You’ve heard about how well the auto industry is doing these days. Sales are up. But, the news isn’t all good.
That's because dealers are giving you loans the way banks were giving you mortgages years ago. Financial planner Michael Parmet says it's not a good thing.
“We are walking down the same street. We’re seeing the same pothole we saw years ago. We’re about to fall in again, because the credit market is getting too loose. Dealers need business,” Parmet explained. “They are telling you to walk in, sign up and drive. The dealers feel they need to let up on credit. Banks are following suit. They want that business.”
Parmet told KTRH even if you can't afford to keep your car the dealer is still making their money.
“Repossessions are up over 17%. It’s all about money and how much the dealers can make up front,” Parmet stated.
Almost 11% of car loans today are given to people with subprime credit scores (under 640). That's double what the number was in 2009. Parmet says that’s a very bad sign.
“When people can’t afford their cars, it’s a sign they can’t afford their mortgage payments,” Parmet said.