6 million Americans have stopped paying their car loans, and it's becoming a 'significant concern'

Business Insider ^ | 11/30/2016 | Matt Turner

[SeekAndFind]

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 at the market. In a blog published Wednesday on the New York Fed's Liberty Street Economics site, researchers highlighted the deteriorating performance of subprime auto loans and set off the alarm.

"The worsening in the delinquency rate of subprime auto loans is pronounced, with a notable increase during the past few years," the report said.

To be clear, the overall delinquency rate for auto loans is pretty stable, and the majority are performing well.

There are, however, signs of stress in the subprime market segment, which has seen rapid growth. Here are the key numbers from the report:

* The subprime delinquency rate for the trailing four quarter period moved to 2% in the third quarter. The only other time it was 2% or more was in the aftermath of the financial crisis.

* Subprime auto loan originations hit $31.3 billion in the third quarter, down from $33.6 billion in the second quarter. Bank and credit unions originated $9.5 billion in subprime auto loans in the period, a record high.

* Outstanding subprime auto loan balances now stand at $280.2 billion, a record high. For perspective, the pre-crisis high was $249.5 billion, in the fourth quarter of 2007.

[dfwgator]

“The life of a Repo Man is always intense.”

[Tammy8]

Yes and if they get married and the wife doesn’t work their cars/trucks get repossessed. One of my daughters lived in an apartment complex where many newlywed soldiers lived, the repo man was a frequent visitor to the complex.

Most learn about finances the hard way. The military tries to give them classes and advice, but for most it goes in one ear and out the other.

[editor-surveyor]

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Little cars with a humped top, bulging rear window, no head room, no leg room, total death trap.

Typical of 90% of the crap on sale today.

[editor-surveyor]

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IOW makes no sense at all.
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[editor-surveyor]

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>> “Therefore, they are not underpaid.” <<

Your ignorant opinion?
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[Mr. Jeeves]

Cal should have run for the Senate - he would have fit right in. :)

[Red Badger]

https://en.wikipedia.org/wiki/Cal_Worthington

Early life

Calvin Coolidge Worthington was born on November 27, 1920 in the now-defunct town of Bly, Oklahoma,[3][4][5] three weeks after his namesake, Calvin Coolidge, had been elected Vice President of the United States.[1][6] Worthington grew up in grinding poverty, one of nine children, and dropped out of school at the age of 13. His first job was as a water boy on a road construction crew for 15 cents an hour.[7] He joined the Civilian Conservation Corps[1] at age 15.
World War II

At the beginning of World War II, Worthington enlisted in the Army Air Corps. Commissioned a Second Lieutenant, he was the aerobatics champion at Goodfellow Field in San Angelo, Texas. He saw combat as a B-17 Flying Fortress pilot with the 390th Bomber Group, flying 29 missions over Germany. He was discharged after the war as a captain. Worthington was awarded the Air Medal five times, and received the Distinguished Flying Cross, which was presented to him by General Jimmy Doolittle.

Worthington’s military service was frequently revisited in the 21st century in aviation magazines, since he had trained pilots who would become some of America’s first astronauts.