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The rates of Americans behind on auto loan and credit card bills continue to rise — in fact, both are at the highest levels in more than 10 years. Rising delinquencies indicate that more people are in financial distress. When auto loan or credit card payments are missed, consumers dig themselves deeper into debt and see major drops in their credit scores, so it’s usually an outcome people try to absolutely avoid.

This morning I discovered something *extremely* alarming happening in the car market, specifically in auto lending. I'm now convinced that there is a massive wave of car repossessions coming in 2023. Here's what I discovered (and what no one knows): Background: Over the past 2 years, many people took out exorbitant loans on cars. Car values were inflated (and frankly, still are to some extent). But many people simply had no choice and bought an overpriced a car. Well... Car valuations are now plummeting. Some cars have declined in value as much as 30% y/y. And these same people that...

A growing percentage of Americans with auto loans are struggling to make their monthly payments. Subprime borrowers in particular are feeling the impact of higher prices for both new and used vehicles. The rise in delinquencies also follows the end of loan-accommodation programs set up during the pandemic. With inflation cutting into the budgets of Americans, a growing percentage of people with auto loans are struggling to make their monthly payments. TransUnion, which tracks more than 81 million auto loans in the U.S., said Tuesday the percentage of loans that are at least 60 days delinquent hit 1.65% in the...

Wells Fargo, one of the biggest lenders for new and used car purchases in the U.S., sent letters to hundreds of independent auto dealerships last month telling them that the San Francisco-based company was dropping them as a customer, according to people with knowledge of the situation. A Wells Fargo spokeswoman confirmed that the bank, which only makes auto loans through car dealerships, will no longer accept loan applications from most independent shops. Independent dealerships typically sell used cars, unlike franchise dealerships that focus on new vehicles from specific manufacturers. The bank had “an obligation to review our business practices...

But it’s even worse than it looks. And this time, there is no jobs crisis. This time, it’s the result of greed by subprime lenders. Serious auto-loan delinquencies – auto loans that are 90 days or more past due – in the third quarter of 2019, after an amazing trajectory, reached a historic high of $62 billion, according to data from the New York Fed today: This $62 billion of seriously delinquent loan balances are what auto lenders, particularly those that specialize in subprime auto loans, such as Santander Consumer USA, Credit Acceptance Corporation, and many smaller specialized lenders are...

Robert Loehr’s dealership is hanging in just fine, much like Fiat Chrysler Automobiles NV’s sales did last quarter. But just as investors doubt the U.S. car market can sustain near-record results for much longer, the Georgia retailer is apprehensive about a key issue: sticker shock. “Prices are crazy on cars nowadays -- all of them,” said Loehr, who sells Jeeps, Rams and other Fiat Chrysler models from a showroom northwest of Atlanta and has been in the business for 35 years. “They’re crazy to me, and I do it every single day, all day long.” New Jeep Gladiators -- the...

Subprime auto loans, a big force behind booming car sales in recent years, are getting crushed by defaults, particularly those originated between 2013 and 2015 when the proportion of subprime loans began to surge while underwriting standards became loosey-goosey, as private-equity-backed auto finance companies with a ravenous appetite for risk, subprime, and securitization elbowed into the market, amid the exuberance of the greatest credit bubble in history. “Bad deals are made in good times,” says the old banking saw. Auto lenders package their loans into asset-backed securities (ABS) and sell them as bonds to yield-hungry institutional investors. Fitch Ratings, which...

There is a lot of talk out there about the auto-loan market right now. Hedge fund manager Jim Chanos has said the auto-lending market should "scare the heck out of everybody," while the auto-lending practices of some used-car dealerships has been given the John Oliver treatment on TV. It's a topic we've been paying attention to as well. In a presentation in September at the Barclays Financial Services Conference, Gordon Smith, the chief executive for consumer and community banking at JPMorgan, set out some eye-opening statistics on the market. Now the New York Federal Reserve is taking a closer look...

Negative subprime auto data from CarMax's earnings is bad news for regional banks, according to investment firm Piper Jaffray. "CarMax is the largest used car dealer in the country, we believe these developments indicate we will continue to see more pressure on used car prices in the coming months," Piper Jaffray's Kevin Barker wrote in a note to clients Tuesday. He added, "The decline in sales from lower tier borrowers (near-prime to subprime) are a clear signal the market recognizes subprime lending may have been overextended. These developments continue to confirm our thesis that lower used car prices and lower...

Jamie Dimon is sounding the alarm on auto loans. "Auto is clearly a little stretched, in my opinion," the JPMorgan Chase (JPM) CEO said Thursday morning, speaking at the Alliance Bernstein Strategic Decisions Conference in New York. "Someone is going to get hurt... we don't do much of that." But other lenders have. The average size of new auto loans is rising, as is the average payment size, according to research from Experian released Thursday morning. In May, the total amount of auto loans cracked the $1 trillion mark for the first time, marking a 10 percent increase. It comes...

Today’s Wall Street Journal report on record levels of credit-card and auto-loan debt sound like a stroll down Memory Lane: U.S. credit-card balances are on track to hit $1 trillion this year, as banks aggressively push their plastic and consumers grow more comfortable carrying debt. That sum would come close to the all-time peak of $1.02 trillion set in July 2008, just before the financial crisis intensified, and could signal an easing of frugal habits ingrained by the recession. The boom has been driven by steady economic conditions and an improving job market that have made creditworthy consumers less reluctant...

By the end of this week, the U.S. government will be a step closer to sending out millions of dollars to minority borrowers who were allegedly discriminated against by auto lender Ally Financial Inc. But there is a potential hitch: No one knows for certain whether all the people getting the checks will actually be minorities. The attempt to sort that out is the end result of a unique settlement in which Ally agreed to pay borrowers at least $80 million to settle allegations of racial or ethnic discrimination, even though the lender is prohibited by law from collecting data...

More than a quarter of car buyers still owed an average of $4,257 more than their vehicles were worth. Unlike a home, which can increase in value, a new car loses 11 percent of its value on average the minute it’s driven off the dealership’s lot. After five years of depreciation, the same car has lost two-thirds of its value and is typically worth just 37 percent of its original purchase price. The problem is that many car loans now exceed five years. Although the longer loans mean lower monthly payments, they leave many owners with negative equity in a...

A combination of higher prices for new cars and relatively low rates for auto loans means Americans are borrowing a record amount to pay for their new rides. According to Experian Automotive, which tracks millions of auto loans written each quarter, the average amount borrowed by car buyers last quarter climbed above $27,000 for the first time ever. "It's not surprising buyers are borrowing more," said Melinda Zabritski, Experian's senior director of automotive credit. "If you look at the most popular segments, they are full-size pickups and SUVs. It's hard to find one of those models new and fully loaded...

Racial Politics: Like mortgage lenders, the auto industry is inoculating itself against trumped-up racism charges by adjusting the way it prices loans. Eric Holder's witch hunt is spreading — and doing lasting damage. On Friday, the National Automobile Dealers Association issued new "fair credit" guidelines to protect the 16,000 car dealers it represents from discrimination lawsuits filed by the Justice Department and Consumer Financial Protection Bureau. The agencies have teamed up to frame car lenders as bigots after successfully framing home lenders. "Fulfilling these goals is particularly important in light of recent allegations," NADA said in a memo to members....

A B.C. couple are speaking out about how they feel they were misled into a 25 per cent vehicle loan from TD, which has left them paying more than double the price of their car. “We’re paying $21,000 for the loan — then $23,000 in interest,” said Angie Hauser of Kelowna. “They’re making money off of people who have no money.” “We’ve been robbed by a bank with the help of a car dealer. I mean, that’s the only way I see it,” said her husband Enzo Gamarra. "Why would I want to pay $44,000 for a car that's now...

Hey, who's up for burying consumers in ridiculous loans and selling them off as securities on Wall Street? I mean, it's not as is this has worked out badly in the past, is it? Well, okay, it didn't work out so well when Fannie Mae and Freddie Mac pulled this stunt with home loans, but it should work out wonderfully for automobiles. After all, they never lose value on the market. My dad’s 1978 green Pinto station wagon would be worth around $123,000 today, I’m sure, so at least the collateral would be worth it (via Ed Driscoll and Jim...

Washington – The Obama administration said Wednesday that the government will lose about $14 billion in taxpayer funds from the bailout of the U.S. auto industry. In a report from the president's National Economic Council, officials said that figure is down from the 60 percent the Treasury Department originally estimated the government would lose following its $80 billion bailout of Chrysler and General Motors in 2009. The report's release coincides with the administration's efforts to tout the bailout's role in the revitalization of the U.S. auto industry after last week's announcement that Chrysler is repaying $5.9 billion in U.S.

Automakers gained $25 billion in taxpayer-subsidized loans and oil companies won elimination of a long-standing ban on drilling off the Atlantic and Pacific coasts as the Senate passed a sprawling spending bill Saturday. *snip* The administration won approval of the defense budget. Democrats wrested concessions from the White House on $23 billion for disaster-ravaged states, a doubling of low-income heating subsidies, and smaller spending items such as $24 million more for food shipments to the elderly.

NEW YORK (MarketWatch) -- The Federal Reserve, along with other central banks, said Friday that it was increasing the funding it is providing to banks and announced that, for the first time, it was willing to accept bonds backed by auto loans and credit cards. "In view of the persistent liquidity pressures in some term funding markets, the European Central Bank, the Federal Reserve and the Swiss National Bank are announcing an expansion of their liquidity measures," the Fed said in a statement. The Fed took the move in an attempt to flood the market with supply and lower short-term...