Impact of buybacks on bank?

So I was thinking last night: I imagine a big chunk of TDi vehicles that are being bought back currently have loans. And that means interest which means bank profit. Making up a number lets say 100,000 loans will be canceled/paid off prematurely. Number could be higher or lower, I don't think any of us know.

Be fascinating to see the impact this has one lenders/banks bottom lines, both on individual companies and as a whole.

I am sure this will have a notable impact on the market

How much do you think consumer debt is at any one time in the US? Think around $12 trillion. The payoff of 100,000 loans in a short period of time won't even be noticed. So no affect.

South Coast Guy said:

How much do you think consumer debt is at any one time in the US? Think around $12 trillion. The payoff of 100,000 loans in a short period of time won't even be noticed. So no affect.

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I doubt it will go unnoticed. It is a guess since we do not know the number of loans and amount of remaining interest owed but even if not a substantial impact it would be an impact nonetheless. The impact is lessened as it is spread across who knows how many banks but still am impact.

fan of fanboys said:

I doubt it will go unnoticed. It is a guess since we do not know the number of loans and amount of remaining interest owed but even if not a substantial impact it would be an impact nonetheless. The impact is lessened as it is spread across who knows how many banks but still am impact.

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The biggest impact would be on VW Credit (VW and Audi financial arm). I would assume that most loans/leases on VW/Audi are through them, as they often offer special deals. Obviously not all loans will be through them. But a good chunk will. So they will see a marked let off in interest. Now, they will probably be financing a bunch of new cars as well, so that will help.

South Coast Guy said:

How much do you think consumer debt is at any one time in the US? Think around $12 trillion. The payoff of 100,000 loans in a short period of time won't even be noticed. So no affect.

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I am sure most of the people are going into new loans. With interest rates so low it's not like they are making much off them anyway.

And for most cars that get paid off, those people will be buying new cars and will have loans on them,......so not much affect.

Not even a blip on the big picture radar.

Not my problem, don't care.

daesania said:

Not my problem, don't care.

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cared enough to post about how much you do not care

dpospres said:

And for most cars that get paid off, those people will be buying new cars and will have loans on them,......so not much affect.

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that is good point

might actually increase number of loans

fan of fanboys said:

cared enough to post about how much you do not care

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so what? you're not my time keeper.

ccbsecu said:

Not even a blip on the big picture radar.

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Not even a blip on that blip.

daesania said:

so what? you're not my time keeper.

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just observing the time you spend on things you do not care about

Well, now that the big news has broken and some people (and you know who you are!) are spinning their wheels, there's plenty of time for renewed incivility.

Several observations about this issue:

1. As others have noted, VW/Audi Credit is most exposed to dieselgate loans. The VW/Audi Credit loans are for new cars, which perform better than used car loans.

2. All car loans in U.S have a delinquency rate below 1%. That is for both new and used cars.

3. Like all loans, the highest interest payments are early in the term of the loan. Later in the loan term, interest payments are quiet low. So VW/Audi Credit has made most of it's profit by now and not much more profit to be made from old loans by now.

4. Old loans will be paid off with VW buy back funds anyway. So VW/Audi credit will get their money before the car owner gets their money.

So, the banks will not loose any money on Dieselgate at all.

fan of fanboys said:

just observing the time you spend on things you do not care about

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I rarely care about things that do not concern me or my finances. A 10 second reply to a thread is but a blip of my time i would have spent here otherwise. YMMV.