Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Data's shown that there's a massive subprime auto crisis going
on right now in America. A lot of data is
shown that it's similar to what happened in two thousand
and eighty with mortgages. The only difference is, at least
back then, when you bought a house, you build out
some equity. Today, when you buy a car, what kind
of equity are you building nothing?
Speaker 2 (00:17):
This is a massive number we're talking about. The deeper
you get into it, you realize who it's affecting the most.
Speaker 1 (00:22):
We're going to talk about that today. If you give
out yet it's been give it times up and subscribe
to the channel and stick around to the area and
to realize how you can get the notes on everything
we're talking about. So let's take a look at this.
When you look at this here October last month, six
point sixty five percent of borrowers in the subprime market
(00:46):
are sixty days late. That's one in fifteen borrower is
seriously behind, two times higher than what it was just
three years ago, one point four percent above the two
thousand and eight peak. This is it's not like just
something people are talking about. This is really taking place.
If you talk about what is prime versus subprime. Subprime
(01:07):
borrowers are those that have a credit score five eighty
to six eighty. If you're deep subprime, you're zero to
five eighty, and then prime is six to sixty six
eighty plus. As you look at this, so let's go
a little bit deeper on these numbers to see what's
going on. By the way, if you notice this is
a subprime issue, prime borrowers, which is zero point three
seven percent, are sixty days behind.
Speaker 2 (01:28):
That's one in two hundred and seventy.
Speaker 1 (01:29):
It's not a big number that anybody's worried about with
subprime borrow So if you look at this chart and
we zoom it a little bit more, what do you notice.
If you notice right here, all the way to the
top right record break in we've never seen that before.
Prime is totally fine. Subprime we peaked here, which is
someone in the late nineties, and in eight you got
(01:50):
another peak here.
Speaker 2 (01:51):
But this is higher than ever before.
Speaker 1 (01:54):
So now when you look at one point sixty six
trillion dollars of America is owing to car what percentage
of subprime?
Speaker 2 (02:03):
What percentages prime?
Speaker 1 (02:05):
Prime makes up for about seventy eight to eighty five
percent of that subprime makes up to fifteen to twenty
twenty two percent of.
Speaker 2 (02:12):
That, which means the number is still a real number.
Speaker 1 (02:15):
We are talking about two hundred and fifty billion to
three hundred and seventy billion dollars on these prime subprime loans.
I remember buying a car when I was in the
Army back in nineteen ninety seven. I bought a ret
Mitsubishi Eclipse from a financing company called f MAC in Clarksville, Kentucky.
Have the contract till today. I showed it to a
few of the guys a couple months ago. You know
(02:37):
what my rate was, thirty three percent. I was paying
for this Smtsubishi Eclipse. My payment for the first year
and a half was pretty much interest only. And that's
what they're targetting some of the subprime folks. If you
look at subprime too deep subprime, sixteen percent is the
interest rate.
Speaker 2 (02:54):
Which you get if you're subprime prime. You run eight
to nine percent.
Speaker 1 (02:57):
Today twenty one two points twenty one points six on
used subprime loans. And then obviously the horri case is
the ones I just talked to you about thirty to
thirty two percent. Like I said, new car APR you
got good credit. Eight to nine percent is where you're at.
So now as we're staying on this, the reason why
this is also slowly becoming a bigger issue is in
(03:18):
the last three months, a company called Tricolor it's pronounced
in a very different way just when bankrupt, then shut
down September of twenty twenty five.
Speaker 2 (03:28):
Guess what business they were in? Subprime auto loaned. Wait
a minute, what's going on over here?
Speaker 1 (03:32):
Chase comes back and says, what are you doing with
all these delinquencies.
Speaker 2 (03:36):
We're no longer lending at all whatsoever? They shut down
September of twenty twenty five.
Speaker 1 (03:41):
Another one, Prema Land, that was also a subprime loan
company for auto for folks, they shut down in October.
So this is starting to get a lot more discussion
and eyeball. So a lot of people are asking what
really is going on here now if you look at
the reasonings for it. Prices, If you look at this
(04:02):
from two thy and twelve, the average car price thirty
thousand dollars, it goes to around twenty twenty forty thousand dollars.
But then in the last four years we've been at
fifty one thousand dollars, and this, of course, when it's fifty.
Speaker 2 (04:17):
Thousand dollars, Eve's at fifty eight thousand.
Speaker 1 (04:19):
Dollars, and you're kind of sitting there realizing the average
new car payment is around seven forty five to seven
sixty seven. Twenty percent of borrowers are paying one thousand
dollars a month. People ask what the reasoning is. One,
of course, interest rates are affecting people. When the interest
rates went up and they have them in lowering it,
that's affecting a.
Speaker 2 (04:38):
Lot of people.
Speaker 1 (04:38):
Number two is the lows being stretched for sixty seven years.
So a lot of times when people are coming back
to trade the car for something else, these dealerships are like,
wait a minute, we'll take the car. In many cases
they're twenty eight percent of trading that happened, we're in
negative equity. I come in, the car's w six thousand dollars.
I got eight thousand dollars long on it. Dealer says, well,
(05:01):
this car you wanted to buy his twelve thousand dollars.
Now I'm going to sell it to for fourteen thousand
dollars because I'm rolling that two thousand dollars loan from
your previous car. That's happened about twenty eight percent of
the time. Number Two, car insurance and repair costs have
gone up the last few years. What do you want
to call it, COVID, auto theft, whatever it is, those
two have gone up and people are feeling that tear
iff some of the prices with repair costs, and the
(05:23):
last but not least, this is affecting low income and
younger households. So if you're watching this saying I don't
even know what this guy's talking about, I'm not affected
by it.
Speaker 2 (05:31):
Neither am I.
Speaker 1 (05:33):
It's not affecting prime people. But if you're asking do
I feel like I'm in recession today? You may say no.
You know who is feeling.
Speaker 2 (05:40):
Like they're in recession today? Low income and younger households.
Speaker 1 (05:44):
We're sitting having a conversation with a couple of our guys,
are like, you know, where are you going?
Speaker 2 (05:47):
What are you paying for your car? What are you
doing with this? The reality of it is with this solution.
Speaker 1 (05:52):
Wise number one, if you're watching this right now saying, man, Pat,
I don't.
Speaker 2 (05:56):
Even know what the solution should be for me.
Speaker 1 (05:58):
Number one, we're learning very quickly the power of having
a great credit score. Do not screw up your credit score.
I'll give you a hint and a tip. Over the years,
I've hired a lot of different people. When we're hiring,
we run credit on a lot of executives that we hire,
and some people we run background checks and we'll see
why does this person have a bankruptcy on their credit?
(06:18):
Do you know how often somebody has a bankruptcy because
a parent goes to their son and says, we're going
to buy this car and put it under your name.
They do, They don't make the payment. An eighteen year
old didn't do anything wrong. By twenty one years old,
has a credit has a card that sixty eight thousand
dollars loan that was written off, couldn't pay a repoll.
That person has to deal with the credit score. If
(06:39):
anybody's asking you, can you co sign? Can you co sign?
Speaker 2 (06:41):
Can you co sign?
Speaker 1 (06:42):
You know what the right answer is, No, I'm not
co signing period. I'd rat to give you two hundred
dollars and go do whatever you want to do with it.
Then co sign for anybody. Protect your credit score. This
helps you with your career. This hips you save money. Obviously,
it helps you when it comes down to your car
payment as well. Number two, use a ten percent phone.
If you have a you know, fifty thousand dollars income,
(07:04):
you're like, man, what can I afford to pay for
car payment? That's say fifty thousand dollars a year, four
thousand dollars a month, maybe after taxis you're making thirty
two hundred dollars a month.
Speaker 2 (07:14):
What's ten percent of that? Three? Twenty three twenty is.
Speaker 1 (07:17):
The car payment you should make? Pat, do you want
me to drive a three hundred and twenty dollars car payment?
Speaker 2 (07:21):
Yes? I do. That doesn't make any sense.
Speaker 1 (07:25):
Yeah, Can you imagine if I go pick up a
girl with a three hundred and twenty dollars car payment.
I'm driving a Mirage, which is guy Henry's favorite car.
I don't want to freaking buy a Mirage, but that's
what you can afford to do. I drove a Ford
Focus to twenty eight a month. You know what it
was like a guy my size six four two fifty
driving a Ford Focus?
Speaker 2 (07:42):
Hey, how you doing? I'm coming out of a Ford Focus.
Speaker 1 (07:44):
But by the end of the year, a meal of
my Ford Focus at two hundred and fifty thousand dollars
saved in the bank. Course, of course I was doing
sales and different things, but I saved up the money.
Speaker 2 (07:52):
Then I got a nicer car, then the rest is history.
Speaker 1 (07:54):
So use the ten percent formula and last final least
you want to have can Because as we're having these conversations,
one of our guys said, I haven't had a car
payment since I was what twenty one years old?
Speaker 2 (08:06):
Hasn't had a car payment since twenty one years old?
Speaker 1 (08:08):
And another one of our guys is, I've had a
car payments that is twenty one years old, right, So
both are in different situations.
Speaker 2 (08:13):
So ideally, if you're able.
Speaker 1 (08:15):
To buy something cash, you don't have the car payment
that allows you to develop and live a little bit
more of a peaceful lifestyle rather than trying to impress everybody.
But this is an issue that is going on. Okay,
so if you watch this you want to get all
the notes and the research that we did, go to
PbD Entrepreneur Circle.
Speaker 2 (08:30):
That QR code right there. This is waiting for you
for free. Number two.
Speaker 1 (08:33):
If you enjoyed this video, you want to see another
video like this having to do with investments and money.
I shot a video titled the Top ten best investments
I made.
Speaker 2 (08:41):
Click you to watch it. You got questions for me?
Minect me.
Speaker 1 (08:44):
If you've got value out of the video, give it
a thumbs up and subscribe to the channel. Take care, everybody.
Speaker 2 (08:48):
Bye bye,
Data's shown that there's a massive subprime auto crisis going
on right now in America. A lot of data is
shown that it's similar to what happened in two thousand
and eighty with mortgages. The only difference is, at least
back then, when you bought a house, you build out
some equity. Today, when you buy a car, what kind
of equity are you building nothing?
Speaker 2 (00:17):
This is a massive number we're talking about. The deeper
you get into it, you realize who it's affecting the most.
Speaker 1 (00:22):
We're going to talk about that today. If you give
out yet it's been give it times up and subscribe
to the channel and stick around to the area and
to realize how you can get the notes on everything
we're talking about. So let's take a look at this.
When you look at this here October last month, six
point sixty five percent of borrowers in the subprime market
(00:46):
are sixty days late. That's one in fifteen borrower is
seriously behind, two times higher than what it was just
three years ago, one point four percent above the two
thousand and eight peak. This is it's not like just
something people are talking about. This is really taking place.
If you talk about what is prime versus subprime. Subprime
(01:07):
borrowers are those that have a credit score five eighty
to six eighty. If you're deep subprime, you're zero to
five eighty, and then prime is six to sixty six
eighty plus. As you look at this, so let's go
a little bit deeper on these numbers to see what's
going on. By the way, if you notice this is
a subprime issue, prime borrowers, which is zero point three
seven percent, are sixty days behind.
Speaker 2 (01:28):
That's one in two hundred and seventy.
Speaker 1 (01:29):
It's not a big number that anybody's worried about with
subprime borrow So if you look at this chart and
we zoom it a little bit more, what do you notice.
If you notice right here, all the way to the
top right record break in we've never seen that before.
Prime is totally fine. Subprime we peaked here, which is
someone in the late nineties, and in eight you got
(01:50):
another peak here.
Speaker 2 (01:51):
But this is higher than ever before.
Speaker 1 (01:54):
So now when you look at one point sixty six
trillion dollars of America is owing to car what percentage
of subprime?
Speaker 2 (02:03):
What percentages prime?
Speaker 1 (02:05):
Prime makes up for about seventy eight to eighty five
percent of that subprime makes up to fifteen to twenty
twenty two percent of.
Speaker 2 (02:12):
That, which means the number is still a real number.
Speaker 1 (02:15):
We are talking about two hundred and fifty billion to
three hundred and seventy billion dollars on these prime subprime loans.
I remember buying a car when I was in the
Army back in nineteen ninety seven. I bought a ret
Mitsubishi Eclipse from a financing company called f MAC in Clarksville, Kentucky.
Have the contract till today. I showed it to a
few of the guys a couple months ago. You know
(02:37):
what my rate was, thirty three percent. I was paying
for this Smtsubishi Eclipse. My payment for the first year
and a half was pretty much interest only. And that's
what they're targetting some of the subprime folks. If you
look at subprime too deep subprime, sixteen percent is the
interest rate.
Speaker 2 (02:54):
Which you get if you're subprime prime. You run eight
to nine percent.
Speaker 1 (02:57):
Today twenty one two points twenty one points six on
used subprime loans. And then obviously the horri case is
the ones I just talked to you about thirty to
thirty two percent. Like I said, new car APR you
got good credit. Eight to nine percent is where you're at.
So now as we're staying on this, the reason why
this is also slowly becoming a bigger issue is in
(03:18):
the last three months, a company called Tricolor it's pronounced
in a very different way just when bankrupt, then shut
down September of twenty twenty five.
Speaker 2 (03:28):
Guess what business they were in? Subprime auto loaned. Wait
a minute, what's going on over here?
Speaker 1 (03:32):
Chase comes back and says, what are you doing with
all these delinquencies.
Speaker 2 (03:36):
We're no longer lending at all whatsoever? They shut down
September of twenty twenty five.
Speaker 1 (03:41):
Another one, Prema Land, that was also a subprime loan
company for auto for folks, they shut down in October.
So this is starting to get a lot more discussion
and eyeball. So a lot of people are asking what
really is going on here now if you look at
the reasonings for it. Prices, If you look at this
(04:02):
from two thy and twelve, the average car price thirty
thousand dollars, it goes to around twenty twenty forty thousand dollars.
But then in the last four years we've been at
fifty one thousand dollars, and this, of course, when it's fifty.
Speaker 2 (04:17):
Thousand dollars, Eve's at fifty eight thousand.
Speaker 1 (04:19):
Dollars, and you're kind of sitting there realizing the average
new car payment is around seven forty five to seven
sixty seven. Twenty percent of borrowers are paying one thousand
dollars a month. People ask what the reasoning is. One,
of course, interest rates are affecting people. When the interest
rates went up and they have them in lowering it,
that's affecting a.
Speaker 2 (04:38):
Lot of people.
Speaker 1 (04:38):
Number two is the lows being stretched for sixty seven years.
So a lot of times when people are coming back
to trade the car for something else, these dealerships are like,
wait a minute, we'll take the car. In many cases
they're twenty eight percent of trading that happened, we're in
negative equity. I come in, the car's w six thousand dollars.
I got eight thousand dollars long on it. Dealer says, well,
(05:01):
this car you wanted to buy his twelve thousand dollars.
Now I'm going to sell it to for fourteen thousand
dollars because I'm rolling that two thousand dollars loan from
your previous car. That's happened about twenty eight percent of
the time. Number Two, car insurance and repair costs have
gone up the last few years. What do you want
to call it, COVID, auto theft, whatever it is, those
two have gone up and people are feeling that tear
iff some of the prices with repair costs, and the
(05:23):
last but not least, this is affecting low income and
younger households. So if you're watching this saying I don't
even know what this guy's talking about, I'm not affected
by it.
Speaker 2 (05:31):
Neither am I.
Speaker 1 (05:33):
It's not affecting prime people. But if you're asking do
I feel like I'm in recession today? You may say no.
You know who is feeling.
Speaker 2 (05:40):
Like they're in recession today? Low income and younger households.
Speaker 1 (05:44):
We're sitting having a conversation with a couple of our guys,
are like, you know, where are you going?
Speaker 2 (05:47):
What are you paying for your car? What are you
doing with this? The reality of it is with this solution.
Speaker 1 (05:52):
Wise number one, if you're watching this right now saying, man, Pat,
I don't.
Speaker 2 (05:56):
Even know what the solution should be for me.
Speaker 1 (05:58):
Number one, we're learning very quickly the power of having
a great credit score. Do not screw up your credit score.
I'll give you a hint and a tip. Over the years,
I've hired a lot of different people. When we're hiring,
we run credit on a lot of executives that we hire,
and some people we run background checks and we'll see
why does this person have a bankruptcy on their credit?
(06:18):
Do you know how often somebody has a bankruptcy because
a parent goes to their son and says, we're going
to buy this car and put it under your name.
They do, They don't make the payment. An eighteen year
old didn't do anything wrong. By twenty one years old,
has a credit has a card that sixty eight thousand
dollars loan that was written off, couldn't pay a repoll.
That person has to deal with the credit score. If
(06:39):
anybody's asking you, can you co sign? Can you co sign?
Speaker 2 (06:41):
Can you co sign?
Speaker 1 (06:42):
You know what the right answer is, No, I'm not
co signing period. I'd rat to give you two hundred
dollars and go do whatever you want to do with it.
Then co sign for anybody. Protect your credit score. This
helps you with your career. This hips you save money. Obviously,
it helps you when it comes down to your car
payment as well. Number two, use a ten percent phone.
If you have a you know, fifty thousand dollars income,
(07:04):
you're like, man, what can I afford to pay for
car payment? That's say fifty thousand dollars a year, four
thousand dollars a month, maybe after taxis you're making thirty
two hundred dollars a month.
Speaker 2 (07:14):
What's ten percent of that? Three? Twenty three twenty is.
Speaker 1 (07:17):
The car payment you should make? Pat, do you want
me to drive a three hundred and twenty dollars car payment?
Speaker 2 (07:21):
Yes? I do. That doesn't make any sense.
Speaker 1 (07:25):
Yeah, Can you imagine if I go pick up a
girl with a three hundred and twenty dollars car payment.
I'm driving a Mirage, which is guy Henry's favorite car.
I don't want to freaking buy a Mirage, but that's
what you can afford to do. I drove a Ford
Focus to twenty eight a month. You know what it
was like a guy my size six four two fifty
driving a Ford Focus?
Speaker 2 (07:42):
Hey, how you doing? I'm coming out of a Ford Focus.
Speaker 1 (07:44):
But by the end of the year, a meal of
my Ford Focus at two hundred and fifty thousand dollars
saved in the bank. Course, of course I was doing
sales and different things, but I saved up the money.
Speaker 2 (07:52):
Then I got a nicer car, then the rest is history.
Speaker 1 (07:54):
So use the ten percent formula and last final least
you want to have can Because as we're having these conversations,
one of our guys said, I haven't had a car
payment since I was what twenty one years old?
Speaker 2 (08:06):
Hasn't had a car payment since twenty one years old?
Speaker 1 (08:08):
And another one of our guys is, I've had a
car payments that is twenty one years old, right, So
both are in different situations.
Speaker 2 (08:13):
So ideally, if you're able.
Speaker 1 (08:15):
To buy something cash, you don't have the car payment
that allows you to develop and live a little bit
more of a peaceful lifestyle rather than trying to impress everybody.
But this is an issue that is going on. Okay,
so if you watch this you want to get all
the notes and the research that we did, go to
PbD Entrepreneur Circle.
Speaker 2 (08:30):
That QR code right there. This is waiting for you
for free. Number two.
Speaker 1 (08:33):
If you enjoyed this video, you want to see another
video like this having to do with investments and money.
I shot a video titled the Top ten best investments
I made.
Speaker 2 (08:41):
Click you to watch it. You got questions for me?
Minect me.
Speaker 1 (08:44):
If you've got value out of the video, give it
a thumbs up and subscribe to the channel. Take care, everybody.
Speaker 2 (08:48):
Bye bye,
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