Subprime Auto Loans Explode, "Serious Delinquencies" Spike to Record. But There's No Jobs Crisis,
Subprime Auto Loans Explode, Serious Delinquencies Spike to Record. But Theres No Jobs Crisis, These Are the Good Times
Posted on February 12, 2020 by Yves Smith
Yves here. Subprime auto loans provide more evidence that this supposedly solid recovery has cracks in its foundations. This is the sort of Ponzi finance behavior that Minsky accurately depicted as leading to eventual ruin.
By Wolf Richter, editor of Wolf Street. Originally published at Wolf Street
Auto loan and lease balances have surged to a new record of $1.33 trillion. Delinquencies of auto loans to borrowers with prime credit rates hover near historic lows. But subprime loans (borrowers with a credit score below 620) are exploding at a breath-taking rate, and theyre driving up the overall delinquency rates to Financial Crisis levels. Yet, these are the good times, and there is no employment crisis where millions of people have lost their jobs.
All combined, prime and subprime auto-loan delinquencies that are 90 days or more past due serious delinquencies in the fourth quarter 2019, surged by 15.5% from a year ago to a breath-taking historic high of $66 billion, according to data from the New York Fed released today:
https://www.nakedcapitalism.com/2020/02/subprime-auto-loans-explode-serious-delinquencies-spike-to-record-but-theres-no-jobs-crisis-these-are-the-good-times.html
cherryinpa
(301 posts)Canary in the coalmine, Trumps so called economic miracle is built on a house of cards.
Personally in my line of business I'm seeing lots of pull back simply because of the s.179/bonus depreciation taken in 2018.
Trump has pulled forward huge demand and now we pay the price.
Sadly whoever takes over is gonna need to clean up a mess, as usual.
BeckyDem
(8,361 posts)CrispyQ
(36,225 posts)Offer easy credit so people can maintain the same lifestyle even as prices go up and wages stay the same. Turn basic necessities like health care and education into a for-profit ventures and convert your citizens into consumers. Thirty years later, you have a nation of debt slaves, people too indebted to rise up against the plutocrats as they dismantle the government and pilfer the treasury.
The GOP plan is right on track and they are going to pull out all the stops this year. This will be the ugliest election year ever.
BeckyDem
(8,361 posts)Excellent summary.
neeksgeek
(1,214 posts)Of course theres no jobs crisis. These delinquent borrowers are just irresponsible with their money!
safeinOhio
(32,527 posts)the dealer only auctions. More and more 10 and 12 year old cars with no damage are coming up. Donated and bank repossessed along with insurance damaged ones. We can usually get some nice ones for $300 to $500 plus fees. We sell them very cheap and they go fast as lots of people are looking $1,000 or less good running cars. We go thru them to make sure they will run good and are safe. If not they become parts cars for us. For those without the cash we can sell them on time with a weekly payment they can afford and hold them for them until the last payment. We don't get rich, might do one or two a month. Retired, we have fun doing it.
BeckyDem
(8,361 posts)handmade34
(22,755 posts)unless you are a working class person
the economy runs on the back of all of us and we will pay the price
Wellstone ruled
(34,661 posts)when Cheap Money starts to flow,we usually have this issue pop up. Now with the Digital Media running the show,what does one expect. Look around and notice the Media Ads.
People like new shinny objects,and the media helps run the debt scam. Again,these Loans are bundled and sold with some being purchased by the Fed Reserve via the Repo Window.
BeckyDem
(8,361 posts)Wellstone ruled
(34,661 posts)led Bank Scam,did Mortgage Loans. We are seeing the same crap happening in real time. Watching the Bloomberg this AM,at least one Refly Ad per Have hour. Like 2006,same crap just 14 years later.
Now with the likely hood of zero Student Loan Cancels,oh Boy,hear we go.
BeckyDem
(8,361 posts)Its like we are on this crazy carousel called, The GOP Scam Ride. Free tickets!
Mosby
(16,162 posts)What's a normal rate vs sub prime?
BeckyDem
(8,361 posts)Deep subprime (credit scores below 580)
Subprime (credit scores of 580 to 619)
Near prime (credit scores of 620 to 659)
Prime (credit scores of 660 to 719)
Super prime (credit scores of 720 or higher)
Subprime auto loans are sometimes even extended to people who have no credit scores at all.
https://www.creditkarma.com/auto/i/what-are-subprime-auto-loans/