Hey everybody, Economic Ninja here. I hope you’re doing well. You know what’s not doing well? Subprime auto loans. But we’re going to talk about something a little bigger because it’s not on a ton of people’s radars, especially in the auto industry. If you look at this chart out of Wolf Street, you’ll see auto loans that are 60 plus days delinquent. This is the index for both subprime and prime. And you’ll see right here by the red blowing off the charts. But the blue down here doesn’t look like it’s going to be a deal. While I have my auto insider, Andrew, I want to bring you along and we’re going to talk about prime lending and how bad it is and how this can be an amazing opportunity for you to be able to start crushing in this auto trade.

So Andrew, how are you doing? Doing good. You, Travis? Yeah, I’m doing really well. It’s been a while. I know you did an awesome spot helping me out with the course, the AutoTrader Pro, and you taught a lot of people a lot of things about auto finance. Why don’t you tell everyone a little bit about your background and then let’s dive into this serious problem with prime lending. Yeah, absolutely. I’ve been in the auto industry for 14 years. By the way, the course is awesome. A lot of great content on there. I spent seven of it in finance directly.

I’ve been a general sales manager, sales manager, finance director, pretty much everything except for GM. But had access to a lot of that because GM didn’t want to attend that. But recently, I need to hit you guys with this. This is not good. The prime lending. So when you speak of that, we’re speaking of people with 700 credit scores and above. So they go in, they think they’re going to get 5%, 6%, not the case. This is from an insider, a pretty high up guy, not going to mention his name, but they’re not raising rates just because the Fed’s raising the rates.

They’re having prime auto repos, which means people are over leveraged, which means we had the other, what, a guy called me the other day, a guy makes $4 million a year. He’s $7 million in debt, couldn’t get approved on an $80,000 BMW. The rates right now, the average prime lending rate is 8.5%. And what’s really shocking is we all knew it was common in credit unions. If you remember about a year and a half ago, they were always doing 1.9s, 2.9s, trying to get the business, and we were like, what the heck are you doing? The economy is collapsing.

This is crazy. Well, they can’t even compete. Yeah, I fully remember it. And these are major lenders. Let me dive in real quick and just clarify this. When we’re talking prime, we’re talking about people that have great credit scores, great credit histories. And so because of that, they’re getting much better deals on their lending. And so you’re saying because that chart that I showed from Wall Street hasn’t shown it uptick, but what you’re hearing from people on the ground because that was you just a mere month or two ago until you were sort of found out.

And you’re actually saying that it’s now ticking up. Wow. So, okay, how big of a problem is this? Because like you said, their raising rates, the banks are raising their rates because now they’re seeing prime lenders as sort of a risk where they used to look at subprime lenders or borrowers the same way. So what do you think is going to be happening in the next couple of weeks or months because we don’t see the data yet? Well, from what he told me, and he has data from talking with the corporate board of this particular bank, they’re going to be between 8% and 10% right off the rip.

Like prime, best rates you can have 8% to 10%. Their repos in the prime market have gone up 12%, I believe is what he said. And that’s a huge problem. The only one that’s going to sneak through this one is Wells Fargo because they have a subsidiary, Global Ending, which is a subprime bank. So they’re buying things, shoveling it through them, giving it to Global. But that’s 22% interest. That’s a different market. But the prime market is this is not good. It’s bad news. Because if we’re saying that they’re 8% to 10%, I mean, every state’s got its maximum.

You know, ours is 29.99%. But that means if you have, and just because you have a great credit score doesn’t mean that you have great credit. But like I said, you could have $7 million in debt and you’re making your payments on time and your credit doesn’t change. Okay, so let me ask you this. How does this affect, let’s say, GM financing or BMW financing companies that actually work with specific lenders or they are the lenders? Is that going to affect them? No. Well, yes, with everything except for EV. So as you know about the EV market, you’ve talked about that on your channel a lot.

That’s the only brand that is getting a break. And that’s because they just can’t move them. Wow. Okay, that makes sense. So now if we see these rates, well, it sounds like they’re already starting to rise right now. What is that going to do to auto prices or the dealers themselves? Down. Gotcha. Wow. Okay. Yeah. So what opportunities do you see because you have a history flipping vehicles. I know you had a hummer. You flipped a little while back, like right on the tail end of this, right? Yes. So where kind of opportunities are you seeing in the market? Are you jumping in right now to start buying cars or are you sort of like holding off? Oh, no, I’m holding off.

You know, it’s not Ramsey says buy used cars. I wouldn’t buy new or used. I’d buy, I’d fix the car you got in the garage or get a bicycle. And I’m being serious because it’s, it’s, it’s that bad. Or one of the easiest things to do is what I tell people, and this is huge for your audience. This is a massive three. It’s take three seconds. You show up to the dealership. You say you want to order a car with no intention of ordering a car. You know, you’ll take a car on the lot. They’ll work you a great deal.

You’ll get the car on the lot at that moment. You say, Hey, I’ve got a trade. Now you just hit them between the eyes because now they’re really upset that you didn’t mention that at the beginning. Never mentioned that you have a trade at the beginning ever, ever, ever, because now you have the best deal on the car, the best deal on the trade and then say, Hey, I also, my credit union is doing this. What is your rate? I’d like to see your rate. And a lot of them are going to show you right now.

And this is from inside information from people that are actually working in the departments right now. I actually was director over a large dealership that said that they’re not turning away business at all. So they’re getting by rate, best deal on the car, best deal on the trade. But please, please take away from this. Never mentioned that you have a trade until you have finished negotiating the car. Nice. Wow. Everybody. I hope that you can appreciate what you were just shown because Andrew shares a bunch of this stuff in the auto trader pro course.

And as a matter of fact, I’m going to throw a discount link and we’re going to make it less than $200 if you want this. If you’ve ever wanted to flip cars for money, or you just want to buy your next car and save hundreds, if not thousands of dollars. And then if you want to sell it, how you’re going to get the most back, I’m going to put a link down below. And Andrew has brought a lot of excellent content for that course. Andrew, in closing, what kind of opportunities do you think? Because this sounds like it’s obviously really bad.

If people with good credit scores can’t get a good rate, then dealerships are going to be having to figure out something, right? They’re going to start coming up with massive incentives. Already seeing there’s no markup over MSRP. What do you see in the future with your 15 years experience? What kind of deals do you expect like coming into the Christmas season? You’re going to see huge deals over the next two quarters, more so than the Christmas season. And you got to remember Toyota, you know that I know we’re about to close up here, but Toyota is bringing over that pickup truck.

That’s like 10 grand. It’s $10,000. So you have $100,000 Forbes over here, you’re going to see massive discounts and drops in prices, and they’re not going to care because as long as they hit their unit volume, as we’ve talked before, these next two quarters, this is your best time to buy. Like at the end of this second quarter, I would go buy if you want to buy a car, buy a car. Do not buy used if you’re going to buy a car right now. If you were to buy a car, don’t buy used.

Wow, that is such great advice. I mean, stay with the use right now, but if you’re getting ready, if you’re holding off and you’re saving your money, you’re going to absolutely crush it. Well, thank you so much for coming on. Ask for the rent, please. Ask for the rate. Tell your people to ask for the buy rate because they’re entitled to knowing. Okay, wait. Do you want to explain that to everyone right now? Let’s give them that nugget. Because we talked about this kind of stuff in the course, but let’s give them that nugget.

On every retail installment contract, it doesn’t matter which date it is. It’s either going to be on the first or the last page. It says you as the customer have the opportunity to negotiate this rate. Well, that means at that point, you can say, hey, show me the buy rate from the bank. And they don’t technically have to show you the buy rate from the bank. But you know at that point, if they say no, then you’re still negotiating. And then that’s when I’m telling you, I’ve seen it time and time again where they’ll be like, get the sales manager in here and guess what happens? They end up getting the buy rate.

That’s why it’s so important to ask for that. So remember, get the car first. Act like you’re going to order one. Don’t order it. Buy one a lot. Then do your trade. And then ask about the rate once you get into finance. Don’t do it. That’s awesome. Well, hey, everyone, you just heard it right from one of my insider’s mouths. I thank you so much, Andrew, for coming on. Everyone, if you want to check out AutoTrader Pro, I can guarantee you this. To say that a deal under $200 for this course is going to save you five times or even 10 times that cost of the course for your next car and then the car after that in every car in the future, it’s an understatement.

Go check it out. The link’s down below. Thank you so much, everyone, for watching The Economic Ninja. He’s out. Take care, guys. [tr:trw].

See more of The Economic Ninja on their Public Channel and the MPN The Economic Ninja channel.