Americans can't afford their cars any more and Wall Street is worried

Subprime-style auto lending and bank incentives

• Commenters describe people repeatedly rolling negative equity into new car loans, echoing subprime mortgage patterns.
• Explanations for why lenders keep doing it: profit from origination fees and high yields, ability to securitize/sell loans, relative ease of repossession, and the need to keep credit flowing in a debt-dependent economy.
• Some argue banks lend because they assume they can repossess and resell for more than the remaining balance plus costs, though others doubt that will hold if the market turns.
• There’s debate over whether this is just normal credit cycles or a looming systemic risk akin to past meltdowns.

Cars vs houses as collateral

• One view: cars “keep their value” better from a bank’s risk perspective because depreciation is more predictable and repossession/resale is easier.
• Counterpoint: houses (including land) generally appreciate; cars always depreciate faster, often with no down payment, so buffer is smaller.
• Discussion of housing leverage, PMI, and low-down-payment loans; many note much of the downside risk is shifted to borrowers and insurers, not banks.

Consumer behavior and financial literacy

• Multiple anecdotes of buyers caring only about monthly payments, not total cost or term, which salespeople deliberately exploit.
• Upsells are framed in “$X more per month” instead of large lump sums.
• Several participants insist basic personal finance (interest, amortization) should be taught in school.
• Some defend financing when rates are low or to preserve cash; others assert “if you need a loan, you can’t afford it,” which is strongly challenged as unrealistic.

Affordability, status, and vehicle choices

• Many criticize average new-car prices (~$50k) and large trucks/SUVs as status symbols or “lifestyle” purchases.
• Others report keeping cars 10–15+ years and buying used as a rational alternative, while noting in recent years 1–3 year-old used cars were barely cheaper than new.
• The rise in average price is partly attributed (in-thread) to low-income buyers deferring purchases and a mix shift toward wealthier buyers and higher-priced EVs.

Economic stress and “informal indicators”

• “Loud muffler index,” more dented/poorly maintained cars, and service-industry worker quality are suggested as informal signals of financial strain.
• Others doubt these have real signal, pointing out confounding factors like rust, driving habits, and local conditions.

Cheap EVs and international comparisons

• Several note very low-cost Chinese EVs and small cars overseas versus the US market’s focus on expensive models.
• Suggested explanations include tariffs, import limits, “light truck” loopholes, lean manufacturing prioritizing high-margin vehicles, and inequality (manufacturers target affluent buyers).
• There is side debate about Chinese surveillance vs already pervasive domestic data collection, and whether limited Chinese EV imports could beneficially pressure US makers.

Macro debt, banks, and systemic risk

• Some describe fractional-reserve banking and credit creation as “money from thin air,” fueling asset inflation (especially housing); others push back, clarifying balance-sheet mechanics and collateral backing.
• Several argue the system is politically committed to bailouts and continued cheap credit, making a true deleveraging crash both likely and devastating if it happens.