LounginMKL Posted October 7, 2020 Author Share Posted October 7, 2020 Summary of this thread: businesses that exploit unwary customers are great moral pillars of society. If you were screwed, shut up, and pay the CoBF investors. It's your fault. Ditto! Long CACC!! Link to comment Share on other sites More sharing options...
DooDiligence Posted October 7, 2020 Share Posted October 7, 2020 This is a super informative thread. It flushed out forum members I'd never consider doing business with and reinforced the integrity of others. Link to comment Share on other sites More sharing options...
Gregmal Posted October 7, 2020 Share Posted October 7, 2020 Lack of personal responsibility is universally a bipartisan position. Maybe we can get car and mortgage payments included in the next stimulus package. Link to comment Share on other sites More sharing options...
LC Posted October 7, 2020 Share Posted October 7, 2020 It has everything to do with the fact that people who default on loans cost the rest of us, the same way that anyone who commits fraud costs the rest of us. First, loans prices are segmented by asset and customer. Secondly and in terms of price discovery, to continue to support a failed asset is actually detrimental as it will not allow the lender to readjust their expectations. In other words, more littleoldladies in the future will be in the same precarious position. Link to comment Share on other sites More sharing options...
Parsad Posted October 7, 2020 Share Posted October 7, 2020 This article outlines my thinking so much better than I can. https://www.currentaffairs.org/2018/05/you-should-care-about-your-bank-exactly-as-much-as-they-care-about-you To sum up everyone's reaction to my inquiry, I think context drives people's judgment of right/ wrong, with a lot of double standards being applied here - buying an indulgence (car, steak, hotdog, xmas trees) vs productive assets (real estate, company) - corporate vs individual - ability to pay vs on the rope - understanding vs not understanding the risks - what's her intention when she borrowed? In the end, I probably wouldn't recommend this option because of the harassment/ income garnishment/ legal trouble. Not so much on the morality ground. Ok- now that I've tarnished my reputation here on CoBF, shall we get back to discussing tobacco, liquor, private prison, dirty energy stocks? =) @Gregmal not honoring contract = fraud? you mean like LVMH backing out of Tiffany? What about all of the tenants who are walking out of their leases to leave NYC/SF? LounginMKL, your grandmother should do what is right for her...simple! If that means she defaults on the car loan and it's repossessed, that is her decision...full well knowing the possible repercussions...credit report, collections, etc. If she chooses to honor the contract and not default, she should also understand the repercussions...reduced quality of life/income, ability to pay other bills, etc. As long as she acts within the law, it's nobody's fucking business! Heed the advice from COBF boardmembers, but don't let their moral righteousness push you into making a decision that isn't right for your grandmother. I know alot of the posters on here, and few are as squeaky clean as they claim to be. Self-righteousness is easy behind an anonymous username! Cheers! Link to comment Share on other sites More sharing options...
cwericb Posted October 7, 2020 Share Posted October 7, 2020 "As long as she acts within the law, it's nobody's fucking business!" Just hold on a minute. She signed a legal document agreeing to pay for the car. She apparently owns her own home free and clear. Should she default on the car she will very soon find out what is within the law and what is not. It does not seem like she is destitute. I pay my bills so should she. PS. Its people who don't pay their bills that mean I have to pay more for what I get. So yes, it is my business. Link to comment Share on other sites More sharing options...
Parsad Posted October 7, 2020 Share Posted October 7, 2020 "As long as she acts within the law, it's nobody's fucking business!" Just hold on a minute. She signed a legal document agreeing to pay for the car. She apparently owns her own home free and clear. Should she default on the car she will very soon find out what is within the law and what is not. It does not seem like she is destitute. I pay my bills so should she. PS. Its people who don't pay their bills that mean I have to pay more for what I get. So yes, it is my business. I pay more too, not just you! I agree people should pay in an ideal world. The President of the United States pays nothing, because it is within the law. So, as long as the laws are there, loopholes not closed, she has as much right as the President to act within the law. If she can get out of the contract, and the repercussion is repossession, damage to her credit rating, but nothing else, then that is her prerogative and right if the auto dealer doesn't pursue further action. Why is it when trillions of student loans may be forgiven (these are contracts too, and I think a more morally bankrupt decision than a car loan default) that is ok? Those with student loans will make a greater income than without that degree in many instances...should their lifetime wages not be reduced if they default on their student loans? But they won't because it is within the law. Cheers! Link to comment Share on other sites More sharing options...
Gregmal Posted October 7, 2020 Share Posted October 7, 2020 Forgiving student loans certainly isn't ok. Freeloaders and degenerates aside. If you have your student loans forgiven there should be a mandatory 10% penalty tax on that persons earnings for the rest of their life. Would make one think long and hard about whether its worth weaseling out of a few years salary worth of loan. Link to comment Share on other sites More sharing options...
Parsad Posted October 7, 2020 Share Posted October 7, 2020 "As long as she acts within the law, it's nobody's fucking business!" Just hold on a minute. She signed a legal document agreeing to pay for the car. She apparently owns her own home free and clear. Should she default on the car she will very soon find out what is within the law and what is not. It does not seem like she is destitute. I pay my bills so should she. PS. Its people who don't pay their bills that mean I have to pay more for what I get. So yes, it is my business. Also, regarding this point. Why is it that a rich person who buys or leases their car through their personal company can default on that loan with virtually no repercussion other than repossession and collections...rarely goes to judgement? Or for that matter, someone with no real assets in their personal company, but buys a car through their company and files corporate bankruptcy? In many of those cases, the car goes back to the auto dealer, but with no real assets or income, there is no other repercussion...very likely not even a hit to the company owner's credit report. Cheers! Link to comment Share on other sites More sharing options...
cwericb Posted October 7, 2020 Share Posted October 7, 2020 “I pay more too, not just you!" Of course. We all do. That was my point. But if she intentionally defaults on the loan - violating a legal agreement which she voluntarily signed, she breaks a [civil] law. It is really simple. If you enter into an agreement, you do everything in your power to live up to it. There have been times when this has cost me more than I like to think about - and on a handshake. But you are only as good as your word. If you find yourself in a situation where you no longer have the ability to live up to the agreement than, well "you can't get blood from a stone". “The President of the United States pays nothing, because it is within the law.” As yet, we do not know if it was within the law. “Why is it when trillions of student loans may be forgiven ...” I paid for my own education by working at three jobs, others should pay for theirs too - BUT - some tuitions are becoming completely unreasonable to the point where some will never be able to repay them. Link to comment Share on other sites More sharing options...
Parsad Posted October 8, 2020 Share Posted October 8, 2020 “I pay more too, not just you!" Of course. We all do. That was my point. But if she intentionally defaults on the loan - violating a legal agreement which she voluntarily signed, she breaks a [civil] law. It is really simple. If you enter into an agreement, you do everything in your power to live up to it. There have been times when this has cost me more than I like to think about - and on a handshake. But you are only as good as your word. If you find yourself in a situation where you no longer have the ability to live up to the agreement than, well "you can't get blood from a stone". “The President of the United States pays nothing, because it is within the law.” As yet, we do not know if it was within the law. “Why is it when trillions of student loans may be forgiven ...” I paid for my own education by working at three jobs, others should pay for theirs too - BUT - some tuitions are becoming completely unreasonable to the point where some will never be able to repay them. I commend you on that. I think all students should pay some portion, if not all, of their education. It forces them to decide...is this really what I want and feel good about it once paid. But just because tuition prices go up, doesn't mean everyone has to be a student or get a student loan. If you cannot afford to go, or earn the money to go, then there are always other options...cheaper local universities/colleges, trade schools, entrepreneurship, interning, sales, self-taught skills, moving to another country with cheaper schools and cost of living, etc. But if you decide to pay $100K or $200K for tuition and you get student loans (a contract) to do so, that isn't my frickin' responsibility and I don't want to have to pay for it. Cheers! Link to comment Share on other sites More sharing options...
Gregmal Posted October 8, 2020 Share Posted October 8, 2020 The student loan problem is largely driven by hedonistic, self centered, and self entitled ambitions. Most "go away" to school as a lifestyle choice. It is getting to a point where it makes next to no sense to go to university unless you are doing STEM type courses. You can make $150 an hour as an electrician. You can earn six figures doing plumbing or HVAC. It costs perhaps several thousand dollars to get the training to do these things. You can even now make six figures driving a truck. I really struggle to understand what some people are thinking when it comes to mortgaging their futures so to speak. For what? Some drinking and sex for 4 years? Link to comment Share on other sites More sharing options...
Parsad Posted October 8, 2020 Share Posted October 8, 2020 “I pay more too, not just you!" Of course. We all do. That was my point. But if she intentionally defaults on the loan - violating a legal agreement which she voluntarily signed, she breaks a [civil] law. It is really simple. If you enter into an agreement, you do everything in your power to live up to it. There have been times when this has cost me more than I like to think about - and on a handshake. But you are only as good as your word. If you find yourself in a situation where you no longer have the ability to live up to the agreement than, well "you can't get blood from a stone". “The President of the United States pays nothing, because it is within the law.” As yet, we do not know if it was within the law. “Why is it when trillions of student loans may be forgiven ...” I paid for my own education by working at three jobs, others should pay for theirs too - BUT - some tuitions are becoming completely unreasonable to the point where some will never be able to repay them. Also what about online companies that don't pay their fair share of taxes...Amazon, I'm looking at you? No taxes on $11B in profit, plus a frickin' $129M rebate from the government in 2018! It's because they operate within a loophole in the law. And we all celebrate Jeff Bezos for dominating all of retail, or Elon Musk for only losing $10B over the last 6 years until 2020! Why, because they've created shareholder value and made more people rich, than the people they've screwed over using loopholes. This poor old lady has probably done most things the right way her whole life, and now she is being persecuted because she made a bad car purchase and her grandson suggested walking away from the loan. She hasn't even agreed to it and we're thumbing our noses at her lack of morality, character and that she still has a roof over her head. What a frickin' old bag! Cheers! Link to comment Share on other sites More sharing options...
LC Posted October 8, 2020 Share Posted October 8, 2020 Meanwhile, Howard Marks is exercising his moral courage: https://www.bloomberg.com/news/articles/2020-10-07/oaktree-deal-crushed-a-leveraged-loan-and-exposed-market-s-woes Link to comment Share on other sites More sharing options...
Parsad Posted October 8, 2020 Share Posted October 8, 2020 The student loan problem is largely driven by hedonistic, self centered, and self entitled ambitions. Most "go away" to school as a lifestyle choice. It is getting to a point where it makes next to no sense to go to university unless you are doing STEM type courses. You can make $150 an hour as an electrician. You can earn six figures doing plumbing or HVAC. It costs perhaps several thousand dollars to get the training to do these things. You can even now make six figures driving a truck. I really struggle to understand what some people are thinking when it comes to mortgaging their futures so to speak. For what? Some drinking and sex for 4 years? I can hear people screaming...well what if you want to be a teacher...maybe teacher's should be paid more than plumbers! ;D Not that I disagree, but it is what it is. If you want to make money, don't be a frickin' teacher. If you want to work with kids and mold their little brains, then you're going to have to suck it up and accept gratitude as some of your compensation. Plus you get two months off in the summer! Cheers! Link to comment Share on other sites More sharing options...
cwericb Posted October 8, 2020 Share Posted October 8, 2020 "This poor old lady has probably done most things the right way her whole life, and now she is being persecuted because she made a bad car purchase and her grandson suggested walking away from the loan. She hasn't even agreed to it and we're thumbing our noses at her lack of morality, character and that she still has a roof over her head. What a frickin' old bag! Cheers!" Whoa, back the truck up just a bit. No one is criticizing her. The criticism is only directed at the SUGGESTION that she should intentionally default - check the opening post. She should NOT intentionally default and I have explained just what the moral and legal consequences might be. She has not done anything wrong at this point. Link to comment Share on other sites More sharing options...
Parsad Posted October 8, 2020 Share Posted October 8, 2020 "This poor old lady has probably done most things the right way her whole life, and now she is being persecuted because she made a bad car purchase and her grandson suggested walking away from the loan. She hasn't even agreed to it and we're thumbing our noses at her lack of morality, character and that she still has a roof over her head. What a frickin' old bag! Cheers!" Whoa, back the truck up just a bit. No one is criticizing her. The criticism is only directed at the SUGGESTION that she should intentionally default - check the opening post. She should NOT intentionally default and I have explained just what the moral and legal consequences might be. She has not done anything wrong at this point. I was being facetious. Note the "old bag" part. ;D Cheers! Link to comment Share on other sites More sharing options...
rkbabang Posted October 8, 2020 Share Posted October 8, 2020 Just an observation. I find it odd that (with some exceptions) you can tell the political view of people by what they think of being honest, keeping your word, and paying your debts. Is there anyone above who thinks it is no problem to just default on a loan that isn't a liberal? It's just a wealth transfer to them from a big bad corporation to a nice little granny. Politics poisons everything in your worldview. Link to comment Share on other sites More sharing options...
cwericb Posted October 8, 2020 Share Posted October 8, 2020 " Is there anyone above who thinks it is no problem to just default on a loan that isn't a liberal? " Hahaha, you may be right. So the inference is that I am a conservative. Tell that to all the guys on the political thread who keep calling me a liberal. Guess that is what happens these days if you are anywhere near the centre. :) Link to comment Share on other sites More sharing options...
Jurgis Posted October 8, 2020 Share Posted October 8, 2020 " Is there anyone above who thinks it is no problem to just default on a loan that isn't a liberal? " Yeah. Donald Trump. Sam Zell. Bob Murray. And tons of other greatly moral businessmen who strategically default all the time. Read the RE threads perhaps? There was a thread on CoBF some time ago where a person was asking advice on how to buy a second (investment) property with non-recourse mortgage so that they could possibly strategically default if things did not work out. The response in that thread was not the moral outrage we see here. It was "hey, here are the states that have non-recourse mortgages, here are the states with recourse mortgages, good luck". Double standards much? Link to comment Share on other sites More sharing options...
DooDiligence Posted October 8, 2020 Share Posted October 8, 2020 Just an observation. I find it odd that (with some exceptions) you can tell the political view of people by what they think of being honest, keeping your word, and paying your debts. Is there anyone above who thinks it is no problem to just default on a loan that isn't a liberal? It's just a wealth transfer to them from a big bad corporation to a nice little granny. Politics poisons everything in your worldview. Sure, Trump is a screaming liberal who does wealth transfers all the time. Me too, I default on at least one loan a year. Neo cons call me a liberal (thinking it's an insult). Lefties call me a Republican (and it actually is an insult based on the current state of the party). The middle doesn't exist any more. Link to comment Share on other sites More sharing options...
thepupil Posted October 8, 2020 Share Posted October 8, 2020 Just an observation. I find it odd that (with some exceptions) you can tell the political view of people by what they think of being honest, keeping your word, and paying your debts. Is there anyone above who thinks it is no problem to just default on a loan that isn't a liberal? It's just a wealth transfer to them from a big bad corporation to a nice little granny. Politics poisons everything in your worldview. I would not consider myself a liberal (or a die hard conservative) A secured non-recourse financing is an agreement between the lender and the borrower where the lender/borrower have agreed upfront what the security for that loan is and the simplicity and transparency of that arrangement underlies much of the financial innovation of the past few decades (securitization). I see nothing wrong with handing back keys / strategic default. the lender took that risk and charged you for it. Link to comment Share on other sites More sharing options...
Cigarbutt Posted October 8, 2020 Share Posted October 8, 2020 Just an observation. I find it odd that (with some exceptions) you can tell the political view of people by what they think of being honest, keeping your word, and paying your debts. Is there anyone above who thinks it is no problem to just default on a loan that isn't a liberal? It's just a wealth transfer to them from a big bad corporation to a nice little granny. Politics poisons everything in your worldview. I would not consider myself a liberal (or a die hard conservative) A secured non-recourse financing is an agreement between the lender and the borrower where the lender/borrower have agreed upfront what the security for that loan is and the simplicity and transparency of that arrangement underlies much of the financial innovation of the past few decades (securitization). I see nothing wrong with handing back keys / strategic default. the lender took that risk and charged you for it. My understanding is that the typical car loan is secured and recourse. So, if there is nothing wrong in handing back the keys, there is nothing wrong for the holder of the newly declared delinquent loan to go after (to obtain (through a legally-supervised process) reparation) the individual's assets or earning power for the excess value not covered by the collateral. There are personal responsibility issues that are being dealt with by the present rules of the game. However, one has to wonder about the rules of the collective game when such a high and rising percentage of trade-ins carry negative equity. Where are we failing on top of poor individual choices? It's not an easy question. Easy credit conditions are a sign of development, innovation and sophistication but easy credit conditions are also punctuation marks in the credit cycle. At this point, who's bearing the actual risk? i would venture to say that we all are and that's not necessarily comforting? Securitizations are great but they increase the distance (and put a number of intermediates) between the person who needs the funds and the one who provides them. Link to comment Share on other sites More sharing options...
LC Posted October 8, 2020 Share Posted October 8, 2020 Securitizations are great but they increase the distance (and put a number of intermediates) between the person who needs the funds and the one who provides them. Not only that, but more intermediaries, more cost and fees. Which I would guess contributes to a portion of the negative equity here. Link to comment Share on other sites More sharing options...
wabuffo Posted October 8, 2020 Share Posted October 8, 2020 when such a high and rising percentage of trade-ins carry negative equity Used car value recent price index trend... wabuffo Link to comment Share on other sites More sharing options...
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