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Posted on 09/19/2025 4:38:37 PM PDT by Responsibility2nd
A guy I know just had his truck repossessed. He claims he was current on his payments and because I used to be in the auto remarketing many years ago, he called (texted) me for assistance. He bought the truck and financed it with Tricolor.
Here's the AI info...
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Tricolor Auto, a major subprime auto lender and used car retailer, abruptly went out of business in September 2025 after filing for Chapter 7 bankruptcy and closing all its dealerships. The company is now under investigation for alleged large-scale fraud, which reportedly involved double-pledging loan portfolios to multiple banks as collateral, resulting in hundreds of millions in potential losses for institutions including Fifth Third Bank, JPMorgan Chase, and Barclays.
Tricolor Auto filed for Chapter 7 bankruptcy on September 10, 2025, planning to liquidate rather than restructure. All dealership gates were locked, staff were placed on unpaid leave, and customers were left unable to contact the company or retrieve vehicles. The bankruptcy filing detailed liabilities possibly exceeding $1 billion, with comparable asset totals.
The collapse followed lender disclosures of "fraudulent activity"—principally a scheme where identical loan portfolios were pledged to different banks, apparently unbeknownst to each institution. Fifth Third Bank alone faces losses up to $200 million, while other lenders are similarly exposed. The company’s troubles are being probed by the U.S. Department of Justice.
Thousands of customers, many of whom relied on Tricolor Auto for financing because traditional lenders excluded them, have been stranded without support or access to vehicles left for service. While Tricolor's collapse is significant for subprime auto lending, experts say it is unlikely to trigger wider financial market turmoil akin to the 2008 subprime mortgage crisis.
The Texas Department of Motor Vehicles is also investigating, advising affected customers to file complaints. The bankruptcy trustee and Tricolor have not commented publicly, and transitioning servicing for outstanding loans may be complicated.
Tricolor’s collapse was driven by alleged fraud, rising subprime loan defaults, and a tightening market, with substantial impact on customers and lenders, but not expected to destabilize the broader auto finance sector.
What a mess. My guess is everyone who had a loan will have their vehicle reposed and their credit ruined. They may, at some point, get their credit restored, but they are likely out the money they spent.
Now I keep thinking about Technicolor and Sensurround with Charlton Heston.
If you can’t pay for it, dont buy it. I live my life by that rule.
Certainly by the time you get into your 40s start buying autos with cash and pay off credit cards each month.
They had subsiduaries or associated companies, and they all marketed loans to people who normally could not get bank loans at normal rates.
This happened to be a lot of illegal aliens.
Since TriColor was the lender and not a bank, I am guessing that after the repossession of the vehicle they are not on the hook for the remaining payments.
If I understand correctly, Tricolor “pledged” the loan portfolio to multiple banks. I think this is like selling the loan at a discount for the cash now. If that’s the case, then the loan is collectable by the new owner, the multiple banks. All of the banks would need to agree not to pursue loan collection. We all know how wonderful and humane bank loan departments are...
Of course, a judge could order them not to collect, but this part of the case would need to be brought to a court, and I don’t see how that would happen. Banks have lawyers. This level of car buyer does not.
“Certainly by the time you get into your 40s start buying autos with cash”
I had a 0% loan on my 2016.
Now a 1% on my 2019.
Meanwhile that money has returned over 3% in QUALIFIED dividends and great capital gains.
Sounds like the previous subprime loan catastrophe, where mortgages were “bundled” and sold as securities.
“If I understand correctly, Tricolor “pledged” the loan portfolio to multiple banks. I think this is like selling the loan at a discount for the cash now.”
Nope. The pledged the loans as collateral.
“Sounds like the previous subprime loan catastrophe, where mortgages were “bundled” and sold as securities.”
Nowhere does it say they bundled and sold securities.
I didn't say they did. I was referring to the 2008 subprime loan crisis. I thought that would be obvious, but evidently not.
Can we make this simpler? Find out the repossessing tow company, sue them in small claims court (short time interval) bring receipts (cancelled checks) for the judge showing current on payments and separate savings account set up for deposit of future payments, (show of good faith intent to pay) and let the judge order the towing company to return the vehicle forthwith. Might work I dunno
major funder of illegal aliens.
If that is really their flag, the vehicles are in mexico by now.
The credit of the buyer has to be marked as payed as agreed. The repossession had nothing to do with missed payments.
I understand that Tricolor was doing high interest auto loans to illegal immigrants.
And investors pounced on that high interest, greed can make people stupid. This is what you get when you loan money to people who are not crediworthy. Lets hope no pensions bought any of that junk.
Doesn't appear to be correct based on the top posts. It looks like they sold the cars on credit, made the loans, and acted as servicer. They then sold the loans to the banks and per this, sold the same loan to more than one bank, " where identical loan portfolios were pledged to different banks".
If the reports are accurate, it doesn't sound like a viable long-term scam.
It's going to be a mess to try to untangle, and there's no pot of gold at the end of the rainbow. If you are JPM or Fifth Third or Barclay's you might be better with taking a $200 million write off and cutting your tax liability instead of spending additional millions chasing a ghost.
JPM's net income for 2024 was roughly $58.5 billion, 5/3's was only $2.1 billion, Barclay's £8.1 billion. If there were smaller banks on the hook, it could get messy for them with an unpleasant conversation with a regulator.
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