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.
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.
ZeroHedge had an article on this recently, stating that there was massive fraud in this area (subprime auto loans) and it has seriously scewed stuff up.
Tricolor went bankrupt and has not paid their employees, some going back to late July.
The problem is at the top of the company, not the US citizens scratching out a living. Very few (if any) illegals working at the DFW branches, but about 40% were "cash" cars, and they definitely sold to the unbanked.
I want to cry when I see someone posting “AI” on FR.