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Author Topic: Home Ownership and Wealth Building  (Read 115291 times)

One Step Ahead

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Re: Home Ownership and Wealth Building
« Reply #1260 on: August 12, 2007, 01:24:32 PM »
Another Headache For Detroit

Buyers of Saturn vehicles beware. If the authors of a new study have their way, banks may one day charge you a higher interest rate on your car loans. Among the findings in the researchers' sample of almost 7,000 loans from a single bank: Although not the worst delinquents, Saturn buyers are 22 times more likely to default on their loans than Toyota (TM ) buyers are. In fact, owners of American cars generally are more likely to default than owners of European or Japanese cars.

The research, in a forthcoming book, Household Credit Usage, published by Palgrave Macmillan, shows that default probability isn't only a function of credit history. Brent Ambrose, lead author of the book and the study, says loans secured for European cars are 50% less likely to go into default than loans for American cars. And owners of Japanese cars are 56% less likely to stop paying.

The study looked at auto loans made from January, 1998, to March, 2003--a period when Detroit cranked up its 0% financing deals and offered six- and seven-year paydowns. Foreign automakers and their dealers did far less of this type of lending, which attracts borrowers with poor credit.

Ambrose, a professor at Penn State's Smeal College of Business, argues that loans for American cars "should have significantly higher interest rates to compensate for higher default risk." And to balance the higher risk, carmakers, he says, should raise prices.

That would mean that buyers paying cash would be subsidizing borrowers with poor credit. And the last thing Detroit needs is for its best customers to have to pay a premium to buy American.

By David Kiley

http://www.businessweek.com/magazine/content/07_34/c4047003.htm

Denny Crane

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Re: Home Ownership and Wealth Building
« Reply #1261 on: August 12, 2007, 01:34:07 PM »
Saturns are low-end cars aimed at less affluent buyers.  Not surprised that Saturn owners tend to default more often than owners of higher end European and Japanese cars.
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Re: Home Ownership and Wealth Building
« Reply #1262 on: August 12, 2007, 04:22:59 PM »
I wonder who is?

Another Headache For Detroit

Buyers of Saturn vehicles beware. If the authors of a new study have their way, banks may one day charge you a higher interest rate on your car loans. Among the findings in the researchers' sample of almost 7,000 loans from a single bank: Although not the worst delinquents, Saturn buyers are 22 times more likely to default on their loans than Toyota (TM ) buyers are. In fact, owners of American cars generally are more likely to default than owners of European or Japanese cars.

The research, in a forthcoming book, Household Credit Usage, published by Palgrave Macmillan, shows that default probability isn't only a function of credit history. Brent Ambrose, lead author of the book and the study, says loans secured for European cars are 50% less likely to go into default than loans for American cars. And owners of Japanese cars are 56% less likely to stop paying.

The study looked at auto loans made from January, 1998, to March, 2003--a period when Detroit cranked up its 0% financing deals and offered six- and seven-year paydowns. Foreign automakers and their dealers did far less of this type of lending, which attracts borrowers with poor credit.

Ambrose, a professor at Penn State's Smeal College of Business, argues that loans for American cars "should have significantly higher interest rates to compensate for higher default risk." And to balance the higher risk, carmakers, he says, should raise prices.

That would mean that buyers paying cash would be subsidizing borrowers with poor credit. And the last thing Detroit needs is for its best customers to have to pay a premium to buy American.

By David Kiley

http://www.businessweek.com/magazine/content/07_34/c4047003.htm

One Step Ahead

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Re: Home Ownership and Wealth Building
« Reply #1263 on: August 12, 2007, 04:32:29 PM »
If I had to guess, Chevy

smujd2007

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Re: Home Ownership and Wealth Building
« Reply #1264 on: August 12, 2007, 07:23:16 PM »
I would guess Ford, actually.  Ford surprisingly has tapped into the credit card market as well.  Also, 0% financing deals are pretty much asking someone to default on a loan.  If you require a down payment, a person is probably more likely to feel like they have invested in the vehicle and more likely to keep making payments.  Also if they actually had the money to make the down payment, chances are they have enough income to actually pay over the life of the note. (Unless Mom and Dad made the payment, etc.)

However, if you don't require a down payment, its almost like a lease to some.  Drive that Navigator for 2-3 years, then let it go back when the value has declined to the point where it is worth less than payoff, or you can no longer afford it . . . wait 6-12 months, and do it again at another dealership.  The cycle is too easy to repeat.

If I had to guess, Chevy
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Re: Home Ownership and Wealth Building
« Reply #1265 on: August 12, 2007, 08:08:51 PM »
I say Kia.  I don't know a single wealthy kia owner.  Whereas, that saturn convertible is actually kinda hot and might appeal to some wealthier people.

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Re: Home Ownership and Wealth Building
« Reply #1266 on: August 12, 2007, 08:33:38 PM »
I say Kia.  I don't know a single wealthy kia owner.  Whereas, that saturn convertible is actually kinda hot and might appeal to some wealthier upper-lower class people.

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Re: Home Ownership and Wealth Building
« Reply #1267 on: August 12, 2007, 08:36:44 PM »
lol the -ier made it comparative...compared to Kia customers, they're wealthier.  RCPWN3D!!!

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Re: Home Ownership and Wealth Building
« Reply #1268 on: August 12, 2007, 08:41:35 PM »
lol the -ier made it comparative...compared to Kia customers, they're wealthier.  RCPWN3D!!!

I know, but in no way should the word "wealth" or any of its derivatives be associated with Saturn vehicles.
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Re: Home Ownership and Wealth Building
« Reply #1269 on: August 12, 2007, 08:43:12 PM »
lol.  snob