, and the lemmings did not disappoint. The next target is to put even more cash into their hands so that they can use some of these funds to speculate. You need crowd participation to create a bubble. We might have two bubbles in the next cycle, real estate and stock market bubble; time will tell.
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Smart move by Ford. Lower the payments hoping that will be enough so the buyer can afford to make payments. It gets the cars off the lot so the dealers don’t have to pay interest on the cars. If buyer defaults on the loan no big deal for Ford. The used car market is booming.