Buried

bury (‘beri) vt. 1. put underground, inter. 2. conceal 3. to be laid away by a car man (‘buried, ‘burying) – ‘ burial n./a. bury the hatchet, become reconciled, owe more than a car or truck is worth


Scenario number 1: He’s driving a 2002 Chevy Suburban. Man he’d sure like one of those new ones! The only problem is that he owes $6000 more on his trade then its worth. Why? Because he was buried in the 1998 Suburban he traded in to buy this one. His credit was good, so they just added the six grand onto the new loan. But man, he’d sure like a brand new one! Someday he’s going to buy a boat. He’ll need the Suburban for that! He just had his third kid, his wife likes to be up high and she sure as hell won’t drive a mini-van! There are a lot of reasons to get a new one.

On Saturday he goes down to the Chevy dealer, and by the end of the day, he’s driving the new Suburban home. No money down, trade in paid off. His payments are only $745 per month for 84 months. Life is good!

Scenario number 2: He’s had his new Suburban for a little less than a year. His payments are $745 per month for Christ’s sake and it’s killing him! The spike in gas prices has made a bad situation even worse. Propeller heads in Priuses are flipping him off. His daughter is accusing him of being the sole cause of global warming. He can kiss that new boat goodbye! And this torture will continue for another six years? No freaking way! He needs to trade the sucker in and he needs to do it now! But there’s one little problem. The ghosts of loans on Suburban pasts have caught up with him. The dealer informed him he’s now buried $15000 and new needs a lot of money down. He’s broke! What’s he going to do?

Repo!

It’s a situation that repeats itself every day in car dealerships all across the land. A lot of people, and I do mean A LOT of people are buried up to their eyeballs in cars.

Its America’s other loan crisis; a crisis no one talks about openly. No one is demanding the government for a bail out. No one is calling Rush Limbaugh up and bitching at him. But a crisis it is. Like houses, repossessions are up, and the newly minted flakes are walking among us like zombies. The auto auctions are loaded with repossessed SUVs, that no one dealer will buy unless they can flat-ass steal them. It’s had a ripple effect that has disrupted the automobile business and the economy as a whole.

Who’s to blame for all this? Don’t say the car man because he’s just trying to earn a living. Don’t blame the dealers because they are just working with the financial tools that have been given to them. Car people are like junkies. Give them a lot of dopes with money and they will do what they’re there to do: roll cars.

Like the sub-prime housing mess, the blame falls directly on the back of the banks and stupid consumers.

When I fist started selling cars in 1970 most auto loans were 36 months. You could sometimes get 48, but no one wanted to pay 48 months for a car. I sold Ford’s. Fords wouldn’t last 48 months! Back in those days the banks financed invoice plus fees. Your down payment was your gross. If you had $800 down your maximum profit was $800. (In those days $800 was a HUGE gross.)

The deals were all recourse. Essentially this meant that if the car got repoed, the dealer was responsible for any deficiency. Sully Sullivan, one of the owners of Hayward Ford, used to call it intercourse. The dealer could get really screwed, so he had a vested interested in making at least reasonably sure that the person he was putting out in the street could pay for his new car.

If your customer had filed for bankruptcy, he couldn’t finance a car for ten years. That’s just the way it was. But it’s not the way it is now—not by a long shot.

It all started with 60 months financing. It revolutionized the business by keeping the payments down when car prices were on the rise. Then it was 72 months! Six years to pay for a car! Who in their right mind would do such a thing? Plenty, as it turned out.

Over the years the terms for financing cars got even looser. Recourse contracts were essentially gone, so the dealers took no risk rolling a car as long as he hadn’t broken any laws. Financing only invoice and low book went away too, and down payments for people with good credit went with it. Any big dummy with a way to go could buy just about anything, figures and common sense be damned!

For car men the late 90’s and early 2000’s were like a feeding frenzy. No down. Roll over a burial. 84 freaking months! We all made enough money to get one of those zero down house loans! But we’re paying for it now--big time. Sure, we can still get the goofy financing. It’s just a little harder to find the asses to put in the seats because so many people are so completely buried.

So we are all now paying the price for the good times we enjoyed. That’s just the way it is. But as the Car God decrees: What goes around comes around. If you look out at the street that runs past your dealership, they’re still driving those cars, trucks and SUVs around, and they can’t last forever—especially the Fords.

All we have to do is wait them out.

Talk to you later,


David