This is a bigger story than meets the eye:
An email sent out Monday asked employees to finish what they were working on, clock out and leave the facility.
www.11alive.com
"They take on a lot of leverage they're after very high rates of return that they've promised to their investors. So, they've taken on a lot of leverage and take on a lot of risk. This is by design," Ganduri explained.
Ganduri said the used car industry has taken a hit since the pandemic.
"The used car prices have gone down quite a bit and also they ended up making loans that were much more than the actual value was," he explained.
He gave an example to help understand how it works.
"On an average, the car was worth $13,000 and they the average loan was in fact was $20,000. Okay, so you're lending out $7,000 or $6,000 more than what the car is worth. And that portion of it is in some ways uncollateralized unsecured debt. And so when someone defaults, that portion of $6,000, $7,000 is gone in the sense that there is no recourse, there's no collateral backing that."
They ALL did that. Carvana, Car Max, Auto Nation, etc.
People are walking away from their ridiculously high priced used car loans the same way they walked away from their ridiculously high mortgages in 2009.
And with property values starting to fall, it's only a matter of time before they start walking away from ridiculously overpriced real estate too.