Posted on 11/21/2015 2:24:53 PM PST by Lorianne
Subprime auto lending is shifting into higher gear, raising some concerns in Washington where top financial regulators have sounded alarms about this category of loans. Over the six months through September, more than $110 billion of auto loans have been originated to borrowers with credit scores below 660, the bottom cutoff for having a credit score generally considered “good,†according to a report Thursday from the New York Fed. Of that sum, about $70 billion went to borrowers with credit scores below 620, scored that are considered “bad.†This rise in subprime auto lending comes against a backdrop of gradually improving credit across the economy. Overall household borrowing has climbed to $12.1 trillion, the highest level in more than 5 years, with rising balances for mortgages, auto loans, student loans and credit cards in the third quarter, according to the report.
But when it comes to auto loans, in particular, a rising volume of loans is going to borrowers with poor credit. The sum in that category has nearly reached the same level as in 2006, raising questions about the health of the nation’s auto-lending portfolio and drawing uncomfortable comparisons to the rise in subprime mortgages that helped fuel the housing collapse, financial crisis and recession. The comptroller of the currency, Thomas Curry, said in a speech last month that some of the activity in auto loans “reminds me of what happened in mortgage-backed securities in the run-up to the crisis.†And Richard Cordray, director of the Consumer Financial Protection Bureau, warned in September 2014 that subprime auto-loan borrowers “may be more vulnerable to predatory practices†and that “direct oversight of their lending practices is essential.â€
(Excerpt) Read more at wsj.com ...
Another bailout!
Right after the student loan bailout. Heck, maybe it’s the same people who’ll need it!
Cash for Clunkers, Part Two?
they don’t need a bail out, they need a repo man
“Richard Cordray, director of the Consumer Financial Protection Bureau, warned in September 2014 that subprime auto-loan borrowers “may be more vulnerable to predatory practices” and that “direct oversight of their lending practices is essential”
Predatory lending? Walk you poor person. No loan for you.
And who might the majority of these deadbeats be I wonder...
aspiring rappers?
I knew it, I knew it would happen
ObamaCARS
Sub prime car lending is a good thing for bargin car shoppers. Lots of repo’s to be had at low cash prices.
Not bad.. I see all kinds of new cars and SUVs all over.
Enjoy em til they take em away.
Cash for Clunkers, Part Two?
Yes, for sure, this loosening of credit standards for auto loans began just in time for Obama’s re-election in 2012 and has only grown since then. My advice for anyone looking to buy a vehicle is to wait for the implosion of these loans, there will be tons of good used cars and trucks for sale.
there ya go....... rational truth
unstated was the need for dealers to sell cars. dealers are bank customers and if the dealers fell on hard times the lenders fall on hard times.
there was no mention of banks bundling car loans and selling them so there is not a derivative problem
the cars are in general, good collateral and the repo man can find them and haul them off. there is no problem with people not making payments and keeping them
I think that is about $105,000 per household. I used 115,227, 000 households(2014 number).
>>aspiring rappers?
The Career Education Center in Denver used to have metal crafting (lathing and milling) as part of its curriculum.
Today it has Audio “engineering” and Video Game Programming.
Figure that.
“...there will be tons of good used cars and trucks for sale.”
You betcha! I have owned ONE ‘new’ car in my entire driving life of 40+ years. You’re a DOPE if you buy anything off the lot!
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